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TABLE OF CONTENTS
DEDICATION 6 ACKNOLEDGEMENT 7 EXECUTIVE SUMMARY 8 CHAPTER # 01 INDUSTRY OVERVIEW
1.1: Industry Background 1.2: The Banking Industry in Pakistan 1.3: Industry Growth / Industry Trends 1.4: Technological Improvements in the Industry 1.5: Competition in the Industry

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10 11 11 13 13

CHAPTER # 02 INTRODUCTION TO ORGANIZATION

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2.1: Introduction of the Bank ... 16 2.2: History of the Bank ... 17 2.3: Achievements 19 2.4: The Hierarchy / Organizational Chart of the Bank 19 2.4.1: Company Information 19

CHAPTER # 03 PRODUCTS AND SERVICES

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3.1: Offerings to Customers 23 3.2: Banking Network ... 24 3.3: Terms and Conditions ... 25 3.3.1: Personal Banking 25 3.3.2: Credit Cards 26 3.3.3: Business-Banking 27 3.3.4: Electronic Banking 27 3.3.5: Government Guarantee 27

CHAPTER # 04 DEPARTMENTS

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4.1: Marketing 28 4.2: HR 28 4.3: Finance 29 4.4: IT 29 4.5: Clearing ... 29 4.6: Cash Deposits and Receipts 30

CHAPTER # 05 INTERNSHIP EXPERIENCE

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5.1: Positive Dimension of Experience and Learning ... 31 5.1.1: Dynamic & Advanced Application 31 5.1.2: Customer Orientations and Personal 31 5.1.3: Professional Style of Management 32 5.1.4: Modern Banking Policies 32 5.1.5: Check Clearing Department 32 5.1.6: Loan Department 32 5.1.7: Account Opening Department 32 5.2: Negative Dimension of Experience and Learning 33 5.2.1: Deposit Department 33 5.2.2: Cash Department ... 33 5.2.3: Insurance Department ... 34

CHAPTER # 06 SWOT ANALYSIS

6.1: Strength 6.1.1: Organization Culture 6.1.2: Industrial Policies 6.1.3: Best Research Appraisal Team 6.1.4: Lenient Policy with the Clients 6.1.5: Young Generation 6.2: Weaknesses 6.2.1: Less Attention to the Rural Development 6.2.2: Poor Advertisement 6.2.3: Poor Network 3

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35 36 36 36 36 36 37 37 37 37

6.3: Opportunities 38 6.3.1: Sponsor the IT Based Projects 38 6.3.2: Goodwill and Better Image 38 6.3.3: Growth in the Industrial Sector 38 6.4: Threats 38 6.4.1: Political Influence and Instability 39 6.4.2: Sick Projects 39 6.5: Summarized Analysis 39

CHAPTER # 07 PEST ANALYSIS

7.1: Political 7.2: Economic 7.3: Social 7.4: Technological

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39 39 40 40

CHAPTER # 08 FINANCIAL ANALYSIS

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8.1: Horizontal Analysis 41 8.2: Vertical Analysis 42 8.3: Summarized View of Horizontal and Vertical Analysis ...44 8.4: Ratio Analysis 45 8.5: Summarized View 47 8.6: Effects and Reasoning of Ratios 52 8.6.1: Return on Equity 52 8.6.2: Gross Profit 52 8.6.3: Profit Margin 52 8.6.4: Current Ratio 52 8.6.5: Common Size Analysis 52 8.6.6: Index Analysis 53

CONCLUSIONS AND RECOMMENDATIONS REFERENCES

54 57

APPENDIX
1: Income Statement 2: Balance Sheet 3: Cash flow Statement 4: Internship Letter 5: Evaluation Performa ...

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58 59 60 61 62

DEDICATION
I dedicated my report and work to my parents and respected teachers, whose love and support encouraged for me at every step of my life.

ACKNOWLEDGEMENT

I offer my humblest thanks to ALMIGHTY ALLAH, The most Beneficent and the Most Considerate and the entire source of all knowledge and wisdom. My respectable advisor, whose blessings gave me the insight and knowledge not only to carry out the jobs assigned to me but also to complete this report, I am also grateful to all the staff members of NIB in completing my assignments and for their kind cooperation during my internship, I offer special thanks to: Mr. KHALID RAJA (Branch Manager) Mr. TARIQ (Operation Manager) There are many other people who have been very helpful to me right from the beginning whose names cannot be included due to the scarcity of space and time.

MUHAMMAD AWAIS

EXECUTIVE SUMMARY
A bank is a financial institution that serves as a financial intermediary. Pakistan has a well-developed banking system, which consists of a wide variety of institutions ranging from a central bank to commercial banks and to specialized agencies to cater for special requirements of specific sectors. NIB bank was launched in March 2003. NIB has acquired and merged with PICIC and PICIC Commercial Bank and is now the seventh largest commercial bank in Pakistan. NIB Banks emphasis on growth has resulted in a branch network that covers almost the whole country offering high quality service to a wide spectrum of clients. Under the strong leadership and management, NIB BANK has achieved success in a short period of time. During the past three years it has assumed a brand new identity plied with a spurred vision and revived commitment. NIB Bank Limited provides various financial products and services in Pakistan. The Consumer and Small Enterprises segment offers various banking services, such as lending, deposits, and distribution of insurance products to individual and small businesses through retail banking and alternate distribution network. The banking sector plays a significant role in a contemporary world of money and economy. It influences and facilitates many different but integrated economic activities like resources mobilization, poverty elimination, production and distribution of public finance. The financial crisis accelerated an ongoing fundamental change in the banking industry as banks diversify their services to become more competitive. The financial crisis has allowed stronger banks to buy other banks and companies that provide other financial services at lower prices than before the crisis.

CHAPTER # 01 INDUSTRY OVERVIEW

A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities: A central bank circulates money on behalf of a government and acts as its monetary authority by implementing monetary policy, which regulates the money supply. A commercial bank accepts deposits and pools those funds to provide credit, either directly by lending, or indirectly by investing through the capital markets. Within the global financial markets, these institutions connect market participants with capital deficits (borrowers) to market participants with capital surpluses (investors and lenders) by transferring funds from those parties who have surplus funds to invest (financial assets) to those parties who borrow funds to invest in real assets. A savings bank is similar to a savings and loan association (S&L). They can either be stockholder owned or mutually owned, in which case they are permitted to only borrow from members of the financial cooperative. The asset structure of savings banks and savings and loan associations is similar, with residential mortgage loans providing the principal assets of the institution's portfolio. Because of the important role depository institutions play in the financial system, the banking industry is highly regulated, and government restrictions on financial activities by banks have varied over time and by location.

1.1 Industry Background

Banking is one of the most sensitive businesses all over the world. Banks play very important role in the economy of a country and Pakistan is no exemption. Banks are custodian to the assets of the general masses. The banking sector plays a significant role

in a contemporary world of money and economy. It influences and facilitates many different but integrated economic activities like resources mobilization, poverty elimination, production and distribution of public finance. Pakistan has a well-developed banking system, which consists of a wide variety of institutions ranging from a central bank to commercial banks and to specialized agencies to cater for special requirements of specific sectors. The country started without any worthwhile banking network in 1947 but witnessed phenomenal growth in the first two decades. By 1970, it had acquired a flourishing banking sector. SBP acts as a nucleolus in the financial system of the country. To day, a central bank is the central arch of the monetary and fiscal framework in many countries of the world and its activities are essential for the proper functioning of the economy and critical for the fiscal operations of the government and Pakistans banking system is no exemption. State Bank of Pakistan was established on the first of July 1948 under the SBP order 1948 as the central bank of the country. State Bank of Pakistan reins the monetary and credit system in Pakistan. The SBP is performing many useful functions like custodian of cash reserve of commercial banks, custodian of foreign currency reserves, bank of rediscount, central clearance, settlement and transfer, and conducting monetary policy for the stability of the entire banking industry of Pakistan. The Banking Industry was once a simple and reliable business that took deposits from investors at a lower interest rate and loaned it out to borrowers at a higher rate. The Banking Industry at its core provides access to credit. In the lenders case, this includes access to their own savings and investments, and interest payments on those amounts. In the case of borrowers, it includes access to loans for the creditworthy, at a competitive interest rate. The collapse of the Banking Industry in the Financial Crisis, however, means that some of the more extreme risk-taking and complex securitization activities that banks increasingly engaged in since 2000 will be limited and carefully watched, to ensure that there is not another banking system meltdown in the future. 10

Mortgage banking has been encompassing for the publicity or promotion of the various mortgage loans to investors as well as individuals in the mortgage business. Banking in the small business sector plays an important role. Find various banking services available for small businesses.

1.2 The Banking Industry in Pakistan

Banking is one of the most sensitive businesses all over the world. Banks play very important role in the economy of a country and Pakistan is no exemption. Banks are custodian to the assets of the general masses. The banking sector plays a significant role in a contemporary world of money and economy. It influences and facilitates many different but integrated economic activities like resources mobilization, poverty elimination, production and distribution of public finance. It is purchase of car or building of a home banks are always theyre to serve you better. It is play ground or any educational or healthy societal activity the money of banks nurture them. It is an industrial project or agricultural development of the country the sponsor-ship of banks is very much involved. Banks play very positive and important role in the overall economic development of the country. Pakistan has a well-developed banking system, which consists of a wide variety of institutions ranging from a central bank to commercial banks and to specialized agencies to cater for special requirements of specific sectors. The country started without any worthwhile banking network in 1947 but witnessed phenomenal growth in the first two decades. By 1970, it had acquired a flourishing banking sector.

1.3 Industry Growth / Industry Trends

Declining home prices were one cause of the recent financial crisis. As home values declined, many borrowers stopped paying (defaulted) on their home loans (mortgages.) With prices of houses declining and increasing rates of default, banks suffered large losses. Some banks suffered larger losses than other banks because they made riskier mortgage loans or owned mortgages concentrated in areas of the country with the largest 11

housing price declines. Many banks with large losses were bought by other, stronger banks, or were taken over by the FDIC. NIB Banks emphasis on growth has resulted in a branch network that covers almost the whole country offering high quality service to a wide spectrum of clients. In the year Branch Network increased to 110 giving the bank coverage in 17 cities. To fulfill the increasing demand of its customers NIB has opened new branches. These branches are spread all over the country. They are contributing to the overall development of commercial banking in Pakistan. . The financial crisis accelerated an ongoing fundamental change in the banking industry as banks diversify their services to become more competitive. The financial crisis has allowed stronger banks to buy other banks and companies that provide other financial services at lower prices than before the crisis. Some other financial services that many banks offer their customers include: financial planning and asset management services, brokerage services, and insurance services. Banks purchase companies that offer these services and still offer them through a subsidiary or a third party. The financial crisis also helped commercial banks increase their share of the investment banking industry. Investment banks help companies and governments raise money through the issuance of stocks and bonds. As banks respond to regulatory changes and other changes driven by the financial crisis, the nature of the banking industry will continue to undergo significant change.

Source: Growth in the banking industry

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1.4 Technological Improvements

In the world of banking and finance nothing stands still. The biggest change of all is in the, scope of the business of banking. Banking in its traditional from is concerned with the acceptance of deposits from the customers, the lending of surplus of deposited money to suitable customers who wish to borrow and transmission of funds. Apart from traditional business, banks now a day provide a wide range of services to satisfy the financial and non financial needs of all types of customers from the smallest account holder to the largest company and in some cases of non customers. The range of services offered differs from bank to bank depending mainly on the type and size of the bank. However deregulation and technology led to a revolution in the Banking Industry that saw it transformed. Banks have become global industrial powerhouses that have created ever more complex products that use risk and securitization in models that only PhD students can understand. Through technology development, banking services have become available 24 hours a day, 365 days a week, through ATMs, at online banking, and in electronically enabled exchanges where everything from stocks to currency futures contracts can be traded. Online banking services have developed the banking practices easier worldwide. Mobile banking (also known as M-Banking, m-banking, SMS Banking) is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA). The earliest mobile banking services were offered over SMS. With the introduction of the first primitive smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers.

1.5 Competition in the Banking Industry

Recent developments in the banking industry in emerging economies, such as competition and consolidation, and their implications for systemic stability, were 13

discussed at a meeting of senior central bankers held at the BIS in December 2000. The developments are being driven by technological innovation, deregulation and change in corporate behavior, in some cases accentuated by recent banking crises. Important aspects include privatization of state-owned banks, mergers of domestic banks and entry of foreign banks. Some people are steadfast in their approach to banking and will only bank in a land-based bank that has a secure method of doing business. Other people have been enlightened to the online savings that are available through online banks and are savings lots of money throughout the year on many of their banking needs. These online bankers achieve savings and they know that their money is insured too. Many online banks allow people to create online savings accounts at first just to give people a chance to form an opinion about the level of service that they receive from the bank. When they see that the new savings account is afforded a higher rate of interest, they begin to feel that there is a possibility for online savings after all at an online banking-institution. The new online banking customers might want to test the banking system to see if how it compares to land-based banks. They know that the advertisements said that they would not have to pay any fees when they accessed the money in the savings accounts through an automatic teller machines and when the online banking customer visited a local bank branch they found out that this advertising was true in all respects. Some consumers that bank online realize quite a few online savings throughout the year. Some business policies require copies of checks to remain on file for a certain number of years and the businesses had to pay for that opportunity. Through online banking the businesses realized online savings by being able to download copies of all cancelled checks and statements for each month of the year and no fees were charged for this service. Some online banking customers find online savings by paying all of their bills through

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the online bill paying networks. Many online banks charge no fees for this service but the customer will realize online savings by not having to pay late fees anymore. This methodical method of payment will also help online banking customers to improve their credit rating and receive offers for lower interest rates on home mortgages and credit cards. High yields offered on savings accounts, checking accounts and certificate of deposit investments are online savings that many consumers choose to grab and enjoy the second that they see them. Some families get organized with all of their financial needs and will only do their banking online. With online banking a very ready source of financial stability, people find that it is easier to save money banking online by setting up a bill paying option that allows them to get paid first.

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CHAPTER # 02 INTRODUCTION TO ORGANIZATION

NIB bank was launched in March 2003. NIB has acquired and merged with PICIC and PICIC Commercial Bank and is now the seventh largest commercial bank in Pakistan. Management of NIB Bank accepted the challenge to transform this bank into a highly professional, most efficient & service oriented institution. The management has been successful in fulfilling the undertaken challenge. It has been successful in making a significant contribution to both corporate and retail banking in Pakistan. Over the years, its emphasis on growth has resulted in a strong entity capable of offering high quality services to a wide spectrum of clients, in a highly challenging business environment. Its strategy is to maximize the synergies of branch network through an optimal allocation of financial resources in the face of dynamic challenges of present financial environment. NIB is now the second most highly capitalized bank in the country with paid up capital exceeding Rs.27.5 billion. Apart from commercial banking, NIB through its subsidiaries and affiliates is now also a significant player in the asset management and insurance businesses, thereby providing a wide range of services to their customers.

2.1 Introduction of the Bank

Growth rate during the past year had been 32%. NIB developed innovative and attractive products for its depositors and offered them branded deposit schemes. The market response to these has been more encouraging. Its successful products include are Car Financing, Rupee Travelers Cheques, Saving Certificates, Home Loans, Online Banking etc.

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Nibs advances and loan portfolio grew by 11.62% to Rs.10.220 billion. Credit rating by PACRA (Pakistan Credit Rating Agency) rated NIB BANK as AA for long term and A1+ for short term. Both ratings are investment grade and denote very high credit quality and very low expectation of credit risk Bank is in the process of acquiring a 15% stake in banking company in Bangladesh. This acquisition will not only help NIB in promoting bilateral trade with Bangladesh, but also help in the initiation of business with other countries. NIB invests heavily in the technological development and advancement of various procedures. It has achieved efficiency through automation and computerization of banking activities. IT department of NIB has developed PIBAS, which is an advanced computer program. NIB BANK is working on a program to increase its ATM installations. It also expects to be online with SWIFT soon.

2.2 History of the Bank

NIB Bank Limited started as NDLC-IFIC Bank Ltd., which was incorporated in March 2003 as a public limited company. It started operations in October 2003 when all assets, liabilities, rights and obligations of the former National Development Leasing Corporation (NDLC) and Pakistan operations of IFIC were amalgamated with and into the bank with a paid up capital of Rs.1.2bn. In April 2004 the Pakistan operations of Credit Agricole Indosuez were also amalgamated with and into NIB. In March 2005 Temasek Holdings of Singapore acquired 25% shareholding in NIB Bank, through Bugis Investments. This shareholding was further enhanced to over 70% (Seventy Percent) in June 2005 following an increase in Nibs paid up capital to Rs.3.4bn. NIB Bank has since grown rapidly from a base of 2 branches in 2003 to 45 in the 4th quarter of 2007. Total assets have grown from Rs.9bn in December 2003 to Rs.87bn (excluding acquisition of PICIC through rights) as of September 30 2007, a CAGR of 85%. Loan growth has been equally rapid, increasing from Rs.7bn to Rs.43bn in the same period (a CAGR of 64%), resulting from successes in both the commercial and consumer business. Deposits for the same period have grown at a CAGR of 95%, reaching Rs.45.3bn. The overall client base of NIB has also witnessed a tremendous growth in the

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same period as of September 2007, from a few thousand to over one hundred thousand. NIB Bank's vision is to rank amongst the top 5 banks in the country. Therefore towards end of June 2007 it acquired majority shares of PICIC with the aim of merging PICIC and its commercial banking subsidiary PICIC Commercial Bank Limited into NIB. The acquisition was financed through the country's largest private sector rights issue, with resultant increase in NIBs paid up capital to Rs.21.4bn. The PICIC acquisition has bought with it another subsidiary "PICIC DFI" and an affiliate "PICIC Insurance". NIB already has a shareholding in NAFA, an Asset Management Company thus its asset management business will now also be increased, with diversification in the The legal merger of PICIC, NIB & PCBL took place on December 31, 2007, once all regulatory approvals were in place. Karajan Iqbal Hassan, supported by four business heads and ten business enabling function heads, leads NIB Bank. The merger has resulted in a vastly expanded network of 240 branches and total assets of over Rs.185bn. Consequently NIB has the second highest paid up capital of around Rs.27.5bn and ranks number 7 amongst commercial banks in terms of distribution network. Merger synergies will accrue through lower cost deposits enhanced customer service delivery channels and overall improved efficiencies. These would provide a competitive edge in the face of increasing competition. Temasek Holdings remains the largest single investor in NIB Bank. This merger is one step forward in consolidating the banking sector as envisioned by State Bank of Pakistan and enhancing FDI as per the Government of Pakistan's objectives. The powerful franchise of the three merged entities has now been brought together to form a large and powerful bank. Going forward management is confident that the combined bank will be a top performer delivering a wide range of financial services through an extensive branch network. The asset management arms and insurance affiliate are also expected to perform well and provide an attractive dividend stream.

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2.3 Achievements
Temasek Holdings remains the single largest investor in NIB. To realize its aggressive growth objectives NIB has developed a segmentation strategy through which it will offer a unique banking experience to customers in each of its Corporate, Commercial and Consumer business segments. For this purpose NIB has organized itself around two specific principles. First, NIB will be a customer-centric organization, which means that in whatever it does, the customer will always come first. Second, there will be a strong focus on efficiency, which means that whatever NIB it will does in the shortest possible time and at the lowest possible cost. Under the strong leadership and management, NIB BANK has achieved success in a short period of time. During the past three years it has assumed a brand new identity plied with a spurred vision and revived commitment. The board and management of the bank have implemented strategies and policies to carve a distinct position for the Bank in the market place. A paragon of strength has played a pivotal role in helping the Bank cross major milestones as a single source financial service provider of Corporate and Retail banking solution. The growing client base is a manifestation of its recognition in the market place. It made a significant progress despite the keen and challenging business environment. It made notable progress in business volume, efficiency and profitability following its increased involvement in trade finance, commercial lending, and foreign exchange and money market operations. By the year 2004 NIB has been successful on further mobilization of resources by attracting low cost and stable deposits.

2.4 The Hierarchy / Organizational Chart of the Bank

2.4.1 Company Information Board of Directors Francis Andrew Rozario Mahmud al Huq Bhuiyan Chairman Director

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Phua Kok Kim Syed Amir Zaidi Tan so Nan Thomas Patric Sodano Willie Wai Kong Chan

Director Director Director Director Director

Board Audit Committee

Tan Soo Nan Mahmud al Huq Bhuiyan Syed Amir Zaidi

Chairman Member Member

Company Secretary Chief Financial Officer Registered Office

Imran Ahmed Mirza Yameen Kerai Muhammadi House Chundrigar Road Karachi-74000 UAN :( 021) 111-33-111 Email: info@nibpk.com URL: www.nibpk.com

Auditors

M/S.M. Yousaf adil Saleem & Co

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Chartered Accountants Legal Advisors M/S. Rizvi, Isa, Afridi & Angell Advocates & Corporate Counselors Credit Rating Long term: A+ Short term: A1 Out look: Positive Credit Rating Agency: PACRA

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B ra n c h S e rv ic e D e liv e ry m a n a g e r
This diagram shows the working network of the organization. At the top, the branch manager is working and than middle managers and than supervisors and relationship officers.

CHAPTER # 03
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C & T s u p e rv is o r

Su

PRODUCTS AND SERVICES

NIB Bank Limited provides various financial products and services in Pakistan. The company operates through four segments: Corporate and Investment Banking, Consumer and Small Enterprises, Small and Medium Enterprises and Commercial, and treasury. The Corporate and Investment Banking segment provides finance, export finance, trade finance, leasing, lending, guarantees, and bills of exchange relating to its corporate and commercial customers, as well as engages in advisory, underwriting, and initial public offering related activities. Banking services include transactional services, such as verification of account details, account balance details and the transfer of funds, as well as advisory services, that help individuals and institutions to properly plan and manage their finances. Online banking channels have become key in the last 10 years.

3.1 Offerings to Customers

The Consumer and Small Enterprises segment offers various banking services, such as lending, deposits, and distribution of insurance products to individual and small businesses through retail banking and alternate distribution network. The Small and Medium Enterprises, and Commercial segment provide funded and non-funded credit facilities, deposit products and transaction services to manufacturing, trade, wholesale, and service sectors. This segment also offers trade finance; export and import finance, such as letter of credit, shipping guarantees, finance against trust receipt, and finance against imported merchandise; and guarantees. The Treasury segment offers foreign exchange services. The companys also provides capital market services, including money market services, and treasury marketing services. It has 223 branches. NIB Bank Limited was incorporated in 2003 and is based in Karachi, Pakistan. NIB Bank Limited is a subsidiary of Bugis Investments (Mauritius) Pte. Limited.

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3.2 Banking Network

An inter-bank network, also known as an ATM consortium or ATM network, is a computer network that connects the ATMs of different banks and permits these ATMs to interact with the ATM cards of non-native banks. While inter-bank networks provide capabilities for all ATM cards within the same network to use other banks' ATMs that belong to the same network, the services vary. For instance, when a person uses their ATM card at an ATM that does not belong to their bank, the basic services, such as balance inquiries and withdrawals are usually available. However, special services, such as the purchase of mobile phone airtime, may not accessible to ATM cardholders of banks other than the ATM cardholders of the acquirer (the bank that owns the ATM). Furthermore, banks may charge a fee to users of cards that do not come that are members of the network when their own bank's ATM is unavailable. from their own bank (in addition to any fees imposed by the bank of the card the person is using). Inter-bank networks are convenient because people can access the ATMs of other banks. NIB Bank, operating with the countrywide network of 240 branches plus an offshore until at end at 2009, commenced its operations in 2003. NIB Bank (Salam Segment) has a business interest spread across a wide range of economic and industrial sectors. NIB Bank offers a full range of services to the corporate, middle market and retail segments. The bank has established an image of efficiency and professionalism, attributable in part to its policy of maximum technology utilization offering facilities such as online real time banking, ATMs, telephone and Internet banking and cash management services. Off shore banking unit in Ukraine, established with the primary objective of capacity building of the bank, has started generating profits though the contribution is modest. The asset base of the bank has grown steadily over the years and the NIB Bank has emerged as one of the four local banks with assets base of over one billion rupees. While the bank continues to rely on organic growth, the management continues to explore the options of an acquisition that would lead to a quantum leap in the banks size. 24

The new President subsequent to the completion of term of the previous one assumed the office. However except this change the senior management comprising experienced and distinguished bankers remains the same. While the new banking president has extensive banking services including two years at NIB Bank, he faces the daunting task of preserving the banks relative position in the fast changing sector dynamics. NIB Bank expanded its network mainly in the last quarter of 2007. The bank at the same time maintained the consistent growth during the year, which helped it in improving its system share. Although increasing concentration on consumer financing entails high risk, the continuing focus on personal loans to corporate employees and increasing focus on mortgage loans has enabled the bank to keep delinquencies in consumer portfolio at relatively lower risks. The banks in terms of both ROA and ROE, declined during 2007 primarily in the absence of one off sizeable capital gains realized during the year. However the performance based on core business showed the marginal improvement. Investment portfolio comprises 33% of total assets. The portfolio is predominantly concentrated in government securities (79%) with higher proportion of treasury bills, implying low interest rate risks.

3.3 Terms and Conditions

3.3.1 Personal Banking Terms and Conditions Deposit Products Terms and Conditions Personal Lending Supplementary Terms and Conditions Cash Passport terms and conditions

3.3.2 Credit Card Terms and Conditions Credit card services and benefits guide Credit card fees and charges guide Your guide to understanding interest Gold card Description of insurance cover

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Platinum card Description of insurance cover Non Cash Payment Facilities terms and conditions Telephone Direct Debit Request Service Agreement

3.3.3 Business Banking Terms and Conditions Business Transaction and Investment Accounts Terms and Conditions Business Visa Debit Transit Accident Insurance and Un-authorized Transactions Insurance Terms and Conditions Business Lending Supplementary Terms and Conditions Merchant Facilities Terms and Conditions

3.3.4 Electronic Banking Terms and Conditions Electronic Banking Terms and Conditions

3.3.5 Government Guarantee Terms and Conditions Government Guarantee Wholesale Funding - Supplementary Product Disclosure Statement Government Deposit Guarantee - Terms and Conditions and Supplementary Product Disclosure Statement.

CHAPTER # 04

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DEPARTMENTS

Each bank will be set-up differently, but the general departments are: deposits, lending, and operations. A deposit is often referred to as "retail". There are a number of different departments within banks. The following is a list of departments at a bank: Finance Compliance Investment research Investment management Legal and management controls Private equity Operations Services Information Risk Management IT

There are so many departments in the bank and the working of each department is different from another. In the functioning of each bank, the central bank plays a very important role. A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on printing the national currency, which usually serves as the nation's legal tender. The primary function of a central bank is to provide the nation's money supply, but more active duties include controlling interest rates, and acting as a lender of last resort to the 27

banking sector during times of financial crisis. It may also have supervisory powers, to ensure that banks and other financial institutions do not behave recklessly or fraudulently. Central banks in most developed nations are independent in that they operate under rules designed to render them free from political interference. Examples include the European Central Bank (ECB), the Bank of England, and the Federal Reserve System of the United States.

4.1 Marketing
The function of the marketing department of a bank is to advertise about the bank and reach more potential customers who would open accounts with the bank. Just like a retail company, banks have products or services that they sell to the public to gain profits or funds to operate the business and make loans. Therefore they need a marketing department to produce brochures, radio, print or TV ads, and generally promote those products and services in the community. They may also organize events and sponsor local groups to raise awareness and increase loans, services and deposits.

4.2 HR
Its wrong to think that HR is only about dealing directly with people face-to-face. Theres far more to it than just doing interviews, being a shoulder to cry on, and dealing with complaints about colleagues. In fact there are lots of different roles you can do in HR. In most banks youll find theres an opportunity to work in either a general role or to specialize. The existence of a human resources department is vital to overall productivity and efficiency of the strong workforce in any thriving company. In most professional organizations, the role of the human resources department is not sidelined or eclipsed by other departments. In fact, good human resources can be one of the most valued and respected departments in an organization; their job is people, and people are the companys most important asset. One of the major roles of a Human Resource Department in a successful business involves a lot of observation and analysis from behind the scenes. The intelligence of the human resource staffs involves a compilation

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of complex data and metrics that follows the performance of individual employees. Their specific job is to make the workforce competent is a vital task. The sensitive nature of human relations and the work of human resource will adequately needed in making the managements tough decisions. And the essential part is keeping a secret behind the close door meetings of who is going to let go, which is going to promote and who is going to hire.

4.3 Finance
The role of finance department is very difficult because even the best risk management techniques cannot guarantee against losses, banks cannot rely on deposits alone to fund their investments. Funding also comes from shareowners equity, which means that bank managers must concern themselves with the value of the banks equity capital as well as the composition of the banks assets and liabilities. A banks shareholders, however, are residual claimants, meaning that they may share in the banks profits but are also the first to bear any losses stemming from bad loans or failed investments.

4.4 IT
The role of information technology in the banking industry has changed dramatically. IT has made e-business possible in this industry. One of the internal networks that allow the bank to do e-business its sales force automation and analytics e-Business solutions which helps streamline operations and increase customer loyalty and sales effectiveness throughout its nationwide commercial sales force and network of all its branches.

4.5 Clearing
Banks process checks that customers deposit with them. A bank's check processing department clears the checks. Whether a check is processed as a paper check or processed electronically, however, a bank's function in clearing the check remains the same.

4.6 Cash Deposits and Receipts

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Functions of cash are one of the most important functions of the Bank. It is of extreme necessity that the cashiers and officers as well as other staffs of the bank should understand this very well. The Receiving Cashier/Teller from the customers on banks printed form called pay-inslip will receive cash. The concerned Receiving Cashier/Teller will ensure that the name of the account holder, account number, name of the branch, date, denominations of the notes and coins are legibly written on the pay-in-slips. He/She must also ensure that the person depositing the cash signs the pay-in-slips. After counting the cash carefully, the Receiving Cashier/Teller put the 'Cash Received' stamp with date and enters the amount in the Teller's Cash Proof Sheet under a Serial Number, which will also be put in the both part of the pay-in-slip with joint signature of the concerned Teller and the Head Teller.

CHAPTER # 05

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INTERNSHIP EXPERIENCE

I entered the program in June 14, 2010. I met my supervisor who seemed fantastic. He had created a motivating list of tasks and assignments that I would complete during the internship. Due to my job, I had been a sufficient duration to personally observe and experience the working and analyze certain factors related to the environment of all the departments in the branch. Internship is a system of on-the-job training for white-collar jobs, similar to an apprenticeship. An internship may be either paid, unpaid or partially paid. The act of job shadowing may also constitute interning. Experience as a general concept comprises knowledge of or skill in or observation of some thing or some event gained through involvement in or exposure to that thing or event.

5.1 Positive Dimension of Experience and Learning

It involves the following: 5.1.1 Dynamic & Advanced Application The Bank employed skilled and professional approach to management, which took a series of successive measures to make the people of Pakistan banking, and savingminded. This dynamic approach and personalized service met the expectations of the customers. 5.1.2 Customer Orientations and Personal The banker customer relationship attained a new dimension courtesy the politeness and efficiency of professionally trained staff and fair induction policies of its Human Resource Department (HRD). Convenience of the customers has been the sole criterion of this relationship. The introduction of different schemes, good atmosphere, proper guidance and team effort have proven to be the catalyst in not only improving the financial standing of the bank but has also been the source of the prestige it holds today.

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5.1.3 Professional Style of Management Although the concept of professional management is still in its transition stage in NIB bank from the very first day employed skilled and professional management, which had the capacity to take quick decisions and respond to the changing business conditions. 5.1.4 Modern Banking Policies With the entry of NIB bank and a new era, banking underwent a complete metamorphosis. When NIB bank challenged the major banks of the time due to quality services they began to evaluate their policies and were surprised to find that they had a lot to change. Before long, they began to change and adopt a more modern and relevant strategy. 5.1.5 Check Clearing Department It involves inward clearing and outward clearing. In inward clearing department the bank receives the checks from other banks of their account-holders, and in outward clearing department the bank sent the checks to other banks. 5.1.6 Loan Department This department approves the loan for the different kinds of salaried people after considering their pay slips and utility bills etc. It provides loan for the asset purchase and also provides the personal loans but didnt provide the huge amount of loans without the approval of committee. 5.1.7 Account Opening The role of this department is to open an account for different persons and of different kinds, e.g: saving, current, fix etc.

5.2 Negative Dimension of Experience and Learning

It involves the following: 32

Departmental Problems at the Branch The following are some of the problems and shortcomings that were inevitably prominent. 5.2.1 Deposit Department In order to save time the addresses filled in the required section of the account opening forms are filled without confirming that they are appropriate for using for correspondence purposes in case of any notifications to be sent to the customers. The present format of the account opening forms seems more complicated to the lessereducated customer and hence he takes it away to be filled with somebodys help, but unfortunately, rarely comes back. 5.2.2 Cash Department Rare instances of fake currency notes result in loss to the branch and the cashier who accepted them, that affects their work negatively. Manual counting system by the cashiers is a very time consuming exercise, especially if there is a rush of customers. The carelessness of the officers at times result in delay of collection, as the original advice is lost in post and proper filing of the copy is not done. The same officer of the branch does the posting of the bills and cheques, clearing and collection that result in unnecessary delay. For the working of ATM, the cash manager is responsible.

5.2.3 Insurance Department This department is responsible for the protecting people from any accidental loss of an asset.

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CHAPTER # 06 SWOT ANALYSIS

34

The SWOT analysis is done by the organization for the environmental scanning. It is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning has been the subject of much research. Strengths: characteristics of the business or team that give it an advantage over others in the industry. Weaknesses: are characteristics that place the firm at a disadvantage relative to others. Opportunities: external chances to make greater sales or profits in the environment. Threats: external elements in the environment that could cause trouble for the business. NIB SWOT analysis is given below:

6.1 Strengths
NIB Bank brand image is its major strength. It has always been considered as the pillar of the country economic scenario assets wise or balance sheet wise. Its image, work force, network and reputation have created a sentimental and emotional attachment of the people with the bank. Complete computerized working is other strength of the bank. Now the bank has the ability to complete with any multinational bank as to keep pace with the changing and fast growing world of today computer have become necessities. The reserve funds indicate positive sign as they have increased as compared to the previous years. Another competitive edge that the bank has on the rest of the competitors is its

35

expanding business worldwide catering for a large and vast group of customer and maintaining standards of excellence globally and other strength of NIB. 6.1.1 Organization Culture Nibs organization culture was very friendly and interesting. Employees have created a very cooperative environment among each other. They have created loyalty toward the organization by deviating their future efforts and energies. The employees take the organizational problem personals and try their best the prosperity of the organization. 6.1.2 Industrial Policies NIB helps the government on the implementation of its industrial policies with respect to economical growth of the country. 6.1.3 Best Research Appraisal Team Before the project financing NIB has the research appraisal team that justifies the economic and financial feasibility of not project in the future. That is the strength is the scare that it helps the organization from any loss that is to over in the future in case of failure of the project. 6.1.4 Lenient Policy with the Clients This is one of the best policies of NIB that it does not rude behavior with this client if they make late in their repayment of loan. But it has adopts lenient way in dealing with them, it helps its customers in the repayment making rescheduling and restructuring of their loans. 6.1.5 Young Generation NIB has young generation aged 27 to 30 graduates that would be helpful to maintain the quality of their service by hiring new graduates but also would be helpful changing the overall culture of the organization.

6.2 Weaknesses
NIB Bank created its own weakness by downsizing. Due to downsizing various

36

experienced and devoted employees were either forced or given the option to leave. Only those people were left who had no organization better to join. Due to right sizing a lot of confusions have taken place as well. For example higher-level management has come from institution or other organizations where everything is computerized. Whereas have by ten staff members hence, the higher management finds it difficult to get work done. From 1995 onward bank exhibits a downward trend indicating its low performance-showing decline in total assets. Total deposits, saving deposits advances investment and total income. This downward trend can cause a great threat to the bank as its competitors are talking its market share, which can cause ruining the image and reputation of the thus posing danger in the long run, the graph depicts a decline in the performance of the bank. 6.2.1 Less Attention to the Rural Development Nibs portfolio shows that it has made project financing only in the major cities of Pakistan. But a reasonable attention is needed in the project financing of the rural based industrial project of the country. 6.2.2 Poor Advertisement NIB is very poor in advertising itself and institution that works a lot in the development of the country but unfortunately in the business community most of the people are in award of it. 6.2.3 Poor Network NIB has only 240 branches all over the Pakistan and in major cities of Pakistan in which other competitors has their branches NIB dont have: The formalities involved in getting loans are time concerning and complicated enough. It is observed that most of the loans, which have been granted on political basis, are either default or their loans are forcefully written off. It is seemed that the recovery system of NIB is not effective thats why number of defaulters is increasing at the growing age.

6.3 Opportunities

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NIB Bank has very bright prospects for the future. They plan to region their lost glory not only in terms of profitability but also include latest technology and competent work force. Furthermore, NIB is the only bank which is providing facility of bills collecting from 9 a.m. to 5 p.m. NIB is considering setting up an exclusive utility Bank in collaboration with a private firm, which would provide this service for 12 hours. 6.3.1 Sponsor the IT Based Projects This is the best opportunity available to all banks and NIB as well, to sponsor the IT and computer based projects because the coming century is the century of information technology as now days all the business community is diverting its attention towards this field. 6.3.2 Goodwill and Better Image NIB has advantage of generating more deposits and attracting valuable customers due to its better image in the business community. NIB has also advantage of increasing credit lines. This is only due its good dealing and better image that NIB has directly acquired those lines of credit from abroad that are only acquired by it, this better image can help further NIB in explanation of its activities. 6.3.3 Growth in the Industrial Sector Nibs major function is the project financing and it is doing it with full efforts. Fortunately industrial sector is nowadays is Pakistan is again growing thus increasing the business opportunities for NIB. Especially the textile sector is one again improving even the sick projects has resumed their operations.

6.4 Threats
If there is a threat to the whole economy, it will pose a threat for NIB Bank, NIB Bank does not consider small bank a threat to its existence because the way NIB Bank can accommodate large customer, and these small banks cannot. Sanctions imposed against Pakistan will affect exchange business whereas the freezing of accounts by State Bank of Pakistan have also caused problems for NIB Bank. But the recent facts and figures

38

indicate that the banks major rivals lime NIB Bank and SME are causing threats to the bank in the long run thus snatching away the market share by attracting a large number of customer due to the their rising standards giving service and value added products and other major threats as under: 6.4.1 Political Influence and Instability This is the major threat for any business organization in Pakistan because the political officials influence NIB in financing those projects which are not viable or write off those loans which are still able to pay, this political influence cause many problems in daily business thus profitability of NIB. 6.4.2 Sick Projects Nibs sick projects are increasing day by day due to economic downfall. As our economy is weakening day by day the number of side projects are becoming sick increasingly thus influencing the profitability even survival of NIB.

6.5 Summarized Analysis

Complete computerized working is strength of the bank. Now the bank has the ability to complete with any multinational bank as to keep pace with the changing and fast growing world of today computer have become necessities. Due to downsizing various experienced and devoted employees were either forced or given the option to leave. Only those people were left who had no organization better to join. Because of their computerized working strength they plan to region their lost glory not only in terms of profitability but also include latest technology and competent work force. If there is a threat to the whole economy, it will pose a threat for NIB Bank, NIB Bank does not consider small bank a threat to its existence because the way NIB Bank can accommodate large customer, and these small banks cannot. This computerized technology can also be the reason for any major threat because due to downsizing various experienced and devoted employees after the coming of new technology.

CHAPTER # 07
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PEST ANALYSIS

PEST analysis of any industry sector investigates the important factors that are affecting the industry and influencing the companies operating in that sector. PEST is an acronym for political, economic, social and technological analysis. Political factors include government policies relating to the industry, tax policies, laws and regulations, trade restrictions and tariffs etc. The economic factors relate to changes in the wider economy such as economic growth, interest rates, exchange rates and inflation rate, etc. Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, changes in tastes and buying patterns, etc. The technological factors relate to the application of new inventions and ideas such as R&D activity, automation, technology incentives and the rate of technological change.

7.1 Political Factors

Government policies affect the banking sector. Sometimes looking into the political advantage of a particular party, the government declares some measures to their benefits like waiver of short-term agricultural loans, to attract the farmers votes. By doing so the profits of the bank get affected. Various banks in the cooperative sector are open and run by the politicians. They exploit these banks for their benefits. Sometimes the government appoints various chairmen of the banks.

7.2 Economic Factors

Staff cost Operating cost Bad debt Constraints in mobilization of public savings because of inflation

7.3 Social Factors

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Inadequate human resources Cultural strain to savings Defaulters lobby Declining education and work ethics Inadequate accountability Adequate empowerment

7.4 Technological Factors

Inadequate communication infrastructure Inadequate computer facilities Inadequate IT training.

Chapter # 8
41

FINANCIAL ANALYSIS

Financial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It refers to the assessment of a business to deal with the planning, budgeting, monitoring, forecasting, and improving of all financial details within an organization. There are various methods or techniques that are used in analyzing financial statements, such as comparative statements, schedule of changes in working
capital,

common size percentages, funds analysis, trend analysis, and ratios analysis. The

process of evaluating businesses, projects, budgets and other finance-related entities to determine their suitability for investment. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and cash flow statement. In addition, one key area of financial analysis involves extrapolating the company's past performance into an estimate of the company's future performance.

8.1 Horizontal Analysis

Comparison of two or more year's financial data is known as horizontal analysis, or trend analysis. It is the division of every expense item in a specific year by an identical expense item derived from the base year. Calculation enables measurement of changes in the comparative importance of expense items over the years. Also evaluates how expense items influences changes in sales.

Horizontal analysis

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31-Dec Assets
Cash and balances with treasury

2006

2007

2008

2009

Lending to financial institutions Investments - net Advances - net Operating Fixed assets Other assets Total assets - net of provisions Liabilities Customer deposits Inter bank borrowings Bills payable Other liabilities Sub-ordinated loans Total Liabilities Share capital Reserves Un - appropriated profit / (loss) Equity - Tier I Surplus on revaluation of assets Total Equity

100% 100% 100% 100% 100% 100% 100%

110.00% 105.30% 140.70% 146.30% 98.30% 101.30% 131.80%

160.90% 37.60% 110.30% 274% 181.80% 113.60% 163.90%

220.80% 124% 115.30% 354.20% 248.30% 155.20% 214.50%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

110.70% 470.50% 143.00% 113.10% 119.10% 414.30% 1066.20% -97.30% 194.00% 90.30% 258.00%

141.30% 363.80% 138.10% 157.70% 146.50% 422.20% 1020.60% 42.10% 265.20% 182.80% 366.10%

180.40% 690.90% 128.50% 180.60% 192.90% 422.20% 1099.40% 86.40% 333.30% 163.00% 445.00%

8.2 Vertical Analysis

Vertical analysis is the procedure of preparing and presenting common size statements. Common size statement is one that shows the items appearing on it in percentage form as well as in dollar form. Each item is stated as a percentage of some total of which that item is a part.

Vertical Analysis

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31-Dec Assets
Cash and balances with treasury

2006

2007

2008

2009

Lending to financial institutions Investments net Advances net Operating Fixed assets Other assets Total assets - net of provisions

9.50% 13.10% 34.70% 34.60% 2.20% 5.90% 100%

8.00% 9.40% 9.80% 10.40% 3.00% 7.60% 37.00% 23.30% 18.60% 38.40% 57.70% 57.20% 1.60% 2.50% 2.60% 4.60% 4.10% 4.30% 100% 100% 1000%

Liabilities Customer deposits Inter bank borrowings Bills payable Other liabilities Sub-ordinate loans Total Liabilities Share capital Reserves Un appropriated profit / (loss) Equity - Tier I Surplus on revaluation of assets Total Equity 97.20% 2.30% 1.50% 2.40% 103.40% 0.90% 7.30% -5.50% -4.10% 0.80% -3.40% 81.60% 83.80% 81.70% 8.10% 5.00% 7.30% 1.60% 1.30% 0.90% 2.10% 2.30% 2.00% 1.00% 93.40% 92.40% 93.00% 2.80% 2.30% 1.80% 3.00% 2.40% 1.90% -4.10% 1.40% 2.25% 6.10% 6.70% 6.40% 0.50% 0.80% 0.60% 6.60% 7.60% 7.00%

8.4 Ratio Analysis

A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis. Financial ratio analysis is used to find the success rates, disabilities, advancements and potentials of a business

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RATIO ANALYSIS
Return on Shareholders Equity

Formulas
(100 x Net Profit After Tax) Shareholders Equity

2008
17.0962

2009
20.7706

PROFITABILITY MEASURES Gross Profit Margin Profit Margin Earning per share (Rs.) (100 x Gross Profit) 69.3113 37.7878 21.5089 68.8620 38.8739 24.0065

Net Sales (100 x Net Profit After Tax) Net Sales Net Profit After Tax

Outstanding Shares TESTS OF INVESTMENT

UTILISATION Assets turnover (times) Net Total Assets Sales 0.0582 0.0689

TESTS OF FINANCIAL CODITION Current Ratio Current Current Liabilities Debt/Equity Ratio Interest cover Total Shareholders Equity EBIT Interest Expense Debt 0.2426 3.2585 0.2209 3.2115 Assets 1.1702 1.1875

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Common Size of Income Statement

COMMON SIZE OF PROFIT AND LOSS ACCOUNT

2009 Mark-up/returne/intrest earned Mark-up/returne/intrest expansed Net mark-up/intrest income Provision against non-performing advances Provision for diminution in value of investments Provision agaist off balance sheet obligations Bad debts written off directly Net mark-up/intrest income after provisions NON MARK-UP/INTEREST INCOME Fee commision and brokerage income Divedend income Income from dealing in foreign currencies Other Income Total non mark-up/intrest income NON MARK -UP/INTREST EXPENSES Administrative expense Other provision /write offs Other charges Total non mark-up/intrest expence Staff Welfare Fund Profit before tax Total Tax Profit after tax Unappropriated profit brought forward Transfer from surplus on revaluation of fixed assets 60.09 21.21 38.87 44.24 56.66 18.87 37.79 27.24 0.13 30.70 -0.04 0.48 31.14 60.09 33.29 0.59 0.19 34.06 56.66 14.03 6.60 3.05 4.09 27.78 91.22 14.65 5.11 3.58 4.68 28.02 90.72 0.01 5.42 63.45 0.07 6.61 62.70 100 31.14 68.86 7.02 -1.62 2008 100 30.69 69.31 7.27 -0.73

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Common Size Analysis of Balance Sheet

COMMON SIZE OF BALANCE SHEET

2009 ASSETS Cash and balance with teasury bank Balances with other banks Money at call and short notice lending to fianancial instituations Investment Advance Other assets Operating fixed assets Capital work in progress Defferred assets Total Assets LIABILITIES Bills payable Borowing from financial instituation Deposits and other accounts Sub-ordinates loans Liabilities againt asset subject to finance lease Other liabilties Deferred tax liabilities NET ASSETS Share capital 1.12% 1.02 1.67% 1.84% 79.02% 0.00% 4.19% 0.38% 87 0.30 1.52 80.22 0.0029 4.32 0.77 87 12.38% 6.40% 3.62% 22.03% 49.77% 4.27% 1.52% 2008 12.32 5.37 2.82 27.17 46.53 4.14 1.64

100

100

Index Analysis 47

Index Analysis of Balance Sheet

ASSETS Cash and balance with teasury bank Balances with other banks lending to fianancial instituations Investment Advance Other assets Operating fixed assets Total assets

2009 83 82 219 97 143 148 105 116

2008 128 86 75 109 191 87 117 133

2007 100 100 100 100 100 100 100 100

LIABILITIES Bills payable Borowing from financial instituation Deposits and other accounts Liabilities againt asset subject to fianance lease Other liabilties Deferred tax liabilities Total liabilities NET ASSETS 147 106 108 78 116 0 109 191 52 87 128 22 84 157 123 311 100 100 100 100 100 0 100 100

Share capital Reserves Unappropriated profit

144 125 348

158 189 491

100 100 100

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