Internship Report on National Bank of Pakistan

Submitted by: Nabeel Ahmed

Registration # SP10!BA0"#
Super$ised by: !r% &afar I'bal
(his internship report is submitted in partial fulfillment of the
re'uirements for the degree of !aster of Business Administration
a)arded by the *+!SA(S Institute of Information (e,hnology-
Abbottabad%
.epartment of !anagement S,ien,es
*+!SA(S Institute of Information (e,hnology
Abbottabad
/une 0010

.epartment of !anagement S,ien,es
*+!SA(S Institute of Information (e,hnology
Abbottabad
Appro$al Sheet
Appro$al *ommittee
1% 12ternal 12aminer
Mr. ____________________________________________Signature______________
0% Super$isor
Mr. ___________________________________________Signature_______________
3% 4ead of .epartment
Mr. __________________________________________Signature________________

.edi,ated to
!y 5o$ely Parents
6 (ea,hers
(ATTACH INTERNSHIP CERTIFICATE ON THIS PAGE)
ABS(RA*(
In CIIT Abbottabad internship is the requirement of MBA degree program, where
students select different organiations to wor! with, in their areas of specialiation.
That is the reason I ha"e chose the #ational Ban! of $a!istan in order to learn how
operations are practicall% ta!e place in ban!s. This internship report highlights the
ma&or facts and operations of #ational Ban! of $a!istan and m% own internship of si'
wee!s at (hola (ehal branch . This report shall focus graduall% on all the points that
ma% be glanced from the table of contents page abo"e, and I would li!e to especiall%
point out those areas of focus in which I had most wor! to do, )f course* the pro&ects
details are included in this report which I did in #ational Ban!, able to help me a lot
to understand and learn about the situation of #ational Ban! +td. in $a!istan when
compared and contrasted against near competitors that it has face. The assignment,
responsibilities and tas! gi"en to me during m% internship helped me a lot to
understand how ban!ing operations are done in practical wa%.
The report shall also highlight m% own anal%sis to the current situation of #ational
Ban! of $a!istan. The current ,inancial, )perational and S-)T anal%sis of #ational
Ban! is also included in the report which will briefl% tell the o"erall performance of
the #ational Ban!. )n the basis of anal%sis recommendations are gi"en to ban! on
branch and corporate le"el. At last the reasonable conclusion is also pro"ided for
future course of action.
(AB51 +7 *+N(1N(S
Ac!nowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ist of Abbre"iations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ist of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ist of ,igures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.'ecuti"e Summar%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page No%
i
ii
iii
i"
"
*hapter 1: Introdu,tion of Study % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % /
/./.
/.0.
/.1.
/.2.
/.3.
/.4.
/.5.
/.6.
Bac!ground of Stud%
$urpose of Stud%
Scope of Stud%
)b&ecti"es of the Stud%
+imitations of the -or!
Benefits of the Stud%
7esearch Methodolog%
Scheme of Stud%
/
/
0
0
0
1
1
2
*hapter 0: Introdu,tion to National Bank of Pakistan% % % % % % % % % % % % % % % % % % % 3
0./.
0././.
0./.0.
0./.1.
0.0.
0.0./.
0.0.0.
0.0.1.
0.0.2.
0.0.3.
0.0.4.
0.1.
0.2.
8istorical Bac!ground of #B$
$resent Status of the Ban!
Credit 7ating
Auditors
)rganiational Structure of #B$
8ead )ffice
Board of 9irectors
Management
Senior Management of #B$
9omestic #etwor!
)"erseas #etwor!
:ision
Mission Statement
3
4
4
4
4
5
5
5
6
;
;
;
/<
*hapter 3: Produ,ts 6 Ser$i,es pro$ided at NBP % % % % % % % % % % % % % % % % % % % % % % % //
1./. Business )"er"iew //
1././.
1./.0.
1./.1.
1./.2
1.0.
1.0./.
1.0.0.
1.0.1.
1.0.2.
1.1.
1.1./.
1.1.0.
1.1.1.
1.1.2.
1.1.3.
1.1.4.
1.1.5.
1.1.6.
1.1.;.
1.1./<.
1.2.
1.2./.
1.2.0.
1.2.1.
1.2.2.
1.2.3.
1.2.4.
1.2.5.
1.2.6.
1.2.;.
1.2./<.
1.2.//.
1.2./0.
Corporate = In"estment Ban!ing
Commercial Ban!ing
SM. ,inance
8ouse ,inance
9epartments in #ational Ban! of $a!istan
9eposits 9epartment
7emittances 9epartment
Clearing 9epartment
Ad"ances 9epartment
$roducts )ffered b% #B$
#B$ $remium Aamdani
#B$ $remium Sa"er
#B$ Saiban
Ad"ance Salar%
#B$ Cash Card
In"estor Ad"antage
#B$ Cash = >old
#B$ (issan 9ost
#B$ $a! 7emit
#B$ $rotection Sheild
Ser"ices )ffered b% #B$
International Ban!ing
9emand 9rafts
Mail Transfers
$a% )rder
Tra"eler?s Chec!s
+etter of Credit
Commercial ,inance
,oreign 7emittances
S-I,T
Short Term In"estments
#ational Income 9ail% Account
.quit% In"estments
//
/1
/1
/1
/2
/2
/3
/3
/4
/4
/4
/4
/4
/5
/5
/5
/6
/6
/6
/;
0<
0<
0<
0<
0<
0<
0/
0/
0/
00
00
00
00
1.3.
1.3./.
1.3.0.
1.3.1.
Trade finance = )ther Business +oans
Agricultural ,inance
Corporate ,inance
Islamic Ban!ing
01
01
02
03
*hapter ": 7inan,ial Analysis % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % 05
2./.
2././.
2.0.
2.0./.
2.0.0.
2.1.
2.1./.
2.1.0.
2.1.1.
2.1.2.
9ata Anal%ing Technique
:ertical Anal%sis
7atio Anal%sis
.fficienc% 7atio
$rofitabilit% 7atios
S-)T Anal%sis
Strengths of #B$
-ea!nesses of #B$
)pportunities of #B$
Threats
06
06
15
15
23
3<
3<
3/
30
30
*hapter 8: *on,lusion 6 Re,ommendations % % % % % % % % % % % % % % % % % % % % % % % % % % % 32
3./.
3.0.
3.0./.
3.0.0.
3.0.1.
3.0.2.
3.0.3.
3.0.4.
3.0.5.
3.0.6.
3.0.;.
3.0./<.
3.0.//.
3.0./0.
Conclusion
7ecommendations
Clean +oans
Interest on )"erdraft
Cash ,inancing
9ecreasing Administrati"e .'penses
)n the @ob Training
#eeds to be ,le'ible in Credit $olic%
+imited Staff
Improper 9istribution of -or!
Complaint of Customers
Incenti"es to .mplo%ees
.ffecti"e @ob Anal%sis
@ob 7otation
32
33
33
34
34
34
34
34
34
35
35
35
35
35
Anne'ure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7eferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
44
A*9N+:51.;1!1N(
AIn the name of Allah, the most merciful and beneficentB
All praise to Almight% Allah, the most >racious and s%mpathetic. -ho created the
uni"erse and bestowed man!ind with the !nowledge and blessings of Allah be upon the
8ol% $rophet Muhammad CS.A.-.D who guided man!ind with the 8ol% Euran and
Sunnah, the eternal source of guidance and !nowledge for humanit%.
I belie"e it an e'treme pleasure to be able to e'press to heartiest appreciation and deep
sense of de"otion to m% re"erend and worth% super"isor Sir. Fafar Iqbal his s!illful
guidance, unfailing patience, inspirational attitude and priceless suggestions to impro"e
the script of this report.
A deep sense of appreciation is owed to m% respected teachers Sir Easim Shah Sir @amil
Anwar who taught me m% specialiation course of finance and pro"ided me "aluable
guidance during m% studies.
+ast but not least I offer m% humble heartfelt gratefulness and deepest affections to m%
great mother and for being inspired for higher ideals of life, supported morall% and
financiall% throughout m% studies, and alwa%s pra%ed for glorious success about m%
pursuits through out all of m% life.
i
5IS( +7 ABBR1<IA(I+NS
A<P Assistant :ice $resident
!BA Master of Business Administration
B+. Board of 9irectors
.%. 9emand 9raft
1BI( .arning Before Income Ta'
1PS .arning per share
1<P .'ecuti"e "ice president
I%( Information Technolog%
5=* +etter of Credit
!=( Mail Transfer
!IS Management Information s%stem
P5S $rofit and loss sa"ing
SBP State ban! of $a!istan
S1<P Senior e'ecuti"e "ice president
S<P Senior "ice president
S:+( Strength -ea!nesses )pportunities Threat
SS Specimen signature
<P :ice president
ii
5IS( +7 (AB51S
Table 0./G Board )f 9irectors . . . . . . 5
Table 0.0G Senior Management . . . . . . 6
Table 1./G Characteristics of $a! rupees tra"elers? chec!s . . . 0<
Table 2./G 8oriontal Anal%sis of #B$ Balance Sheet . . . 0;
Table 2.0G 8oriontal Anal%sis of Income Statement . . . 1<
Table 2.1G :ertical Anal%sis of Balance Sheet . . . . 10
Table 2.2G :ertical Anal%sis of Income Statement . . . . 12
Table 2.3G $rofit per .mplo%ee . . . . . . 16
iii
5IS( +7 7I;>R1S
,ig 2./G $rofit per .mplo%ee . . . . . . . 16
,ig 2.0G Business per .mplo%ee . . . . . . 1;
,ig 2.1G Interest Income per .mplo%ee . . . . . 1;
,ig 2.2G Business per Branch . . . . . . . 2<
,ig 2.3G .mplo%ee per Branch . . . . . . 2/
,ig 2.4G 7eturn on .quit% . . . . . . . 2/
,ig 2.5G 7eturn on Assets . . . . . . . 20
i"
1?1*>(I<1 S>!!AR@
This internship report is about #ational Ban! of $a!istan, which is one of the largest
ban!s in the countr%. #B$ is a profitable organiation, ha"ing a large networ! within and
out of the countr%. The #ational ban! of $a!istan was established on ; #o"ember /;2;
under the #ational ban! of $a!istan C#B$D )rdinance, /;2; in order to sur"i"e with the
crises which were de"eloped after trade deadloc! with India and de"aluation of Indian
7upee in /;2;. Initiall% the ban! was established with the ob&ecti"e to e'tend credit to
agriculture sector. The normal procedure of establishing a ban! compan% under the
Companies +aw was set aside and the ban! was established through the proliferation of
an )rdinance due to situation that had de"eloped with regard to financing of &ute trade.
The ban! commenced its operations from 0<th #o"ember, /;2; at si' important &ute
centers in the .ast $a!istan Cnow BangladeshD and directed its resources in financing of
&ute crop.
The ban!s, (arachi and +ahore offices were subsequentl% opened in 9ecember /;2;.
Mood%Hs maintained #B$Hs financial strength rating at 9Ithereb% recogniing the internal
strength and leadership position of the Ban!. In addition, #B$ also en&o%s the highest
Credit 7ating amongst $a!istani ban!s* @C7I:IS Credit 7ating Co. +imited awarded
highest standalone Credit 7ating of AAA to #B$. The @C7I:IS Credit 7ating Co.
comments about #B$ sa%s a lot about the ban!G AThe organiation has been able to
Strategicall% manage and build on its competiti"e ad"antages which ha"e translated into
the strong and well managed impro"ement in profitabilit% trend obser"ed o"er the last
few %ears, a substantial balance sheet of sound asset qualit%, and strong liquidit% and
capitaliation le"el. #ational Ban! of $a!istan is the forge in the ban!ing industr% with
/03< inland and 02 o"erseas branches engaged in commercial, ban!ing and retail ser"ices
in $a!istan and )"ersees.
"
The report is categoried into the following chaptersG
In the first chapter introduction to the report, bac!ground of stud%, scope of the stud%,
merits, limitations and scheme of the stud% are gi"en.
The second chapter is about, introduction to the organiation, its historical bac!ground,
role and functions of organiation, its core "alues, and miscellan% topics related to
ban!ing.
The third chapter is the ma&or portion of the report. It co"ers the organiational structure
of #B$, the different departments wor!ing at #B$ and the different financial products of
#B$.
The fourth chapter of the report co"ers the anal%sis of report and the findings, which ha"e
been obser"ed. It includes the financial anal%sis. ,urthermore it anal%sis in detail
strengths, wea!nesses, opportunities and threats of the organiation. S-)T anal%sis no
doubt acts as a epitomie for the management to !now the strengths and wea!nesses so
that it can ta!e suitable correcti"e actions. The management should de"elop detailed
plans for capitaliing on the a"ailable opportunities.
The end of the report is about recommendations based on the anal%sis in chapter four. It
mainl% focuses on the recommendations pertaining to managementJadministration, to let
#B$ capitalie on the opportunities and o"ercome the wea!nesses b% using its strength.
"i
*4AP(1R1
Introdu,tion of Study
Beginning with the name of Allah, I am going to write m% internship report as part of the
academic requirement according for the completion of /4 %ear?s stud% in Master of
Business Administration. Therefore we the students of Management Sciences are
required to under go an internship program for the period of two months as an internee in
an organiation. This internship helps us to gain the practical !nowledge of wor!ing
en"ironment of the ban!ing. This report is about #ational Ban! of $a!istan.
1%1 Ba,kground of Study
#B$ was established in /;2;, #ational ban! of $a!istan has grown to become the largest
commercial ban! in the countr%, maintain its position as $a!istan?s premier ban!
determined to set higher standards of achie"ements. The ban! came in to sur"i"al b% the
order promulgated b% go"ernor general and started functioning from #o" 0<, /;2;. #B$
is the ma&or business partner for the go"ernment of $a!istan with special prominence on
nurturing $a!istan?s economic growth through aggressi"e and balanced lending policies,
technologicall% oriented products and ser"ices offered through its large networ! of /03<
branches locall%, 02 branches internationall% and // regional offices.
As part of the academic requirement for completing MBA C,inanceD Master of Business
Administration of the students are required to under go eight -ee!s of internship with an
organiation. The internship is to ser"e the purpose of acquainting the students with the
practice of !nowledge of the discipline of ban!ing administration.
1%0 Purpose of Study
The purpose of this stud% is to get more !nowledge about the structure and functioning of
the departments of #ational ban! of $a!istan and a clear picture of its financial health in
particular. ,or this purpose a thorough financial anal%sis through common sie and ratio
anal%sis of the ban!, is carried out to &udge the actual financial standing of the ban!.
/
Solid recommendations are gi"en on all aspects to further impro"e the functioning of the
ban!.
1%3 S,ope of Study
The time duration of eight wee!s is fairl% insufficient for conducting complete stud% and
obser"ation of a large ban!. Being a student specialiing in finance, the main focus of m%
stud% is on its financial aspects including the financial health of the ban! and its
comparison with pre"ious %ears performance. Some of the problems faced b% the ban!
ha"e been identified and some remedies ha"e also been suggested to o"ercome these
problems and to impro"e the pre"ailing financial condition of the ban!.
1%" +bAe,ti$es of the Study
The ob&ecti"e of the stud% is to e'perience real life ban!ing practices in order to bridge
the gap between the theoretical and the actual for better comprehension and !nowledge of
the different aspects of this "ast field of profession. The main purpose of this report is to
criticall% anal%e and understand ban!ing operations and propose measures in the form of
solid and weighted recommendations. Besides, the report also aims to inculcate amongst
the students the method of collecting pertinent material and shaping it in the form of
formal report writing..
1%8 5imitations of the :ork
#o one is entitled to repossess its result for an% purpose e'cept authoried ban! personnel
for official purpose. Internship students are not allowed to get bac! and use an%
confidential material for an% purpose, as it is against the ban! polic%. This stud% was
conducted in accordance with the ob&ecti"es of the stud%. The stud% ma% not include
broad e'planations of facts and figures due to the nature of the stud%, the problem of
short time period also ma!es the anal%sis controlled as one cannot properl% understand
and thus anal%e all the operations of a ban!.
0
1%B Benefits of the Study
An internship grooms a person personall%, academicall% and professionall%. At the end of
internship one gets a certificate which ac!nowledges his wor! for that specific compan%.
This adds to his e'perience. An internship is a great opportunit% to impro"e "erbal and
written communication s!ills. Internship also pro"ides the opportunit% to gain self
coolness. ,igure out what one?s strengths are and also a good time to identif% one?s
wea!ness so that one can impro"e them Through an internship one can decide his choice
for a career in future b% obser"ing that does that wor! suit his talent and temperament and
is he meeting his goals. The #B$ ma% also benefit from the recommendation made at the
end of the report.
1%C Resear,h !ethodology
1%C%1 Primary .ata:
This report in"ol"es the following t%pe of dataG
Inter"iews with emplo%ees and Customers
$ersonal obser"ation during wor!
1%C%0 Se,ondary Sour,es:
In secondar% source I ha"e ta!en information for report writing from annual reports of the
#ational Ban!. Some information from the following
Manuals
@ournals
Magaine
Annual reports
Internet
1
1%D S,heme of Study
The scheme of stud% of the report is as under.
$art one is about the introduction of the stud%, which includes its bac!ground, purpose,
and scope of the stud% research methodolog% and the scheme of stud%.
$art two is about the literature re"iew, which includes #B$?s pre"ious performance,
ob&ecti"e, and the organiational structure of the ban!, the departmentaliation and its
function*
$art three is about the financial anal%sis of the ban!, which includes the ratio anal%sis,
common sie anal%sis, comparati"e anal%sis and inde' anal%sis.
$art four includes the S-)T anal%sis, finding = 7ecommendation prescribes for the
ban! to further impro"e its functioning.
2
*4AP(1R0
Introdu,tion to National Bank of Pakistan
0%1% 4istori,al Ba,kground of National Bank of Pakistan
The creation of #B$ goes as for bac! as /;2;. It was originall% concei"ed b% the
go"ernment to pro"ide a financial bac! bone to the newl% born countr% a great deal has
changed in the ban! since the passage of #B$ ordinance no KIK of /;2;, originall% it
was planned to establish #ational Ban! of $a!istan under a special legislation in the
budget session of /;3< but it was setup earlier under ordinance of #o"ember ;, /;2;
following the de"aluation of India rupee in /;2;. It started functioning from #o"ember
0<, the same %ear the ban! commenced business at si' important &ute centers in .ast
$a!istan and directed its resources in financing the &ute crop offices in (arachi and
+ahore were opened in 9ecember.
To ha"e a better understanding of the noteworth% of the creation of national ban! of
$a!istan one has to turn the cloc! to partition era where the British go"ernment de"alued
its currenc%, the pound sterling in September /;2;, India also de"alued its rupee to
continue parit% with pound sterling. As $a!istan did not thin! it proper to de"alued to
currenc%, it led to a crisis in trading between the two countries and India refused to lift
the $a!istani &ute. This created problems particularl% for .ast $a!istan. 7ealiing the
gra"it% of situation and to ma!e possible the trade flow, the go"ernment passed two
ordinances, one setting up the &ute board and the other national ban! of $a!istan. The
ban! was engaged solel% on &ute operation until @une /;3<. +ater it e'pended business to
include other function as well.
9uring its influential phase in the /;3<s the ban! too! o"er all important role of acting as
the go"ernment?s treasur%, and it was in this period, that public was offered 53L of the
ban!?s paid up capital. 8owe"er, from Ma% /;;5, reforms had begun to ta!e shape under
the dictation of multilateral lending bodies and semiautonomous state ban!. Mnder the
reforms program, emplo%ee rationaliation too! place as well as hea"% pro"isioning of
nonIperforming loans to rid the ban! of an unh%gienic portfolio.
3
0%1%1 Present Status of the Bank
In toda%Hs aggressi"e business en"ironment, #B$ needed to redefine its role and shed the
public sector ban! image, for a modern commercial ban!. It has offloaded 01.0 percent
share in the stoc! mar!et, and while it has not been completel% pri"atied li!e the other
three public sector ban!s, partial pri"atiation has ta!en place. It is now listed on the
(arachi Stoc! .'change.
#ational Ban! of $a!istan is toda% a progressi"e, competent, and customer focused
institution. It has de"eloped a wide range of consumer products, to enhance business and
pro"ide to the different segments of societ%. Some schemes ha"e been e'clusi"el%
designed for the low to middle income segments of the population. These include #B$
(arobar, #B$ Ad"ance Salar%, #B$ Saiban, #B$ (isan 9ost, and #B$ Cash n >old
It has implemented special credit schemes li!e small finance for agriculture, business and
industries, administrator to EarIeI8asna loans to students, self emplo%ment scheme for
unemplo%ed persons, public transport scheme. The Ban! has e'panded its range of
products and ser"ices to include Shariah Compliant Islamic Ban!ing products. ,or the
promotion of literature, #B$ recentl% initiated the Annual Awards for .'cellence in
+iterature.
0%1%0 *redit Rating
#B$ also en&o%s the highest Credit 7ating amongst $a!istani ban!s* @C7I:IS Credit
7ating Co. +imited awarded highest separate Credit 7ating of AAA to #B$.
0%1%3 Auditors
Auditors of #B$ are ,ord 7hodes Sidat 8%der and Co, M. Nousaf Adil Saleem and Co.
+egal ad"isor are Mand"iwala and Fafar.
0%0 +rganiEational Stru,ture of NBP
As well as other organiations national ban! of $a!istan has its own organiation
structure e'plained below.
4
0%0%1 4ead +ffi,e
The head office of national ban! of $a!istan is situated in (arachi. All branches,
corporate branches and regional offices wor! according to head office rules and
regulations. The head office is operationall% in charge of central affairs including the
allocation of powers and authorit% to the ; regional head quarters throughout the countr%.
0%0%0 Board of .ire,tors
Board of director nominates the members of e'ecuti"e committee and e'ecuti"e
nomination the di"ision heads. B)9 consists of chairman who is also president of the
ban!, under whom si' directors and one secretar% wor!s. $resident is the main in charge
of all affairs and all other directors are there to assist him in ta!ing ma&or decision about
the organiation.
#B$, Board of 9irectors list consist the following members and their designation.
Table 0./G Board )f 9irectors
#AM. 9.SI>#ATI)#
Ali 7aa Chairman = $resident
Ibrar A.Mumta 9irector
Muhammad A%ub (han Tarin 9irector
Muhammad Arshad Chaudar% 9irector
Mian !ausar 8ameed 9irector
Tariq !irmani 9irector
Si!andar 8a%at @amali 9irector
.!hlaq Ahmed S.:$ = Secretar% to B)9
Source G Self made
0%0%3 !anagement
Management is a distinct process consisting of acti"ities of planning, organiing,
actuating and controlling performed to determine and accomplish stated ob&ecti"es with
the use of human being and other resources. The management has two t%pes.
/.Centralied.
0. 9ecentralied.
5
Centralied Management tends to concentrate decision ma!ing at the top of the
)rganiation. 9ecentralied disperses decisionIma!ing and authorit% throughout and
further down the organiational hierarch%.
#B$ ha"e a centralied t%pe of management because the top management ta!es all the
decisions.
0%0%" Senior !anagement of NBP
Senior Management of #B$ consists of following member and their respecti"e
designation.
Table 0.0G Senoir Management
Eamar 8ussain $resident
Masood (arim Shei!h
S.:$ = >roup Chief, Corporate = In"estment
Ban!ing >roup
9r. Asif A. Brohi
S.:$ = >roup Chief, Commercial = 7etail Ban!ing
>roup
Shahid Anwar (han S.:$ = >roup Chief, Credit Management >roup.
9r. Asif A. Brohi S.:$ = >roup Chief, )perations >roup.
9r. Mira Ibrar Baig
S.:$ = >roup Chief, 8uman 7esource Management
= Administration >roup.
M. #usrat :ohra S.:$ = >roup Chief, Treasur% Management >roup.
Fia Mllah (han
S.:$ = >roup Chief, Compliance >roup.Islamic
Bac!ing 9i"ision.
Imam Ba!hsh Baloch S.:$ = >roup Chief, Audit = Inspections >roup.
Ta&amal 8ussain Bo!laree
.:$ = >roup Chief, Special Assets Management
>roup
I!hlaq Ahmed .:$ = Secretar% B)9s
#adeem A. Ili%as .:$ = $S) to the $resident
Mrs. (hurshid Maqsood Ali
.:$ = 9i"ision 8ead, .mplo%ee benefits,
9isbursements = Trustees 9i"ision.
Tahir 7aa
.:$ = >roup Chief, )"er seas CoIordination = 7is!
management >roup.
Anwar Ahmed Meenai .:$ = di"ision 8ead, IB 9i"ision.
Amir Sattar ,inancial Controller = 9i"ision 8ead, ,inancial
6
Control di"ision.
Atif 8assan (han >roup Chief, IT >roup.
SourceG self made
0%0%8 .omesti, Net)ork
#B$ has a immense networ! of /03< branches within $a!istan. Its subsidiaries areG
#B$ +easing +imited Cformerl% #B$ Capital +imitedD
#B$ Modaraba Management Compan% +imited
#B$ .'change Compan% +imited
Taurus Securities +imited
0%0%B +$erseas Net)ork
#ational ban! of $a!istan has 01 o"erseas branches and // regional offices in different
part of the world. The% are in MSA, >erman%, ,rance, .g%pt, Mbe!istan, Bahrain,
(orea, Bangladesh, 8ong (ong, @apan, China, (%rg%stan, Tur!menistan, Aerbai&an,
Afghanistan and Canada.
0%3 <ision
#B$ wants to become a leader in ban!ing, pro"ide ser"ices with highest standard of
qualit% in a sociall% responsible manner.
;
0%" !ission Statement
#B$ as a nation?s ban! wants to institutionalie a merit and performance culture. And
creating a distincti"e brand identit% b% pro"iding the highest standards of ser"ices. It
wants to adopt the best international management practices. #B$ also wor! in a best
interest of its sta!eholders that is ma'imiing sta!eholders "alue in a sociall% responsible
manner.
/<
*4AP(1R 3
PR+.>*(S AN. S1R<I*1S PR+<I.1. A( NBP
3%1 Business o$er$ie)
The business o"er"iew of #B$ is defined through the followingG
3%1%1 *orporate and in$estment Banking
Corporate ban!ing is a de"oted business and is being "er% well recei"ed b% the corporate
sector. The ban! was mandated as a lead manager is significant capital mar!et
transactions, through a combination of large direct equit% portfolio as well as 03 L
holding in #IT, the $a!istan?s largest mutual fund, the #B$ has a largest portfolio in the
countr% .
3%1%1%1 +perations
The #B$ has redefined its monitoring s%stem to collects and utilied feed bac! from
branches with the countr% and o"erseas, in this regard, the concept of compliance officers
has been introduced.
3%1%1%0 :orking ,apital and short term loans
#B$ specialies in pro"iding pro&ect finance, e'port refinance to e'porters, $re shipment
and postIshipment financing to e'porters, 7unning finance, Cash ,inance, Small ,inance,
9iscounting = Bills $urchased O .'port Bills $urchased J $reI Shipment J $ost Shipment
Agricultural $roduction loans.

3%1%1%3 !edium term loans and ,apital e2penditures finan,ing
#B$ pro"ides financing for its clients? Capital e'penditures and other longIterm
in"estment needs, b% sharing the ris! associated with such longIterm in"estments, #B$
e'pedites client?s effort to upgrade and e'pand their operation thereb% ma!ing possible
the fulfillment of our clients? :ision. This t%pe of long term financing pro"es the Ban!?s
belief in its clientHs capabilit%, and its commitment to the countr%.
//
3%1%1%" Retail banking
To positions the ban! for capitaliation on the requirement of the relati"el% lower ban!ed,
sector a de"oted commercial and retail ban!ing group was. -ithin a short duration of
time a number of retail products ha"e been launched and the response of the customer in
this regard is "er% encouraging. new retail ban!ing products going to be introduced to
suppl% to large di"ersified customers this of o"er ; millions, the largest in the countr%,
the success of retail ban!ing is gra"e to maintain interest re"enue and increase fee
income, with large customers base and deli"er% capabilities, the ban! will become !nown
as a Mar!et leader in the retailJ consumer business in "er% near future.
3%1%1%8 (reasury = international Banking
The ban! is focusing on e'pending its mar!et sharing trade finance, house remittances
and foreign in"estment retailed for e'Idenominated flows. ,or o"erseas operation, focus
continued to the on trade continued to be on trade financing acti"it% to ta!e the ad"antage
of ban! presence in most countries C01 BranchesD which are $a!istan?s ma&or trading
partners in 0<<1 the also establish wholl% owned subsidiar% in good relations. $resentl%
the Ban! is present in four of the central Asian counties and it unique representation
should pro"ide the ban! with ma&or competiti"e edge in the coming %ear as the central
Asian countries with realie there economic potential.
#ational Ban! of $a!istan is at the front position of international Ban!ing in $a!istan
which is pro"en b% the fact that #B$ has its branches in all of the ma&or financial capitals
of the world, additionall%* we ha"e freshl% set up the financial institution wing which is
placed under the ris! Management >roup. The role of financial institute which is to
effecti"el% manage #B$ .'posure to foreign and domestic correspondence Manage the
monetar% aspect of #B$ relationship with correspondents to support trade, treasur% and
other !e% business areas, thereb% contributing to the ban!?s profitabilit%, generation of
incremental tradeI finance business and re"enues.
/0
3%1%0 *ommer,ial banking
#ational Ban! of $a!istan through it subsidiaries, pro"ide "arious commercial ban!ing
and related products and ser"ices in $a!istan and internationall%. It offered sa"ing ,
currant, and foreign currenc% account, the compan% also pro"ed personal loan,
agricultural finance including agriculture Credit, ,arm credit, and production loans ,
corporate finance such as wor!ing capital and short term loans, Medium term loans and
Capital e'penditures finance, trade finance, home equit% loan for home purchases , and
home construction and reno"ation as well as for the purchase of land and home
construction, and commercial finance for professionals, Agriculturalist, and Business
segments.
3%1%3 S!1 finan,e
#B$ has announced the SM. finance for shop!eepers, retailers? whole sellers, Traders,
Small = Medium Businessman a manufacturer etc the Ma'imum financing limits is up
to 53 million and its 7epa%ment period is from one %ear to three %ears and the rate of the
mar! up is from/< L to /1 L per anum and this rate is based on actual utiliation of the
capital while the C,i'ed = floating rates options are a"ailableD. And the .as% monthl%J
Euarterl% Installments are there and ha"e Euic! $rocessing with +ow $rocessing ,ee and
Minimum setting for ta!ing e'posures. 8ouseJ constructed propert% suitable as Collateral
securit% situated in MunicipalJ Cantonment limits in addition to business Assets.
3%1%" 4ouse finan,e
#ational Ban! of $a!istan C #B$ D has announced the computeried launching of a
housing scheme top co"er all sections of the societ% with monthl% income starting from
as low 7s. 3<<<JI month. ,inance a"ailable for home $urchase, 8ome construction and
home impro"ement and period of repa%ment ranged between 1I0< %ears, and +oans
a"ailable up to a ma'imum of /< Million with Mar!Iup choices a"ailable , 7ate 7ange
between 5.3 L I ;.53 L with Minimum Appro"al and disbursement timing. +imited to
area where there are no documentation, fee, and resale and fore closure related issues, so
to protect the ban! interest
/1
3%0 .epartments in National bank of Pakistan F9hola 9ehal Bran,hG
There are some departments in which I ha"e done m% internship during internship period
and these departments are as followG
9eposits 9epartment
7emittances 9epartment
Clearing 9epartment
Ad"ances 9epartment
3%0%1 .eposits department
#ational Ban! of $a!istan acceptsJcollects deposit from their accountholders. An account
opening form is pro"ided to potential customer. At the same time introduction of that
customer is an essential condition so that pro"ided information b% that customer ma% be
got genuine. An e'isting accountholder ma% introduce the incoming customer. The
Manager ta!es the Account holder?s sample signatures on signature card in order to a"oid
future problems. At the circumstance withdrawal of fund accountant compares the
signature on cheque to the pro"ided sample of signatures.
Current account.
Sa"ing account
,i'ed account
3%0%1%1 Payment of ,he'ue at ,ounter
-hen Cheque is presented at counter for pa%ment, the officer e'amines the cheque
before issuing a to!en. The following is loo!ed intoG
The Cheque is drawn on the same branch of the ban!.
The cheque is not crossed that it is open cheque.
It is not stale or post dated.
The drawer has signed the cheque.
The amount written in words and figure is same.
The drawer of the cheque dul% signs all alteration or cancellation.
/2
The presenter has signed at the bac! of the cheque.
The cheque is not pa%able to the limited compan%.
3%0%0 Remittan,es department
This department helps in the transfer of mone% from one place to another place and
recei"es mone% of the people through these instruments and helps them in the clearance
and "erification and transfer of mone% from foreign or local ban!s. The ban! charges a
certain rate of commission on these instruments.
9emand draft.
Mail transfer.
Telephone transfer.
3%0%3 *learing department
The ma&or function of Clearing 9epartment is to recei"e the cheque, which are drawn on
some other ban!. The customer can get the mone% in his account at #B$, from the
cheque drawn on another ban!. The ban! accepts these cheques and collects the amount
from that ban! on which cheque is drawn through the Clearing 8ouse. Ban! charges
some commission for this function.
3%0%3%1 Pro,edure for *learing the *he'ue
There are some procedures that #B$ is following for clearing the Cheque these areG
3%0%3%1%1 Payin slip
The customer fills pa%Iin slip. This slip is &ust li!e deposit slip. The cheque number,
date, amount and account number must be written on this slip.
3%0%3%1%0 Stamping and s,rutiniEing
The officer on receipt of cheque and pa%Iin slip will stamp the pa%Iin slip with Acheque
recei"edB and gi"e a portion of slip to customer and the remaining portion is attached
with the original cheque. The original cheque will be mar!ed with two stamps. #ational
/3
ban! of $a!istan and Clearing Stamp At the end of da%, all cheque are counted and then
scrutinied in ban!Iwise and sent to the Clearing 8ouse.
/4
3%0%" Ad$an,es department
The primar% purpose of this department is to encourage small business to ta!e loans and
help them in their business. The ban! earns from the ad"ancement of loan to the people
or association and charges a certain percentage of interest on it and ban! earns profits.
3%3 Produ,ts offered by NBP
#ormall% the product is defined as AThe Tangible thing which is e'isted ph%sicall% and
can be touched and for which we pa% some mone% Athe following are the products of the
#ational Ban! of $a!istan.
3%3%1 NBP Premium Aamdani F!onthly In,ome S,hemeG
.arn up to /0.0L p.a. P
Amount of in"estment required from 7s. 0<,<<<JI to 7s. /< million
In"estment period is 3 %ears
,ree Cheque Boo! J #B$ Cash Card CATM P 9ebitD
,inancing facilit% a"ailable up to ;<L of the deposit "alue
$remature encashment will attract penalties
Fa!at and withholding ta' will be deducted as per rules.
3%3%0 NBP Premium Sa$er FP5S Sa$ing A,,ountG
Minimum sa"ing balance of 7s. 0<,<<< and a ma'imum balance of 7s. / million.
,ree #B$ Cash Card CATM P 9ebitD
Two debit withdrawals allowed in a month and no limit on number of deposit
transactions.
$rofit is calculated monthl% and paid on half %earl% basis.
.arn up to 6.3L p.a. P
3%3%3 NBP Saiban F4ouse 7inan,eG
8ome $urchase
/5
8ome Construction
8ome 7eno"ation
$urchase of +and P Construction
Balance Transfer ,acilit% CBT,D
,or home purchase, and home construction the finance amount is 13 million, financing
period is 1 to 0< %ears while debt to equit% ratio must be 63G/3 ma'imum. -hile for
home reno"ation finance amount is to /3 million, financing period 1 to /3 %ears and debt
to equit% ratio 6<G0< ma'imum. ,or purchase of land construction finance amount is up
to 13 million, financing period is 1 to 0< %ears and debt to equit% ratio is 6<G0<
ma'imum.
3%3%" Ad$an,e Salary FPersonal 5oanG
.as% installments of / to 4< months at customerHs choice.
#o minimum income collateral = insurance charges required
Euic! processing and fastest disbursement
The product is for permanent emplo%ees of >o"ernment, Semi >o"ernment
and Autonomous bodies recei"ing salaries through #B$ accounts.
3%3%8 NBP *ash *ard FA(! H .ebit *ardG
#B$ Cash Card is a 02Ihour direct access ATMJ9ebit card to %our ban! account, which
lets %ou pa% directl% from %our account as an alternati"e pa%ment method to cash. The
transaction is authoried and processed b% entering a $I#. Card holders are able to
transact at an% of the 2<<< P Merchants where )ri' logo is displa%ed and can withdraw
cash from #B$, /I+in! = MI#.T ATM?s across the countr%. Cash withdrawal up to 7s.
0<,<<<JI per da%.
3%3%B In$estor Ad$antage F!argin 7inan,e 7a,ilityG
The detail about in"estor ad"antage is as followsG
/6
3%3%B%1 7inan,ing 7a,ility for Sto,k In$estors
Comfortable en"ironment for trading
#o securit% requirement, e'cept for the customer?s equit%
Customer?s equit% freel% a"ailable for in"estment
.quit% acceptable in cash or appro"ed shares
3%3%B%0 7inan,ing 7a,ility for Retail In$estors
,eatures of the financing facilit% for retail in"estors are as follows.
Comfortable and secure en"ironment for trading.
#B$ financing at "er% eas% terms requiring minimum documentation.
Minimum turn around time.
#o securit% requirement from the customer e'cept for the customerHs equit%.
CustomerHs equit% freel% a"ailable for in"estment.
.quit% acceptable in cash or appro"ed share.
3%3%C NBP *ash and ;old FReady ,ash against ;oldG
A roll o"er abilit% of lending is offered b% #B$ against gold. #B$ gi"e 7s.0<, <<<
against /< gm of net weight of gold ornaments on /3.3L mar! up per annum. The
ma'imum period is one %ear = there is no limit of credit.
3%3%D NBP 9issan .ost FAgri,ulture 7arming ProgramG
+oans are a"ailable to the farmers for production, and de"elopment e.g. for purchase of
tractors, installation of tube wells, go down construction, construction of fish pond,
li"estoc! farming, mil! processing, cold storage bioIgas plants etc. This loan is offered
b% #B$ at the farmer?s entrance on competiti"e mar! up rate. #B$ (issan 9ost is
a"ailable against agricultural passboo!, gold ornament = <paper securit%. The% also
pro"ide technical guidance to farmers and also pro"ide financing facilit% up to 7s.
/<<,<<< for landless farmers against personal guarantee.
3%3%# NBP Pak Remit
/;
$a! 7emit is an internet based 8ome 7emittance Ser"ice. This ser"ice is a"ailable to
M.S. residents for sending mone% to their famil% and friends in $a!istan. )ne must ha"e a
"alid MS 9ollar account with a M.S. ban! or a MS 9ollar credit or debit card in order to
remit funds through this channel. 7emitters in MSA log on www.pa!remit.com and
easil% remit funds to $a!istan from the comfort of their homes, in a matter of minutes.
The ser"ice is full% secure with ad"ance encr%ption application and is a"ailable for use 02
hours a da%, 5 da%s a wee!. ,ees and e'change rate ha"e been set at competiti"e le"els
and the remitters ha"e the abilit% to trac! deli"er% of funds as well.
3%3%10 NBP Prote,tion Shield FPersonal A,,ident Insuran,eG
#o documentation
#o medical required
$remium Auto 9ebit facilit% = choice of deacti"ation
Co"erage includes death due toG
#atural Calamities e.g. .arthqua!e, ,lood, C%clone etc.
Accident
7iots
Ci"il Commotion
Stri!es
Acts of Terrorism
.ligibilit%
#B$ $+S account holders
/6 %ears and abo"e
3%3%10%1 (ermination of *o$erage
The date the polic% e'ecuted b% #B$ with A+IC) is terminated.
The date the Insured $erson is no longer eligible within the Classification of
Insured $ersonCsD.
0<
If the required premium is not paidJdeducted for the particular month.
The date the benefits are paid to the e'tent of the $rincipal Sum in respect of an%
Insured $erson.
The date the Insured $erson cancels co"erage under this polic%.
0/
3%" Ser$i,es +ffered by NBP
The ser"ices pro"ided b% #B$ are*
3%"%1 International Banking
#B$ has its branches in all of the ma&or financial capitals of the world. In addition, #B$
has freshl% set up the ,inancial Institution -ing, which is placed under the 7is!
Management >roup.
3%"%0 .emand .rafts
The safe, speed% and reliable wa% to transfer mone% is pro"ided b% #B$ b% purchasing
9emand 9rafts at "er% reasonable rates. An% person whether an account holder of the
ban! or not, can purchase a 9emand 9raft from a ban! branch.
3%"%3 !ail (ransfers
Mone% can be mo"ed securel% and quic!l% using #B$ Mail Transfer ser"ice. #B$ also
offer the most competiti"e rates in the mar!et.
3%"%" Pay +rder
#B$ pro"ides another wa% to transfer mone% using their amenities. #B$Hs pa% orders are
a secure and eas% wa% to mo"e mone% from one place to another. And, as usual, charges
for this ser"ice are e'ceptionall% competiti"e.
3%"%8 (ra$elerIs *he,ks
The% are preferred o"er cash b% customers while tra"eling.

Table 1./. Characteristics of $a! rupees tra"elers? chec!s
#egotiabilit% The% are a negotiable instrument
:alidit% There is no restriction on the period of "alidit%
A"ailabilit% At 5<< branches of #B$ all o"er the countr%
00
+imitation #o limit on purchase
Safet% The% are the safest wa% to carr% our mone%
SourceG httpGJJwww.nbp.com Annual 7eport 0<//
3%"%B 5etter of *redit
-ith "iable rates, safet%, and ease of transaction, #B$ +etters of Credit are the best wa%
to do business transactions b% the commercial enterprise.
3%"%C *ommer,ial 7inan,e
The dedicated team of professionals of #B$ trul% understands the needs of professionals,
agriculturists, large and small business and other segments of the econom%. The% are the
customerHs best resource in ma!ing #B$Hs products and ser"ices wor! for them.
3%"%D 7oreign Remittan,es
To facilitate its customers in the area of 8ome 7emittances, #ational Ban! of $a!istan
has ta!en a number of measures to boost home remittances from side to side the ban!ing
s%stem and meet the SB$ directi"esJinstructions for timel% and prompt deli"er% of
remittances to the beneficiaries.
3%"%D%1 Ne) 7eatures
The e'isting s%stem of home remittances has been re"isedJsignificantl% impro"ed and
wellItrained field functionaries are posted to pro"ide efficient and reliable home
remittance ser"ices to nonresident $a!istanis at /3 o"erseas branches of the Ban! besides
Mnited #ational Ban! Cthe &oint "enture between #B$ and MB+ in M(D., and Ban! AlI
@aira, Saudi Arabia.
Fero TariffsG #B$ is pro"iding home remittance ser"ices without an% charges.
Strict monitoring of the s%stem is done to ensure the highest possible securit%..
01
3%"%# S:I7( FSo,iety for :orld)ide Interbank 7inan,ial (ele,ommuni,ationG
The S-I,T s%stem has been introduced for quic! ser"ices in the area of home
remittances. The s%stem has builtIin features of computeried test !e%s, which eliminates
the manual application of tests that often basis dela% in the pa%ment of home remittances.
The S-I,T Center is operational at #ational Ban! of $a!istan with a uni"ersal access
number #B$I$((A. All #B$ o"erseas branches and o"erseas correspondents are
drawing remittances through S-I,T. Msing the #B$ networ! of branches, one can
securel% and promptl% transfer mone% for business and personal needs.
3%"%10 Short (erm In$estments
#B$ offers e'cellent rates of profit on all its short term in"estment accounts. $eople
loo!ing to in"est for 1 months or / %ear, #B$Hs rates of profit are tremendousl% attracti"e,
along with the safet% and ser"ice onl% #B$ can pro"ide.
3%"%11 National In,ome .aily A,,ount FNI.AG
The scheme was launched in 9ecember /;;3 to attract corporate customers. It is a
current account scheme and is part of the profit and loss s%stem of accounts in operation
throughout the countr%. Mode of CalculationG A"erage balance during a calendar month.
3%"%10 1'uity In$estments
#B$ has accelerated its beha"ior in the stoc! mar!et to impro"e its economic base and
restore in"estor selfIassurance. The ban! is now regarded as the most acti"e and
dominant pla%er in the de"elopment of the stoc! mar!et. #B$ is in"ol"ed in the
followingG
In"estment into the capital mar!et
Introduction of capital mar!et accounts
#B$Hs in"ol"ement in capital mar!ets is predictable to increase its earnings,
which would result in enhanced returns offered to account holders.
02
3%8 (rade 7inan,e and +ther Business 5oans Fother ser$i,esG
The% are e'plained below*
3%8%1 Agri,ultural 7inan,e
#B$ pro"ides Agricultural ,inance to solidif% faith, commitment and pride of farmers
who produce some of the best agricultural products in the -orld.
3%8%1%1 Agri,ultural 7inan,e Ser$i,es
AI ,eed the -orldB program, a new product, is introduced b% #B$ with the aim to help
farmers ma'imie the per acre production with minimum of required input. Selected
farms will be made role models for other farms and farmers to follow, thus helping
farmers across $a!istan to increase production.
3%8%1%0 Agri,ultural *redit
The agricultural financing strateg% of #B$ is intended at three main ob&ecti"esGI
$ro"iding reliable infrastructure for agricultural customers
8elp farmers utilie funds efficientl% to further de"elop and achie"e better production
$ro"ide farmers an incorporated pac!age of credit with supplies of "ital inputs, technical
!nowledge, and super"ision of farming.
3%8%1%3 Agri,ultural *redit F!edium (ermG
$roduction and de"elopment
-atercourse impro"ement
-ells
,arm power
9e"elopment loans for tea plantation
,encing
Solar energ%
.quipment for sprin!lers
03
3%8%1%" 7arm *redit
#B$ also pro"ides the following subsidied with ranges of 1 months to / %ear on a
restoration basis.
)perating loans
+and impro"ement loans
.quipment loans for purchase of tractors, farm implements or an% other
equipment.
3%8%1%8 Produ,tion 5oans
$roduction loans are meant for basic inputs of the farm and are short term in nature.
Seeds, fertiliers, spra%ers, etc are all co"ered under this scheme.
3%8%0 *orporate 7inan,e
The offerings of #B$ in categor% of Corporate ,inance areG
3%8%0%1 :orking *apital and Short (erm 5oans
#B$ specialies in pro"iding $ro&ect ,inance, .'port 7efinance to e'porters, $reI
shipment and $ostIshipment financing to e'porters, 7unning finance, Cash ,inance,
Small ,inance, 9iscounting = Bills $urchased ,and .'port Bills $urchased J $reI
shipment J $ost Shipment Agricultural $roduction +oans
3%8%0%0 !edium term loans and *apital 12penditure 7inan,ing
#B$ pro"ides financing for its clientsH capital spending and other longIterm in"estment
needs. B% sharing the ris! lin!ed with such longIterm in"estments, #B$ e'pedites
clientsH attempt to upgrade and e'pand their operation thereb% ma!ing possible the
accomplishment of their clientsH "ision.
3%8%0%3 5oan Stru,turing and Syndi,ation
Because #B$ understand their consortium partnersH asset criteria, the% help borrowers
meet considerable financing needs b% enabling them to reach the ban!s most interested in
lending to their particular industr%, geographic location and structure through s%ndicated
04
debt offerings. #B$Hs s%ndication capabilities are complemented b% their own capital
power and b% industr% teams, who bring specialied !nowledge to the structure of a
transaction.
3%8%0%" *ash management ser$i,es
-ith #ational Ban!?s Cash Management Ser"ices, the customer?s sales collection will be
channeled through "ast networ! of #B$ branches spread across the countr%. This will
enable the customer to manage their compan%?s total financial position. The% will also
be able to ta!e ad"antage of #B$Hs e'cellent range of pa%ment, discharge, liquidit% and
in"estment ser"ices.
3%8%3 Islami, Banking
#B$ is conceited to e'pand its range of products and ser"ices to include Shariah
Compliant Islamic Ban!ing products, now a"ailable at our dedicated Islamic Ban!ing
Branches at (arachi, +ahore and $eshawar. Commercial and Corporate customers
requiring financing will ha"e the following financing facilities a"ailable to them b% #B$
to meet their requirementsG
3%8%3%1 !urabaha
Murabaha ma% be defined as a contract between a Bu%er and Seller under which the
Seller discloses to the Bu%er the cost of goods being sold and adds an agreed profit. $rice
is pa%able on spot or at a definite future date, in lump sum or in installments Cdeferred
pa%mentsD.
3%8%3%0 !urabaha 7a,ility
Mnder the Murabaha facilit%, the ban! will first purchase the required goods directl% or
through an agent. All costs incurred on such purchases will be borne b% the Ban!.
Subsequentl% the Ban! will sell the goods to the customer on late pa%ment basis C1< da%s
to one %earD at an agreed price comprising cost of goods purchased and Ban!?s profit. )n
due date the customer will pa% to the Ban! the agreed price, in lump sum or as per the
agreed installment schedule.
05
3%8%3%3 IAarah F5easingG
I&arah means Ato gi"e something on rentB. The term AI&arah? is similar to the .nglish term
Aleasing A.,irstl% the Ban! will purchase the Assets as required b% the Customer and
subsequentl% the assets will be leased to the Customer on the terms and conditions as
agreed with him.
I&arah ,acilit% will be offered for the following assetsG
:ehicles Cboth Commercial and $ri"ateD
)ffice .quipment
$lant and Machiner%
06
*4AP(1R"
7INAN*IA5 ANA5@SIS
,inancial anal%sis is the process of identif%ing the financial strengths and wea!nesses of
the firm b% establishing relationships between the items of balance sheet and profit and
loss account. ,inancial anal%sis can be underta!en b% management of the firm or b%
parties e'terior to the firm i.e. owners, creditors, in"estors and others.
Ban!s, Creditors
In"estors, Shareholders and )wners
>o"ernment Agencies
The "arious sta!eholders of business are all interested in the anal%sis of financial
statements. But focal point of interest of all is not same. ,or e'ample trade creditors are
interested in firm?s capabilit% to meet their claims o"er a "er% short period of time. Their
anal%sis will consequentl% detain to the e"aluation of the firms liquidit% position.
Suppliers of long term debt on other hand are alarmed with firm?s longIterm sol"enc%
and sur"i"al. The anal%e the firms profitabilit% o"er time, its abilit% to generate cash to
be able to pa% interest and repa% interest as well as principal and the relationship between
"arious sources of funds CCapital structure relationshipD. +ongIterm creditors do anal%sis
of past financial statements as the% place more pressure on the firm?s pro&ected financial
statements to ma!e anal%sis about its future sol"enc% and profitabilit%.
In"estors that ha"e in"ested their mone% in the form of shares are most concerned about
the firm?s stead% growth in earnings. As such the% concentrate on the anal%sis of the
firm?s present and future profitabilit%. The% are also interested in the firm?s financial
structure to the e'tent it influences the firm?s earning abilit% and ris!.
0;
Management of the firm would be interested in e"er% aspect of the financial anal%sis. It is
their o"erall responsibilit% to see that the resources of the firm are used most effecti"el%
and professionall% and that the firm?s financial position is sound.
The financial growth of an% organiation can be measured in terms of the profit it
generates at the end of its financial %ear. In case of ban!s? this financial e'pansion can
further be measured b% the increase it its base of equit%, deposits and profits. The
increase in its ad"ances to customers as well as its financing of imports and e'ports
emphasies a ban!?s financial enrichment. These factors gi"e a clear indication of the
enlargement and progression of ban!?s operations.
In this chapter the general financial anal%sis of #B$ is gi"en to highlight its growth in
0<// b% comparison to the pre"ious %ears? financial figures. It includes the consolidated
figures from the %ears 0<<4 to 0<// and also indi"idual comparison of equit%, deposits,
ad"ances, total assets and profit for the %ear 0<//. The purpose of this anal%sis and
comparison is to show the financial growth of #B$ o"er the %ears which is attributable to
its meticulous strategies, ban!ing practices and inno"ati"e products as was discussed in
pre"ious chapter.
"%1 .ata AnalyEing (e,hni'ue:
:ertical Anal%sis
8oriontal Anal%sis
,inancial 7atio Anal%sis
"%1%1 <erti,al Analysis:
In the "ertical anal%sis anal%st compares each amount with a base amount selected from
the same %ear.
"%1%1%1 *ommon SiEe F<erti,alG Analysis of NBP Balan,e Sheet:
Common sie statements can be e'tremel% helpful in highlighting changes o"er time in
the financial performance and financial conditions of a compan%. The table shows a
common sie anal%sis of the #B$?s balance sheet for 0<<6, 0<<; and 0</<.
1<
1/
(able "%1 4oriEontal Analysis of NBP Balan,e Sheet
Balan,e sheet 000B 000C 000D 000# 0010 0011
Assets
Cash and balances
with treasur% ban!s
/<<L /0<.44L /13.23L /25.1/L /24.61L /45L
Balances with other
ban!
/<<L ;0.0<L ;2.12L 4;.6;L 52.55L 4;L
+ending to financial
institutionsI net
/<<L ;1.05L 52.20L 63.//L /<<.<3L /;0L
In"estmentsI net /<<L /3<.6L /00.<4L /33.3/L 0/3.1/L 006L
Ad"ancesInet /<<L /<5.43L /1<.42L /3<.12L /3/.<3L /4.45L
)perating fi'ed
assets
/<<L 045.52L 03<./1L 03;.51L 055.5/L 0<;L
9eferred ta' assets O
net
/<<L <L <L <L <L <L
)ther assets /<<L //2.1/L //2.1/L 0/6.54L /;5.1<L 023L
(otal Assets 100J 100%00J 10D%C8 1DD%BDJ 1B0%#BJ 181J
5iabilities
Bills pa%able /<<L 44.36L ;4.13L /<<./2L 53.2;L 63L
Borrowings /<<L ;0.2<L 123.46L 164.6L /5/.55L 003L
9eposits and other
accounts
/<<L //5.;1L /02.30L /22.53L /43.6/L /62L
+iabilities against
assets sub&ect to
finance lease
/<<L 031.30L /;<.;4L 100L 6<4.01L 5<<L
9eferred ta' liabilit% /<<L 0/1.33L <L <L <L <L
)ther liabilities /<<L //4.11L /2;./<L /36.;1L /51.34L 0<3.45L
(otal 5iability 100J 11B%C8J 10#%30J 1"#%0CJ 1B0%#BJ 1D3J
Share capital /<<L //3L /04.3<L /3/.6<L /6;.5;L 015L
10
7eser"es /<<L //1.41L /21.45L /41.20L /54./4L /66L
(otal liabilities 6
e'uity
100J 1"1%#8J 1"1%#8J 1"1%#8J 1B0%#BJ 11B%BJ
Table 2./ of horiontal anal%sis of balance sheet shows balances with treasur% ban!s and
other cash and balances. It shows positi"e trend in Cash and balances with treasur% ban!s
b% increasing /45L in 0<//. +ending to financial institutions show positi"e trend and
increased to /;0L. #B$ balance sheet shows positi"e trend of Bills pa%able in 0<// as
compared to 0<<5 and 0<<6 and 0<<;. Borrowings deposits and other accounts are
increased in 0</< and also in 0<//. It shows that ban! has not control o"er funds to
maintain its financial position.
(able "%0 4oriEontal Analysis of in,ome statement
Parti,ulars
000B
000C 000D 000# 0010
0011
Mar!up 7e"enue
/<<L
//2.44L /16./6L /54.52L 0<<.4/L
0/4.;L
Mar!up .'pense
/<<L /0/.23<
L
/5/.03L /1<.;4L 0;<.1/L
125.6L
>ross $rofit Margin
/<<L
//./3L /00.6;L /05.31L /1<.6;L
/34.2L
$ro"ision for
Ad"ances
/<<L
/31.34L 122.20L 13;.<3L 005.;3L
0<0.0L
$ro"ision for
In"estments
/<<L
C3.45DL
C30.4/D
L
C63.14D
L
C512/./5D
L
C220.1LD
Bad debts wJf
/<<L
533L <L <L <L
<L
Interest Income
/<<L
/<2.<2L ;1.6;L ;4.20L /21.12L
/14.//L
Non markup in,ome
,ee and
Commission
/<<L
//<.14L /06.;6L /23.11L /40./0L
/4/.;<L
9i"idend Income
/<<L
//0.62L ;;.33L 44.2<L 5<.6<L
33./4L
.'change income
/<<L
55;L 0;5.34L 005.<L 036.10L
01;.4L
)ther income
/<<L
01.2L /;6.20L 65.;6L /<0.13L
2<3.0<L
Total nonImar!up
income
/<<L
///.14L /12.;4L /34.20L /50./3L
/40.2L
Non markup
e2penses
11
Admin .'penses
/<<L
/<3L /13./4L /1;./4L /22.0;L
006.6L
nonImar!upe'pense
/<<L
/<3.3L /21.41L /50.23L /62.43L
01<.4L
$rofit Before Ta'
/<<L
/<<.44L 65.20L 66.25L 63.<0L
;;.0L
$ro"ision for Ta'es
/<<L
;5./6L 6/.0<L 22.</L 20.53L
;<L
$rofit After Ta'
/<<L
///.6L ;<.6/L /<4.;6L /<1./5L
/<2L
Table 2.0,shows positi"e trend in Mar!IupJreturnJinterest earned, Mar!IupJreturnJinterest
e'pensed and pro"isions against nonIperforming ad"ances and $ro"ision forJdiminution
in the "alue of in"estments of the ban! are greater than 0</< "alues than 0<//. Interest
income after pro"isions is also increased in 0<//. #on mar!IupJ interest e'penses are
increased in some of its aspects and at the same time some decreases are also obser"ed in
the %ear 0<<;. $rofit before ta'ation is decreased in 0<<;. $rofit after ta'ation it is
increased in 0<<; when compared with 0<<6 "alues. 8oriontal anal%sis of profit and
loss show interest earned increase 0/4.; L in 0<//. 8ere the table shows an absolute
increase in the gross profit. This is mainl% due to the fact that #B$ has a good control
o"er its mar!up e'penses, in relation to its total mar!up re"enue. As we can see that
mar!up e'penses are graduall% being increased, that ultimatel% gi"es boost to the gross
profit of the ban! from the base %ear. The mar!up e'pense stands as the cost of sales. The
increase in the gross profit shows that the management has been able to gain control o"er
the mar!up e'penses then pre"ious %ear this shows that the ban! is mo"ing in a trend
where it would lead into the achie"ement of the goals it has set.
"%1%1%0 <erti,al Analysis
:ertical anal%sis compares each amount with a base amount selected from the same %ear.
Simpl%, we compare the items of balance sheet or income statement "erticall% b% ta!ing
one item as /<<L.
(able "%3 <erti,al analysis of balan,e sheet
12
Assets 000B 000C 000D 000# 0010 0011
Cash =
balance with
treasur% ban!
/0.16L /0.23L /1.<L /0.04L //./3L //.21L
Balance with
other ban!s
4.2<L 2.;0L 2.46L 1.<<L
0.;2L 0.21L
+ending to
,inancial
Institutions
1.40L 0.60L 0.<;2L 0.<5L 0.00L 1.26L
In"estments 00.<1L 05.44L 0<.6L 01.<2L 0;.//L 05.5L
Ad"ances 2;.55L 22.5<L 3<.3<L 3<.11L 24./1L 23.4L
)ther assets 2.05L 2.<5L 3.2L 4.06L 3./5L 3.54L
9eferred ta'
assets
<L <L <.1;L <.10L
<.45L <.4;L
)perating
fi'ed assets
/.30L 1.2<L 0.;4L 0.44L
0.4<L 0.21L
(otal Assets 100J 100J 100J 100J 100J 100J
5iabilities
Bills pa%able /.45L <.;1L /.02L /./0L <.55L <.56L
Borrowings /.62L /.21L 2.;2L 2.5;L /.;2L 0.06L
9eposits =
other
accounts
5;.<0L 55.44L 54.20L 54.;1L
6<.2<L 6<.2L
,inance lease <L <L .<<1L .<<23L <.</L 6L
)ther
liabilities
2./;L 2.<3L 2.62L 2.25L
2.24L 2.5L
9eferred ta'
liabilities
<.<2L <.45L <L <L
<L <L
(otal
liabilities
DC%10
J
D"%C"
J
DC%"C
J
DC%3"
J
DC%#J DD%00J
Shareholder
e'uity
Share capital /./0L /.<5L /.<;L /./2L /.1<L /.23L
7eser"es 0./;L 0.<5L 0.21L 0.2<L 0.14L 0.05L
Mnappropriate
profit
3.<3L 3.;3L 4.2/L 4.2;L
4.14L 4L
7e"aluation 2.33L 4./0L 0.35L 0.04L 0.2<L /.;3L
(otal e'uity
10%#0
J
18%0B
J
10%80
J
10%BB
J
10%"1
J
11%CCJ
(otal
liabilities 6
e'uity
100J 100J
100J
100J
100J 100J
13
Table 2.1 shows the :ertical anal%sis of balance sheet and the proportionate percentage
of different items of the balance sheet with respect to Total Assets. As clear from abo"e
that cash and balance with other ban! are //.21L of total Assets. Balances with other
ban! are 0.21L of total asset in 0<// and 9eposits in other account are 6<.2<L of Assets.
The ad"ances show increasing trend from the period 0<<4 to 0<// with different trend
and in"estment ratio increase in 0<// as compare to 0<<6 because of low interest rates in
0<<6 and higher interest rates in 0<//.
(able"%" <erti,al analysis of in,ome statement
14
000B 000C 000D 000# 0010 0011
!arkup
Re$enue
100J 100J 100J 100J 100J 100J
Mar!up
.'pense
1/.41
L
11.3<
L
11./;
L
3<.44
L
3/./3
L
3<.5<L
>ross
$rofit
46.15
L
44.3<
L
4<.6<
L
2;.11
L
26.63
L
2;.0;L
$ro"ision
for
Ad"ances
4.;5L ;.15L /5.16
L
/2./4
L
4.;5L 4.2;L
$ro"ision
for
In"estme
nts
/.4/L <.<6L <.4/L <.55L 1.12L 1.05;L
Bad debts
written
off
<.</L <.<6L <L <L <L <L
#et
Mar!up
Income
40.;;
L
35./4
L
20.6<
L
12.15
L
15.36
L
1;.3L
N+N
!AR9>
P
IN*+!
1
,ee and
Commissi
on
/1.;1
L
/1.2/
L
/1L //.23
L
/<.6;
L
/<.1;L
9i"idend
income
4.34L 4.23L 2.50L 0.24L /.02L /.44L
.'change
income
1.<0L 0.<4L 4.3L 1.662
L
0.3<L 1.12L
)ther
Income
/.20L <.0;L 0.<2L <.5<6
L
0.23L 0.43L
Total
nonI
mar!up
income
05.36
L
04.56
L
04.;1
L
02.2<
L
/;.;1
L
0<.4L
15
Table 2.2 shows decreasing trend in profit of organiation in 0<// as e"aluate to the
pre"ious %ear. It also shows the percentage change in sales or mar!up income .The gross
profit of #B$ decreases from the %ear 0<<4 till 0<//, the reason is this the ban! has
control its mar!up e'penses comparati"el% to its total mar!up re"enue. This can be
because of increasing interest rate on ad"ances or increasing interest rate on deposits to
dispirit sa"ings. So this increasing trend of gross profit is a negati"e or not a health% sign
and the ban!?s management should thin! it and ta!e some more actions to per! up its
position.
#et profit margin has also shown decreasing trend o"er all. The decrease in gross profit
percentage is lower than the increase in the net profit percentage. The reason behind this
is the increase in non mar!up e'penses will balance increase in the non mar!up income.
,urthermore, the ta'ation percentage was low for 0<<4 but for 0<// the ta'ation
percentage decreases due to decrease in profit before ta'
16
"%0 Ratio analysis
The user of financial statements finds it helpful to calculate ratios when the% interpret
compan% financial statements. A financial ratio is simpl% one magnitude di"ided b%
another. 7atios focal point on special relationship between two items of balance sheet,
income statement or one from each. So ratio anal%sis is the most commonl% used anal%sis
to &udge the financial strength of a compan%. It is a quantitati"e relation between two
magnitudes of the same !ind. In ratio anal%sis, the financial ratios of the firm are
compared to that of its competitors. This comparison allows the firm to sense main
operating differences. A lot of entities li!e research houses, in"estment ban!ers, financial
institutions and in"estor ma!e use of this anal%sis to &udge the financial strength of an%
compan%. -ith the help of these we can also &udge the management and its capabilities,
the decisions and more things that are important for the firm?s growth.
This anal%sis ma!es use of certain ratios to achie"e the abo"eImentioned purpose. If we
go through the boo!s and the whole financial management, we find a lot of ratios that
co"er each and e"er% aspects of the compan%, the main categories are.
.fficienc% ratios
$rofitabilit% ratios
"%0%1 1ffi,ien,y ratio
.fficienc% ratios measure the qualit% of a #B$Hs recei"ables and how efficientl% it uses
and controls its assets, how effecti"el% the firm is pa%ing suppliers, and whether the
business is o"ertrading or under trading on its equit% Cusing borrowed fundsD.
.fficienc% ratios measure how effecti"el% the compan% utilies these assets, as well as
how well it manages its liabilities.
"%0%1%0 Profit per 1mployee
This ratio indicates the a"erage profit generated per person emplo%ed.
1;
(able "%8 Profit per 1mployee
Near 0</< 0<//
/. $rofit /5,341,0/2 /5,5<;,/43
0. Total number of emplo%ees /4235 /4253
$rofit per .mplo%eeC/J0D /<45.0/ /<52.;
Interest income per emplo%ee in 0</< is 7S /<45.0/, while in 0<//, 7S /<52.;. The ratio
increases in 0<//, showing the more efficient the #B$ uses its emplo%ees.
7igure No% "%1 Profit per 1mployee
"%0%1%3 Business per employee
This ratio shows the management abilit% that how use their emplo%ee to earned interest.
(able "%B Business per employee
Near 0</<
0<//
/. Interest .arned 66,250,/12
;3,46;,52/
0. Total number of emplo%ees /4235
/4235
Business per emplo%eeC/J0D 3153.;
3,6/2.3
This ratio indicates the a"erage interest earned generated per emplo%ee, which is
increases in 0<//, showing the good management abilit% to use their emplo%ee.
2<
7igure No% "%0 Business per employee
5100
5200
5300
5400
5500
5600
5700
5800
5900
2010 2011
"%0%1%" Interest in,ome per employee
Interest income per emplo%ee measures managementHs abilit% to use their emplo%ee
resources effecti"el% to create profits for the #B$.
Table 2.5 Interest income per emplo%ee
Near 0</< 0<//
/. Interest income 21.00/,436 25,/51,002
0. Total number of emplo%ees /4235 /4235
Interest income per emplo%eeC/J0D 0404 0644.23
Interest income per emplo%ee in 0</< is 7sG 0404, while in 0<//, 7sG 0644.23. The ratio
increases in 0<//, showing fa"orable trend.
7igure No% "%3 Interest in,ome per employee
2/
"%0%1%8 Business per Bran,h
This ratio shows that how much each branch of #B$ earned interest.
Table 2.6 Business per Branch
Near 0</< 0<//
/. Interest .arned 66,250,/12 ;3,46;,52/
0. Total number of Branches /045 /045
Business per BranchC/J0D 4;606.<2 53302.43
The business per branch ratio high in 0</< as compared to in 0<<;, mean the a"erage
branches of #B$ performing efficientl% in 0</<, showing a positi"e sign.
7igure No% "%" Business per Bran,h
"%0%1%B 1mployee per Bran,h
This ratio indicates the a"erage number of emplo%ee in each branch.
Table 2.; .mplo%ee per Branch
Near 0</< 0<//
/. Total number of emplo%ee /4235 /4235
0. Total number of branches /045 /06<
emplo%ee branches per C/J0D /0.;6 /0.63
.mplo%ee per branch in 0</< is /0.;6 and in 0<//, /0.63. #umber of emplo%ee in 0</<
is increase as compared to 0<//.
7igure No% "%8 1mployee per Bran,h
20
"%0%1%C Return on 1'uity
It becomes di"iding profit after ta'ation b% shareholder?s equit%. 7). compares net
profit after ta'es to the Shareholder?s .quit%. This ratio is calculated asG
7).Q$rofit after ta'esR/<<JShare holder?s .quit%
(able "%10 Return on 1'uity
Near 0</< 0<//
/. $rofit after ta'es /5,341,0/2 /5,5<;,/43
0. Share holder equit% /06,2;3,606 /13,5;2,2<;
7eturn on equit%C/J0D /1.4 /1
7igure No "%B Return on 1'uity
,rom the calculation it is clear that the 7). 7atio ha"e an downward trend of #B$ in
0<// as compared to 0</< its means that it is not feasible for #B$ to in"est more mone%
on current resources, because Ban! can?t earn more profit in 0<// as the% in"ested.
"%0%1%D Return on Assets
21
This ratio shows the efficienc% of organiation that how efficientl% utilies their assets
and earns some return on it. It is calculated as.
7)A Q $rofit after Ta'JTotal Assets
(able "%11 Return on Assets
Near 0</<
0<//
/. $rofit after ta'es /5,341,0/2
/5,5<;,/43
0. Total Assets /,<13,<02,46<
/,/31,26<,/<<
7eturn on assetsC/J0D /.4;L
/.31L
7igure No "%C Return on Assets
,rom calculation it is clear that this ratio shows #B$ is going down. It shows that #B$
using its assets not efficientl%.
"%0%1%# In$estment deposit Ratio
This ratio shows the comparison of in"estments and deposits. It is calculated asG
In"estment deposit 7atioQIn"estmentJdeposits
Table 2./0 In"estment deposit 7atio
Near 0</<
0<//
/. In"estment 1</,101,6<2
1/;305032
22
0. 9eposits 610,/3/,666
;052/3/10
In"estment 9eposit 7atioC/J0D 14.0/L
12.23L
7igure No "%D In$estment deposit Ratio
,rom abo"e table and graph it is "er% much clear that #B$ are using their deposit not
efficientl%. The ratio has an downward trend, which shows the performance of #B$ is not
good
"%0%1%10 .ebt to Assets Ratio
This ratio shows that to which degree the organiation assets are financed b% debt.
(able "%13 .ebt to Assets Ratio
Near 0</< 0<//
/. Total 9ebt 602,454,162 /,</5,463,4;/
0. Total Assets /<1,3<0,246,< /,/31,26<,/<<
9ebt to Assets 7atio C/J0D <.5; <.66
23
7igure No "%# .ebt to Assets Ratio
This ratio is directl% related to ris!, high ratio means high ris! and low ratio means low
ris!. ,rom calculation it is clear that the ratio is growing which show high ris!. This ratio
ser"es the comparable point to the debt to equit% ratio. This ratio is low because of fewer
deposits in the ban!, and deposits are the liabilit% of customer on ban!
"%0%1%11 Ad$an,es deposit Ratio
This ratio show that how much efficientl% the ban!s ad"ances the deposits of their
customer to borrower. It is calculated asG
Ad"ances deposit ratio Q Ad"ancesJ deposit
(able "%1" Ad$an,es deposit Ratio
Near 0</< 0<//
/. Ad"ances 255,3<4,342 305,/<;,0<;
0. 9eposits 610,/3/,666 ;05,2/3./10
Ad"ances 9eposit 7atioC/J0D <.35 <.34
7igure No "%10 Ad$an,es deposit Ratio
24
,rom abo"e table and graph it is clear that the ratio is going low. -hich means the
competence on #B$ is a"erage but the% use their deposits efficientl% in ad"ancing to
borrowers. 8ere high ratio is required. The ne't face of the picture is that the people will
thin! that is ris!% to deposit the mone% in the ban!.
"%0%0 Profitability Ratios
$rofitabilit% ratios measure how well a compan% is performing b% anal%ing how profit
was earned comparati"e to sales, total assets and net worth. The profitabilit% ratios are the
basic ban! financial ratios. This 7atios show how successful a compan% is in terms of
generating returns or profits on the In"estment that it has made in the business. If a
business is liquid and efficient it should also be $rofitable.
"%0%1%1 Net Interest !argin
#et interest margin measures the differences between the interest incomes generated b%
ban!s. It is ali!e to the gross margin of nonIfinancial companies. This ratio e'amines
how flourishing a firmHs in"estment decisions are compared to its debt situations.
(able "%18 Net Interest !argin
Near 0</< 0<//
/. Interest e'penses 23,03<,254 263/43/5
0. Interest income 21,00/,436 25/51002
#et Interest MarginC/J0D /.<2< /.<06
The interest margin ratio in 0<// is decreases, which is not fa"orable for the ban!,
because in"estment decision is not well planned.
25
7igure No% "%11 Net Interest !argin
"%0%1%0 *redit to .eposit ratio
(able "%1B
Near 0</< 0<//
/. Ad"ances 256,664,533 305,/<;,0<;
0. 9eposits 610,/12,<32 ;05,2/3,/10
Credit to 9epositC/J0D <.35 <.346
This ratio shows the assessment of credits to debts of #$B. In 0<// both credit and debt
are increased, but ad"ances rise at higher rate, which is fa"orable and shows a good sign
for the ban!.
7igure No% "%10 *redit to .eposit ratio
26
"%0%1%3 +perating *ost to in,ome ratio
The costJincome ratio is an competence measure ali!e to operating margin. Mnli!e the
operating margin, lower is better. The cost income ratio is most commonl% used in the
financial sector.
(able "%1C +perating *ost to in,ome ratio
Near 0</< 0<//
/. #on interest Cost 01,3/1,6;5 1/,231,255
0. #et Income 2,<66,105 /;,532,20<
)perating Cost to income ratioC/J0D 3.53 3.3;
This ratio shows how cost is changing compared to income. In 0<// both operating cost
and income are increased, but operating cost rise at higher rate, showing the unfa"orable
trend for the ban!.
7igure No% "%13 +perating *ost to in,ome ratio
"%0%1%" 1'uity to (otal Assets
The equit% to debt ratio shows how much #B$ ha"e equit% out of total assets. AThis ratio,
also called funds to total assets measures the e'tent of equit% ownership in the ban!. This
ownership pro"ides the cushion against the ris! of using debt and le"erage.B
2;
(able "%1D 1'uity to (otal Assets
Near 0</< 0<//
/. .quit% /<1,540,1/< /13,5;2,2<;
0. Total Assets /<1,3<0,246,< /,/31,26<,/<<
.quit% to Total AssetsC/J0D <./< <,//
This ratio shows the ownership of the ban!. In 0</< it is <./ while in 0<// it is <.//. The
equit% increases in 0<// as compared to 0</<, which is showing positi"e sign and
fa"orable for the ban!.
7igure No% "%1" 1'uity to (otal Assets
"%0%1%8 1arning Asset to (otal Assets
An asset that produces mone% for a compan% de"oid of an% wor! needs to be done.
.arning assets include such things as loan, +ease, stoc!s, bonds, certificates of deposit,
Cin"estment securities and mone% mar!et assetsD and generall% an%thing that earns
interest or di"idends. This ratio show that the contribution of these assets to total assets.
3<
(able "%1# 1arning Asset to (otal Assets
Near 0</<
0<//
/. .arning Assets 64/,/15,150
06,/04,532
0. Total Assets /<1,3<,024,6<
/,/31,26<,/<<
.arning Asset to Total AssetsC/J0D <.610
0.21
The ratio of earning to total assets in 0</< is <.610 and in 0<// is 0.21. As return on total
is increase in 0<//.
"%0%1%B Return on 1arning Assets
An indicator of how profitable a compan% is relati"e to its earning assets. 7).A gi"es an
idea as to how efficient management is at using its assets to generate earnings.
Table 2.0< 7eturn on .arning Assets
Near 0</< 0<//
/. #et Income 3<,662,4<; 35,34;,25;
0. A"erage .arning Assets 6<4,</3,/64.3 5<4,/<4,46/
7eturn on .arning AssetsC/J0D <.<41 <.<6
7eturn on earning assets is increases in 0<// as compared to pre"ious %ear, its means that
management of #B$ has control o"er its earning assets, it is showing fa"orable trend. But
management needs to impro"e their efficienc%.
7igure No% "%18Return on 1arning Assets
"%3 S:+( Analysis:
3/
The word AS-)TB stands for strengths, wea!ness, opportunities and threats respecti"el%.
S-)T anal%sis is a tool with the help of which we can measure the performance and the
pre"ailing condition of an organiation. In S-)T anal%sis we can easil% identif% the
problems faced b% the organiation and its remedial actions. S-)T anal%sis is one of the
most important steps in formulating strateg% using the organiation?s mission as a
conte't* managers re"iew internal strengths distincti"e competencies, wea!ness and outer
opportunities and threats. The goal is to then de"elop good strategies and e'ploit
opportunities and strengths neutralie threats and a"oid wea!nesses.
"%3%1 Strengths of NBP:
#B$ is one of the oldest and largest ban! of $a!istan and first nationalied ban!.
8ence its customer base is its strength as customers ha"e more confidence in the
ban!.
+argest customers base of more than ; million. So it is "er% well positioned.
#B$ has the relati"e proficienc% in ha"ing more deposits than the other ban!s.
This is because of the confidence the customers? ha"e in the ban!. The ban! being
the honored and oldest ban! in ban!ing sector of $a!istan en&o%s this edge o"er
all others, lac!ing it.
Can easil% meet an% restriction for capital adequac% introduced b% SB$ under
ban!ing sector reforms.
The emplo%ees at #B$ are offered reasonable monetar% benefit. #ormall% two
bonuses are gi"en at .idIMlI,itar = .idIMlIAha. This ser"es as an additional
benefit and competenc% for the ban! and a source of moti"ation for the
emplo%ees.
The ban! has another competenc% i.e. it has large networ! of branches throughout
the countr% and also more than one branch in high producti"e cities. The
customers are pro"ided ser"ices at their nearest possible place to achie"e
customer satisfaction.
30
Through a amalgamation of large direct equit% portfolio as well as 03L holdings
in #IT, the ban! has massi"e capital base for increasing its balance sheet at an%
moment.
Sound ad"ance portfolio.
$resence in all ma&or financial centers of the world.
$articipating in -orld Ban! and Asian 9e"elopment Ban!?s line of credit.
.'tremel% competent senior management ha"ing "ast !nowledge of local mar!et
conditions.
"%3%0 :eaknesses of NBP:
There are some wea!nesses of #B$, which are as followsG
The ban! does not promote its corporate image, ser"ices, etc in a competiti"e
wa%. 8ence lac!s far behind in mar!eting effort .A need for "iolent promotion is
needed as it is an era of mar!eting and is becoming a part of e"er% organiation.
The strong political hold of some parties and go"ernment and their supremac% is
affecting the ban! in a negati"e wa%. The% sometime ha"e to pro"ide loan under
the stress, which leads to une"en and de&ected feelings in the ban! emplo%ees.
$ercei"ed as relati"el% go"ernment ban!, customer prefers to deal with pri"ate
ban!s.
Bureaucratic ci"iliation in deepl% permeated hence o"erall staff is usuall%
indifferent towards customers. The effect of bureaucratic culture is all passi"e in
business bod% of the ban!. Sometimes customer satisfaction is least cared.
The promotions and bonuses etc in the ban! are often powered b% senior?s
preferential treatment or depend upon their wills and decision. This adds to the
negati"e factors, which denominate the emplo%ees thus resulting in affecting their
performance negati"el%.
#ot s%nchronied with present da% needs so insufficientl% equipped to meet the
technological challenges. In computeriation much remains to be desired. At most
of the branches ATM facilit% is not a"ailable.
31
:er% low delegation of authorit%.
Training for the officers other than credit officers is nonIe'istent the onl% mode is
through seminars.
The ban! lac!s the strength of being powered b% the s%stem of computers, which
sa"es time, energ% and would ha"e tapering the mental stress, the emplo%ees ha"e
currentl%. This would add to the strength if it were powered b% networ! of
computers.
"%3%3 +pportunities of NBP:
The world toda% has become a global "illage because of ad"ancement in the
technologies, especiall% in communication sector. More emphasis is now gi"en to
a"ail the modern technologies to better the performances. #B$ can utilie the
electronic ban!ing opportunit% to ensure on line ban!ing 02 hours a da%. This
would gi"e a aggressi"e edge o"er others.
Because of the need for micro financing in the mar!et, there are lot of
opportunities in this regard. )ther ban!s ha"e alread% initiated, now the time has
arri"ed that #B$ must realie it and ta!e on steps to cater an ongoing demand.
Better positioned to meet large borrowing requirement of the countr% big
multinationals and domestic corporate sector which will help in soliciting top tier
business
Consumer ban!ing still has much to be desired li!e car financing and houseI
financing
Islamic ban!ing is opening new "istas of ban!ing in $a!istan. It is pic!ing up at a
time when interest rates are low and Muslim nationalism is gearing up so ma!ing
situation conducti"e for new "entures.
An e'tensi"e and sustained training and de"elopment program will inculcate
customer focus and hence will eliminate a ma&or shortcoming.
"%3%" (hreats:
32
The ban! is facing threats with the emergence of new competitors especiall% in
terms of foreign ban!s. These foreign ban!s are equipped with hea"% financial
power with e'cellent and inno"ati"e wa%s of promoting and performing their
ser"ices. The ban! has to ta!e initiati"e in this regard or will find itself far bac! in
competition.
#ational ban! is the onl% >o"ernment ban! so there is political interference time
to time and e"er% political go"ernment wants to impose its own policies.
There e'ists no regular and specific s%stem of the remo"al of customer
complaints. #ow a da% a need for total customer satisfaction is emerging and in
their demanding consequences customerHs complaints are ignored.
Top tier multinational and domestic corporate generall% prefer to deal with
AmericaJ.uropean ban!s due to their superior image ser"ice qualit%, networ!
support, and global relationship with parent compan%.
A low sa"ing culture in the countr%.
:olatile domestic and regional political scenarios which has rendered the
in"estment engine sluggish. As s consequence companies ma% default on ban!?s
credit.
Tremendous increase in competition in ban!ing industr% with more than 15 ban!s
operating in the countr%.
Though some macro indicators ha"e been impro"ed o"erall situation of the
econom% is not impro"ing* industrial sector is not pic!ing up momentum and so
remains subdued. This unresponsi"eness of the industrial sector is posing serious
challenges to ban!ing industr%.
+ast but not least -T) regime is also approaching. An% organiation, which will
not be responding to efficienc%, qualit% and price, will be out of race.
33
*4AP(1R 8
*+N*5>SI+N AN. R1*+!!1N.A(I+NS
8%1 *on,lusion:
I need to e'press m% e'perience of internship in #ational Ban! of $a!istan, (hola (ehal
Branch Abbottabad, I would briefl% sa%G
#B$ is a good )rganiation so that an% person can &oin it for hisJ her longIterm career.
)"erall wor!ing en"ironment is comfortable. Management of branch cares a lot of its
emplo%ees and considers them as the Asset of ban!. Beha"ior of senior e'ecuti"e of ban!
is "er% courteous and the% are caring about the indi"idual?s career and their growth.
8owe"er management isso much demanding about the targets but good reward at the
achie"ement of assigned targets is awarded. .mplo%ees at #B$ are prett% efficient. The
emplo%ees ha"e to bring their ban! among the list of good ban!s. Therefore, the% wor!
more than their wor!ing hours and it is all according to their will. It also shows their
allegiance and commitment to the organiation. .mplo%ees are gi"en the benefits li!e
bonus, pri"ilege funds, loans, increments, and medical facilities. All the customers are
entertained indi"iduall%. Same !ind of beha"ior and attention is gi"en to all the
customers. >etting ideas for impro"ement from customer side is a new idea and that is
wor!ing "er% well in #B$. All the customers are as!ed to fill a idea form and the
standards of the ban! are impro"ed through them.
$rioritiing its product portfolio in line with its corporate and consumer needs and wants
the ban! is committed to de"elop products that gi"e more "alue to its customers in all the
sectors. In ban!, all the wor! is done on computers. All the entries are made in computer.
Balances are sa"ed into the computer. This increases effecti"eness of the ban!.
9uring m% internship training I gathered information regarding how a successful ban!
operational aspect decorticated with the practical.
I found m% internship training at #B$ to be a "er% rewarding e'perience. The training
was beneficial because it helped me to be aware of a real life wor!ing en"ironment.
34
As far as m% learning is apprehensi"e* all the emplo%ees at branch were quite
cooperati"e. The% helped me to understand the acti"ities of a ban! to possible e'tent.
Their good mindIset ga"e me more confidence to learn more and to as! if I ha"e an%
question mar! in m% mind. Besides their e"er going acti"ities the% ne"er get anno%ance
b% m% questioning. I had made an sincere effort to present the wor!ing = operations of
#B$, (hola (heal Branch Abbottabad in simplest wa%. I feel pleased that I ha"e reall%
gained a lot during 4 wee!s = en&o%ed wor!ing with e'perienced cooperati"e =
intellectual staff.
8%0 R1*+!!1N.A(I+NS
#ational ban! of $a!istan is an effecti"el% operating and profit ma!ing organiation and
carr%ing out its acti"ities under a specified s%stem of procedures. The man regulator%
bod% is state ban! of $a!istan, which pro"ide the polic% guide lines and ma!e sure that
the mone% mar!et operate on sound professional bases. -hile the head offices specifies
the whole procedure of functions and operations. This procedure has been modernied
with the passage of time with a "iew to stream line the approach and the underline
procedures of time with a "iew to modernie the approach and the underl%ing procedure
for effecti"e o"erhauling of its own capabilities so as to bring them at par with
international practices.
8ere some suggestions are recommended, which can add some input for competence and
better performance of #B$
8%0%1 *lean 5oans
Clean loan or clean o"erdraft is the credit facilit% e'tended to the customers without an%
securit%. These t%pes of small term loans should not be e'tended to an%bod%, because
sometime these loans are pro"ided to blueIe%ed people of the management and the%
become a part of bad debts

35
8%0%0 Interest on +$erdraft
)"erdraft is a shortIterm credit facilit% pro"ided b% the ban! to its reliable customers free
of interest. )nl% ban! commission is charge small amount of mar!Iup on the o"erdraft,
which will help the ban! to impro"e its re"enue position.
8%0%3 *ash 7inan,ing
In this mode of financing the amount of credit not utilied b% the borrower is remained
ta'Ifree. It is recommended that a small amount of interest should be charge on this
amount as well because the ban! gas !eptIaside the amount for that borrower and can not
ad"ance it an%where.
8%0%" .e,reasing Administrati$e 12penses
Ban! should decrease their administrati"e e'penses.That can be done b% l%ing off the
surplus pool of emplo%ee with golden handsha!es scheme. The branches that are not
much used could also be closed. .mplo%ee can also be how to control the ban! e'penses.
That will gi"e positi"e results in the future
8%0%8 +n the /ob (raining
)n the &ob training should be carried out b% the management to ma!e their staff better
recognie the global changing economic en"ironment. ,or these purpose seminars,
conferences and debates should be organied.
8%0%B Needs to be 7le2ible in *redit Poli,y
As mentioned earlier, #B$ is "er% conser"ati"e in ad"ances and loans polic%. It reduces
the in"estment opportunities. Also loans should be gi"en to the small businessmen and
the agriculture sector at the low mar!up rate. It should adopt fle'ible credit polic% while
gi"ing credit to the agriculture sector
8%0%C 5imited Staff
7equired staff should be pro"ided to branch in order to impro"e the functioning of the
branch.
36
8%0%D Improper .istribution of :ork
$roper distribution of wor! leads to success in e"er% organiation. $roper distribution of
wor! pre"ents the emplo%ee from o"erwor! and under wor! situation. So far a horiontal
running of an organiation proper distribution of wor! is the hint to be followed. 9uring
the internship It obser"ed that the% was no proper distribution of wor! in the ban!, some
of the emplo%ee wor! li!e ants while others sat idle staring here and there. So this created
a lot of o"erwor! situation for some while rela'ation for others.
8%0%# *omplaint of *ustomers
There should be an information des! to pro"ide the information and to recei"e the
complaints of the customer in the ban!. There is no grie"ance bo' a"ailable in the branch
and not an% person appointed to hear the complaints. ."er% person cannot go to the
manager for the grie"ance because most of the people are hesitant. So I suggest to
management to install a complaint bo' in the branch, and recruit a special person for the
guidance of the customer when the% are unable to manage some difficulties in ban!ing
matters.
8%0%10 In,enti$es to 1mployees
#B$ should start some incenti"e plans for its emplo%ees in order to increase their %ield.
This will lead to automatic success of the ban! because for a business the most successful
assets are its emplo%ees.
8%0%11 1ffe,ti$e /ob Analysis
@obs of different emplo%ees should he anal%ed b% professional anal%sts and all should be
treated according to their wor!. This will lead to merit among the emplo%ees.
8%0%10 /ob Rotation
@ob rotation policies should be indirect to gi"e more e'perience to the emplo%ees. In this
wa% the% will fit for an% situation confronting them.
3;
ANN1?1S FAG
All Balan,e Sheets +f NBP F000B0011G
4<
4/
40
41
ANN1?1S FBG All Profit and loss Statement +f NBP F000B0011G
42
43
44
45
Referen,es:
Breale%, 7,M%ers, C = Marcus, @. C0<<5D* $rinciples of Corporate ,inance.
$rentice 8all International CorporationB, 1rd .dition.
>ibson, Charles 8, C0<<0D* ,inancial 7eporting = Anal%sis, $rentice 8all
International CorporationB, 5th .dition
8ussain,S,7ana,(= Shabir,AC/;;/D*Ban!ing Currenc% and ,inance,C0nd edD,Ilmi
(utab (hana, +ahore.
httpGJJwww.sbp.org.p!JstatsJstatIbalIsheet.htm CAccessed on 9ec, 0</<D
Inter"iew from Manager Shera (han of #B$ (hola (ehal branch
#B$ Annual report C0<<5D* #ational Ban! of $a!istan 0<<5
#B$ Annual report C0<<6D* #ational Ban! of $a!istan 0<<6
#B$ Annual report C0<<;D* #ational Ban! of $a!istan 0<<;
#B$ Annual report C0</<D* #ational Ban! of $a!istan 0</<
#B$ Annual report C0<//D* #ational Ban! of $a!istan 0<//
Siddiqi,Asrar 8C0<<6D*$ractices and law Ban!ing in $a!istan,C6th edD,7o%al
Boo! Compan%, (arachi.
46