CHAPTER # 01

Historical review Introduction Branches and Sub-offices Board of Management

HISTORICAL OVERVIEW
The story of the national bank of Pakistan is part of Pakistans struggle for the economic independence. At the time of existence in 1949 the country was facing several crises. NBP was established under the National Bank of Pakistan Ordinance 1949 in Pakistan. The intention of the founders of the country was to setup the bank in public sector by earlier fifties. NBP occupies a unique position in the financial sector of Pakistan. It acts as an agent of the Central Bank wherever the State Bank does not have its own Branch. It also undertakes Government Treasury Operations. Its registered and head office is situated at 1.1. Chundrigar Road Karachi. The bank is engaged in providing commercial banking and other related services in Pakistan and overseas. National Bank of Pakistan was established in November 8, 1948. The primary objective of setting the National Bank of Pakistan was to purchase the jute from the farmers of the East Pakistan, as India refused to lift the Jute. The National Bank of Pakistan was exclusively engaged in the purchase of Jute till June 1950. Later on it begin to perform the commercial banking functions in the country. With pioneer role of financing industrial project in Pakistan NBP will continue its core business of long-term financing besides assisting industrial and commercial sectors through matrix of financial products like term loans to new as well as balancing, modernization and replacement projects, working capital loans, syndication,

underwriting, leasing, equity investment and related financial services.

INTRODUCTION
National Bank of Pakistan was established under the National Bank of Pakistan Ordinance 1949 in Pakistan. NBP occupies a unique position in the financial sector of Pakistan The primary object of setting the National Bank of Pakistan was to purchase the jute from the formers of the East Pakistan, as India refused to lift the Jute. The National Bank of Pakistan was exclusively engaged in the purchase of Jute till June 1950.

National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. The national; bank of Pakistan is one of the leading commercial banks and has world wide network of branches with extensive banking, leasing and discounting along with treasury work of provincial and federal governments on behalf of state bank of Pakistan. The bank has distinction of acting as an agent of state bank of Pakistan, because State of Pakistan doesnt have its branches. National bank of Pakistan has its head office at Karachi. It has played the crucial role in increasing volume of trade in the country.

It has offices at all the major financial centers of the world including at pride places like 100 Wall Street, New York and United nations plaza. Its international network includes branches at Bahrain, Cairo, Paris, Frankfurt, Hong Kong, London, Washington D.C, and other major cities of the world. The bank provides complete banking facility to the people through network of over 1436 branches operating all over the country

MISSION STATEMENT:
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.

VISION & GOALS:

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.

CORE VALUES OF NBP

Were & following values to deliver to you. Growth through creation of sustainable relationships with our customers Prudence to guide our business conduct A national presence with a history of contribution to our communities Meet expectations through market-based solutions and products Reward entrepreneurial efforts Create value for all our stakeholders 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 Leaders in our industry An organization maintaining the trust of our stakeholders An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment We aim to be an organization that is founded on: We shall work to: We aim to be people who: We have confidence that tomorrow we will be

CORPORATE INFORMATION
BOARD OF DIRECTORS Mr. Syed Ali Raza Mr. Muhammad Ayub Khan Tarim Mr. Sikandar Hayat Jamali Mr. Tariq Kirmani Mr. Mian Kausar Hameed Mr. Ibrahim Mumtaz Ms. Haniya Shahid Naeem Ekhlaq Ahmed Chairman & President Director Director Director Director Director Director Secretary Board of Director

BRANCH NETWORK
National bank of Pakistan has 29 Offices and 1,189 branches, the online branches of banks are 143 while there are 4 subsidiaries in Pakistan. while talking about international there are 16 overseas Branches and four Representative Offices while 1 subsidiary of National Bank of Pakistan have boost up its position internationally.

PAKISTAN BRANCHES
Here is al list of the banks locations in Pakistan according to each province or territory SINDH:

Dadu, Sanghar, Hyderabad, Jacobabad, shikarpur, Karachi,

Larkana, Mirpurkhas, Badin, Nawabshah, sukkur, Khairpur, Tharparkar.

PUNJAB:

Bahawalpur, D.G. khan RYKhan, Faisalabad, Gujranwala, Sialkot,

narowal jhang Jhelum, Gujrat, Chakwal, Darya khan, Bhakkar, Lahore, Multan, Murree, Attock, Gilgit, Rawalpindi, Sahiwal, Sargodha, Sheikhupura.

NWFP: Peshawar.

Abbottabad, Mansehra, Bannu, D.I. khan, kohat, Mingora, Mardan,

BALUCHISTAN:

Quetta

AZAD KASHMIR: Muzaffarabad, Mirpur.

CHAPTER # 02
Principal Business & services Organizational Structure Decision Making

PRICIPAL BUSINESS
As it was already discussed in the history of the National Bank of Pakistan that the primary objective of setting the National Bank of Pakistan was to purchase the jute from the formers of the East Pakistan, as India refused to lift the Jute. The National Bank of Pakistan was exclusively engaged in the purchase of Jute till June 1950. Later on it begin to perform the commercial banking functions in the country. Its Principal Business is simply to lend and borrow, and for that lending and borrowing they use different ways and techniques to attract their customers, due to strong competition within the country. Day to day many Programs are introduced by the National Bank of Pakistan according to different needs of customers for lending purpose. Such as,

NBP CASH N GOLD

Meet your need for ready cash against your idle gold jewellery with no minimum or maximum limits. Facility of Rs. 14000/- against 10 grams of gold, Mark-up 15.5% per annum, no maximum limit of cash, repayable after one year, roll over facility, no penalty for early repayment.

NBP ADVANCE SALARY

NBP advance salary product alone has attracted approximately 300,000 customers. 15
months salary in advance (certain conditions apply), minimum documentation, repayable in 5 years, no processing charges; no collaterals, no guarantees, no insurance, Mark-up charged at 17.5% per annum on reducing balance method.

DEPOSITES These are the savings/ money submitted by the people with the bank, for fetching some return or for the purpose of safety and security. There are various types of deposits, such as SAVING, FIXED OR TERM, CURRENT, ETC.

SAVINGS DEPOSITS

These deposit fetch returns upon them these are basically introduced to inculcate habit of savings in the general masses and to invest and reinvest the saved money. These deposits get return on the basis of announced rate for these deposits and that rate is according to the economic activity and net profit earned by the organization in fact this is a profit and loss sharing mode, but the history or till the introduction of these deposits, the depositors never share a loss. There are certain rule of the game viz. there is restrictions upon frequency of withdrawal and amount of withdrawal i.e. you can not withdraw more than twice a week and in case of amount more than 10000/= you have to submit prior notice. In fact these are not practiced at the moment because customer does not want to bound himself in such things and want to avail of the facilities of the account along with return, there are restrictions of keeping the minimum balance otherwise service charges are imposed, further you have to open with at least RS.3000/= which is now a days relaxed up to 200/= for opening the teachers accounts. CURRENT DEPOSITS These accounts were basically introduced for the business firms and persons who frequently use their account and want to avail of banking facilities of remittances, collection transfer of funds, safety security etc. these were basically in contrast to the saving accounts as these did not offer any restriction in terms of withdrawals and amount. These accounts does not fetch any return on them because you are allowed to take your money at any time so bank does not get enough time to invest the amount for longer period. More over this account was basically as mentioned above, was introduced for the business men, and provide them other facilities apart from return; state bank of Pakistan is taking steps to make it mandatory to provide return upon minimum balance and current account. The current account is opened in the name of individuals, proprietary firms, partnership firms, private limited companies, clubs, associations, societies and other institutions. The account can be operated by single or two or more persons jointly as the instructions may be given at the time of opening the account. No profit is given on current deposits. If the person who wants to open the account is not in a position to sign or his signature is not firm or shaky, the bank requires his photographs and he has to present Cheques personally at the counter for withdrawals from his account. The initial

amount of deposits with which he can open the

account must not be less then

Rs.1000/= But his restriction is not imposed to the accounts of charitable institutions.

FIXED OR TERM DEPOSITS These deposits are basically saving deposits and meant for inculcating the habit of saving for longer periods and provide chance for the bank to invest in a long term project or plan. These fetch comparatively high returns than the other deposits because of longer time periods. These are available for THREE, SIX MONTHS AND FOR ONE, TWO, THREE, FOUR, AND FIVE YEARS. These have got a maturity date on which principal and mark up amount is to be provided to the depositor. This also has got a slight modification in shape of MIS (monthly income scheme) this is also a term deposit scheme but one can earn profit on monthly basis instead getting the same along with principal amount on maturity. In the case of fixed deposit account deposit is made for a fixed period and money deposited can be withdrawn before the expiry of period fixed or before giving an advance notice to the bank. Fixed deposit caries a higher rate of interest than the other type of bank account, and the rate of interest rises with the length of the period and the amount of deposit. On opening a fixed deposit account the bank grants to the depositor a Fixed Deposit Receipts (FDR) which is not transferable to any other person. When the deposit is with drawn the receipt must be handed back to the bank.

PLS ACCOUNTS The silent features of profit and loss sharing saving accounts to be opened in NBP are as under. 1. These accounts can be opened by individuals in their own single or joint names. The PLS. saving accounts can also be opened for provident fund or other benevolent funds of 2. 3. 4. Companies, firms, organizations of welfare and educational institutions. PLS. Saving account can be opened with a minimum amount of Rs.500/- only. Money can be with drawn form PLS saving account with prior notice if heavy amount is involved.

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5.

To share in the profit a minimum balance of Rs.500/- must be maintained in account. The minimum balance on sixth and last of month will qualify for the profits.

6.

The profit will be calculated on the basis of monthly minimum balance for the period of six months i.e. from January to June and July to December.

7.

The head office of NBP determines the profits or loss on PLS saving deposits and advises its branches the rate and time of distribution of these profits concerned PLS. saving account.

8.

With

drawls

from

PLS

saving

accounts

are

allowed

not

oftener then 8 time in a calendar month and for a total amount not exceeding Rs.1500/- for withdrawal of a large amount seven days notice in writing is required to be given. This notice shall not how ever affect the monthly with drawls ordinarily allowed. In the even of contravention of rule, depositors shall forfeit his right to share profit for the notice period shall be deducted from his total profit earning products. 9. There shall be no restrictions on maintaining the maximum balance in PLS saving account. 10. On the fist of Ramzan every year the Zakat 2.5 % will be recovered from the deposits on the balance of that day. But if depositors give declaration of Zakat or he is non-Muslim no Zakat will be recovered from him. In the same day Zakat is not recovered from account in which the balance are below up to prescribed limit as declared by the administrator of Zakat Pakistan. This system of accepting deposits has been stated in NBP since 01.01.1981.

FOREIGN CURRENCY DEPOSITS 1. NBP has also introduced foreign currency accounts for Pakistan and foreign Nationals in Pakistan and abroad. This scheme assures its customers of better profit and superior service. 2. It offers Pakistani or foreign National to operate a foreign currency A/C with any one of their authorized branches spread all over the country.

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3.

Deposits of this accounts will be acceptable in all convertible currencies, but accounts will be maintained on the customers choice in US $, British pond, German mark or Japanese yen.

4.

Deposits may be made in the forms of remittances in foreign currencies,

Travelers Cheques on the bank counter will be accepted.

1. 2. The customer can make with drawls and transfers to anywhere in the world. All the deposits and profits in the customers foreign account are exempted from Zakat, income or wealth tax. 3. The customers sources are protected from any scrutiny of concerned authorities.

The NBP has over 1189 branches in Pakistan, of these more than 100 branches are authorized and fully equipped to deal with all kinds of foreign currency transaction. NBP has worldwide network of branches and it has associates in Saudi Arabia bank, All Jazira (18 branches) to facilitate the customers in Pakistan, Saudi Arabia and UAE. LETTER OF CREDIT Letter of credits are promises or guarantee to some of amounts to the importers or exporters or to their agents on accomplishment of certain agreement. These are also offered by the National Bank of Pakistan in shape of import and export L/Cs. So as to boost up countrys trade and improve foreign exchange reserves, to enhance countrys exports and to introduce them world wide. CREDITS These are the various advance or finance facilities issued to the borrowers to carry on or to meet their business requirements. These are extended in three modes as explained above which are. SHORT TERM- MEDIUM TERM AND LONG TERM, which caters to the needs of clients according to their requirements. TRAVELERS CHEQUES These are the modern tools which enable clients to carry money from one point to another with complete safety and security. These available in various denominations ranges from RS. 5000/= to 100000/=. They provide you guarantee of payment even case of lost or theft. They are available for inland transfer of money as well as for abroad

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where ever the branches of National Bank are available and at other places through the agency arrangements. NBP also provides different other services, such as

SERVICES
LOCKERS These are one of the services which NBP provides to its clients for safe keeping of their valuables and documents at cheaper rates. These are available in three sizes at the designated branches. These are small, medium and large.These are usually used for

keeping the gold, cash; documents etc. 42561 lockers are available for clients at NBP dargai branch.

ATMS. (AUTO TELLER MACHINES) Fifteen auto teller machines are installed at present at the main business centers like KARACHI, LAHORE,ISLAMABAD ETC. and 30 more are to be installed shortly at other places for which feasibility reports are prepared. These modern banking tools which provide unique facility for the clients to withdraw their cash at late hours in case of emergency.

SBP TREASURY OPERATIONS Being the agent of SBP National Bank of Pakistan perform treasury operations like collection of salaries from the treasury and collection of challans for various taxes and fees on behalf of Govt. and facilitate clients, which is a unique function of NBP. It receives commission for offering these functions from SBP, but these are nominal and are not compatible with the services provided by the NBP.

COLLECTION OF UTILITY BILLS NBP-is providing this facility since long but recently it embark upon it with anew with a new vigor and vitality and extended the range of its utility collections. In this connection National Bank nominated its 148 Branches all over the Pakistan to provide utility bill

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collection facility up to 9:pm instead of normal working hours 5:pm. It also amended the previous collection timings which were from 9: am- to 1:pm, now all branches collect the utility bills up to 5:pm instead of 1:pm. This amounts to the un-matched and unique services provided only by the NBP. Its utility collection ratio is more than 34% of market which is a clear proof of its exclusive services in this respect.

PENSIONS PAYMENT Both types of pensions that is provincial and federal are paid to the thousands of pensioners, this is also a unique feature of NBP, which it performs being the agent of SBP.

PAYMENT OF SALARIES This is one the distinct features of NBP, that it provides services to the Govt. departments to distribute their salaries every month. The prominent examples include ARMY,

RANGERS, POLICE, EDUCATION, and PUBLIC WORKS ETC.

GOVERNMENT COLLECTIONS AND OTHER COLLECTIONS This is another unique feature of National Bank that it provides services for collection of various instruments far and wide through out the country with out or on the nominal charges and this facility is also provided to the general public on the nominal and fair charges not only inland but across the borders.

EVENING BANKING In order to provide extra banking facilities round the clock and to compete with the contemporaries National Bank embarked upon evening banking facilities. This also improves their image in the general public and corporate circle. This facility at present is undertaken at the selected centers, but the management is planning to expand it shortly.

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CASH Being the agent of SBP it also provides this service to the other Commercial banks where branches of SBP are not available. It takes and supplies cash to the other banks and send or receive the same to the SBP. It receives soiled notes from general public and banks and submits to the SBP for change and replacement with the new one, which are onward supplied to the general public and banks whenever required or occasions like Eid and other festivals.

CLEARING This is an extra ordinary banking facility which is provided to the public in this if they are maintaining an account with the National bank they can lodge Cheques of any bank in Pakistan, which will be collected and credited to their respective accounts through the process of clearing. In this representatives of various banks are gathered at SBP and exchanges the Cheques presented to them for debit of the respective accounts and in second round of meeting provide each other the fate of those Cheques to be credited to respective accounts.

SAVINGS AND INVESTMENT FACILITIES Through these facilities not only the clients are encouraged to inculcate the habit of saving which not only is beneficial for them but also to their country as these funds are utilized for the development purpose, secondly they are also provided with the chance of investment to earn the return and multiply their funds. Various schemes as detailed above are in practice and available at National Bank.

DEMAND DRAFTS If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBPs 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.

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MAIL TRAVELERS Move your money safely and quickly using NBP Mail Transfer service. And The Bank also offers 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

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) NBPs involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders. CASH MANAGEMENT SERVICES With National Banks Cash Management Services (in process of being set up), the customers sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their companys 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, youll be provided everything, which takes to manage your cash flow more accurately.

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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. 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.
a. Issuance of Pay order

1. 2.

For NBP Account Holder

Rs. 50/- (Flat) Rs. 100/- (Flat)

For NBP Non-Account Holder

Rs. 25/- (Flat) from student for payment of fee favoring educational institution

Issuance of duplicate Pay order 1. 2. For NBP Account Holder Rs. 100/- (Flat) Rs. 150/- (Flat)

For NBP Non-Account Holder

MAIL TRANSFER Move your money safely and quickly using NBP Mail Transfer service. And we also offer the most competitive rates in the market.

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ORGANIZATIONAL STRUCTURE
President and chairman President Secretariat Board of Director Secretariat Corporate and investment banking Group Commercial and retail Banking Group Operations Group Audit & inspection group Compliance group Financial control division Employees benefit, Disbursements and trustee Special assist Management group Organization development and training group Overseas coordination and management group Information technology group Risk management group Treasury management group Human resources management and Admin Group 18

CORPORATE AND INVESTMENT BANKING GROUP Corporate and Investment Banking group

Corporate banking north, Lahore

Investment Banking

Corporate Banking (South) Karachi

Source: Annual Report NBP 2008

COMMERCIAL AND RETAIL BANKING GROUP Commercial and retail Banking group

Agriculture Finance

Commercial banking

Product Policy

Retail Banking

Source Annual Report NBP 2008

AUDIT AND INSPECTION GROUP Audit & Inspection Group

Admin (A&IG)

Internal Audit & Inspectio n

System & Secretarial Support

EDPA&A

Monitoring & Evaluation

Area Audit Offices

Source Annual Report NBP 2008

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FINANCIAL CONTROL DIVISION Financial Control Division

Financial Control Source Annual Report NBP 2008

Taxation

Equity & Investment

ORGANIZATION DEVELOPMENT AND TRAINING GROUP Organization Development and Training Group

Staff Colleges

Islamabad Peshawar Lahore Karachi

Source Annual Report NBP 2008 REGIONAL STRUCTURES Regional Management Team

Regional Business Chief

Regional Operational Chief

Regional Risk Management

Regional Compliances Chief

Regional Human Resourse Departments

Source Annual Report NBP2008

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ORGANIZATIONAL STRUCTURE OF NBP COMMERCIAL MARKET BRANCH RAWALPINDI National bank of Pakistan main Satellite Town Branch is situated in commercial market Rawalpindi, in its front there is a parking and police lane. There are total 26 employees currently permanent and working in the NBP Satellite Town branch.

NBP STRUCTURE

Branch manager

Cash Deptt. Officer

Admin Deptt Officer

Banking Deptt Officer

Finance Deptt Officer

Source: Self Made

DECISION MAKING
Decision making is one the most important management function, and it has a major impact on the performance of an organization. Two kinds of decisions are taken, first are those decisions which are related to non programmed problems, situations, initiatives, suggestions, and improvements. The second type of decisions is related to day to day banking activities. The Non-programmed decision making process in National bank of Pakistan is carried out by Board of directors, and President of NBP. These boards of directors are selected by (GoP) Government of Pakistan. Bench of directors has 7 members and President. Every branch is supervised by three officers, Business Manager, Operation manager, and compliance officer. Every officer has been assigned a set of duties, in order to run the activities of branch smoothly and mostly it is achieved by their coordination among themselves. If the Business managers face any kind of problem or feel that there is room for improvement then these problems and suggestions are communicated to respective

21

regional officers. Regional officers attend an annual meeting with group chiefs and board of directors and discuss the problems and suggestions forwarded by the branch managers. After that board of directors conduct another meeting in which only the president and the board of directors participate. The meeting agenda consists of the problems and suggestions for improvement, an open discussion is carried out like brainstorming session and the board suggests a particular way to handle the situation then it is left to president to make final decision. Every branch is provided with a manual which contains all the rules and regulations related to Banking activities. Apart from this manual every branch is also provided document of empowerment in which the powers of every position are defined. And whenever the problem arises managers make decisions by consulting both of the mentioned manuals, mostly these decisions are programmed. In case a situation arises which can not be solved by consulting the above mentioned manuals then it is communicated to the regional offices by the business manager of the branch.

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CHAPTER # 03
The Learning and working

23

WORK DONE BY ME:

I learned many things during my internship at National Bank of Pakistan. During my stay at the Satellite Town branch Rawalpindi I enjoyed the learning environment provided to me. It was much difficult to work with all the department of the bank in short time, but I thank to all the employees who really help me and provide me all the necessary information that I requested from them. They guide me in very proper manner. I am very much thankful to Mr. Raja Sheraz Akhtar (branch manager) who provides me such a learning environment to work in at the stay in NBP Satellite Town Rawalpindi. I performed various tasks and work in almost all the departments in the bank.

FIRST WEEK
During the first week I learned about the account opening of the accounts and I performed the same tasks during the week.

OPPENING ACCOUNT
Opening account is a function of the account department. There are different kind of customers who came for the opening account they may be individuals, sole proprietorship, partnership, public/private limited companies, trusts accounts, agents, Govt. institutions etc. The most frequently accounts are Current PLS saving Opening account is the start of the relationship between the bank and its customer. Basic information for the accounts Introduction and preliminary investigation Before opening account NBP as like other banks in Pakistan ascertain whether or not person who is going to open the account is a desirable customer or not. The NBP determine the prospective customers integrity, respectability, occupation and the nature of business by the introductory references given at the time of account opening.

Negligence in this informal preliminary investigation may result in serious consequences not only for the banker concerned directly also for the other bankers and the general 24

public who may affected indirectly. In order to further strengthen and streamline this process, the Federal Ombudsman of Pakistan, vide his ruling on complain No. II/31/5186, has directed the banks to retain with the account opening from a Photostate copy each of the CNIC of the person desiring to open an account as well as of introducer. As per these directions, concerned Branch Managers are required to obtain the CNIC along with their photocopies and the return the original after attesting the authenticity of the retained copy. Preliminary Investigation is necessary because of the following reasons PROTECTION AGAINST FRAUD In this regard learned that if a banker does not make the necessary inquires mentioned above he may enable dishonest person to possess check books for fraudulent purposes. If any such person happens to be undercharged bankrupt, the banker might be placed in an awkward for having allowed such a person to open and a bank. INQUIRES ABOUT CLIENT Being a banker I think NBP has a business obligation to respond to inquries from other banks etc. about his customers financial position. Though the banker gives only a general idea about financial standing of his customer, it should necessary information available with him. GENERAL RECORD FOR THE OPENING ACCOUNT Following are the commonly steps followed while opening account. First take the photo copy of CNIC of the person who is interested to open account and send this for NADRA verification of the person that he is the original holder the card and a citizen of Pakistan.. After the verification of the person we open an account of that person an account opening form is to be filled for the opening of the account. In the account opening form the information include types of account, nature of account, initial deposit, title of the account and a very important information of the next of the relative will also be given net of relative is that person who will operate the account after the death or misplace of the original account older. Account opening from then sign from the customer so that the information filled is relevant and correct. nevertheless have

25

 A signature form is to be filled from the customer so that the sign may be verified from the cheque in the future transactions. Then the required documents are attested to the account opening form. Then the sign are verified by the accounts officer and signed A/C opening form. The account opening form then sent to operation manger with a request that please open the account then operation manager authorized the account and account is opened. DOCUMENTS REQUIRED FOR THE OPENING AN ACCOUNT During the internship I learned about the documents that are to be attached while opening a new account. Different documents are required for the different accounts. Their detail is as follows INDIVIDUALS Copy of CNIC Copy of the driving license in case of without photograph or the attested photograph from the gazetted officer. A copy of the next of relative CNIC Acopy of the CNIC of the other family member PARTNERSHIP CNIC copy of all partners. Partnership deed(certificate copy). Attested copy of registration certificate with registrar of the firm. Original authority letter favoring the person authorized to operate the account. PRIVATE/PUBLIC LIMITED ACCOUNT Certified copies of the certificate of the incorporation Certificate of the commencement of the business Memorandum & Article of the association List of directors. Board of directors Resolution CNIC copy of the Board of directors

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SECOND WEEK
During the second week I worked in the advance department and learned about the procedures how to provide loans to the different customers there I repeatedly perform the demand finance (Gold). There I learned different kind of the advances are given to the customers and to the employees of the NBP Demand Finance Staff Loans

DEMAND FINANCE(GOLD) It is a kind of advance in which he customer demand for the loan against a security. During the spam of my internship the most commonly open account was the loan against gold. THE PROCEDURE OF GOLD ADVANCE Following steps are to be followed: First customer comes to the manager for the approval of the gold finance. After the approval the person goes to the gold smith for the weights, market value and originally checking of the gold ornaments. Then the person comes to the branch with the detail provided by the gold smith. Then that information is recorded on the ledger book of the demand finance.The information entered include the name of the customer, occupation, phone no. , address, account opening date, the information provided by the gold smith. Then that ledger sends to the manager for the approval. After the approval that person submit the Gold ornaments and takes loan as much as he/she demanded. The maximum limit is 50% of the total market value of the ornaments. The maximum limit of the gold finance is one year; however the account can be renewed after the one year by paying the markup amount which is charged on the days the person use the loan. The markup is 15.5% per annum

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STAFF LOANS: The other kind of loans which is given to the staff of the NBP. Different rates are charged to the different rank of the employees. Following are the loans that are given to the staff of the bank. Advance for Home. Advance for Car Advance for the Computer.

THIRD WEEK
During the third week I worked in the clearing department. I found that every banker acts both as a paying as well as collecting banker. It is however an important function of crossed cheques. A large part of this work is carried through the bankers clearing house. A clearing house is a place where representatives of all he banks 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 protection to the banks. At the branch level the cheques is just received and a slip is filled and handover the customer who comes with cheques that we has received the cheques then the cheques information is recorded in the relevant book and send the clearing house. CLEARING OF CHEQUES Clearing of cheques are those cheques which are drawn on the branches of some other bank of the city of the same area which cover a particular clearing house.

INTER CITY CLEARING Inter city clearing means the cheques which are drawn on the branches of same other banks from outside the city. In Airport branch Islamabad, all the cheques that come from outside the city mare handling as inter city clearing. In this week I have also done the dispatch work.

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FOURTH WEEK
During the fourth week of the internship I performed the miscellaneous tasks. In this week I performed the following tasks. Issuing of the cheques book Again opening the accounts Demand finance Filling the mail transfer of the GEPCO on the MS ExcelSheet. In the issuing of the cheques book the customer is verified first and then provide the cheques book no. other person can take the cheques book except the account holder. Unless or until the person authorize to other person. In the cheques book we punch the account number of the customer.

FIFTH WEEK
In the fifth week I learned the operation of number of the NBPs software. The software name is Electronic Banking System. In this software the record of all transactions is managed. All the bank keeping, new account information, existing account holders information, the financial reports of the week, month, and year. All the information is kept, and managed in this software. I learned the punching of the mail transfers, debit and credit of the cheques from the accounts, entering the information of the new opening accounts, and printing the report of different kinds.

SIX WEEK
During six week I worked on the pension department. First I learned the book keeping record of different pensions like DDP, govt pension, EOBI and railway pensions. Here my duty was to keep the record of all the pensions in a book and compare it with the computer record.

29

SEVEN WEEK
During the seven week I worked on the pension department. Here I performed the different task like to pass the pension book making increment and different pensions as per govt orders. I also worked on transfer of pensions for a next month. Here i not only keep the record of the pensions on the pension book but also record it on the computer software. I also worked on the computer by using software for the recording of pension payments. I was also done a work to make a day to day summary of the pensions govt and provisional receipts.

EIGHT WEEK
During eight week I repeatedly perform the same tasks that I have already performed in the previous weeks. It was a very good experience to work with such a cooperative people who guide me in very proper manner.

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CHAPTER # 04
Critical Analysis SWOT analysis

31

RATIO OR FINANCIAL ANALYSIS

LIQUIDITY RATIO
It shows NBPs ability to convert current liabilities with its current assets.

Years

2009 9851244/ 4994231

2008 10922991/ 7028082 1.44 times

2007 2966743/ 4527591 1.44 times

2006 5458800/ 4579204 1.19 times

Ratio

1.98 times

Liquidity Ratio
3 T imes 2 1 0 2009 2008 2007 2006

CURRENT RATIO AND ASSET TEST RATIO

Current ratio/ current liabilities(time)

This indicate that in 2009 the bank had a high ability to meet its current Liabilities out of its assets as compare to other under consideration years. The current ratio is increasing with the every year which means NBP is strongly able to meet its current obligations. CASH RATIO
Cash+Marketable seurities/ years 2009 967346/ 4994231 Ratio 0.19 times 2008 3270121/ 7028082 0.47 Times 2007 493604/ 4527591 0.11 Times 2006 310348/ 4579204 0.07 Times

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Cash Ratio
0.6 Times 0.4 0.2 0 2009 2008 2007 2006

Current Liabilities (times)

There is increase in 2009 in cash ratio except all the years of under Consideration, which shows that the NBP is having enough cash to its best advantage in the year 2006, 2007 and 2008. As it is less then current liabilities have increased also. So overall cash ratio is satisfactory. It can become difficult for bank to meet its immediate cash needs in 2009 due to the decrease in the ration. The greater cash ratio, the greater it is better for NBP to meet short term immediate expenses.

WORKING CAPITAL
Years 2009 9851244 (4994231) Ratio Rs 4857013 2008 10922991 (4028082) Rs 3094909 2007 6966743 (4527591) Rs 2439152 2006 5458899 (4579204) Rs 14617260

Working Capital
20000000 R upees 15000000 10000000 5000000 0 2009 2008 2007 2006

33

Current Assets/ Current liabilities There is very sudden and quick decrease in the amount of working Capital in the every next year which shows that it will be difficult for NBP to be able to borrow on short notice to meet the day to day short term obligation of the firm.

SALES TO WORKING CAPITAL

Years 2009 2008 2007 2006

30897823/ 36699882/ 4857013 Ratio 6.36 time 3094909 11.59 time

22173734/ 16234294/ 2439152 9.09 time 1417260 1.11 time

Sales to Working Capital

15 T imes 10 5 0 2009 2008 2007 2006

Net sales /Working Capital (times)

This ratio is increasing with the passage of time but there is a sudden deterioration in the year 2009as compare to other years, which indicate that bank is overcapitalizating its assets. It means that NBP is able to generate enough sales to meet its obligations. This on one end is a positive sign also that assets are probably utilized. But at the same time it shows that working capital is not invested in assets till this period.

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TURNOVER RATIOS
ACCOUNT RECEIVABLE TURNOVER Years 2009 2008 2007 2006

30897823/ 36699882/ 9851244 Ratio 5.79 time 10922001 8.12 time

22173734/ 16234294/ 6966743 5.36 time 2930649 5.54 time

Account Receivable turnover

10 8 T imes 6 4 2 0 2009 2008 2007 2006

Net sales/ AccountReceivables (Time)

The higher the turnover, the shorter time period between the typical sale and collection. The turnover of 2008 is greater than any under consideration and overall the ratio shows better results for the firm. Because it shows that the chances of getting back receivables have increased. It shows greater amount of sales is in receivables and quickly been recovered. RECEIVABLE TURNOVER IN DAYS
Years 2009 365/5.79 Ratio 63 days 2008 365/8.12 45 days 2007 365/5.36 68 days 2006 365/5.54 66 days

35

Receivable Turnover in days

80 60 40 20 0 2009 2008 2007 2006

D ays

365/Account Receivable Turnover

This shows that the number of days for the receivables outstanding have increased, which indicates that in 2008 NBP has 45 days for the receiving back their receivables from its customers and in all the other years

it customers and in all the other years it shows greater figure which indicates negative sign fir the national bank.

TOTAL ASSET TURNOVER RATIO

Years 2009 30897823/ 22290457 Ratios 1.39 Times 2008 36699882/ 23628906 1.55 time 2007 2006

22173734/ 16234294/ 18783351 1.18 time 13731247 1.18 times

Total Asset Turnover Ratio

2 1.5 T imes 1 0.5 0 2009 2008 2007 2006

36

Net Sales/total Assets

This ratio indicate that how well the NBP has used its total assets in generating sales. This ratio measures the activity of assets and ability of the firm to generate sales through the use of assets. If both of these have been well managed then the sales would gp up or vice versa. Higher ratio is better for business. But due to increased amount of assets and less increase in sales as compared to increase in assets the NBP total assets turnover ratio has increased in 2009.

PROFITABILITY ANALYSIS
Profitability ratios are of two types those showing profitability in relation to sales and those showing profitability in relation to investment. Together these ratios indicate the firms overall effectiveness of operation.

PROFITABILITY IN RELATION TO SALES GROSS PROFIT MARGIN (PERCENT)

Yeats

2009

2008

2007 6905567/ 22173734 31.14 %

2006 59879671/ 16234294 36.88 %

11631494/ 16729038/ 30897823 Ratio 37.97 % 36699882 45.58 %

Gross Profit Margin (percent)

60 P ercentage 40 20 0 2009 2008 2007 2006

(Gross Profit/Net Sale) x100

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This ratio tell us the profit of the NBP relative to sales, after we deduct the cost of producing the goods. It is a measure of the efficiency of the firms operations, as well as an indication of how products are priced. National Banks gross profit margin decreased in 2007 and in 2009.

OPERATING INCOME MARGIN (PERCENT)

Years

2009 2008588/

2008 5958078/

2007 755584/ 22173734 3.41 %

2006 690954/ 16234294 4.26 %

30897823 36699882 Ratio 6.82 % 16.23 %

Operating Income Margin (Percent)

20 15 P ercentage 10 5 0 2009 2008 2007 2006

(Operating Income/Net Sales) x100

This ratio helps in determining the ability of the management in the running business. It indicate the efficiency of the management. Operating profit shows that what actually is left behind after deducting all direct & indirect expense from operations. Those expense and incomes which has no direct relation with the operations but which do happen will be deducted after operating profit giving the profit before tax and eventually net profit after tax. Higher ratios is better for bank. NB was doing good generating handsome operating margin but in 20098 there is a sudden and quick change has been taken into account.

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NET PROFIT MARGIN RATIO (PERCENT)

Years 2009 1799737/ 2008 546595/ 2007 540678/ 22173734 2.48 % 2006 277094/ 16234294 1.71 %

30897823 36699882 Ratio 6.15 % 14.87 %

Net Profit Margin Ratio (Percent)

20 15 P ercentage 10 5 0 2009 2008 2007 2006

(Net Income/Net Sales) x 100

This ratio express the relationship between net profit after tax and sales. This ratio is the measure of all profitability. It also tells us that how much bank is saving after deducting all the expense from sales. Net profit margin ratio is also known as return on sales Higher the net profit ratio, higher profitability of business. Profitability of the NBP is continuously increasing but there is a sudden trend in 2009 with a large percentage.

RETURN ON TOTAL EQUITY (PERCENT)

Years 2009 1799737/ 7950000 Ratio 22.63 % 2008 5456595/ 7950000 68.63 % 2007 540678/ 7950000 6.80 % 2006 277094/ 7950000 3.48 %

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Return on Total Equity (percent)

80 60 percentage 40 20 0 2009 2008 2007 2006

(Net Income before tax/Total Equity) x 100

This ratio measure the profit earned

by the share holders on their invested amount in the bank. It measures the return on common shareholders, preferred shareholders and reserves also. Higher the ratio, the better it is. The NBP is lacking minimum figure profits this year. PROFITABILITY IN RELATION TO INVESTMENT

Year

2009 6.15*1.39

2008 14.87*1.55 49.81%

2007 2.48*1.18 7.88%

2006 1.71*1.18 2.08%

ratio

8.55 %

Profitability in relation to Investment

60 percentage 40 20 0 2009 2008 2007 2006

DUPONT RETURN ON ASSETS

40

(Net Profit Margin x total Assets turnover) x 100% The core idea behind this ratio is that both Net Profit Margin & Total Assets Turnover have a direct impact on the return on assets ratio (ROA). When these ratios are reviewed together it is called DUPONT return on assets. A high profit margin means a high profit per 1 Rs of sales. Higher ratio is better for bank. The NBP is having higher percentage in 2008 except all the years under consideration. DUPONT RETURN ON EQUITY
Year 2009 6.15*1.39 *2.80 ratio 23.94 % 2008 14.87*1.55 *2.97 68.45 % 2007 2.48*1.18 *2.36 6.90 % 2006 1.71*1.18 *1.73 3.49 %

DuPont Return on Equity

80 60 percentage 40 20 0 2009 2008 2007 2006

N.P. Margin x Assets Turnover x Equity Multiplier This DUPONT approach to ROE is made up of net profit margin, total asset turnover and equity multiplier. Higher ratio is better for bank and vice versa. While in NBP case percentage is increasing.

41

SOLVENCY ANALYSIS
DEBT TO EQUITY RATIO

Year

2009 1592429/ 7950000

2008 2831747/ 7950000 0.41 %

2007 1648647/ 7950000 0.51 %

2006 1127103/ 7950000 0.58 %

ratio

0.37%

DuPont Return on Equity

0.8 0.6 percentage 0.4 0.2 0 2009 2008 2007 2006

(Total Liabilities/ Equity) x 100

It indicates the banks total debt paying ability. It indicates the percentage of assets financed by creditors. From the perspective of long debt term paying ability, lower this ratio the better position. It tell us the NBP has decreasing trend in the percentage against the assets of the bank. This shows that bank position is improving with the every next year.

DEBT TO TOTAL ASSETS RATIO (PERCENT)

(Total Liabilities/ total Assets) x 100 Year 2009 192429/ 2008 2831747/ 2007 1648647/ 18783351 0.08 % 2006 1127103/ 13731247 .08 %

22290457 23628906 ratio 0.07 % 0.12 %

42

Debt to total Assets Ratio

0.15 P ercentage 0.1 0.05 0 2009 2008 2007 2006

It also serves similar purpose of the debt to equity ratio. It also highlights the relative importance of the debt financing to the firm by showing the percentage of the banks assets that is supported by debt financing. The lower the ratio is the better the banks position. However the higher ratio indicates the decreased amount of debts.

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BALANCE SHEET FOR THE PERIOD 2005-2009

2005 NON-CURRENT ASSETS Operating fixed assets Intangible Assets Long term Deposits LONG RUN Inv. CURRENT ASSETS Accounts Receivables Advances and deposits Cash & bank balance Total Assets EQUIRT & LIABILITIES SHARES CAPITAL & Res. Authorized Share Capital Issued & paid up capital Accumulate Profit LONG TERM Liab. Liability against the assets Subject to finance lease CURRENT LIABILITIES Current portion of finance Lease liability Creditors Provision for taxation Total Debt & Equity 2503462 837123 1523690 9999594 2213067 1127103 1239034 13731247 1905005 1648647 973939 18783351 1514219 2831747 2682116 23628906 1010762 1592429 2391040 22290457 8136972 1382039 1901168 419445 680018 15000000 7950000 1235962 1500000 9750000 2358963 1500000 7950000 4404592 1500000 7950000 7431379 1500000 7950000 8666208 2037800 2013058 287931 9999594 2930649 2217803 310348 13731247 4139100 2334039 493604 18783351 5181031 2471839 3270121 23628906 5329336 3554562 967346 22290457 3573208 1170394 917203 5252784 1879304 140359 7534708 2702590 1579310 7468274 2432331 1555310 1250000 8188833 2189098 811282 1250000 2006 2007 2008 2009

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INCOME STATEMENT FOR THE PERIOD 2005-2009

2005 2006 2007 2008 2009

Revenue

9723293

16234294

22172724

36699882

30897823

Cost of revenue

(6270326)

(10246327)

(15268167)

(19970844)

(19266329)

Gross Profit

3452967

5987967

6905567

16729038

11631494

Admin Expense

(2947231)

(5297013)

-6149983

-10770960

(9622906)

Operating Profit Financing charges

505736

690954

755584

5958078 (501483)

2008588

(310271) -

(413860)

(526784)

(436866)

Other income

311878

228015

Profit before tax

195465

277094

540678

5456595

1799737

Taxation

(78540)

(98756)

(110869)

(1091319)

(629908)

Profit after tax

116925

178338

429809

4365276

1169829

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VERTICAL ANALYSIS OF THE BALANCE SHEET For the period 2005-2009

Figure in (%)

PARTICULARS NON-CURRENT ASSETS Operating fixed assets Intangible Assets Long term Deposits LONG RUN Inv. CURRENT ASSETS Accounts Receivables Advances and deposits Cash & bank balance Total Assets EQUIRT & LIABILITIES SHARES CAPITAL & Res. Authorized Share Capital Issued & paid up capital Accumulate Profit LONG TERM Liabilities Liability against the assets Subject to finance lease CURRENT LIABILITIES Current portion of finance Lease liability Creditors Provision for taxation Total Debt & Equity

2005

2006

2007

2008

2009

35.73 11.70 9.17 -

38.25 13.69 8.30 -

40.11 14.39 8.41 -

38.61 10.29 6.58 -

36.74 9.82 3.64 -

20.38 20.13 2.88 100.00

21.34 16.15 2.26 100.00

22.04 12.43 2.63 100.00

21.93 10.46 13.84 100.00

23.91 15.95 4.34 100.00

15.01 79.50 12.36

10.92 57.90 17.18

7.99 42.32 23.45

6.35 33.65 31.45

6.73 35.67 38.88

81.37

10.06

10.12

1.78

3.05

25.04 25.04 8.37 100.00

16.12 8.21 100.00

10.14 8.78 100.00

6.41 11.98 100.00

4.53 7.14 100.00

46

In vertical analysis of the balance sheet we express the various components of the balance sheet as percentages of the total assets of the firm. To illustrate the vertical analysis of balance sheet from 2005-2009 we see that the operating fixed assets of the NBP are increasing except the financial year of 2008 and 2009. While in all the other under consideration years the percentage is increasing. The cash and receivables percentage are increasing. There is also good indication of the increase in the ling term deposits and intangible assets but in 2008 and 2009 percentage graph is downward. But the long term deposit are not showing good sign for the bank as long term investment in any slop from 6.64% to 3.18%. The NBP is not presenting any long term investment in any type of project. The current assets percentage is presenting good picture for the bank as all are increasing except the advances and pre-paid of the firm. When we look at the liability side of the analysis we come to know that the authorized and issued capital is the stagnant during the under consideration years means the firm has not issued any new capital during 2005-2009. While there is considerable progress in the percentage of the accumulated profits of the firm which increased from 12.36% to 38.38%. The long term liabilities of the firm are decreasing with a very large percentage, a very good sign for the investor point of view. Creditors percentage is decreasing throughout the under consideration years and makes the graph downward. Provision for taxation is fluctuating with every year which means the companys profits fluctuating with the passage of time.

47

VERTICAL ANALYSIS OF INCOME STATEMENT FOR THE PERIOD 2005-2009

FIGURES IN (%) 2005 2006 2007 2008 2009

Revenue

100.00

100.00

100.00

100.00

100.00

Cost of revenue

(64.49)

(63.12)

(68.86)

(54.42)

(62.35)

Gross Profit

35.51

36.88

31.14

45.58

37.65

Admin Expense

(30.31)

(32.63)

(27.74)

(29.35)

(31.14)

Operating Profit Financing charges

5.20

4.26

3.41

16.23

6.50

(3.19)

(2.55)

(2.38)

(1.37)

(1.41)

Other income

1.41

.74

Profit before tax

2.01

1.71

2.44

14.87

5.82

Taxation

(0.81)

(0.61)

(.50)

(2.97)

(2.04)

Profit after tax

1.20

1.10

1.94

11.89

3.79

Vertical analysis of income statement shows that cost of service s is fluctuating with every year while in 2007 and in 2009 rose up. Gross profit is also fluctuating while increased in 2008 and 2009 with higher percentages which is a good sign for firm. Operating cost is fluctuating and there are also variation in the operating profits of the company. NBP is reducing its financing cost with every year.

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HORIZONTAL ANALYSIS OF BALANCE SHEET FOR THE PERIOD 2005-2009

PARTICULARS NON-CURRENT ASSETS Operating fixed assets Intangible Assets Long term Deposits LONG RUN Inv. CURRENT ASSETS Accounts Receivables Advances and deposits Cash & bank balance Total Assets EQUIRT & LIABILITIES SHARES CAPITAL & Res. Authorized Share Capital Issued & paid up capital Accumulate Profit LONG TERM Liabilities Liability against the assets Subject to finance lease CURRENT LIABILITIES Current portion of finance Lease liability Creditors Provision for taxation Total Debt & Equity

2005

2006

2007

2008

2009

100.00 100.00 100.00 -

147.00 160.57 124.33 -

210.87 230.91 172.19 -

209.01 207.82 169.57 -

229.17 187.04 88.45 -

100.00 100.00 100.00 100.00

143.81 110.17 107.79 137.32

203.12 115.94 171.43 187.84

254.25 122.79 135.73 236.30

261.52 176.58 335.96 222.91

100.00 100.00 100.00

100.00 100.00 190.86

100.00 100.00 356.37

100.00 100.00 601.26

100.00 100.00 701.17

100.00

16.98

23.36

5.15

8.36

100.00 100.00 100.00 100.00

88.40 134.64 81.32 137.32

76.09 196.94 63.92 187.84

60.49 338.27 176.03 236.30

40.37 190.23 156.92 222.91

In horizontal analysis of the balance sheet we express the all components of the balance sheet in term of percentage and we get this by dividing all the components to the base

49

year which is 2005. As for as horizontal analysis of the NBP from 2005-2009 is concerned, we come know that fixed assets of the firm are going upward with every year. Intangible assets of the firm are going to increase in all years except 2009. No long term investment of the company by comparing to the base year. Receivables and advances are also increasing with greater percentages. The cash percentage is increasing with every coming by year by comparing it with its base year 2005 which means company has enough cash to meet short term obligations. The liability side of balance sheet tells us that the NBPs authorized and issued capital is same over all the years which mean the firm has not issued still any new capital. While accumulated profits are increasing with very large percentages. The long term liabilities of the firm is downward slope over the years which means the firm has not issued still any new capital. While there are fluctuations in the liabilities against assets subject to finance lease. It has come its minimum percentage. Creditors are going upward with every coming year except the 2009. There is increase in provision for taxation when we compare that with its base year except 2006.

50

HORIZONTAL ANALYSIS OF INCOME STATEMENT FOR THE PERIOD OF 2005-2009

2005 2006 2007 2008 2009

Revenue

100.00

166.96

228.05

377.44

317.77

Cost of revenue

100.00

163.41

243.50

318.50

307.26

Gross Profit

100.00

173.42

199.99

484.48

336.86

Admin Expense

100.00

179.73

208.67

365.46

326.51

Operating Profit Financing charges

100.00

136.62

149.40

1178.10

397.16

100.00

133.39

169.78

161.63

140.80

Other income

100.00

Profit before tax

100.00

141.76

276.61

2791.60

920.75

Taxation

100.00

125.74

141.16

1389.51

802.02

Profit after tax

100.00

152.52

367.59

3733.40

1000.50

When we look at the horizontal analysis of the income statement of NBP we come to know the Cost of professional services percentages are increasing except 2009 and also the gross profit of the firm by comparing all the years with its base year 2005. Operating profit and operating cost are also going upward with greater percentage while there is also an increase in the financing cost of the firm but there is no operating income of bank. Profit before taxation is showing very good results and as for as taxation percentage is concerned it is increasing which means the bank is going into large profits.

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CHAPTER # 05
SWOT analysis PEST analysis

52

SWOT ANALYSIS STRENGTHS

1. Government functions, like giving salaries and pensions to govt. employees, collection of utility bills and other collections. 2. 3. 4. 5. 6. 7. 8. 9. Renewal of driving licenses and registration of vehicles. Advanced salary scheme. House financing scheme (Saiban). Gold loan facility. Agricultural loan. Act as an agent of state bank of Pakistan. Employees allowances are high against competitors. Large network.

10. Government support 11. Public trust 12. High profits 13. Large number of branches 14. AA/ A-1+ credit standing 15. First Pakistani Bank to open branch in Kabul 16. First Pakistani Bank to open branch in Iraq 17. Globally recognizable 18. Western union facility 19. ATM facility which offers no cash withdrawal limit and facilitates the payment of utility bills.

53

WEAKNESSES
1. Government intervention 2. Professional jealousy 3. Unionization 4. Corruption 5. Poor Technology 6. Delayed Decision Making 7. Conflicts 8. Favoritism 9. Inefficient staff 10. Poor staffing 11. Poor communication system 12. ATM facility is not provided in all branches 13. Rude employees behavior with customers

54

OPPORTUNITIES
Reorganizing efforts going on in the NBP has open many opportunities for NBP to grow. NBP current management has boarder vision. They have taken steps to improve customer services, streamline internal procedure and creating a delectating climate for technology initiative.

To achieve above mention objective they have created operation group

1. Stating of the retail banking initial working. 2. Setting of target for of making at least 300 branches country wide on line. 3. Closing of all those branches which are burden on NBP. 4. Comprehensive training programs has been develop to up grade the core banking skills of the existing staff as well as integrate high quality hiring . 5. To improve the motivation of staff a merit-based culture is being promoted through overhauling the manpower recruitment preservation and performance appraisal system. These actions taken by current management provide a great opportunity for NBP for making it future prosper and can make NBP not less than any modern commercialize bank in Pakistan.

55

THREATS
Following are the major threats which national bank of Pakistan is facing.

COMPETITORS Major threats NBP facing is form its competitor especially from denationalized commercial bank. In which MCB is on the top of the list. The bank provides 24 hour banking convenience with the largest ATM network in Pakistan covering 15 cities with over 100 ATM location.

RETAIL BANKING

Retail banking and consumer banking resulting in the products such as credit cards, housing finance and automobile finance lending to small individual consumers and purchases of automobiles housing and consumer goods are generally made on a cash basis. These are causing another threat if not counter will result in significance losss of customers.

INNOVATIVE SCHEMES

Recently banks and other financial institution have introduced innovative schemes to attract deposits like gift cheques scheme by MCH. These schemes offer prizes on short and long term fixed deposits through lucky draws.

TECHNOLOGY Now banks are using technology which covers the distance no matter how far away any one through a satellite based on-line , real time banking system and by offering telephone banking electronic funds transfer, E-Banking and other modern facilities.

56

PEST ANALYSES POLITICAL

Privatization policy impact on NBp due to privatization the whole policy changes Impact of subsidized credit affecting of NBP. Employment practices unions association . political interference and harassment Incidents of high taxation on banking industry.

ECONOMICAL
Constraints in mobilization of public savings because of inflation. Staff cost changes. Operating cost Bad debts.

SOCIAL
Inadequate human resources, Culture poor saving habits, Declining education and work ethics, Inadequate accountability.

TECHNOLOGICAL
Inadequate communication infrastructure, inadequate computer facilities, Inadequate IT training.

57

CHAPTER # 06
Recommendation Conclusions Bibliography

58

RECOMMENDATIONS
Government has to change the existing culture of the bank and to put the foundation stone of business oriented culture. In which employees give importance of the bank its customers. To attract the customers in the future NBP have to make broad effort to give facilities of retail and consumer banking. Technology in the banking which will be necessary for future banking is another week area need to be stressed. The attitude of the bankers with all of their customers is not the same they pay more attention and good service to some of the customers and neglect a major portion of them. Banks different schemes must be conveyed to the targeted customers so that to have a reasonable share in market. The outlook and inside lay out of the branches is another thing which needs to be improved. The procedure o f taking services form the bank must be made easier and straight forward not involving long difficult procedure for simple task. Latest reorganizing efforts are necessary to make it cost effective also making its facility accordingly to modern banking. These must continue. Aggressive publicity campaign must be introduced through press and Electronic media for new products and scheme by initiating vigorous marketing policy.

59

CONCLUSION
After overall analysis of National Bank of Pakistan, we have come to a point that it is a valuable asset of Government of Pakistan as it contributes a substantial portion of GDP. National Bank of Pakistan has been proving its efficiency by recording the historic profit growth for last three years. The major reason behind this achievement is the improvement in core banking methods by restructuring.

Although, NBP has reported the highest ever profit by any financial institution in Pakistan but it still needs improvement in many aspects which are well defined in weaknesses and fault lines. Apart from working on the existing fault lines NBP should also look for available opportunities like expanding its international network, introduction of new products and services i.e NBP can introduce online depositing facility through ATMs.

Being a public enterprise NBP can introduce services and products which are difficult for private banks to introduce, because NBP can depend on Government for funds and favor in strict rules and regulations set for financial sector by Ministry of Finance.

In last, we conclude that NBP is one of the very few profit generating Public Enterprises and is the only public enterprise which is competing with the private financial institutes.

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BIBLIOGRAPHY
REFERENCES: Adam Nosheen, Foreign Exchange Analysis of Financial Statement by Sundhi and White Madam Maria,Remittance Madam Sarwat,Pension Department Madam Uzma, Account Opening Balancing Malik Zohaib, Credit Officer Mian Hamid Satti, Cheque Clearing Money Banking and finance by M. Saeed Nasir Raja Sheraz Akhtar, Branch Manager Yousaf Raza , Operatyion Manager Zahid Khatak, Cash Department

ONLINE REFERENCES: http://en.wikipedia.org/wiki/karachi _stock Exchange http://www.nbp.pk https://www.nbp.com.ok/treasury

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