Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
(0301)
Abbottabad
(0301)
Abbottabad
Abbottabad
APPROVAL SHEET
Approval Committee
1. Supervisor
Signature
Designation
2. External Examiner
Mr.
Signature
Designation
Mr./Miss
Signature
DEDICATION
Banks play very important and vital role for the economic growth and
sustainability of economy. The bank deals in money, such institution are also
required to fulfill other financial needs such as provision of place to deposit
money, serving for the utilities and advancing money in order to facilitate the
needs of householders and the businesses. In this report the financial position
of NBP has been studied and analyzed.
The methodology for data collection that was available resources by the
organization, like website, annual reports, books, articles publicly available
data, etc. also, interviews with some employees and observation methods were
used. In the first chapter introduction to the report, background of study, scope
of the study, merits, limitation, and scheme of the study are given. The report
covers the history of NBP bank, introduction of NBP, its background, role and
functions, its core values, and miscellaneous topics related to Finance
department of NBP Bank
In this report, I also included the financial analysis that helps to know that
where the NBP is strong and where it needs improvements. NBP offers new
products and services day by day for improving its performance, but there are
many hurdles in the way of success of NBP, all the recommendations are given
in the report and there solutions as well as that can be helpful in the success of
NBP in future.
ACKNOWLEDGEMENTS
I highly appreciate the help and cooperation of the Branch manager of NBP
Abbottabad branch for his support and collaboration.
Chapter 1 ....................................................................................................................... 1
Introduction of Study ..................................................................................................... 1
1.1 Background of Study .............................................................................................. 1
1.2 Purpose of Study ..................................................................................................... 1
1.3 Scope of Study ........................................................................................................ 2
1.4 Limitations of the work........................................................................................... 2
1.5 Benefits of the Study............................................................................................... 2
1.6 Research methodology ........................................................................................... 3
1.6.1 The major sources for Primary data includes............................................... 3
Chapter 2 ....................................................................................................................... 4
Introduction to organization (NBP) ............................................................................... 4
2.1 They aim to be an organization that is founded on ................................................. 4
2.1.1 They aim to be People who…...................................................................... 4
2.1.2 They have confidence that tomorrow they will be… ................................... 4
2.9.2 LOCATION......................................................................................... 19
2.9.3 OVERVIEW........................................................................................ 19
Chapter 3 ..................................................................................................................... 20
Product and services .................................................................................................... 20
3.1 Deposit Department .............................................................................................. 20
3.1.1 Account opening ........................................................................................ 20
3.8.2Inward TT in FC ......................................................................................... 32
Chapter 5 ..................................................................................................................... 62
Conclusion and recommendations ............................................................................... 62
5.1Conclusion ............................................................................................................. 62
5.2 Recommendations ................................................................................................. 62
5.5.1 Professional Training: ................................................................................ 63
References.................................................................................................................... 70
LIST OF TABLES
Table 2.1 13
Table 2.2 16
Table 4.1 40
Table 4.2 41
Table 4.3 43
Table 4.4 44
Table 4.5 46
Table 4.6 47
Table 4.7 48
Table 4.8 49
Table 4.9 50
Table 4.10 51
Table 4.11 52
Table 4.12 54
Table 4.13 55
Table 4.14 55
Table 4.15 56
LIST OF TABLES
Chart 4.3 43
Chart 4.4 44
Chart 4.5 46
Chart 4.6 47
Chart 4.7 48
Chart 4.8 49
Chart 4.9 50
Chart 4.10 51
Chart 4.11 52
Chart 4.12 54
Chart 4.13 55
Chart 4.14 55
Chart 4.15 57
LIST OF ACRONYMS
SS Specimen signature
VP Vice president
EXECUTIVE SUMMARY
National bank of Pakistan is one of the leading and establishes banks of the
country. It has a large setup of departments and a big organizational structure.
While working in a Abbottabad branch of the bank, it is not possible to
thoroughly cover all the areas of the bank, as it requires more time and two
months are in no way sufficient to do so. Different tools and techniques were
used to gather relevant information for writing the report. Secondly, journals
from regional head quarter and staff college was also reviewed which gave
very useful information about the functioning of the bank. I also visited the
national bank of Pakistan’s official web site, which gave very useful
information about the services provided by the bank.
NBP established in 1949, National bank of Pakistan has grown to become the
largest commercial bank in the country, maintaining its position as Pakistan’s
premier bank determined to set higher standards of achievements. The bank
came in to existence by the order promulgated by governor general and started
functioning from Nov 20, 1949. NBP is the major business partner for the
government of Pakistan with special emphasis on developing Pakistan’s
economic growth through aggressive and balanced lending policies,
technologically oriented products and services offered through its large
network of more than 1400 branches locally, 24 branches internationally and
11 regional offices.
The basic purpose of this report is to describe and define different functions
and products of the bank, to identify weak areas of the bank, to analyze the
performance of the management and to make a financial analysis of it and
suggest recommendations. It is also our degree requirement to do an internship
in any company so the basic purpose of this report is to fulfill the bachelor
degree requirement
Chapter 4 includes the SWOT and ratio analysis and their interpretation.
INTRODUCTION OF STUDY
NBP established in 1949, National bank of Pakistan has grown to become the
largest commercial bank in the country, maintaining its position as Pakistan’s
premier bank determined to set higher standards of achievements. The bank
came in to existence by the order promulgated by governor general and started
functioning from Nov 20, 1949. NBP is the major business partner for the
government of Pakistan with special emphasis on developing Pakistan’s
economic growth through aggressive and balanced lending policies,
technologically oriented products and services offered through its large
network of more than 1403 branches locally, 24 branches internationally and
11 regional offices (Annual report NBP, 2016).
The purpose of this study is to get more knowledge about the structure and
functioning of National bank of Pakistan and to check its financial health. For
this purpose I have done financial analysis, common size analysis and ratio
analysis of the bank, this is carried out to judge the actual financial position of
the bank and give recommendations on financial aspects to further improve
the functioning of the bank.
1
1.3 SCOPE OF STUDY
The time duration of two months is insufficient for conducting complete study
and observation of a large bank. Being a student specializing in finance, the
focus of this study is on its financial aspects including the financial health of
the bank and its comparison with previous year’s performance. Some of the
problems faced by the bank have been identified and some recommendations
have been suggested to overcome these problems and to improve the
prevailing financial condition of the bank.
There are some limitations which internee had to face during the internship
program, which are described as under:
The period of two months was too short to properly understand and analyze
all the operations of bank.
Staff members avoided to give all information due to the matter of secrecy.
So it was very difficult to collect the relevant information and to learn
accordingly.
Manager and other staff members have busy schedule due to this reason it
was a great problem for them to spend time with internee, so it is not easy to
learn or to gain knowledge from them.
Some of the data was confidential and that was not made available to me.
2
strengths are and also a good time to identify one’s weakness so that he can
improve them.
National bank of Pakistan is one of the leading and establishes banks of the
country. It has a large setup of departments and a big organizational structure.
While working in a Abbottabad branch of the bank, it is not possible to
thoroughly cover all the areas of the bank, as it requires more time and two
months are in no way sufficient to do so. Different tools and techniques were
used to gather relevant information for writing the report. Secondly, journals
from regional head quarter and staff college was also reviewed which gave
very useful information about the functioning of the bank. I also visited the
national bank of Pakistan’s official web site, which gave very useful
information about the services provided by the bank.
Personal observation
Interviews of management
Customer response
Books
Internet
3
CHAPTER 2
NBP contains its position as Pakistan's premier bank determined to set higher
standards of achievements. It is the major business partner for the Government
of Pakistan with special emphasis on fostering Pakistan's economic growth
through aggressive and balanced lending policies, technologically oriented
products and services offered through its large network of branches locally,
internationally and representative offices.
Leaders in industry.
An organization will take the trust of S&h.
4
2.1.3 Evaluation of Banking / Industry in Pakistan
A number of banks closed their branches with the result that only 81
branches remained open on 30th June 1948 out of 487. The head offices were
in India and most of their employees were Hindu, and they fled to India.
Imperial Bank of India, Which was conducting government receipts and
payments, closed down most of its branches thus blocking the funds needed by
the government?
The country was in trouble and needed most of the general commercial
banking and credit facilities. This need was a little bit satisfied with the
transferring of the head offer of the HBL. To Karachi on 7th, August 1947.
This bank playing a great role in the next year in the economic development of
Pakistan as the Habib Bank was also new in the new country it was asked to
open more branches at new place this was a difficult time foe H.B.L to open
their branches in different places.
5
opened many branches and in 1952 took over the emperor Bank of India. It
will draw Indian Currency notes of Rs: 125 crore from General Circulation
and send these for recovery to reserve Bank of India.
National bank was establish in November 09, 1949 under NBP ,ordinance
1949, in order to handle the crises condition which was develop after
Deadlock with India and the devaluation of Indian Rupee in 1949. The bank
proved all type of banking services to the government in general public. It
works as agent of sent real bank because the SBP does not has its own
branches.
The bank schedule commercial bank and its principally engaged in the
business of banking as defined in the banking company's ordinance 1962.
National Bank of Pakistan was basically established for reducing the
difficulties of east Pakistan farmers engaged in jute and patens” after mass
migration of community from east and west Pakistan in India. The bank
commenced its operation in November 20.1949 at six centers of jute in the
then East Pakistan. Lahore and Karachi officers were opened subsequently in
December 1949. Before restructuring in 2002, national Bank of Pakistan with
its head office at Karachi operates through 9 regional headquarters at Lahore,
6
Karachi Hyderabad, Quetta, Peshawar, Multan, Muzaferabad, Faisalabad and
Islamabad.
The bank was incorporated with authorized capital of 60 millions .in 960 this
amount was redacted to the 30 million banks issued 15 million of which 25%
was subscribed by the government and the balance was offered to the general
public .shears to the public where issued in 1950 and where quickly taken up.
In 190 banks ordinance was amended so that it take ordinarily commercial
banking business. On janvery-01-1974 national bank along with thirteen
others commotional banks were nationalized under the promulgation of
“nationalization” act 1974 and the shears not held by the government where
required after compensation them.
The period 1990’s witnessed financial referees and the national bank also in
cooperated the change in its working and offered new services and products to
its clients .at present the bank is playing very important role in financing the
trade .commerce ,agricultural and important concerns and contributing the best
to word making the country prosperous. The improve its costumer focus
redacted decision making layers restructured its entire command and control
system in business and operational spheres zones and audit offices in the year
2002 and eliminated the total numbers of regions in hands from 9 to 29 across
the country .anew matrix structure has been introduced with the objective to
separate the office and the bank offices .to improve the good governance and
enhance the internal control.
Operation group
corporate and investment banking group
special assets management group
commercial and retail banking group
audit and inspection group
overseas Coordination and Management Group
Risk Management Group
National Bank of Pakistan is known as the premier commercial institution of
Pakistan provide the large diversified customer base of 9.009 million, which is
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the biggest figure, in the country and conduct the business function of state
bank of Pakistan in addition to provision of other financial and allied services
such as deposit banking financing and credit remittance facilities collection
government receipts and payments. sale and purchase of government
securities, Bands and other certificates, Foreign exchange business, Safe
custody, Safe deposited services and safe deposit, Lockers, Hajji facilities
Utility bills, Investment advice and other services, Special deposits products /
Schemes, pak rupee travelers choose, New product.
NBP enjoys the highest rating of ‘AAA’ in the industry assigned by M/s JCR-
VIS Credit Rating Company. The ratings assigned to NBP are primarily driven
by the bank’s role in the national economy as an agent of the State Bank of
Pakistan and as a bank to the Government of Pakistan. Additionally, ratings
also derive strength from the bank’s consistently high capitalization levels, and
nationwide access that has enabled it to secure a cost effective and diversified
deposit base.
Chairman
Muneer Kamal
Tariq Kirmani
Auditors
Chartered Accountants
Chartered Accountants
8
Legal Advisors
9
2.3 ORGANIZATIONAL STRUCTURE OF NBP
President Secretariat
Board of Director
Operations Group
Compliance group
Human resources
Treasurymanagement
managementand Admin Group
group
10
2.3.1 Operational Group
Operation Group
Customer Logistic
services and support and
govt business security
Admin Internal
(A&IG) Audit &
Inspection
11
2.4 SENIOR MANAGEMENT
Masood Karim Shaikh SEVP & Group Chief, Commercial & Retail
Banking Group
Dr. Mirza Ibrar Baig EVP & Group Chief, Training & Organization
Development Group
Abdul Wahid Sethi SEVP & Group Chief, Audit & Inspection
Group.
12
Sultana Naheed SEVP & Group Chief, Risk Management
Group
Table-2.1
Zubair Ahmed
SEVP & Regional Chief Executive, Middle East, Africa & South Asia
Region
M. Rafiq Bengali
13
SVP & Coordinator, Afghan Operations
NBP will aspire to the values that make NBP truly the Nation's Bank by:
Institutionalizing a merit and performance culture.
Creating a distinctive brand identity by providing the highest standards of
services.
Adopting the best international management practices.
Maximizing stake holder’s value.
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2.7.1 Shall work to
15
2.8 CORPORATE PROFILE
NBP, Board of Directors list consist the following members and their
designation.
NAME DISIGNATION
Table-2.2
16
2.9 ORGANIZATION STRUCTURE OF BANK
BRANCH
President
Board of Directors
GM HRM and
GM
GM org administration
operation
development
and training
Branch Manager
17
2.9.1 Internal Structure of Bank Branch
CHART
Chief Cashier
Source: Self Made
18
2.9.2 LOCATION
2.9.3 OVERVIEW
In NBP Abbottabad branch the employees are very experienced. They are very
loyal and committed to their jobs. They are also very much cooperative with
their colleges if anyone of them face any problem in his work they never
hesitate to help him. Number of Employees currently working there is 25.
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CHAPTER 3
A/C opening.
Issuance of cheque book.
Current a/c
Saving a/c
Cheque cancellation
Avoid frauds.
Negligence.
Inquiries about clients.
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known to him. Details of account are entered into computer system. Included
non-deduction of zakat and services charges who’s applicable.
Copy of CNIC.
Copy of driving license in case CNIC is without photograph.
Applicant photograph and CNIC copy attested by gazetted officer in case
of CNIC without photograph.
Copy of service card/evidence of employment in case of salaried person.
Photograph in case of illiterate person.
Zakat exemption declaration/certificate.
Requisition slips to verify that cheque books have been issued to the account
holder. Cheque book are issued after receipt of acknowledgement of letter of
thanks or with the remarks of managers or operation managers giving
justification for issuance of cheque book before receiving of acknowledgment
of letter of thanks. Cheque book series are recorded in register. Charges for
issuance of cheque books are recorded.
21
3.2 TYPES OF ACCOUNTS
Fixed accounts or term deposits are those deposits which are repayable after
certain period of time which may vary from 3months to 5years. In this account
no cheque book is issued to the customers. At the time of opening account
TDR is issued showing the amount of money deposited, period and rate of
interest payable. The rate of interest on fixed deposits is greater than saving
accounts which also varies with the length of period and amount deposited.
The longer the period of deposit, higher will be the rate of interest. The shorter
the period of deposit, lower will be the rate of interest. PLS term deposit
account can be opened by all who are allowed to open current, PLS saving
accounts.
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3.2.4 Rates on term Deposit
3months 5.30%
6months 5.60%
1year 5.80%
2year 6.10%
3year 6.40%
4year 6.70%
5year 7.10%
Above 5 7.80%
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Deposits in the NIDA accepted on the conditions that the depositor shall
always maintain minimum balance as prescribed by bank in his account.
2million to 25million=1.50%
Premium Amdani products account can be opened by all who are allowed to
open current, PLS saving account. The bank reserves the right of refusing to
accept deposit from any person in premium Amdani account without assigning
any reason. Premium Amdani deposits are accepted by the bank with
24
minimum sums prescribed by the bank from time to time. In case of premium
Amdani additional amount in the lots of 25000/- will be accepted. Premium
Amdani Certificates will only be issued for period of 5 year. Loan will be
given 85% of face value of certificate. Loan will be sanctioned for one year
and lump sum payment will be made.
3.2.10 Rates
1 year 7.50%
2year 8.50%
3year 9.50%
4year 10.50%
5year 11%
Blind person (both literate & illiterate) can open an account to be operated
jointly with a visually literate person on completion of all documents and
formalities as prescribed by the bank. Operations in the joint account will not
be subject to ‘’either or Survival’’. In the event of death of blind account
holder the entire credit balance will be paid to the legal heirs of the deceased
blind account. In the event of death of joint visually account holder the entire
credit balance will be payable to the surviving blind account holder.
All current accounts, which have not been operated upon for six months or all
saving accounts which have not been operated upon for one year shall classify
as ‘’Dormant account’’. All current account s, which have not been operated
upon for two years or all saving accounts, which have not been operated upon
for three year shall classify as ‘’Inoperative account’’.
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3.2.13 Minor’s accounts
That person who has not up till attained the age of 18years is considered as
minor. Under section 11 of contract act, 1872 minor is incompetent to enter
into contract. Therefore in bank, contract with minor is avoided. There are two
types of minor’s account.
In case of death of account holder the credit balance in his account will be
payable to his legal heirs. They have to prove themselves through court. Bank
will present the details of his account in court. If any one of them is minor
then he will not be given balance. His account will be opened in the Bank
according to orders of court and Senior Civil Judge will be guardian of
account until he attained the age of majority. After that he can withdraw
money from the account.
In the event of death of an account holder, the credit balance, in any account,
in the name of an individual will be payable to the legal heirs of the deceased
individual account holder If the account is in the name of two or more persons
operated jointly the credit balance will be payable to the legal heirs of the
deceased account holders along with the remaining account holders.
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3.4 ADVANCES DEPARTMENT
27
Repayable after one year. (Lump sum).
Loan is given on net weight.
Minimum on 12 g loan is sanctioned.
If after one year no capacity to repay then loan can be rescheduled by
paying mark-up for one more year.
One person cannot take additional loan on other grams of gold with same
name.
If after one year payment is not made to bank. Bank send 3 notice to
borrower
Again if he doesn’t reply to notice. Case will be sent to the court. Court
will give gold to bank and will order the borrower to pay mark-up.
Documents
I.D. Card :
Goldsmiths documents.
Gold loan insurance form
Promissory note, IB-12 (Here amount + mark-up).
Undertaking
IB/6A- Agreement for financing for Short/med/long term on mark-up basis
IB-2 Letter of pledge (Here also A + mark-up).
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Loan is sanction for one year. After one year it can be renewed. Markup is
paid in quarterly.
Documents
Application form
I.D Card of borrower and two guarantors.
Three blank but signed cheques
Agreement for financing on mark-up basis, variable rate
Undertaking
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Annexure “A” .It is issued by department of borrower which shows how
much service is left and account no etc. His salary will be transferred to this
account.
Annexure “C” Agreement for financing on mark-up basis.
Annexure “D” Letter of hypothecation for stocks, machinery
And receivables.
Guarantee IB 29
It is private not govt. (a kind of Hundi).On the spot cash payment is made. No
compulsion of account.10 Digits MTCN (Money transfer control number) is
allotted. On which payment is done .It can be taken anywhere in Pakistan by
showing the number. Receiver has to show any one of following in order to
receive money. Original I.D. card. Original Driving license. Original Passport.
Duplicate or photo state is not accepted.
3.7CLEARING DEPARTMENT
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Procedure
The bank uses this book for the purpose of recording all the cheque
that are being received by the bank in the first clearing. All details of the
cheque are recorded in this book.
The bank uses outward clearing register for the purpose of recording
all the details of the cheque that the bank has delivered to other banks.
The banks which are not included in NIFT and out of city SC is sent to
them. If cheque is of which ever bank out of city NBP Abbottabad Branch will
send it to the NBP Abbottabad Branch of that city. That Abbottabad branch
will present the cheque in clearing to other banks. On SC Rs 50 commission
up to 50,000 Rs 75 postage and 10% of commission FED (Federal exchange
duty) are deducted from party account.
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any other foreign currency then amount will be converted in $ to deduct
charges.
Every foreign bank has opened a Nastro account in head office Karachi.
In order to send TT to other country bank will debit account of person who
is sending TT and credit Head office. F-15 will be prepared to credit HO.
Head office will credit the account of that bank which is dealing the
transactions of that F.C.
Or minimum US $5.00
Maximum US $25.00
Plus telex/ SWIFT charges Rs.2.50 per telex/ SWIFT case of TT.
3.8.2Inward TT in FC
When any one send TT to Dr foreign currency amount in F.C. account then
bank will Dr, Cr foreign currency amount at updating rates but when anyone
ask to deposit in Pak
If checks are of any bank out of country then bank will send these
cheque to standard chartered Bank Karachi for clearance. The account of
32
Standard Chartered is in H.O Standard Chartered Bank will credit the required
amount of cheques in their account in H.O But until 21 days bank will not ask
for money by FET. Standard chartered will physically present those cheques in
relevant banks out of country.
3.9REVALUATION OF ACCOUNTS
Revaluation is also done here at the end of month but here Head Office
is not involved. It is loss or profit of bank itself. Bank has cash with it which it
has purchased and is its asset. It does not belong to customers. Here bank Dr
and Cr interest account.
The money, which either comes or goes out from the bank, its record
should be kept. Cash department performs this function. The deposits of all
customers of the bank are controlled by means of ledger accounts. Every
customer has its own ledger account and has separate ledger cards When the
bank receives the cash from the customer, the bank credits the customer’s
account which is then used for paying their bills or remitting it to their
creditors or suppliers as the case may be.
33
3.9.5 Cheque and their Payment
It should be in writing
The unconditional order
Drawn on specific banker only
Payment on Demand
Sum Certain in money
Payable to a specific person
Signed by the drawer
The Drawer
The Drawer
The Payee
34
3.10 TYPES OF CHEQUE
Bearer cheque is cashable at the counter of the bank. These can also be
collected through clearing.
These types of cheques are also cashable on the counter but its holder
must satisfy the banker that he is the proper man to collect the payment of the
cheque and he has to show his identification. It can also be collected through
clearing.
35
3.11REMITTANCE DEPARTMENT
Demand Draft
Telegraphic Transfer
Pay Order
Mail Transfer
36
3.12.3 Charges for DD Cancellation
When the money is not required immediately, the remittances can also be
made by mail transfer (MT). Here the selling office of the bank sends
instructions in writing by mail to the paying bank for the payment of a
specified amount of money. Account holder and non-account holder both can
send MT. MT can only be issued to NBP branches.
3.13.2Postage on MTs
3.13.3Courier Charges
Local Rs.50/-
Inland Rs.75/-
37
and will send to the address of the receiver but it will take time and benefits of
TT will not be availed
Rs.100/-(Flat)
Pay order is made for local transfer of money. Pay order is the most
convenient, simple and secures way of transfer of money It is the property of
bank. It is payable only at the branch from where it is issued.
38
3.14.8 Charges for PO Cancellation
NBP has an agency agreement with some Banks which includes Citibank,
Standard Chartered, Grand lay and Oman exchange etc. These Banks have
their accounts in Head Office Karachi. When instruments of these banks are
presented in NBP Abbottabad Branch the Bank make the payment in advance.
NBP purchases the instrument from customer and make payment of
benevolent fund, pension funds etc on behalf of these banks.
In this department the review of all the works in the bank is done. The
responsibility of compliance officer is to check whether works are done
according to procedure recommended or not. His duty is just to point out the
mistakes, if any, and he will not be liable if relevant department has do not
correct the mistakes even after his notification. He reviews different works at
different time periods.
Checking balance.
Deduction from balance on clearing cheque.
Issuing bank statements.
Dealing Western Union.
39
3.16 ESTABLISHMENT DEPARTMENT
This department mainly deals with the branch employees. The main objective
of this department is to” To regulate bank business”. Main functions of this
department are:
NBP Abbottabad branch also performs the duties on behalf of SRSP. SRSP
account is in NBP Abbottabad branch . Before 2005, SRSP involves
development projects, building roads.
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CHAPTER 4
FINANCIAL ANALYSIS
Balance Sheet
Rs in “000” Rs in “000”
ASSETS
41
Other assets 91839258 81576084 80,991,187
LIABILITIES
Table-4.1
42
4.1.1 Common size analysis
Table-4.2
ASSETS
Investments 54 36 29
Advances 37 41 45
Other assets 5 6 6
43
LIABILITIES
Bills payables 1 1 1
Borrowings 1 2 2
Sub-ordinate loans 0 0 0
Finance lease 0 0 0
Other Liabilities 4 5 5
Total liabilities 90 88 89
Net Assets 10 12 11
Share capital 1 1 2
Reserves 3 2 2
inappropriate profit 3 4 4
Equity 7 7 7
10 12 11
44
Sources: Annual reports 2015-2016
Interpretation
The major components in the balance sheet of banks are deposits, advances
and investments. Advances decreased from 2015 and o 2016, increased from
41 % to 45%. Investment increased from 2015 to 2016 although it is not
comparable to previous years, still it is showing improvement from 2015. This
is due to low interest rates in 2015 and higher interest rate in 2016 and.
Bankers are left with only option of investing in short-term investment, to
increase their profit margin. Investments, as being a non-interest source of
income are more promising than advances that are becoming more profitable
due to inclining interest rates. Bankers prefer to give advances when the
interest rate was high but then prefer to invest in non-interest income in 2016 .
Table-4.4
ASSETS
Investments 47 41
Advances -8 2
45
11 13
LIABILITIES
Borrowings -42 69
Other Liabilities -8 0
Net Assets -6 14
Share capital 0 0
Reserves 42 2
Equity 5 9
-6 14
Interpretation
Common size horizontal analysis of NBP for the year 2015-2016, in asset side
of the NBP balance sheet. Cash and balance with treasury banks, Balances
with other bank shows positive trend in 2015 and 2016 in both years. Lending
to financial institution investment are decreased in 2016 than 2015. Advances
46
shows increase in 2016 net advances. Operating fixed assets are decreased in
2016. Deferred tax assets also decreased in 2016. Other assets are increased in
2016 as compare to 2015.
The liability part of the NBP balance sheet shows negative trend of bills
payable in shows increase in 2016 as compared to 2015. Borrowings, deposits
and other accounts shows increase in 2016. It shows that bank have sufficient
funds to maintain its financial position. Liabilities against assets subject to
finance lease, deferred tax liability they show decrease in 2016.
Table-4.5
Markup revenue 15 14
Markup Expense 15 15
Net Markup 46 15
11 12
47
4.2 Ratio Analysis
These simplify the comprehension of financial statement and tell the whole
story of changes in the financial conditions of the business. These provide
data for inter-firm comparison. The ratios highlight the factors associated with
successful and unsuccessful firms, also reveal strong and weak firms. These
help in planning and forecasting these can assist management in its basic
functions of forecasting, planning, coordination and control. These help in
investment decision in case of investor and lending decision in case of
Bankers etc.
However, the ratios are only indicators, they cannot be taken as final regarding
good or bad financial position of the business other things have also to be
seen. Great care is needed while calculating meaningful ratios and in
interpreting them. Although there are several ratios, which an analyst can
employ yet the type of ratios he would, use entirely depends on the purpose
for which the analysis is done i.e., a creditor would keep him abreast about the
ability of a concern to cover up its current obligations and so would care about
current and liquid ratios, Turnover of receivables, coverage of interest by the
level of earnings etc.
In graphs 2016 should be near origin. Round the figures upto 2 decimal places
We need to provide complete working of the ratios. we are required to
carefully study the table regarding “maturities of assets and liabilities”. Where
you can easily find the current and long term part of assets and liabilities.
Assets and liabilities having upto 1 year maturity are considered as current
assets and current liabilities. This table is given in the annual report of the
selected bank. You need to re-calculate the current and long-term parts of
assets and liabilities according to this table.
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These are includes:
Current Ratio:
Table 4.6
Comments:
The current ratio of 2016 and 2015 is almost same. It means that its current
ratio is less liquid. There is small increase in industry’s ratio which can meet
the short term obligations of 2016 and 2015.
Current Ratio
1.132
1.13
1.128
1.126
1.124
1.122 Sales
1.12
1.118
1.116
1.114
2014 2015 2016
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Acid Test Ratio
Table 4.7
Comments
the acid test ratio shows the liquidity by showing its ability to pay off its
current liabilities with quick assets has decreased from 0.73 to 0.69 in 2016. If
a firm has enough quick assets to cover its total current liabilities
2016.5
2016
2015.5 0.72
2014
2015
2014.5
2014
1 2
Profitability Ratios
“Profitability measures enable the analyst to evaluate the bank or firm’s profits
with respect to a given level of sales, a certain level of assets or the owner’s
investment. Without profits, a bank or firm could not attract outside capital”
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Return on Asset = Profit before Tax / Total Assets *100
Table 4.8
Comments:
This ratio shows that the returns on assets are Increasing as compare to
previous years and overall profit with its available assets is increasing as well.
0
2014 2015 2016
Table 4.9
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Comments:
Return on equity indicates the net income by the total equity of the owners.
In the year of 2016, In the year of 2015, the total equity is greater than net
income. It means that generally, the bank has high return.
Debt Ratio:
Table 4.10
Comments:
These values indicate that the firm has financed close to total of its assets with
debt. This ratio is same in both 2015 & 2016.The higher this ratio, the greater
the firm’s degree of indebtedness and the more financial leverage it has.
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Debt Ratio
1.135
1.13
1.125
Sales
1.12
1.115
2014 2015 2016
Debt-Equity Ratio:
Table 4.11
Comments:
Debt Equity Ratio slightly increased in the year 2016 than the previous years
2015& 2014 because of the increase in the total liabilities in the year 2016
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Debt Equity Ratio
12
11.9
11.8
11.7
11.6
11.5
Sales
11.4
11.3
11.2
11.1
11
2014 2015 2016
Market Ratios
These include:
Table 4.12
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Dividend per Ratio
0.6
0.5
0.4
0.3
Sales
0.2
0.1
0
2014 2015 2016
Comments:
Dividend per Ratio Ratio slightly increased in the year 2016 than the previous
year 2015
Table 4.13
Comments:
This ratio is same as in previous year. In these ratios, net income is greater
than no of shares outstanding. That’s why, the earning per share is same and
growth rate as well as. It shows profitability between the shareholders.
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Earning Per Share
1.6
1.4
1.2
1
0.8
Earning Per Share
0.6
0.4
0.2
0
2014 2015 2016
Table 4.14
Comments:
This ratio is relating the long-term debt to the permanent capital of the bank. It
shows that the fixed assets decrease than previous years which show a good
sign. This ratio is considered to be satisfactory.
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Market Captalization Ratio
1.122
1.12
1.118
1.116
1.114
1.112 Market Captalization Ratio
1.11
1.108
1.106
1.104
2014 2015 2016
Table 4.15
Comments:
This ratio increased from0.7 to0.8 in the year 2016 while it was 0.8 in 2014
too it decreased from 0.8 to 0.7 in 2015 because of decrease in profit before
interest & tax it increased again in the year 2016
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Interest Cover Ratio
0.82
0.8
0.78
0.76
0.74
0.72 Interest Cover Ratio
0.7
0.68
0.66
0.64
2014 2015 2016
The word “SWOT” stands for strengths, weakness, opportunities and threats
respectively. SWOT analysis is a tool with the help of which we can measure
the performance and the prevailing condition of an organization. In SWOT
analysis we can easily identified the problem facing by the organization and its
remedial actions.
The SWOT analysis is used to focus NBP’s business to enhance strengths and
eliminate weakness, take advantage of opportunities edge against threats.
4.3.1STRENGTHS OF NBP
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interest. Bank staff is also given three types of bonuses in every year
i.e. on Eid-ul-Fittar, Eid-ul-Azha and the last one is given annually.
6 Highest profitability
7 It deals in almost all the affairs of the government.
8 In order to give loan to the farmers they provide special services while
rendering the loan.
9 NBP open different branches in rural areas in order to facilitate the
farmers.
10 It Provides loan named as NBP (SAIBBAN) for the construction of
houses to the salaried persons.
11 Provide 15 advance salary packages to the needy people.
12 Act as an agent of SBP.
13 Staff College is also the part of the national bank of Pakistan; it helps
the trainee to get some practical knowledge.
14 Not a tough competition, because it is nationalized bank.
15 Highest deposits.
16 Staff gives the importance to internees.
17 The attitude of the staff with internees and customers is very
cooperative.
4.3.2 Weaknesses of NBP
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8 No job rotation according to rules and regulation.
9 The number of branches of NBP is decreasing every year.
10 Poor quality counters service during the rush hours.
11 Lack of scheme and projects to invest the money.
12 Limited staffing and no adequate span of management.
13 Unequal distribution of work.
14 No much use of computer as it is required.
15 No library for internees as well as students to get the relevant material.
16 Delay in decision making.
17 No note counting machine.
18 No online banking system.
19 Employee does not follow the basic rules and regulation of banking.
4.3.3 Opportunities of NBP
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4 There is also an interest policy present in the bank.
5 Sanctions imposed against Pakistan will affect exchange business
where as the freezing of account by SBP have also caused problems for
NBP.
6 Rapidly growing business of other foreign banks and expansion of
their brands networks in the country.
7 Strike regulation by the government and credit facilities to the
customers as well as to meet the production regulators.
8 Lack of public confidence to open foreign currency account NBP due
to political instability due to tear of economic sanctions on the country
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CHAPTER 5
5.1CONCLUSION
I had made an honest effort to present the working & operations of NBP,
specifically to Abbottabad branch in simplest way. Moreover, I feel pleased
that I have really learned a lot during two months & enjoyed working with
experienced cooperative & intelligent staff.
5.2 RECOMMENDATIONS
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time. The state bank of Pakistan, which is the main regulatory body, provides
all the procedures and information to ensure the effective operations of the
commercial banks. The man regulatory body is state bank of Pakistan, which
provide the policy guide lines and ensure that the money market operate on
sound professional bases. While the head offices specifies the whole procedure
of functions and operations.
Here some suggestions are recommended, which can increase the efficiency of
the workers and as well as the performance of the NBP.
The staff members do not have the strong professional background. They do
not have modern techniques and knowledge regarding the bank procedures.
Although staff training colleges are working in all major cities but they are not
performing well. For this purpose these staff colleges should be reorganized
and their syllabus should be made in such a way to help the employee
understand the ever-changing economic conditions.
Banking council, of Pakistan should also initiate some programs to equip the
staff with much needed professional knowledge.
To make the environment of the work place more cohesive proper authority
delegation is required in the bank. Staff members of the bank should be given
a task and authority and he or she should be ask for their responsibility. In this
way no one can put the blame of their mistake on others.
The manager should strictly monitor the performance of every staff member.
All of them should be awarded according to their performance. Special
bounces and incentives should be given to motivate them.
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5.5.4 On The Job Training:
On the job training should be carried out by the management to make their
staff better concerning the global changing economic environment. For these
purpose seminars, conferences and debates should be organized.
5.5.5 Transfer:
Transfer is not properly carried out. Some of the employees are continually
serving at the same post. They are simply rotated at the same branch.
There should not be any abrupt polices by the upper management, as this
practice damage the customer confidence in the bank. Policies should be made
in such a manner that any new government could not alter it.
Most of the work in Baffa branch is carried out manually. Therefore it is very
time consuming and difficult task
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5.5.9 Utility bills charges:
The banks are entitled to levy special charges on utility bills (electrically, gas,
telephones etc.) from consumer. It was fixed by the government. These
charges are so less that they are unable to meet the cost of the bank. These
charges should be increased to Rs.10 per bill to enable the branch to cover
there handling costs and earn some profit.
100 major branches of NBP should establish a direct link with the head quarter
in Karachi, through internet. This will make the functions and decision making
of the management easier and convenient.
National bank of Pakistan should start its operations in credit cards. These
cards are very helpful for the ordinary customer in general and the business in
particular.
To make it more secure and to eliminate the misuse of it, the management is
required to keep proper security against the card.
Valuator machine is used to count the currency notes and its installation will
help to eliminate the counting errors and will save time as well.
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5.5.14 Interest On Overdraft:
Overdraft is a short term credit facility provided by the bank to its trustworthy
customers free of interest. Only bank commission is charge on the amount of
credit availed. It is recommended that the bank should charge small amount of
mark-up on the overdraft, which will help the bank to improve its revenue
position.
Clean loan or clean overdraft is the credit facility extended to the customers
without any security. These types of small term loans should not be extend to
anybody, because sometimes these loans are provided to blue-eyed people of
the management and they become a part of bad debts.
In this mode of financing the amount of credit not utilized by the borrower is
remained tax free. It is recommended that a small amount of interest should be
charged on this mode of financing. Because the bank does not utilize this
amount anywhere.
Good relationship among the staff members leads to the better performance in
any organization. It is observed that the staff relationship was normal but some
time it is noted that their existed a little conflicts among the staff members. So
this sort of attitude is not good because it weak the spirit of team work.
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During the internship I observed that there was no proper distribution of work
in the bank, some of the employee work like ants while others sat idle staring
here and there. So this created a lot of overwork situation for some employees.
In the Oghi branch during the internship, it is observed that there is lot of
nepotism and favoritism.
When some of the employees are transfer to other places, due to their relations
with top management they can cancel their transfer in few weeks.
It is observed during the internship that, there are number of employees who
are working on one seat since last two years. It can affect the performance and
motivation of the employees negatively. Therefore there should be the
interdepartmental transfer of the employees to make the jobs and the working
environment interesting. And this transfer should be for a reasonable time
period.
5.5.21 Marketing Policy: The branch should adopt various marketing strategy
and promotion strategy to promote the bank and its products. These marketing
strategies may be very helpful. For this purpose the bank should conduct the
seminars and conferences within and outside the bank.
The NBP should adopt various prizing scheme just like allied bank (kar –amed
scheme) bank Alfalah (monthly income earning scheme) and various others.
Media and newspapers can be helpful in this regard.
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5.5.22 Facilities In branch:
There is no proper facility for the customers in the bank when they enter the
bank. The proper furniture is not available for the customers. In the time of
rush the people move here and there in the bank which really create the
disturbance.
There should be an inquiry desk to provide the information and to receive the
complaints of the customer in the bank.
There is no complaint box available in the branch and not any person
appointed to hear the complaints.
Proper analysis of the business should be conducted before extending any type
of loan. For this purpose professional training of the staff member is required.
The credit department of the bank should carries out vigilant credit
monitoring. They should ensure the proper payment of installments and the
markup by the borrower.
The staff member who has done all the paper work of the loan extension
should perform the monitoring very carefully.
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5.5.26 Avoiding Bad Debts
Great care should be taken while extending the loans. Loans should be
awarded against reasonable securities, where market value should be equal to
the loan granted.
Policies should be adopted in such ways that ensure that no loan is extended
on political pressure.
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REFERENCES
3. Siddiqi, Asrar H (2008); Practices and law Banking in Pakistan, (8th Ed),
Royal Book Company, Karachi.
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