INTERNSHIP REPORT

ON

NATIONAL BANK OF PAKISTAN

By

Ejaz Latif

M.com

Roll No. 12

Session 2017-2019
 Executive Summary

It was a great chance for me to enter in a practical business world and see what is the
difference between the theoretical world (book) and the practical life of e banker. Before
this training program at National Bank of Pakistan, I have been feeling a sense of
dissatisfaction because of the unbalance to explore the cause of this dissatisfaction. The
internship training program at National Bank of Pakistan Gulpur Branch Kotli AJK has
no doubt brought a revolutionary chance in my priorities for learning. I had great practical
experiments and an actual and factual witness of the management thoughts. It has also
created a great change in my attitude towards studies.

This report bears the impression of my experience; I have gained during the training
program at National Bank of Pakistan. The main purpose of writing this report is to
express the overall picture and particular function of National Bank of Pakistan. I hope that
it will help the reader to know and learn about the organization structure, the function of
particular departments and other useful information about the National Bank of Pakistan
The report has eight chapters, in which all the information about National Bank of Pakistan
has been provided. I have also included the financial statement of National Bank of
Pakistan. I have also included the problems faced by the National Bank of Pakistan and
also include some suggestions towards these problems. I hope this report provide better
understanding about National Bank of Pakistan and banking system of Pakistan.
 ACKNOWLEDGEMENT

It was not an easy task for me to accomplish without the help of many people, this report
has been made possible through the assistance of many people whom I wish to recognize
with great appreciation. While working as Internship training at NBP Gulpur Branch Kotli
AJK. I am especially indebted to executives and other personnel who provide information
and permitted to go through publications for use in the completion of this report, there are:
Mr. Zafar Tanveer(Manager) Mr Waheed Sabir (Cash Officer).

I would also like to express my heartiest gratitude and appreciations to The Chairman
Department of Commerce (Mr. Muddasir Anwar Swati) who has given me the chance to
be acquainted with practical work in such a prestigious institution, and also thankful to my
friends who helped me a lot while completing this work. Finally to all those who have
helped I express my deepest gratitude
 List of Acronyms

AbbreviationsMeanings

NBP National Bank of Pakistan

BOD Board of Directors

CEO Chief Executive Officer

A/C Account

BM Bank Manager

DR Debit

CR Credit

SWOT Strengths, Weakness

, Opportunities, Threats

IP Item Processing

BTF Balance Transfer Facility

DD Demand Draft

M.T Mail Transfar

FBC Foreign Bills for Collection

FTT Foreign Telegraphic Transfer

FDD Foreign Demand Draft

LG Letter of Guarantee

ATM Automatic Teller Machine

T.T Telegraphic transfer

NIFT National Institutional Facilitation Technologies

SC Short Credit

LSC Long Short Credit

 Table of Contents

i Title page
ii Letter of transmittal
iii Experience/Internship letter ( From your organization)
iv Acknowledgements
v Executive summary
vi List of acronyms
vii Contents
viii List of tables
ix List of figures
x Main body
xi References/ Bibliography
Chapter 01

INTRODUCTION

1.1 OVERVIEW OF THE ORGANIZATION

1.1.1Introduction to the Organization

1.1.2Banking in Pakistan

1.2History of NBP

1.2.1The History of NBP (1996 & Onward)

1.2.2Corporate Information

1.2.3Nature of the Organization

1.2.4Competitors

1.3Current Performance of National Bank of Pakistan

1.3.1Vission
1.3.2 Mission
1.3.3Current Performance
Chapter 02

Operations of the Organization

2.1 Introduction of the Department

2.1.1Deposits Department

2.1.2Remittances Department

2.1.3Cash Department

2.1.4Govt. Collection Department

2.2Products & Services of National Bank of Pakistan

2.2.1Products of NBP

2.2.1.1NBP Advance Salary:

2.2.1.2NBP Cash in Gold:

2.2.2Services

2.2.2.1Cash Link

2.2.2.2Money Transfer Services

2.2.2.3Collection of Electricity Bills

2.2..2.4Government Receipts and Payments

Chapter 03

Organizational and Industry Analysis

3.1Horizantal Analysis
3.1.1Blance Sheet(2013-17)

3.1.2Horizantal Analysis of Incom Statement(2013-2017)

3.2Vertical Analysis:

3.2.1Blance Sheet(2016-2017)

3.2.2Income Statement for the year ended December, 31.2017

3.2Ratio Analysis Of NBP

3.2.1Liquidity Ratios & Solvency Ratios
3.2.1.1Cash and Balances with Banks to Total Assets

3.2.1.2Investment and Total Assets

3.2.1.3Advances and Total Assets

3.2.1.4Total Liabilities to Total Assets

3.2.1.5Current Ratio

3.2.1.6Gross Advances to Deposits

3.2.2Efficiency Ratio/Profitability Ratio

3.2.2.1Spread Ratio

3.2.2.2 Return on Equity (ROE)

3.2.2.3Return on Assets (ROA)

3.2.2.4 Non-Interest Income to Total Assets Ratio

3.2.2.5Interest Ratio

3.2.2.6Net Interest Income after Provision to Total Assets

3.2.3Market Ratio

3.2.3.1Earnings per Share (EPS)

3.3SWOT ANALYSIS
Chapter 04
My Internship Responsibilities
4.1 Departments of the organization in which you have worked
4.1.1 General Banking Department
4.1.2 Credit Department
4.1.3 Foreign Exchange Department
4.2 Problems Faced by Branch
4.3 New Knowledge Acquired

Chapter 05
Conclusion and Recommendations
5.1 Conclusion
5.2 Recommendations

Bibliography

List of Tables

Table 1 Current Performance

Table 2 Horizantal Analysis of blance Sheet

Table3Horizantal Analysis of P/L Account

Table 4 Vertical Analysis of blance Sheet

Table 5Vertical Analysis of P/L Account

CHAPTER.1

OVERVIEW OF THE ORGANIZATION

1.1.1Introduction to the Organization

The word “BANK” is derived from Latin word “BANKO/BANCUS” which means a
bench at which the money changers used to change one kind of money into other. Adam
Smith also point out another feature of earliest banks that is “to make loans to and float
loans. The Bank of Venice founded in 1157, was the first public banking institution.

Founders of Commercial Banking

There are three founder of commercial bank the merchants, the money lenders and the
goldsmiths

1. Merchants
The one founder of commercial bank are merchants. In the earlier days merchants were
considered very honest people because of their strong financial positions so in 14th century
the Italian merchants shifted towards England and start a business of lending money on
interest basis.

2. Money Lender
The second founder of commercial banking is money lender. In the start money lender lend
their own money or capital to the needy people and get profit on it but after some time they
start the business of borrowing money from the rich people at low interest rate and further
lend it to the needy people at higher interest rate. Now a day this is the main function of
modern banking.

3. Goldsmiths
Last but not the least the third founder of commercial banking is goldsmiths. Goldsmiths
were also considered very honest in the past and people give their valuable things with
them like gold, silver and cash because they have the iron-safes. So, the needy people came
and request for loans so goldsmiths start the business to get loans to the needy people and
receive profit on it and then give some parentage to the depositor also.

1.1.2Banking in Pakistan
At the time of independence, the areas, which now constitute Pakistan, were producing
only food grains and agricultural raw material. However, commercial banking facilities
were provided well here. There were 487 offices of scheduled banks in the territories now
constituting Pakistan.

As a new country without resources it was very difficult for Pakistan to run its own
banking system immediately. Therefore, the specially appointed Export Committee
recommended that the Reserve Bank of India should continue to function in Pakistan.
Following the announcement of Independence Plan in June 1947, the Hindus residing in
the territories now comprising Pakistan started transferring their assets to India. Moreover,
the banks including those having their registered offices in Pakistan transferred them to
India. By 30th June 1948, the number of offices of schedule banks in Pakistan declined
from 487 to only 195.
There were no Indian foreign banks operating in Pakistan, which were solely engaged in
the export of crops from Pakistan, while there were only two Pakistani Institutions i.e.
Habib Bank and the Australasia Bank. To safeguard the interests of both bankers and
customers, the Government, therefore, promulgated the Banking Companies Ordinance
1947.

The Imperial Bank of India, which has been acting as the Agent of Reserve Bank of India
closed most of its offices in Pakistan and was not willing to purchase even token amounts
of government of Pakistan securities on the plea that these are not marketable. So, the
urgency of assuming control of banking and currency in Pakistan was direly needed then.
Therefore, it was agreed between the governments of India and Pakistan to advance the
date from 30th September 1948 to 30th June 1948. And thus, the Governor General of
Pakistan, Quaid-e-Azam Muhammad Ali Jinnah, inaugurated the State Bank of Pakistan on
July 1, 1948.

The first important task for the State Bank of Pakistan was the issuance currency notes and
withdrawal of Reserve Bank of India notes, which had been in circulation in Pakistan so
far.

The first Pakistani notes were issued in October 1948 in the denominations of Rs. 5, 10
and 100 and by August 1949 the State Bank of Pakistan withdraw the notes of Reserve
Bank of India 0 the value of Rs. 125.02 crores with the help of Pakistani notes.

As the Central Bank of the country, the State Bank addressed itself with the equally urgent
task of creating a national banking system. To attain this goal, it provided every help and
encouragement to Habib Bank to expand its network of branches and recommended to the
government the establishment of a new bank, which could serve as an agent of the State
Bank. As a result, the National Bank of Pakistan came into being in 1949 and by 1952 it
became stronger enough to take over the agency function from the Imperial Bank of India.

1.2History of NBP
National bank of Pakistan (NBP) was established on November 9, 1949 under the National
Bank of Pakistan Ordinance, 1949 to cope with the crisis condition which were developed
after the trade deadlock with India and devaluation of Indians rupee in 1949. Initially the
Bank was established with the objective to extend credit to agriculture sector. The normal
procedure of establishing a banking company under the companies’ law was set aside and
the Bank was established through the promulgation of an ordinance due to the crisis that
had developed about financing of jute trade. Bank commenced its operation from
November 20,1949 at six important jute centers in the East Pakistan and directed its
resources in financing of jute crop. The Bank’s Karachi and Lahore offices were
subsequently opened in December 1949.

The bank as originally conceived was allowed an authorized capital of Rs.60 million. In
December 1960, the authorized capital was reduced to RS. 30 million. The bank was set up
with an issued capital of RS. 15 million, of which the government subscribed 25 percent,
the balance was offered to the public. The shares offered to the public were floated in 1950
and were promptly taken up. In 1950 the bank’s Ordinance was amended so that it could
take up ordinary commercial banking business.
1.2.1The History of NBP (1996 & Onward)
Of almost sixty-six units with Rs.3.5 billion in 1998. NBP also participated in self-
employment scheme with Rs.1.9 billion. NBP also introduced ATM card system and
became a member of SWIFT in New York as well. In November 2001, 10% share Like all
businesses in Pakistan, National Bank of Pakistan also endured a great pressure in this
period. When the biggest bank of the country was faced with losses, Government of
Pakistan made some reforms. Pakistan Banking Council was demolished and all banks
were put under independent board of governors. Default of loans is the big issue since that
time. In 1996-1997 the Government of Pakistan pressurized all the institutions of the
country to down size their staff to cut down the expenses. This was the demand of IMF. As
a result, Golden Handshake Scheme was offered to the employees and many employees
opted to leave. This decision was very costly and was amortized. In the second phase of
the cost reduction program, the number of branches including the branches that were
running in losses, were reduced by a figure of 100.

The decision of May 28, 1998 nuclear tests followed by political decision of freezing of
foreign currency accounts gave hard time to NBP. But still, NBP performed very well and
succeeded in increasing the deposits. NBP was also successful in collecting reasonable
amount of money from the defaulters. After some time, the situation was made worst by
economic crises of East Asian countries. National Bank of Pakistan performed well in this
region and maintained its credibility.

National Bank of Pakistan as per its tradition, forwarded funds for revival of NBP’s shares
were offered to public and listed on all domestic Stock exchanges. It has also prepared a
plan for electronic banking and E-commerce by analyzing these improvements we can say
that the Officials and Directors of the bank are fully aware and alert for the challenges of
globalization and modernization.

1.2.2Corporate Information

1.2.2.1Board of Diracters

Saeed Ahmad President & Chief Exective Officer

Muhammad Naeem Director

A.Akbar Shrifzada Director

Fareed Malik Director

Muhammad Imran Malik Director

Asad Munir Director

CORPORATE INFORMATION

1.2.2.2 Chief Financial Officer

Abdul Waheed Sethi

1.2.2.3Company Sectretary
S.M.Ali.Zamin

1.2.2.4Registered & Headoffice

NBP Building 1.1 Chundigar Road Karachi
1.2.2.5Website
www.nbp.com.pk

1.2.3Nature of the Organization

National bank of Pakistan was incorporated in Pakistan under the National bank of
Pakistan ordinance 1949 and is listed on all the stock exchanges in Pakistan. The bank is
engaged in providing commercial banking and related services in Pakistan and overseas.
The bank operates 1519 branches in Pakistan and 22) overseas branches (including the
export processing zone branch, Karachi). Under a trust deed, the bank also provides
services as trustee to national investment trust (NIT) including safe custody of securities on
behalf of NIT.

The nature of responsibilities of the bank is different and unique from other banks/financial
institutions. The bank also handles treasury transactions for the government of Pakistan as
an agent to the state bank of Pakistan for handling provincial/federal government receipts
and payments on their behalf.

The national bank of Pakistan has also played important role in financing the country’s
growing trade which has expanded through the years as diversification took place. The
bank is providing all banking services of mercantile and commercial banking permissible
in the country, which include:

i. Accepting of deposits of money on current, fixed, saving term deposit and profit
and loss sharing accounts.
ii. Borrowing money and arranging finance from other banks.

iii. Advancing and lending money to its clients.

iv. Financing of projects, including technical assistance, project appraisal through long
term/short term loans, term finance and musharika certificates etc.

v. Buying, selling, dealing, including entering into forward contracts of foreign

exchange.

vi. Financing of seasonal crops like cotton, rice, sugarcane, tobacco etc.

vii. Receiving of bonds, valuables etc. for safe custody.

viii. Carrying on agency business for any description other than managing agent, on
behalf of clients including government and local authorities.

ix. Generating, undertaking, promoting etc. of issue of shares and bonds etc.

x. Transacting guarantee and indemnity business.

xi. Undertaking and executing trusts.

xii. Joint venturing with foreign dealers, agents and companies for its representation
abroad.

xiii. Participating in “World Bank” and “Asian Development Bank’s” lines of credit.

1.2.4Competitors
There are many competitors of NBP and the numbers of competitors are increasing day by
day. The major competitors of NBP are as follows

i. Allied Bank Limited

ii. Habib Bank Limited

iii. United Bank Limited

iv. Askari Bank Limited

v. Alfalah Bank Limited

1.3Current Performance of National Bank of Pakistan

1.3.1VISION

To be a leading bank for partnering in financial growth

through innovation and service

1.3.2MISSION

To be a catalyst for economic growth, serving the nation

through diversified product offering, innovation,
superior service quality, universal banking capabilities,
multiple delivery channels, investment in people and
processes and work towards sustainable higher returns
for stakeholders
1.3.3Current Performance

National Bank of Pakistan's (NBP) B3/Not-Prime global local-currency deposit ratings

reflect our assessment of the bank's standalone credit strength, based on a caa1 baseline
credit assessment (BCA) and our assessment of a very high likelihood of support from the
government of Pakistan (B3 stable). Our assessment for support reflects NBP's systemic
importance as the country's second-largest bank, with a 14% market share in deposits and
the government's majority ownership (at 76%). The bank's foreign-currency deposit ratings
of Caa1/Not-Prime are constrained by Pakistan's relevant country ceiling and reflect
foreigncurrency transfer and convertibility risks. NBP maintains a stable deposit-based
funding profile, which we consider to be a key credit strength. However, its caa1 BCA also
captures: (1) the high level of credit risks, driven by its significant and rising exposure to
the Pakistan sovereign through holdings of government securities and government-related
loans (at around 10.2x its common equity tier 1 (CET1) capital as of December 2016),
which links the bank's creditworthiness to that of the government and an NPL ratio of
16.7% as of March 2017; (2) modest capital buffers in light of these high exposures - with
adjusted 2016 CET1 ratio of 6.4%; and (3) weaker than peers profitability. However,
sustained progress on structural reforms on the sovereign side should support lending
growth going forward.

1.3.1Current Performance Table

PERFORMANCE 2017

Total Assets 2,369,885

Deposits 1,727,102
Advances – net 739,772
Investment – net 1,295,720
Capital & Reserves 175,382
Capital Adequacy Ratios 15.95%
Pre-Tax Profit 35,599
After-Tax Profit 23,028
Earnings Per Share (Rs.) 10.82
Break-up Value per Share (Rs.) 82
Number of Branches 1,519
Number of Employees 15,616
CHAPTER - 2

Operations of the Organization

Brief introduction of NBP Gulpur Branch Kotli AJK

NBP have multiple branches throughout Pakistan and Azad Jammu & Kashmir so I did my
internship in the NBP Gulpur Branch Kotli AJK. This branch provides all the financial
facilities to all the residence of that area. Like the other branches of NBP it also provides
the deposit facilities and advancing loans to its loyal customers. It also provides the
remittances, online fund transfers and Cheque clearance facilities and have approximately
more than 3400 Account holders. In the staff of this branch 7 members includes Manager,
cashiers and non-managerial staff.

2.1 Introduction of the Department

I have worked in the NBP as an internee in the NBP Gulpur Branch Kotli AJK during my
internship I worked in the operation department. Operation department is the major
department in the retail banking it includes all the other sub departments that are Deposits,
Remittances, Cash and Govt. Collection department.

Functions of the Department

Departmentalization is arranging the activities into meaningful groups. It distributes the

workload and increases efficiency and effectiveness. Departmentalization can be done on
various bases for example, departmentalization for customers, by function or by location.

National bank of Pakistan, NBP Gulpur Branch Kotli AJK, consists of various departments
based on its different functions. So, it can be said that the basis for departmentalization at
NBP is purely functional.
 Departments of NBP Gulpur Branch Kotli AJK

Manager

Deposite Remittances Cash Government

Department Department Department Department

2.1.1Deposits Department

This department is responsible for the accounts opening, accounts closing and answering
customers’ queries regarding their accounts, checkbook issuance etc. Lockers are also
under the supervision of this department.

2.1.1.1Current Account
A current account is a running account, which is continuously in operation. NBP current
account allows customers to deposit and withdraw cash at their own convenience. The
customer can withdraw the current deposits anytime, without any previous notice to the
bank. The bank must honor the Cheques to the extent of credit balance in the account. No
profit/interest is paid to the customer on these deposits, but the customer is required to
maintain a minimum balance in the account. The initial amount required for opening of
such an account is Rs5,000.

The current account is opened and operated by traders, business companies, public service
bodies, industrialists etc.

2.1.1.2PLS Saving Account

Saving deposits or profit and loss sharing (PLS) are those accounts on which bank offers a
relatively lower rate of interest. PLS saving account can be opened with an initial deposit
of not less than Rs.500.

PLS Saving Account may be opened in the name of an individual or jointly in the name of
two or more persons. Charitable institutions, companies, Associations, Societies,
Educational institutions, firms etc., may also open these accounts. Minors and illiterates
are also eligible for opening saving accounts. However illiterate customer must present
themselves in person for withdrawals. The bank determines the rate of profit or loss on
PLS saving account.

Opening of an Account with the Bank

Account opening has the following requirements:

1. Formal Request

The person desirous of opening an account is required to fill an “Account opening form”.
It is a formal request by the customer to the bank to allow him to open and operate the
account. The form contains information about the customer i.e. his name, address,
business/profession, contact number etc.

2. Obtaining Introduction

Before opening an account, the bank obtains introduction of the customer from an old
customer.

3. Specimen Signature

The bank takes specimen signature of the customer on the “signature book” or on a card.
Signature card is used for the verification of drawer’s signature on the Cheques.

4. Minimum Initial Deposit

The current account can be opened with minimum of Rs. 5,000 and PLS Saving Account
with minimum of Rs. 500.

5. Operating the Account

Bank provides pay-in-slip book, Cheque book and passbook to the customer for operating
the account.

Accounts Terms and Conditions

Against the submission of the bank’s prescribed application form, duly introduced in the
manner provided and on supply of documents required, the account is made fully
functional under certain conditions. In case of account on PLS basis, bank invest the
amount in any manner it considers under PLS system.

1 Deposits

All money to be deposited to the credit of an account is accompanied by a pay-in-slip

showing the name and number of account to be credited. Putting Bank’s stamp under the
signatures of two bank officers on the pay-in-slip then authenticates the entry.

2 Withdrawals

Withdrawals from the account can be made only by means of Cheques supplied by the
bank. Cheques should be signed according to the specimen signature. The drawer under his
full signature must authenticate any alteration in the instrument.

3 Statement of account

Account statement is provided to the customer by the bank. In these statements, the bank
assures that all debit entries are correct. In case of error, the bank passes an adjusting entry
to rectify the error.

4 Closure of account

While closing the account, the account holder returns the unused Cheques and passbook to
the bank. The customer also withdraws the credit balance of the account (if any).
5Issuance of Cheque book

Before issuing a new Cheque book, the bank is required to give a requisition slip to the
customer. The customer put his signature on the requisition slip. After verifying the
signature, the cost of Cheque book is charged. The account number of the customer is
written on the Cheque book as well as in a Cheque book register.

2.1.2Remittances Department

This department is responsible for inward and outward remittances through demand draft
(DD), telegraphic transfer (TT) or Cheque collection. It also provides account statements to
the customers and answering their queries regarding their accounts.

At NBP Gulpur Branch Kotli AJK, remittances are made in the following manners.

Telegraphic transfer (T.T)

Mail Transfer (M.T)

Demand Draft (D.D)/Payment Order

Cheque collection

Duplicate Account Statements

Telegraphic transfer
Bank use swift and telexes for telegraphic transfer. These both modes are the same. Swift
is an improved mode of funds transfer Outward Remittances. When the bank sends a
telegram etc. to another bank (concerned branch) for payment to the customer, it is called
outward remittance. The sender is required to apply through a form in which he will give
all the necessary details about the sender and beneficiary. The signature of the customer is
verified. The details regarding documents attached and exchange control regulations are
scrutinized. Telexes option and transaction number is recorded on the source document.
This source document is then forwarded for verification. No instrument is given to the
customer. Customer can receive the T.T receipt (advice) at the end of day and document is
credited to the beneficiary’s account.

1. Inward Remittances

When T.T through telexes etc. is drawn on NBP branch, it is called inward remittance.
Message is received from Telex department. The concerned officer duly checks SWIFT
authentication and purpose of remittance if it is received from abroad. Bank charges
withholding tax and commission according to the rates specified in the schedule of bank
charges.

2. Mail Transfer

For mail transfer the same procedure of application and cash depositing is used. The
official of the remittance department records the transactions, vouchers etc. and sends
advises through mail. NBP charges a fee for mail from the applicant. No excise duty is
charged on M.T.

3. Demand Draft (DD)/ Payment Order

“A bank draft is an order drawn by one branch of the bank to another of the same bank to
pay a certain sum of money on demand or to the person named there on”.

It bears the signature of the authorized officer with his code number. The only difference
between the Demand Draft and Pay order is that pay order is drawn on local branches,
while Demand Draft is for outstation transaction.

i. Outward Remittances

When NBP Gulpur draws DD on another branch, it is called outward remittance. Request
is received from the customer for the issuance of DD against debit to his account. The
customer pays charges on the bank counter, from where he is given a receipt and in
accordance with this receipt, he is issued a demand draft. Customer’s signature is also
verified and relevant document is attached as per exchange control regulation. The
customer can cancel DD or can stop payment by giving instruction to its bank.

ii. Inward Remittances

When DD is drawn on NBP branch, it is called inward remittance. DD is received from

customer on counter for the credit to his account. Signatures of the customer are then
verified and details regarding amount’s validity or any stop payment instructions are
scrutinized.

4. Cheque Collection

“A Cheque may be defined as a written order of a depositor upon a bank to pay to or to the
order of a designated party or to a bearer, a specified sum of money on demand.”
Cheque is received from the customer by the bank and branch-crossing stamp on the face
of the Cheque is checked. Cheque is received along with deposit slip.

5. Clearing of Cheques

Clearing of Cheques is made through SC (short credit), LSC (Local short credit) in
clearing house.

i. SC (Short Credit)

SC is the short credit, which consists of the Cheque outside the district. These Cheques are
sent in SC outside the district for clearance. Once they are cleared our bank charge a
certain amount of money spent on the process from the customer.

ii. LSC (Local Short Credit)

LSC is the short credit, which consists of the Cheques inside the district. Separate register
is maintained for it. Local branches for clearance send these Cheques for clearance. Bank
has no charges on the process from the customer.

6. Duplicate Account Statements

If the customer has not received his account statement due to any reason, he can get a
duplicate account statement. Request is received from the customer for the issuance of
duplicate statement and signatures are verified. Statement is then printed and delivered to
the customer.
2.1.3Cash Department

The head of this department is an accountant. All the cash is given with fixed amount in
the morning, from which they can make payments. At the cash counter, local as well as
foreign currency receipts and payments are handled. Cheques are received and presented
for transfer or collection. All the money is kept in the strong room. Cash handling is very
risky job; therefore, only authorized person can enter cash department.

Cash limit

Each Branch is authorized in writing by the Bank’s central office the maximum
cash holding limits applicable to them individually. Any excesses over the authorized cash
holding limits must be advised to the Central Office immediately by fax/telex or over
telephone.

Cash receipts.

The first function of CD department is to collect cash from the customer. There is a
prescribed procedure for handling this task. Customer, first, has to fill in a deposit slip. The
deposit slip has two portions. One is for cash department and other is for the customer. On
the cash slip, the depositor has to write the date, the amount in words and figures, the name
and bank account number of the person in whose account he has to deposit the cash, and
then his signatures.

This voucher/slip is passed on to the receiving cashier along with the cash. After
receiving the cash, the cashier writes the denomination of the cash on the back side of the
slip, totals it, tallies the two totals, and then puts his signature and the stamp of ‘Cash
receipts’ the slip, and passes counterpart of the slip to the customer. After that, the
receiving cashier makes entry in the computer. He enters the account number in the
computer and the balance of the account appears on the screen. Because a deposit slip is a
credit voucher, therefore, the amount is credited to the account and the balance of the
account increases. Computer generates an entry number, which is called the Transaction
number. The cashier writes that number on the deposit slip, encircles it and places his
initials on the slip. After that he records the transaction in his book manually. Then the
voucher along with the book is passed on to the person in charge of the department.

Cash payments to customers

Cheques which are presented on Bank counter must be checked in the following way.

1) Date.

2) Signature of Drawer.

3) Signature of Payee.

4) Whether Bearer has cancelled.

5) Whether Payee account duly is there.

If condition 4 & 5 exist then check the signature of Drawer.

6) Match the figure and wordily amount of cheque.

When all above matters are satisfied then come to the Token register and cheque

1) Token number.

2) Cheque number.

3) Amount of Cheque.

4) Particulars.

Two stamps are put on cheque.

a) Cash Payment (on the face of the cheque)

b) Stamp for Token (on the back of the cheque)

On stamp which is put for token their details are as follows:

 Token number.
 Time of giving token to client.
 Signature of token giver.
Petty Cash

To meet the day to day sundry expenses of the branch, the branch Managers

Using their discretion may draw appropriate amounts to the debit of ‘Advances
Against ‘Petty cash Account’ held with the Main Cashier and recorded in Petty Cash
Register. These expenses would normally relate broadly to three types of expenses.
Conveyance, entertainment, and Miscellaneous Expenses Disbursement out of Petty cash
are made against Petty cash Memos duly authorized by the Branch Manager. At end of
counter hours paid Petty cash Memos is totaled-up for each three types of expenses and the
totals of each type of expense recorded in Petty Cash Register. At the end of the month,
total expenses are recorded in Petty Cash Register. At the end of the month, total expenses
are credited to Advance Against Petty Cash Account ensuring that the balance there in is
brought down to Nil.

Maintenance of appropriate cash reserve

Another key function of this department is to maintain an appropriate amount of

cash reserve to fulfill the customer’s demand for cash promptly whenever they need it. If a
customer comes to the bank for drawing cash and the bank tells him that there is no cash
available that time, then the confidence of the customer in the bank will shatter. Bank
manages it for emergencies. It also depends on nature of transaction. The bank takes the
amount from the SBP or by other banks due to agency arrangements.

Monitoring the errors through ICC (Internal Control of Cash)

The department applies the dual checking system to correct the errors having two levels:

1. One being the entry level

2. Other is authentication level

There is very little chance of any mistake or error. There may be other reasons for the cash
shortage such as frauds, but due to good control and effective cash management, it rarely
happens that the cash is found short.

2.1.4Govt. Collection Department

Most of the accounts are of armed forces personals, Govt. and private institutions but it
also has civilian accounts. The pension and salary to Air Force, Army and civilians is
given through Govt. Department. The record of the account is also maintained in this
department. It also collects the utility bills, taxes and license fee etc.

2.2Products & Services of National Bank of Pakistan

National Bank of Pakistan provides the following services to its customers and clients;

2.2.1Products of NBP:

2.2.1.1NBP ADVANCE SALARY:

Advance Salary Scheme/Plan:

NBP Advance Salary is a convenient finance facility, 15 months’ salary in advance

to Government and Semi Government employees repayable in maximum 60 months equal
installments. The main highlight of this finance is that it requires no personal guarantee, no
Insurance premium, Containing a shortest documentation and procedure easy and fast
disbursement. National Bank of Pakistan, advance salary facility is available for permanent
employees of:

 Federal and Provincial Governments

 Semi Government, Autonomous, semi-Autonomous
 Local Bodies, Government Corporations and other corporation and
organizations approved by National Bank of Pakistan.
Important Features:

 Those who qualify for scheme should have

 Three years of service age remaining
 Salary account at national bank.
 15-month salaries in advance (Certain condition apply)
 Minimum documentation required
 Affordable installment from 1-60 months.
 No processing charges: no collaterals, no guarantees,
 No Insurance, no hidden cost,
 Mark-up charged at 11% per annum on reducing balance Method.

2.2.1.2NBP Cash in Gold:

Finance facility against Gold for needy person on lowest markup rate for one year,
having no maximum limit of cash Easy and fast disbursement of finance. National Bank of
Pakistan offers its customer NBP Cash in Gold scheme to avail the facility of loan against
their gold items. With Nap’s Cash in Gold, you can meet your need for ready cash against
your idle gold jewelry.

Features:

o Main features of NBP Cash in Gold are as under:

o Lowest mark-up in the market at only 11%
o Facility of Rs.5000 against each 10 grams of gold.
o No maximum limit of cash.
o Repayable after one year.
o Roll over facility.
o Only gold ornaments acceptable.
o Weight and quality of gold to be determined by NBP
o No penalty for early repayment.

3.2 2.2.2Services

National Bank of Pakistan offers many kinds of services to their customers. The

most important services provided by National Bank of Pakistan are as under

1. Cash link:
2. Money Transfer Services
 3. Collection of Electricity Bills
4. Government Receipt and Payments

2.2.2.1Cash Link:

 Automatic Teller Machine (ATM)

Recently ATM is launched by National Bank of Pakistan. ATM is the machine for
people and customer that provides link to the bank 24 hours a day. Through an ATM one
can operate his bank account at any time. And he can draw money from every online bank
in Pakistan.

 ATM Card:
An ATM Card is the plastic card issued by the bank to the customer for the purpose
of accessing the account after the bank fining round the clock.

2.2.2.2Money Transfer Services:

The National Bank of Pakistan performs the services of money transfer to their
customers in easy terms and conditions. The National Bank of Pakistan has introduced a
western Union Money Transfer facility for the customer.

2.2.2.3Collection of Electricity Bills:

 National Bank of Pakistan also collects electricity bills from the people on behalf of
the electricity department. The bank will charge Rs.2 per bills as commission from the
concerned department. After the bank time has been closed the bank will prepare cash
scroll and send it to the concerned department.

2.2..2.4Government Receipts and Payments:

The National Bank of Pakistan also received the Government receipts in the shape
of tax, token and Chelan etc.The National Bank of Pakistan provides the facilities to the
retied Government .servant in the form of the payment of pension.
CHAPTER – 3

FINANCIAL ANALYSIS

Financial Analysis

Financial analysis is an evaluation of a firm’s past financial performance and its prospects
for the future. It consists of applying analytical tools and other relevant data to obtain
useful information. The financial statement with the attached schedules and Directors
report on past performance and prospects give compact information. The interested parties
need to interpret this information about performance of the company using financial tools.
The main purpose of financial analysis is to give a clear picture of the financial position by
studying the relationship and comparisons between the items in the statement. Keeping in
view its importance, in addition the banking sector indicators like deposit and Advances
positions, the investments and Advances to Total Assets have been calculated and
analyzed.

Blance Sheet(2016-17)
Assets & Liablities Rupees in”000”

2016 2017

Cash and balances with

treasury and other banks 159,836 159,765
Balances with other banks 13,828 26,404
Lending to financial
institutions 121,709 26,916
Investments – net 897,131 1,295,720
Advances – net 667,389 739,772
Operating Fixed Assets 32,901 32,752
Deferred Tax Assets – net 5,136 7,317
Other Assets 77,775 81,240
Total Assets 1,975,706 2,369,885
LIABILITES
Bills payable 10,187 13,195
Borrowings 44,864 360,106
Deposits and other
accounts 1,657,312 1,727,102
Sub-ordinated loans - -
Liabilities against Assets
subject to Finance Lease 26 15
Deferred tax liabilities - -
Other liabilities 86,584 94,086
Total Liabilities 1,798,973 2,194,503

Net Assets 176,733 175,382

Profit & Loss Account(2016-17)

Rupees In
“000”

2016 2017

Mark-up / Return /
Interest earned 114,403 123,073
Mark-up / Return /
Interest expensed 59,578 68,820
Net Mark-up / Interest
income 54,824 54,253
Fee, Commission,
Brokerage and Exchange
income 17,013 19,026
 Capital gain & Dividend
income 11,405 10,301
Other income 1,549 1,740
Non-interest income 29,967 31,066
Gross income 84,791 85,319
Operating Expenses 47,253 48,528
Profit before Provisions 37,539 36,791
Provisions 397 1,192
Profit before Taxation 37,141 35,599
Taxation 14,389 12,571
Profit after Taxation 22,752 23,028

3.1Horizantal Analysis:
Is a financial statement analysis technique that shows
changes in the amounts of corresponding financial statement items over a period of time. It
is a useful tool to evaluate the trend situations.
3.1.1 Horizantal Analysis Blance Sheet For The Year Ended December(2013-17)

ASSETS 2013 % 2014 % 2015 % 2016 % 2017 %

Cash and balances
with treasury 157,93 12 97,97 - 150,90 54 159,83 159,76
banks 0 % 2 38% 0 % 6 6% 5 0%
Balances
with other 17,45 12,10 - 20,12 66 13,82 - 91
banks 8 1% 8 31% 8 % 8 31% 26,404 %
Lending to
financial 51,93 111,78 115 - 121,70 1482 -
institutions 9 4% 9 % 7,695 93% 9 % 26,916 78%
Investments 397,95 29 561,76 41 829,24 48 897,13 1,295,7 44
– net 9 % 4 % 6 % 1 8% 20 %
Advances - 615,42 45 626,70 578,12 - 667,38 15 739,77 11
net 0 % 4 2% 2 8% 9 % 2 %
Operating 32,70 31,79 31,70 32,90
Fixed Assets 2 2% 6 -3% 6 0% 1 4% 32,752 0%
Deferred tax 10,95 - - - 42
Assets - net 5 1% 9,878 10% 9,669 2% 5,136 47% 7,317 %
Other Assets 80,56 6% 91,04 13 78,89 - 77,77 -1% 81,240 4%
 4 5 % 5 13% 5
1,364,9 100 1,543,0 13 1,706,3 11 1,975,7 16 2,369,8 20
Total Assets 26 % 54 % 61 % 06 % 85 %
LIABILITE
S
13,89 11,01 - - 10,18 11 30
Bills payable 5 1% 2 21% 9,172 17% 7 % 13,195 %
22,23 37,54 69 21,91 - 44,86 105 360,10 703
Borrowings 9 2% 1 % 1 42% 4 % 6 %
Deposits and
other 1,101,1 81 1,233,5 12 1,431,0 16 1,657,3 16 1,727,1
accounts 39 % 25 % 37 % 12 % 02 4%
Sub-
ordinated
loans - 0% - 0% - 0% - 0% - 0%
Liabilities against
assets subject to - 181 - -
Finance Lease 24 0% 13 47% 36 % 26 28% 15 43%
Deferred tax
liabilities - 0% - 0% - 0% - 0% - 0%
Other 71,34 82,63 16 75,85 - 86,58 14
liabilities 3 5% 4 % 5 8% 4 % 94,086 9%
Total 1,208,6 89 1,364,7 13 1,538,0 13 1,798,9 17 2,194,5 22
Liabilities 39 % 25 % 10 % 73 % 03 %
NET 156,28 11 178,32 14 168,35 - 176,73 175,38 -
ASSETS 7 % 9 % 1 6% 3 5% 2 1%
Represented
by as below: -
21,27
5 2%
31,53 21,27 21,27 21,27
Share capital 9 2% 5 0% 5 0% 5 0% 21,275 0%
48,04 32,07 45,58 42 46,80
Reserves 6 4% 4 2% 1 % 0 3% 50,357 8%
Unappropriat 100,86 57,00 19 49,15 - 51,93
ed profit 0 7% 7 % 6 14% 9 6% 54,061 4%
55,42 110,35 116,01 120,01 125,69
Equity 7 4% 6 9% 1 5% 5 3% 3 5%
Surplus on
revaluation of 156,28 11 67,97 23 52,34 - 56,71 -
assets 7 % 3 % 0 23% 8 8% 49,689 12%
71,34 178,32 14 168,35 - 176,73 175,38 -
3 5% 9 % 1 6% 3 5% 2 1%
3.1.2Horizantal Analysis of Incom Statement(2013-2017)

Financial RUPEES IN “000”

Performance

2013 % 2014 % 2015 % 2016 % 2017 %

Mark-up /
Return /
Interest 99,02 114,17 15 113,66 114,40 123,07
earned 8 100% 4 % 2 0% 3 1% 3 8%
Mark-up /
Return /
Interest 60,82 68,37 12 - 59,57 16
expensed 3 61% 0 % 59,941 12% 8 -1% 68,820 %
Net Mark-
up /
Interest 38,20 39 45,80 20 17 54,82 -
income 5 % 4 % 53,721 % 4 2% 54,253 1%
Fee,commissi 15,39 16% 15,68 2% 17,043 9% 17,01 0% 19,026 12
on and 4 7 3 %
exchange
income
Capital
gains &
dividend 11,10 61 11,40 - -
income 6,908 7% 3 % 15,860 43% 5 28% 10,301 10%
Other 10 - - 12
income 3,268 3% 3,587 % 2,081 42% 1,549 26% 1,740 %
Non-
interest 25,57 26 30,37 19 15 29,96 -
income 0 % 7 % 34,983 % 7 14% 31,066 4%
Gross 63,77 64 76,18 19 16 84,79
income 4 % 1 % 88,704 % 1 -4% 85,319 1%
Operating 36,29 41,70 15 47,25
expenses 5 37% 3 % 42,193 1% 3 12% 48,528 3%
Profit
before
Provision 27,48 28 34,47 25 35 37,53 - -
s 0 % 8 % 46,511 % 9 19% 36,791 2%
20,40 12,47 - - 200
Provisions 1 21% 8 39% 13,296 7% 397 97% 1,192 %
Pre-tax 22,00 211 51 37,14 12 -
Profit 7,078 7% 1 % 33,216 % 1 % 35,599 4%
 342 14,38 -
Taxation 1,578 2% 6,973 % 13,997 101% 9 3% 12,571 13%

3.2Vertical Analysis:
Vertical analysis is a method of financial statement analysis in which each line item is
listed as a percentage of a base figure within the statement.

3.2.1Vertical Analysis of Blance Sheet For The Year Ended December(2016-2017)

2016 % 2017 %

ASSETS
Cash and balances
with treasury banks 159,765 7% 159,836 8%
Balances with
other banks 26,404 1% 13,828 1%
Lending to
financial
institutions 26,916 1% 121,709 6%
Investments –
net 1,295,720 55% 897,131 45%
Advances - net 739,772 31% 667,389 34%
Operating
Fixed assets 32,752 1% 32,901 2%
Deferred tax
Assets - net 7,317 0% 5,136 0%
Other Assets 81,240 3% 77,775 4%
Total Assets 2,369,885 100% 1,975,706 100%
LIABILITES
Bills payable 13,195 1% 10,187 1%
Borrowings 360,106 15% 44,864 2%
Deposits and
other accounts 1,727,102 73% 1,657,312 84%
Sub-ordinated
loans - 0% - 0%
Liabilities against
assets subject to
Finance Lease 15 0% 26 0%
Deferred tax
liabilities - 0% - 0%
Other liabilities 94,086 4% 86,584 4%
Total
Liabilities 2,194,503 93% 1,798,973 91%

NET ASSETS 175,382 7% 176,733 9%

Represented
by as below:
Share capital 21,275 1% 21,275 1%
Reserves 50,357 2% 46,800 2%
Unappropriated
profit 54,061 2% 51,939 3%
Equity 125,693 5% 120,015 6%
Surplus on
revaluation of
assets 49,689 2% 56,718 3%
175,382 7% 176,733 9%

Interpretation:

i. The change of Share of Cash and balances with treasury banks in total assets is 7%
and there is any change in balance with other bank in 2017 and decline by 8%

ii. Their share of lending to financial institution is 1%% of total assets in2016 but
increase in2017 by 6 %. The share of investment in total assets is 55% in 2016 and
there is an decreasing trend in 2017.

iii. Advances are 31% of total assets in 2016 but it is a increasing trend in 2017 which is
34%. There is change in the other operating assets from 1 to 2. There is a 0%
change in other assets.
 iv. The share of bill payable in total liabilities is 1% in 2016 and 1 % in 2017.
Borrowing form financial institution is 0% in 2016 but in 2017 to 0%. There is an
increasing trend in deposits with other banks.

v. Other liabilities are remains same for both years.

vi. There is decline in share capital, surplus on revaluation and un-appropriated profit.
There is an increasing trend in reserves of asset.

3.2.2Vertical Analysis ofIncome Statement for the year ended December(2016-2017)

2016 2017

Mark-up / Return
/ Interest earned 123,073 100% 114,403 100%
Mark-up / Return /
Interest expensed 68,820 56% 59,578 52%
Net Mark-up /
Interest income 54,253 44% 54,824 48%
Fee, commission and
exchange income 19,026 15% 17,013 15%
Capital gains &
dividend income 10,301 8% 11,405 10%
Other income 1,740 1% 1,549 1%
Non-interest
income 31,066 25% 29,967 26%
Gross income 85,319 69% 84,791 74%
Operating
expenses 48,528 39% 47,253 41%
Profit before
Provisions 36,791 30% 37,539 33%
Provisions 1,192 1% 397 0%
Pre-tax Profit 35,599 29% 37,141 32%
Taxation 12,571 10% 14,389 13%
After-tax
profit 23,028 19% 22,752 20%

Interpretation

The two years’ analysis from 2016-2017 showing the increase and decrease of income
statement within its all items. Following are the up down movement of vertical analysis of
income statement of two years where 2016 is the base year.

i. There is decreasing trend in mark up interest expense, and the share of net markup
income consistently increases in 2017.

ii. The share of dividend income in interest income is consistently increased.

iii. The share of Total non-mark-up/interest income gradually increased.

iv. Total non-mark up interest/expanse remains constant in both years.

v. The share of Profit before tax in interest income is consistently increase in both
years.
The share of profit after tax in interest income gradually increase respectively.

3.2Ratio Analysis Of NBP

A ratio is a quantitative relation between two magnitudes of the same kind. In ratio
analysis, the financial ratios of the firm are compared to that of its competitors. This
comparison allows the firm to detect major operating differences. Another very popular
method of ratio analysis is to compare the firm’s financial ratios to industry averages.
There is no doubt that financial ratios are a useful guide for managerial decision-making.
Let us now calculate some of the key financial ratios of NBP for the years 2016-2017, and
try to understand these ratios. These ratios are calculated from the “Balance Sheet” and
“Profit & Loss Account” of NBP, 2016-2017.

3.2.1Liquidity Ratios & Solvency Ratios

3.2.1.1Cash and Balances with Banks to Total Assets

= Cash and Balances with Banks/ Total Assets ∗ 100

2016 174481403/1,981,416,562*100 = 8.80%

2017 107073014/ 2,376,016,409 *100 =7.87%

Interpretation:
This ratio expresses the 2017(7.87) & in 2016(8.80) of total assets available
in the form of highly liquid assets.

3.2.1.2Investment and Total Assets

= Total Investment/ Total Assets ∗ 100

2016 896,280,784/1,981,416,562*100 = 45.23%

2017 1,296,537,064/2,376,016,409 *100 = 54.57%

Interpretation:
The ratio between Investment and total assets shows investment activity
with reference to its total assets. It indicates the2017(54.57%) & in 2016(45.23%) portion
of total assets used for investment in various venues

3.2.1.3Advances and Total Assets

= Advances (Net) Total Assets*100

2016 34,058,289/ 1,981,416,562*100 = 33.76%

2017 33,822,237/2,376,016,409 *100 = 31.16%

 Interpretation:
This ratio expresses the2017(31.16%) & in 2016(33.76%) relationship of
advances (net) to total assets.

3.2.1.4Total Liabilities to Total Assets

= Total liabilities Total Assets ∗ 100

2016 1,801,277,896/ 1,981,416,562*100=90.90%

2017 2,196,340,695/ 2,376,016,409*100=92.43%

Interpretation:
The ratio shows the2017(92.43%) & in 2016(90.90%) proportion of banks
assets, which are financed through debt.

3.2.1.5Current Ratio

= Current Assets Current Liabilities

2016 1859893/1712363=1.08

2017 2248577/2100403=1.07

Interpretation:
This ratio shows 2017(1.07) & in 2016(1.08) times current assets
cover current liabilities and the strength of the company to pay immediate liabilities.
3.2.1.6Gross Advances to Deposits
= Gross Advances Deposits *100

2016 783,555,074/1,657,132,405*100=47.28%

2017 858,207,777/1727,059,246*100=49.46%

Interpretation:
The ratio expresses the percentage of gross advances in2017(49.46%) & in
2016(47.28%) to deposits and expresses the utilization of deposits in the core business of a
bank, i.e., intermediation.

3.2.2Efficiency Ratio/Profitability Ratio

The profitability or financial performance is mainly summarised in the statement of profit
and loss. Profitability ratios are calculated to analyse the earning capacity of the business
which is the outcome of utilisation of resources employed in the business. There is a close
relationship between the profit and the efficiency with which the resources employed in the
business are utilised. The various ratios which are commonly used to analyse the
profitability of the business are:

3.2.2.1Spread Ratio
= Net Markup/Interest Income Markup/Interest Earned*100

2016 55,434,478 /115,028,828 = 48.19%

2017 54,604,280/123,415,023=44.24%
Interpretation:
It is the2017(44.24%) & in 2016(48.19%) amount of Net Markup/Interest
Income divided by Markup/Interest Earned .

3.2.2.2 Return on Equity (ROE)

= Net Profit after Tax/Total Shareholders′ Equity*100

2016 23,087,260/ 123101567*100= 18.75%

2017 23,345,862/129231552*100= 18.07%

Interpretation:
Total Shareholders’ Equity (Pakistani Banks) = Share Capital + Reserves +
Un-appropriated Profit (Loss) Total Shareholders’ Equity (Foreign Banks) =H.O Capital
Account + Reserves +Unremitted Profit

This ratio expresses the2017(18.07%) & in 2016(18.75%) return on shareholders’ equity.

ROE is a direct measure of returns to the shareholders. It is calculated as a percentage of
the net profit after tax to total Shareholders’ equity.

3.2.2.3Return on Assets (ROA)

= Net Profit after Tax/Total Assets *100

2016 23,087,260/ 1,981,416,562 *100= 1.17%

2017 23,345,862/ 2,376,016,409*100= 0.98%

Interpretation:
This ratio expresses the2017(0.98%) & in 2016(1.17) capacity of earning
profit by a bank on its total assets employed in the business It is calculated as a percentage
of the net profit after tax to total Shareholders’ equity. It is also useful for whole financial
sector.

3.2.2.4 Non-Interest Income to Total Assets Ratio

= Total Non−Markup Income/ Total Assets ∗ 100

2016 31,032,139/1,981,416,562*100=1.56%

2017 32,115,231/2,376,016,409*100=1.35%

Interpretation:
Ratio on incomes earned other than mark-up e.g. capital gains, commission,
fee to total assets etc. This ratio expresses how much income is earned2017(1.35%) & in
2016(1.56%) other than mark-up through other functions of the bank by employing total
assets. sets. It is useful for whole financial sector.

3.2.2.5Interest Ratio
= Interest Paid/ Interest Earned *100

2016 59,594,350/115028828*100=51.80%

2017 68,810,743/123415023*100=55.75%
Interpretation:
This ratio expresses the payment of interest2017(55.75%) & in
2016(51.80%) mainly to depositors. The lower the ratio, the less the company is burdened
by debt expenses.

3.2.2.6Net Interest Income after Provision to Total Assets

= Net Interest Income after Provision Total Assets ∗ 100

2016 56,402,674/ 1,981,416,562*100=2.84%

2017 55,936,582/2,376,016,409*100=2.25%

Interpretation:
This is the ratio between interests earned less provision to total assets
in2017(2.25%) & in 2016(2.84%)

3.2.3Market Ratio

3.2.3.1Earnings per Share (EPS)

= Net Profit after Tax/ No.of Ordinary Shares

2016 23,087,260 / 2,127,513*100= 10.8%

2017 23,345,862/ 2,127,513*100= 10.97%

Interpretation:
EPS is the ratio between net profit after tax to number of shares outstanding
at the end of the year as shown in balance sheet and its relevant notes to accounts. It is
useful for whole financial sector except for Modaraba Companies where certificates are
issued for raising capital.

3.3SWOT ANALYSIS

3.3.1Strengths of NBP:

National Bank of Pakistan NBP has some of its unmatched qualities that, which at length
makes it’s backing strengthened. Some of these points are as follows

The strengths of NBP are as follows:

NBP is one of the oldest banks of Pakistan; therefore, people have more confidence in the
bank.
1. The use of SWIFT and other computer technologies has made NBP to cope with the
pressure of rising competition.

2. Considered to be a ‘trustworthy’ and highly secured bank as it is also holds many

government accounts.

3. Convenience for armed forces personnel and government servants as all salaries &
pensions of such categories are serviced by National Bank of Pakistan NBP.

4. The Bank has an existing department of HRD.

5. Bank staff is given three bonuses every year, i.e. on Eid-ul-Fittre, Eid-ul-Azha and the
last one is given annually.

6. The Bank is having a very good compensation plan so the employees are motivated.

7. Through the introduction of new technologies and methodologies by the HRD section
NBP has been in the field of facilitating the poor in different ways. The introduction of
the new training and the development Programs upgrades the staff skills and the
motivational level.

3.3.2Weaknesses of the NBP:

Weaknesses, like strengths are a part of almost every organization. These weaknesses point
out the potential areas of improvements and make the organizational behavior intelligent.
A cumulative effort to overcome these flaws makes success possible.

During the internship period, the weaknesses that generally surfaced and were visible at
NBP are as below:

1. All its branches are not using tools of IT like computerization and ATM etc.
2. Employees lack training in the consumer dealing.

3. Absence of a well-planned marketing strategy to tap the vast market.

4. Standard of Customer services at NBP branches are well below the average level of
services offered by most local commercial banks.

5. The HR department is less dynamic than other contemporary banks e.g. Habib Bank,
Muslim Commercial Ban MCB and United Bank Limited UBL etc.

6. Many branches are being closed every year, due to which employees working in less
profitable branches feel their jobs insecure.

7. Employees are lacking motivation and fear of downsizing.

8. Training is not the only tool to upgrade the employee’s motivation and the inefficiency
of the work force. There can some other reason for the employee’s dissatisfaction i.e.
promotion, salary increment or the burden of the work (Exposure trips), so it one of the
management tool.

9. Employees have not access to upper management.

10. Performance appraisal is generally considered a motivational as well as evaluative tool.

At National Bank of Pakistan NBP its use is normally made in an exploiting fashion.
Evaluation is not made based on the achievements or hardworking. Unfortunately, it is
made based on

11. Problems arising from Employees Union.

12. Non-application of modern technology which has rendered the bank uncompetitive to
commercial banks which are presently using the latest technology.
13. The outlook of an organization plays important role in portraying its image to
customers. Similarly, the image of the sections also matters because a section makes a
structure of the organizations but unfortunately the outlook of buildings and its
departments are very poor.

3.3.3Opportunities of the NBP:

“Success, more than anything is all about converting into opportunity what everybody else
considers danger” Opportunities, when exploited properly reap profits and earn success.
They are almost always a matter of time. They are to be sought, picked and made use of,
before anybody else gets up and do so. It’s just about being smart and accurate. National
Bank of Pakistan NBP and HRD section also have some opportunities it can utilize and
obtain good market position. Some of the opportunities are hinted below.

1. The bank should be completely computerized like other banks.

2. Employees should be sent for training and seminars to get advanced knowledge about
banking.

3. Customer feedback on various products and services could be of immense help to

NBP.

4. With the help of the latest technology and with such a large deposit base NBP could
become the no.1 bank in Pakistan. Therefore, the bank should be completely
computerized like other banks.
6.2.4 Threats of NBP:

Threats are the unseen, futuristic, probable events that can occur and prove dangerous in
consequences. Every organization is faced by some category of threats in its operations and
functions. Opening new outlets, altering existing policies, designing fresh marketing
strategies, bringing change in physical structure, almost every activity that an organization
do face threats, just like the benefits it seeks.

The National Bank of Pakistan NBP also faces some threats, which can just prove minor
assumed fears; as well as can become events with grave consequences. The prevailing
condition indicates the following as the possible threats.

1. Political interference is a very important factor, which can threaten the credibility and
foundation of any organization. Bank is through a commercial institution and it to be
free from any kind of political grudges but unfortunately this is not customary in
Pakistan.

2. The increased number of nationalized banks becoming privatized and foreign banks
operating in Pakistan is a major threat for NBP.

3. Unsatisfactory Human Resources as it is not observed properly.

4. The organization is facing a very crucial problem of a strong labor union. The
leadership of these associations are highly uncooperative in their attitude towards the
achievement of banks mission.
Lack of consistency of government policies often directly affects NBP and often destroys
the progress it has made in the past.
CHAPTER 4

MY INTERNSHIP RESPONSIBILITIES

AT NBP Gulpur Branch Kotli

I am pleased to thank the authorities of department of Business Administration who

provide me a great opportunity to work same practical tasks during my course of study.
Although it is not enough to know about banking operation in a limited duration of
internship but to have a practical market experience exposure is the basic thing to know
about because I believe that.

During my internship I learned things regarding my personal experience; it is a good

experience of learning to deal with different ‘types’ of customers, I worked in different
department like:

 Cash Department
 Deposit Department
 Remittance Department
 Clearing Department

Task Assigned to me

During eight weeks of internship at Gulpur Branch Kotli Branch , I was given plenty of
tasks to perform which enabled me to get command on day to day operation of banking.
On very first day, I was said to fill the deposit slips of those clients who could not fill them
properly. Deposit slips is comprised of number of columns to be filled in date, account
number, account title, description and amount is to be written in proper columns of the
slips and phone number. Most of the customers could not understand English language, so
in order to assist them bank staff fill the deposits clips of the clients, illiterate customers
also handover the cheques to staff members to fill in the amount and description. Cheque
books are issued by name printed on each leaf. Date and amount along with description is
required to be written I also filled the cheque of walk in customers. Whole first weak I
used to fill the deposit slips and cheques of the clients.

4.1Departments in which I worked

4.1.1Cash Department
After one weak, I moved to cash counter, the most risky task in banking. Two officers
were sitting in cash cabin I was said to sort a cash. Cash sorting rules to arrange of
currency notes. Notes of same values are arranged together to form a packet of hundred
notes. Old, soiled and notes with tap ware to separate to form the packet of soiled notes. In
order to count quickly notes counting machine was used in bank. In order to bind a packet
of hundred notes branch was using cash binding machine also. In order to check the fake
notes, NBP using UVL (Ultra Violet Lamp). I also learned to count the notes quickly in a
professional style of counting. I spent whole week in cash counter.

One third week, I was allowed to sit with teller and learnt how to post the debt and credit
transaction on the system. This was one the most interesting task for me. In order to log
into the system a special password and ID is required. Since I was sited with teller and see
how he is working and posting the vouchers such as cheques, cash deposit vouchers and
online fund transfer vouchers. Voucher posting is also very risky task and requires extra
care and attention while inserting the account number and amount in the system.
4.1.2Deposit Department
Account opening

After getting learning on voucher posting on system, I was given the task to fill up account
opening form of people who want to open bank account. It was very boring and lengthy
task and required extra time since a very fine detailed information was to be taken from
client to fill up the form. The client signatures are required on many places in the form.
Before opening an account the copy of CNIC is to be obtained from client in order to know
about exact name date of birth residential address of the client. The detailed information
about occupation, education, religion, gender, next of kin and source of income is to be
provided while completing the account opening form. After manually completing the
account form, the same information is updated in the system. Account opening form is
attached in specified file. The multiple purpose AOF is duly signed by account holder and
all the columns are correctly filled in.

 All the signatures of account holders on AOF are verified by branch authorized
persons. Branch verified their CNIC Numbers through online NADRA verisys
system provided by the NADRA.
 The AOF is signed by account holder personally before the manager and the
attested copy of CNIC compared with original record at attached with AOF.
  For illiterate persons/shaky who can’t signature, or having thumb impression must
provide with 2 recent photographs attested by BM/BOM by affixing ALT/ATI
stamp and attached on photograph with AOF and other on S.S card.

4.1.3Remittance Department
There are two types of Remittance:

Internal Remittance

Foreign Remittance

Internal Remittance

Internal remittance is to deal with DD’s, online banking, PO, BC and out station checques
etc. dealing with negotiable instruments needs extra care so that paying banker may not
find any suspicion in it. The customers visiting the branch for having different purpose.
Some needs DD, PO and banker Cheque, RTC and other may have to buy RTC or have to
transfer funds to different branches of Pakistan through NBP online system. I maze to see
that millions of funds transferred with in few minutes.

Foreign Remittance

In Pakistan inflow of foreign remittance is very high and banking sector grapping it by
proving reliable services quality services to customers. Before it remittance from abroad
was sent through “HUNDI” system which is very worst for the country as well as for
customers. Now government/SPB banned the Hundi system and encouraging banks. I
personally observed that MCB bank is providing best services in this regard.
4.1.4 Clearing Department
Clearing procedure is followed for the purpose of making and receiving payment of the
cheques or other instruments through clearing house. Every schedule bank is a member of
clearing house. Representative of bank collects the cheques from bank and received to the
clearing house. Clearing is sent daily by every bank through NIFT. If clearing cheques do
not return after 3 days, it means that is has made debited by the payee bank and credit entry
is made in drawee branch because may be trapped in financial crises in case of delay or
ineptness in repayment of these borrowing. Where

On fifth week of my internship, I was asked to sit with an officer dealing with clearing of
cheques from other banks. There are two types of clearing, inward and out ward clearing.
Inward clearing refers to cheques clearing from our branch by other banks of or other
branches of same bank. Clearing of cheques between and among different banks is carried
on by NIFT (National Institutional Facilitation Technologies). NIFT acts as a relay station
and plays the role of liasan between different banks to clear the cheques. I learned how to
maintain clearing register and how to post the transaction in the computer system. Where
NIFT is not available NBP is the clearing house.

4.2 New Knowledge Acquired

All the knowledge I acquired from my internship is new to me, because I had
never done internship before. Directly communicating with customers and
fulfilling their basic requirements was totally a new experience for me. I
learned how to communicate effectively and efficiently with customers.
Internship also improved my communication skills with different persons in
well manner.

Due to my internship program at NBP I learnt lot of knowledge about banking and
banking procedure. Internship allowed me to gain experience of working with a team in a
professional environment and helped me develop my own teamwork and interpersonal
skills which would make me a more rounded and attractive candidate for any employer.

Internship in NBP provided me a chance to observe various roles and jobs in the banking
sector, making professional networking contacts and a chance to gain "real world"
experience. The close support and guidance from our senior staff enabled me to utilize
most of my time with them and develop an edge that can take me to heights of success.

At the beginning banking job seems very tough for me but with the passage of time and
with the help of all branch staff it becomes easier to me in some extent. The best part of my
internship was to come across all sorts of customers every day and it was a pleasure to
assist them in professional manner every time. Our Manager strictly guided us to never let
a customer leave unsatisfied as customers are the key to success and failure of every
organization. I also enhanced my confidence level, communication skills i.e. public
speaking, Writing, interviewing customers regarding bank’s services and groom my
overall personality. I got the knowledge of account opening and learnt how to open the
account I learnt Cheque book issuance process.
4.3 Problem encountered at NBP Gulpur Branch Kotli
NBP is lacking of stuff. So there is a lot of work burden on the employees NBP bank
should provide sufficient stuff in every branch to reduce the burden of work.

As a student it is a very difficult task for me to sit in the branch from 9 am to 5 pm and
behave or work professionally so I discussed this matter with the BM and he gave some
relaxation to me.

Banking is a very technical and tough job so as a student it was very difficult for me to
learn it. BM was also remain the student of our university having such kind of experience
so he released my problems and personally helped me to learn banking. Computing skills
are also low, some executive are very efficient in computing skills but some are not totally
aware from this system. When operation manager is on leave branch faces problems
about ATM machine. Efficiency of employees is also low at this branch Where he assign
the result is zero. During my internship nobody was satisfy from his performance.
Sometimes he has done wrongly postings.

Resource are very needy, so there must be avoid to misuse the resources but in this branch
it is reverse case, there is very wrong use of the resources, employees does not take care of
resources and not used them in right direction. For example every person misuse
telephone service even guards they use it for personal matters. During the period of my
internship I found this problem as a biggest problem that, they are not very effective in
communication between themselves. They do not share the experience with each other and
do not care the other employee. If one employee has a problem, then he asked to other, but
he does not give clear solution to that problems. They are shows the facial expressions
against each other .They are talk against each other in front of me. So finally it is very
needy for a public services organization to keep atmosphere friendly among the
management and employees.

Some walk in customers were came into branch and ask me for different things he which I
have no knowledge about that. The sharp eyes of BM also remained on customers and they
come quickly to assist and help me as well as customers so my problem is solve before my
request

As this is not a paid internship and kind Branch Manager Zafar Tanver treated me as a staff
and facilitates me with tea, launch and etc. with staff.
CHAPTER -5

CONCLUSIONS AND RECOMMENDATION

5.1Conclusions
NBP is one of those organizations who is efficiently operating on their set procedures and
making profit. NBP fallow the guidelines of SBP in other words State Bank of Pakistan
provides policies to the banks operating in Pakistan and NBP is one of them.I worked in
the NBP Gulpur Branch Kotli AJK and during my internship I learn a lot about banking
sector and practically do different tasks e.g. Account opening, online funds transfer and
much more. Now I am quite capable to deal with customers.By concluding this report, I
will say that NBP is a very good organization for long term carrier because the staff is very
friendly with each other and respectful too.

5.2RECOMMENDATION

5.2.1Development of Managerial Leadership

In services industries like banks the need of managerial skill is much more important. It
makes positive contribution towards higher effective results. Without development of
managerial leadership, the effective utilization of the human resource will be impossible
NBP Gulpur Branch Kotli AJK should also focus on this area and should avoid
deficiencies in managerial leadership, by applying the modern styles of management.
5.2.2Basis for Promotion
A sizeable portion of the officers of NBP, are promoted in without test and interviews to
officer’s cadre. The promotion policy must be too tight and transparent that no one may
have the chance to be promoted on criteria other than the required qualification,
experience and performance.

5.2.3Management Changes on Merit

In NBP though very rare fresh recruitments are made, and the bank faces saturation in
personnel, now clipping will be more helpful. This downsizing will leave the bank with the
staff, to be retained on the basis of ultimate meritocracy with zero tolerance of
incompetence. Now in this remaining workforce, a cultural change right from the top
management down to the front line, that better suits to the present day needs of banking
environment could be included through proper discipline and training.

5.2.4 Needs of change in Recruitment Policy

It is important to say that the external level market is full of the required talent like
M.com, BBA, MBA etc. But on the country only graduation with simple subjects (e.g.
BA) is still the requisite qualification for officer’s cadre, which has already worked amply
in the devastation of NBP Gulpur Branch Kotli AJK. Therefore, the recruitment
qualification to the officer’s framework should be enhanced for simple graduation, to
professionally qualified preferably Masters in their respective fields.

5.2.5 Refresher Courses

The Human Resource Development of the bank should frequently conduct meaningful
refresher courses, seminars and workshops with a view to improve the knowledge of the
staff. Due to severe competition and technological developments, the banking business is
 experiencing rapid changes therefore the HRD should have arrangements for staff
trainings to cope with the new changes that may become threats for the interest of the
bank.

5.2.6 Computer Trainings

The present conventional and orthodox training programs need to be made more
comprehensive and reinforced with inclusion of computer training courses.

5.2.7Training with Clear Objectives

Training needs assessment is necessary so that only the relevant staff is sent for the
training courses.

5.2.8 Introduction of New Courses

The human recourses division of the bank should focus on the restoration of the corporate
image of the bank by floating programs such as, marketing excellence, courses on
corporate culture and others. Usually in businesses the wholesalers, retailers and other
intermediaries are finished by opening a network of the business own outlets. It works as
profit maximization devise. In my opinion the above two programs marketing excellence
and corporate culture, added with the best counter service and outdoor informal
relationship with the potential customers by the line managers will save the sum of
money spent on various media of advertisement.

5.2.9 Customers Orientation

Every entrepreneur if concerned about the success of his business, has to understand,
recognize, carefully and appropriately that his customer is “The King” of the business
system and the original spring of the business revenue. NBP should recognize its
 customers as the mainstream of the bank’s revenue. They need to be provided the
deserved respect, quality and in time service and to be politely dealt with.

5.2.10 Career Development

As a matter of personnel policy HRD of NBP should prepare a plan showing the future
growth potential of employees on the job performance and evaluation and it should be
made known to the employees. In this regard, employees should be given opportunities to
show their performances, which would help in their career development.

5.2.11 Professionalism
NBP there is a lack of professionalism at most of the levels. Employees feel
overburdened due to the shortage of staff. The bank should create new jobs to have
competent and professional persons for various posts, so increase in the number of staff
can raise the efficiency of the Bank.

5.2.12 Effective Chequing System

In our country, an effective chequing system is not prevailing. People prefer to receive
payment in hard cash rather than in the form of a cheque. This is mainly due to the fact
that in Azad Kashmir collection of cheques takes time. In addition, cheques are
dishonored mainly due to the reason there are insufficient fund in the drawer’s accounts.
If the collection of cheque procedure is speeded up and the account holders are made
bound be bank to write cheques only when they have funds in their accounts, an effective
chequing system can be developed in our country.
5.1.13Job rotation
There should be inter department transfer of employees, so that they should know about
all departments, in this way a proper coordination could be achieved. They must have
some basic information of other departments. There must be proper job rotation.