Humayoun Ahmad Farooqi

MC080203376
MBA (Finance)
National Bank of Pakistan
Internship Report
Brief Introduction of the organization
Overview of Organization
 Vision
To be recognized as a leader and a brand synonymous with
trust, highest standards of service quality, international best
practices and social responsibility.
 Mission
NBP will aspire to the values that make NBP truly the Nation’s
Bank, by:
Institutionalizing a merit and performance culture
Creating a distinctive brand identity by providing the highest
standards of services
Adopting the best international management practices
Maximizing stake-holders value
Discharging our responsibility as a good corporate citizen of
Pakistan and in countries where we operate
Brief Introduction of the organization
Overview of Organization

 Brief history of Organization

• Established vide NBP Ordinance No. XIX of
November 9. 1949
• Awards and achievements
 Nature of Organization
• Financial Institution
• Largest commercial bank in Pakistan
• Government Organization
• Islamic Banking
Brief Introduction of the organization
Business Volume
Particulars Year ending 2008
Paid up Capital Rs. 8,969,751,000
Shares holders equity and Reserves Rs. 81,367,002,000
Deposits Rs. 624,939,016,000
Advances-net Rs. 412,986,865,000
Investment-net Rs. 170,822,491,000
Total Assets Rs. 817,758,326,000
Pre-Tax Profit Rs. 23,000,998,000
After-Tax Profit Rs. 15,458,590,000
No. of Branches 1,276
No. of Employees 15,204
Brief Introduction of the organization
Competitors of Organization

 Habib Bank Limited

 United Bank Limited
 Muslim Commercial Bank Limited
 Allied Bank Limited
 Askari Commercial Bank Limited
 Soneri Bank Limited
 Bank Al-Habib Limited
 Bank Al-Falah Limited.
 Standard Chartered Bank Limited
 Other local and foreign banks operating in
Pakistan
Organizational Hierarchy Chart
President

Director/ Senior Executive Vice President

Provincial or Regional Chiefs/ Executive Vice Presidents

Vice President

Assistant Vice President

Officer Grade I

Officer Grade II

Officer Grade III

Clerical / Non-Clerical Staff

Training Program

 General Banking Department

• Opening an Account
• Accepting Deposits
• Making Payments
• Govt. Receipts and Payments
 Advances/Credit Department
• Retail Advances
• Commercial Advances
Structure of Finance Department
Hierarchy of Finance Department

Branch Manager

Retail Officer Credit Officer

Clerical/ Non clerical staff Clerical/ Non clerical staff

 Functions of Finance
Department
 Accounting system of Organization
• Double entry
• Accrual system
 Finance system of Organization
• Investing and lending
• Holding up cash position for other financial
institutions
 Use of electronic Data in decision
making
• Core Banking Application
• Electronic Banking system
 Functions of Finance
Department
 Sources of Funds
Deposits and Mark up/interest/return
Fee, commission and brokerage
Dividend Income
Others
 Allocation of Funds
Providing loans
Expenses
Critical Analysis
Balance Sheet As at December,31 2008
Critical Analysis
Profit & Loss Account for the year ended
December 31, 2008
Critical Analysis
Cash Flow Statement for the year ended
December 31, 2008
Critical Analysis
Statement of changes in equity for the year
ended December 31, 2008
Critical Analysis
Ratio Analysis

 Liquidity Ratios
 Leverage Ratios
 Profitability Ratios
 Activity Ratios
 Market Ratios
 Statement of Cash flow Ratios
 Other Ratios
Critical Analysis
Liquidity Ratios

Current Ratio = (Current Assets/Current Liabilities) *100

where current Assets = Cash and balance with treasury banks + Balances
with other banks + Short term lending to financial institutions
Current Liabilities = Bills payable + Borrowing + other Short term liabilities
2006 2007 2008
142279638/ 524181985 153810681/ 609784513 161976396/ 675617003
27.14% 25.22% 23.97 %

28.00%

26.00%

24.00%

22.00%

2006 2007 2008

Critical Analysis
Liquidity Ratios

Acid Test Ratio = (Current Assets-Prepaid Expenses/Current Liabilities)

*100
2006 2007 2008
(142279638 – (153810681 – (1611976396 –
23012732)/ 21464600) / 17128032)/
524181985 609784513 675617003)
22.7 % 21.7 % 21.4%
22.80%
2006

22.40%

22.00%

2007
21.60%
2008
21.20%
2006 2007 2008
 Critical Analysis
Liquidity Ratios

Sales to working capital ratio = (interest earned/Working Capital)*100

Where working capital= Current assets- current liabilities
2006 2007 2008
142279638 – 153810681 - 161976396 –
Working capital 524181985= 609784513 = 675617003 =
38190234700 4559783200 9440939300
Interest earned / (43788628/ (50569481/ (50569481/
working capital 38190234700) 4559783200) 4559783200)
0.11% 1.1% 0.64%
Critical Analysis
Leverage Ratios

Debt ratio = (Total Debt/Total Assets)*100

2006 2007 2008

(553178593/ (645855939/ (715299108/
635132711) * 100 762193593)* 100 817758326) * 100
87.01% 84.73% 87.47%
Critical Analysis
Leverage Ratios

Debt to equity ratio = (Total Debt/Total Shareholders equity)*100

2006 2007 2008

(553178593/ (645855939/ 8154319) * (715299108/ 8969751) *
79090712)*100 100 100
78.01% 79.20 % 79.74%
Critical Analysis
Leverage Ratios

Total capitalization ratio= (Long term debt/(Long term debt +

shareholders equity))*100
where Long term debt= Long term Deposits and other accounts + Other
liabilities-long term
2006 2007 2008
(492853073/ (608382912/ (655781930/
5458977220) *100 677653543) * 100 737148932) *100
90.28% 89.77% 88.96%
Critical Analysis
Leverage Ratios

Long term asset to long term debt ratio= (Long term assets/Long
term debt)*100

2006 2007 2008

(492853073/ (608382912/ 36071426) (655781930/

28996608) * 100
* 100 39682105) * 100
16.99% 16.86% 16.52%
17.10%

17.00%

16.90%

16.80%

16.70%

16.60%

16.50%

16.40%
2006 2007 2008
Critical Analysis
Profitability Ratios

Net Profit Margin= (Profit available for appropriation/net earning)*100

2006 2007 2008

(363944869 (51145457/ (60933234
/43788628)*100 50569481)*100 /60942798)*100
83.11% 101.14% 99.98%

104.00%

100.00%

96.00%

92.00%

88.00%

84.00%

80.00%
2006 2007 2008
Critical Analysis
Profitability Ratios

Return on assets ratio = (Net Profit /Total assets)*100

2006 2007 2008

(36394869 / (51147457 / (60933234 /
635132711)*100 762193593)*100 817758326)*100
5.7% 6.7% 7.45%

8.00%

7.50%

7.00%

6.50%

6.00%

5.50%

5.00%
2006 2007 2008
 Critical Analysis
Profitability Ratios

Operating income margin = (Operating income / interest earned)

*100
Where operating income= profit before tax + Provisions
2006 2007 2008
Operating 26310577 +2371546 28060501 +4722735 23000998 +10990814
incoem =28682123 =32783236 =33991812
(28682123 /43788628) (32783236 (33991812 /60942798)
*100 /50569481) * 100 * 100
65.50% 64.82% 55.77%
68.00%

64.00%

60.00%

56.00%

52.00%
2006 2007 2008
Critical Analysis
Profitability Ratios

Operating asset turnover = (Profit available for appropriation/

Operating assets) *100
Operating assets = Total assets – fixed assets – deferred tax assets
2006 2007 2008
(36394869/ (51147457/ (60933234/
625450737) * 100 736270614) * 100 790336099) * 100
5.82% 6.95% 7.71%

8.00%

7.00%

6.00%

5.00%
2006 2007 2008
Critical Analysis
Profitability Ratios

Return on Operating asset = (Profit after taxation/ Operating assets)

*100
2006 2007 2008
(17022346/ (19033773/ (15458590/
625450737) * 100 736270614) * 100 790336099) * 100
2.7% 2.5% 1.95%

3.00%

2.50%

2.00%

1.50%
2006 2007 2008
Critical Analysis
Profitability Ratios

Return on Investment = (Net profit available for appropriation/

investment) * 100
2006 2007 2008
(36394869/ (51147457/ (60933234/
139946995)* 100 211146038) *100 170822491) * 100
26.01% 24.22% 35.67%

37.00%

33.00%

29.00%

25.00%
2006 2007 2008
Critical Analysis
Profitability Ratios

Return on total equity = (net profit after tax/ Total equity) * 100

2006 2007 2008

(17022346/ 53044649) (19033773/ 69270631) * (15458590/ 81367002) *
* 100 100 100
32.09% 27.47% 18.99%
18.99%
37.00%

32.00%

27.00%

22.00%

17.00%
2006 2007 2008
Critical Analysis
Profitability Ratios

Gross Profit Margin = (net mark up/ interest income) * 100

2006 2007 2008

(42316608/ 43788628) (47174315/ 50569481) * (53473892/ 60942798) *
* 100 100 100
96.63% 93.28% 87.74%

99.00%

96.00%

93.00%

90.00%

87.00%
2006 2007 2008
Critical Analysis
Activity Ratios

Total assets turnover = (interest earned/ total assets) * 100

2006 2007 2008

(43788628/ (50569481/ (60942798/
635132711) * 100 762193593) * 100 817758326) * 100

6.89% 6.63% 7.45%

7.60%

7.40%

7.20%

7.00%

6.80%

6.60%

6.40%
2006 2007 2008
Critical Analysis
Market Ratios

Dividend per share = (Total dividends/ Number of shares outstanding)

2006 2007 2008

1474605/ 590000 2831895/ 708970 6104894/ 814000
2.5 4 7.5

8
7
6
5
4
3
2
1
0
2006 2007 2008
Critical Analysis
Market Ratios

Earning per share = (Net Income/ Average number of shares issued)

2006 2007 2008

17022349/ 896875 19033733/ 896975 15458590/ 896975
18.97 21.22 17.23

25

20

15
2006 2007 2008
Critical Analysis
Market Ratios

Price earning Ratio = (Avg. market price per share/ Earning per share)

2006 2007 2008

249.05/24.01 259.9/23.34 162.54/17.23
10.37 11.13 9.43

11.4

10.8

10.2

9.6

9
2006 2007 2008
Critical Analysis
Market Ratios

Dividend Payout = (Dividend per share/ Earning per share)

2006 2007 2008

(2.5/ 24.01) * 100 (4/ 21.22) * 100 (7.5/17.23) * 100
10.41% 18.85% 43.53%

50.00%

40.00%

30.00%

20.00%

10.00%
2006 2007 2008
Critical Analysis
Market Ratios

Dividend Yield = (Dividend per share/ avg. market price per share)

2006 2007 2008

(2.5/249.05) *100 (4/259.9) *100 (7.5/162.54) *100
1.01% 1.54% 4.61%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%
2006 2007 2008
Critical Analysis
Cash Flow Statement Ratios

Operating cash flow to total debt = (Operating cash flow / total debt) *
100

2006 2007 2008

(10176913/ 553178593) (78804419/ 645855939) * (2532681/ 715299108) *
* 100 100 100
1.83% 12.20% 0.35%
14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2006 2007 2008
Critical Analysis
Cash Flow Statement Ratios

Operating cash flow per share = (Operating cash flow / Number of

equity shares) * 100

2006 2007 2008

10176913/708970 78804419/896975 2532681/896975

14.35 87.86 2.82
100
90
80
70
60
50
40
30
20
10
0
2006 2007 2008
Critical Analysis
Cash Flow Statement Ratios

Operating cash flow to cash dividend = (Operating cash flow / Cash

Dividend) * 100
2006 2007 2008

(10176913/ 2891755) * 100 (78804419/ 3263249) * 100 (2532681/ 28789320) * 100

3.51% 24.14% 0.87%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2006 2007 2008
Critical Analysis
Other Ratios

Net income per employee = (Operating income / number of

employees) * 100

2006 2007 2008

28682123/ 10419 32783236/ 14079 33991812/ 15204
2753 2329 2236

2900

2600

2300

2000
2006 2007 2008
Critical Analysis
Other Ratios

Asset per employee = (Total asset / number of employees) * 100

2006 2007 2008

635132711/ 14019 762193593/ 14079 817758326/ 15204
45305.1 54136.9 53785.7

55000

50000

Series1

45000

40000
2006 2007 2008
Critical Analysis
Other Ratios

Growth of Income = (Change in income / income of last year) * 100

where change in income = income of this year – income of last year

2006 2007 2008

(3575143/ 19033773) * (2011427/ 17022346) * (2532681/ 28789320) *

100 100 100
33.93% 11.81% 18.78%
40.00%

30.00%

20.00%

10.00%
2006 2007 2008
Horizontal Analysis
Balance Sheet as at December 31, 2008
Vertical Analysis
 Industry Analysis

Ratio NBP Bank Al- Falah ABL UBL

Net Profit Margin Ratio 25.36% 10% 27% 27%

Gross Profit Margin Ratio 87.74% 57% 72% 65%
Return on total Equity 15% 7% 18% 18%
Return on Assets (After tax) 1.89% .372% 1.1% 1.37%
Total Assets to shareholders fund 7.98 20.47 16.40 13.79
Earning per share (pre-tax) 25.64 2.24 9.47 10.8
Earning per share (after- tax) 17.23 1.63 6.43 8.24
Payout Ratio 49.33 76.69 54.43 56.9
Book Value 90.71 18.27 32.19 35
Net Interest Income Growth 9.75% 5.68% 1.98% .83%
Future Prospects of the
Organization

 Committed to interests of stake

holders
 Complete automation of work
 Commitment to employee
empowerment
 Commitment to vision, mission and
core values
SWOT Analysis
Strengths
 Awards
 Branch network
 Agent of State Bank of Pakistan
 Highest asset and highest no. of
accounts
 Overseas operations
 Leader in agricultural finance
SWOT Analysis
Weaknesses
 Political pressure
 Lowest internal control
 Unsatisfactory Corporate culture
 Behind in IT and online banking
 Insufficient training and technical
education
 Shortage of staff
SWOT Analysis
Opportunities
 Trusted and reliable bank
 Rapidly increasing deposits
 Agent of SBP
 Vast network
 Electronic banking
 Islamic banking
SWOT Analysis
Threats
 Penalties by SBP
 Emergence of new competitors
 High complaints
 Govt. transaction a heavy work load
Conclusions

 Customer Satisfaction
 Record maintenance
 More accounts fewer deposits
 Job rotation, Promotion, Appreciation
 Training and communication
 Theory vs Practice
 Delegation of authority
Recommendations

 Performance appraisal
 Delegation of authority
 Customer complaints
 Credit card, cash financing
 Decreasing Administrative expenses
 Technological advancements
 Organizational Commitments
THANK
YOU