INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

CITY BRANCH MANSEHRA (1372)

Submitted by: Usman Munir

Roll # F/13/B01

Supervised by: Muhammad Ikram

Government College of Management Sciences Mansehra

SESSION

2013-2017

i
 INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

CITY BRANCH MANSEHRA (1372)

Submitted by: Usman Munir

Roll # F-063-2013

Supervised by: Muhammad Ikram

This internship report is submitted in partial fulfillment of the
requirements for the degree of Bachelors of Business
Administration awarded by the Hazara University,
Mansehra

Government College of Management Sciences Mansehra

SESSION
2013-2017
ii
 Government College of Management Sciences
Mansehra

APPROVAL SHEET

Approval Committee

1. Supervisor

Muhammad Ikram Signature______________________

GCMS Mansehra

2. Head of department

Mr. Arif Zahid____________ Signature_____________________

Designation Principal GCMS Mansehra

3. External Examiner

Mr.______________________ Signature______________________

iii
 DEDICATION

To my beloved Parents & my honorable Teachers

.

iv
 ABSTRACT

Banks play very important and vital role for the economic growth and sustainability of
economy. The bank deals in money, such institution are also required to fulfill other financial
needs such as provision of place to deposit money, serving for the utilities and advancing
money in order to facilitate the needs of householders and the businesses. In this report the
financial position of NBP has been studied and analyzed.

The methodology for data collection that was available resources by the organization, like
website, annual reports, books, articles publicly available data, etc. also, interviews with
some employees and observation methods were used. In the first chapter introduction to the
report, background of study, scope of the study, merits, limitation, and scheme of the study
are given. The report covers the history of NBP bank, introduction of NBP, its background,
role and functions, its core values, and miscellaneous topics related to Finance department of
NBP Bank

Ultimately whole argument comes down to this: the bank is functioning in a proper &
systematic manner, but need more competitive strategies, long term debts, & outside
creditors, creditors should provide the funds to meet the SBP policies to have the maximum
branches.

In this report, I also included the financial analysis that helps to know that where the NBP is
strong and where it needs improvements. NBP offers new products and services day by day
for improving its performance, but there are many hurdles in the way of success of NBP, all
the recommendations are given in the report and there solutions as well as that can be helpful
in the success of NBP in future.

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 TABLE OF CONTENTS
Chapter 1 ......................................................................................................................................... 1
Introduction of Study ....................................................................................................................... 1
1.1 Background of Study ................................................................................................................. 1
1.2 Objectives of study .................................................................................................................... 1
1.3 Scope of Study ........................................................................................................................... 2
1.4 Limitations of the work .............................................................................................................. 2
1.5 Benefits of the Study .................................................................................................................. 2
1.6 Research methodology ............................................................................................................... 3
1.6.1 The major sources for Primary data includes.................................................................. 3
1.6.2 The major sources for Secondary data includes.............................................................. 3
1.7 Scheme of the report .................................................................................................................. 4
Chapter 2 ......................................................................................................................................... 5
Introduction to organization (NBP) ................................................................................................. 5
2.1 They aim to be an organization that is founded on… ................................................................ 5
2.1.1 They aim to be People who… ......................................................................................... 5
2.1.2 They have confidence that tomorrow they will be… ...................................................... 6
2.1.3 Evaluation of Banking / Industry in Pakistan ................................................................. 6
2.2 Historical Introduction to the organization (National Bank of Pakistan)................................. 7
2.2.2 Credit Rating ................................................................................................................... 9
2.2.3 Present status................................................................................................................... 9
2.3 Organizational structure of NBP .............................................................................................. 11
2.3.1 Board of Directors ........................................................................................................ 12
2.4 Senior Management ................................................................................................................. 13
2.4.1 Senior Management for Overseas Operation ................................................................ 15
2.5 Vision and Mission Statements ................................................................................................ 16
2.5.1 Mission.......................................................................................................................... 16
2.6 Objectives of National Bank of Pakistan ................................................................................. 16
2.7 Core Values .............................................................................................................................. 16
2.8 Internal Structure of Bank Branch ........................................................................................... 17
2.9 Product and services ................................................................................................................ 19
2.9.1 Deposit Department .............................................................................................................. 19
2.9.1 Account opening ........................................................................................................... 20
2.9.2 Procedure of Account Opening .............................................................................. 20
2.9.3 Documents Required..................................................................................................... 20
2.9.4 Issuance of Cheque Book....................................................................................... 21
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 2.9.5 Cheque Cancellation .............................................................................................. 21
2.9..2 TYPES of Accounts ............................................................................................................. 21
2.9..2.1 Current Account ........................................................................................................ 21
2.9..2.2 Profit & Loss Sharing Saving Account ..................................................................... 21
2.9.3 Problems in personal account ............................................................................................. 26
2.9.4 Advances department ............................................................................................................ 26
2.9.5 Types of financing ................................................................................................................. 27
2.9.6 Western union........................................................................................................................ 30
2.9.7 Clearing department .............................................................................................................. 30
2.9.8 Foreign exchange department ............................................................................................... 31
chapter 3 ....................................................................................................................................... 35
FINANCIAL ANALYSIS .............................................................................................................. 35
3.1 Financial Analysis .................................................................................................................... 35
3.1.1 Common size analysis .................................................................................................. 35
3.1.1.1 Vertical Analysis of NBP ........................................................................................... 36
3.1.1.3 Horizontal Analysis of NBP`s Balance interpretation ............................................... 40
3.2 Horizontal Analysis of Income Statement ............................................................................... 44
Interpatition .................................................................................................................................... 45
3.3Vertical Analysis of Income Statement ..................................................................................... 46
Interpatition .................................................................................................................................... 47
3.4 Ratio Analysis .......................................................................................................................... 48
3.5SWOT ANALYSIS ................................................................................................................... 59
3.5.1 STRENGTHS OF NBP........................................................................................................ 59
3.5.2 Weaknesses of NBP ............................................................................................................ 60
3.5.3 Opportunities of NBP ........................................................................................................... 61
3.5.4 Threats................................................................................................................................. 61
Chapter 4 ....................................................................................................................................... 63
Conclusion and recommendations ................................................................................................. 63
4.1 Conclusion ............................................................................................................................... 63
4.2 Recommendations .................................................................................................................... 63
References ...................................................................................................................................... 70

vii
 ACKNOWLEDGEMENTS

With the name of ALLAH the Most Beneficial and Merciful. I completed my internship in
National Bank of Pakistan City branch. I am really pleased to have a professional learning
experience in one of leading organizations of country. In these 8 weeks I worked in different
departments and I am truly thankful to all officers and staff who entirely give assistance to
me. I am also grateful to my honorable supervisor Muhammad Ikram, and all other teachers
who motivated me to work hard and taught me techniques to learn work. The account of
acknowledgement will remain incomplete if I do not express my sincere appreciation,
indebtedness and gratitude to my parents and siblings. They have always been a source of
encouragement for me.

And last but not the least I would like to express my gratitude to all the staff of NBP City
branch Mansehra.

Usman Munir

viii
 LIST OF ABBREVIATIONS

BOD Board of Directors

D.D Demand Draft

EBIT Earning Before Income Tax

EPS Earning per share

EVP Executive vice president

I.T Information technology

L/C letter of credit

M/T Mail Transfer

MIS Management Information system

NBP National Bank of Pakistan

PLS Profit and loss saving

SBP State bank of Pakistan

SEVP Senior executive vice president

SVP Senior vice president

SWOT Strength Weaknesses Opportunities Threat

SS Specimen signature

VP Vice president

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 EXECUTIVE SUMMARY

This internship report is related to national bank of Pakistan, being a government bank it is
operating in almost every part of the country that is why it is the largest bank of Pakistan.
Furthermore, NBP has its network outside national boundaries of Pakistan. To know about the
functions and procedure of any organization it is very important to work there for minimum
six months than you may able to understand this thing. The intense competition, among
banks, the privatization of the financial institution and financial liberalization in general are
gradually and continuously making the banking sector effective and efficient.

The basic purpose of this report is to describe and define different functions and products of
the bank, to identify weak areas of the bank, to analyze the performance of the management
and to make a financial analysis of it and suggest recommendations. It is also our degree
requirement to do an internship in any company so the basic purpose of this report is to fulfill
the Bachelor degree requirement

The report actually gives the following information, which I have divided in different
chapters. First chapter is about introduction to the report, background of study, scope of the
study, merits, limitations, and scheme of the study. The second chapter is related to history of
banking, banking in Pakistan, introduction to the organization, its historical background, role,
and functions of organization, its core values, and collection of topics related to banking.

Third chapter covers the organizational structure of NBP, different departments working at
NBP and different financial products of NBP. The fourth chapter of this report is related to the
analysis and the findings, which have been observed. It includes the financial analysis;
Analysis no doubt acts as a mirror for the management. In addition, management should
develop plans to avail any opportunities which is been created by the environment because it
is very important in this competitive world. At the end of this report there is
recommendations based on the analysis.

x
 CHAPTER 1
INTRODUCTION OF STUDY
Starting with the name of Allah, I am going to write my internship report as
part of the academic requirement for the completion of Two year’s study in
BBA Hons. Therefore, we the students of Management Sciences are
required to undergo an internship program for the period of 6 weeks as an
internee in an organization. This internship helps me to gain the practical
knowledge of working environment of the banking sector of Pakistan.

1.1 BACKGROUND OF STUDY

NBP established in 1949, National bank of Pakistan has grown to become

the largest commercial bank in the country, maintaining its position as
Pakistan’s premier bank determined to set higher standards of
achievements. The bank came in to existence by the order promulgated by
governor general and started functioning from Nov 20, 1949. NBP is the
major business partner for the government of Pakistan with special
emphasis on developing Pakistan’s economic growth through aggressive
and balanced lending policies, technologically oriented products and
services offered through its large network of more than 1403 branches
locally, 23 branches internationally and 11 regional offices (Annual report
NBP, 2016).

1.2 OBJECTIVES OF STUDY

As part of the academic requirement for completing BBA Hons students

are required to under go eight Weeks of internship with an organization.
The internship is to serve the purpose of acquainting the students with the
practice of knowledge of the discipline of banking administration.

 To understand the various operations of the bank and work in

different departments.
 To analyses the financial and operational performance of NBP.
 To study the organizational management structure.

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  To make possible recommendation in the light of analyses.
 To study the working environment of the organization.
 To apply the knowledge gained in practical field.
1.3 SCOPE OF STUDY

The time duration of two months is insufficient for conducting complete

study and observation of a large bank. Being a student specializing in
finance, the focus of this study is on its financial aspects including the
financial health of the bank and its comparison with previous year’s
performance. Some of the problems faced by the bank have been identified
and some recommendations have been suggested to overcome these
problems and to improve the prevailing financial condition of the bank.

1.4 LIMITATIONS OF THE WORK

There are some limitations which internee had to face during the internship
program, which are described as under:

 The period of two months was too short to properly understand and
analyze all the operations of bank.

 Staff members avoided to give all information due to the matter of

secrecy. So it was very difficult to collect the relevant information and to
learn accordingly.

 Manager and other staff members have busy schedule due to this reason it
was a great problem for them to spend time with internee, so it is not easy
to learn or to gain knowledge from them.

 Some of the data was confidential and that was not made available to me.

1.5 BENEFITS OF THE STUDY

An internship grooms a person personally, academically and professionally.

At the end of internship, one gets a certificate, which acknowledges his
work for that specific company. This adds to his experience, an internship is
a great opportunity to improve interpersonal skills. Practical also provides

2
the opportunity to gain self-confidence. Moreover, it Figure out what one’s
strengths are and also a good time to identify one’s weakness so that he can
improve them.

1.6 RESEARCH METHODOLOGY

National bank of Pakistan is one of the leading and establishes banks of the
country. It has a large setup of departments and a big organizational
structure. While working in a City branch Mansehra of the bank, it is not
possible to thoroughly cover all the areas of the bank, as it requires more
time and two months are in no way sufficient to do so. Different tools and
techniques were used to gather relevant information for writing the report.
Secondly, journals from regional head quarter and staff college was also
reviewed which gave very useful information about the functioning of the
bank. I also visited the national bank of Pakistan’s official web site, which
gave very useful information about the services provided by the bank.

1.6.1 The major sources for Primary data includes

 Personal observation

Personal observations during the internship period

 Interviews of management

Short interviews of the bank’s management

 Discussion with staff members

1.6.2 The major sources for Secondary data includes

 Annual reports of Bank

Annual reports of the last three years

 Books

Relevant course books

3
 Internet

Official web site of NBP and some other relevant sites mentioned in the
references

1.7 SCHEME OF THE REPORT

This internship report is divided into five chapters, which are:

Chapter 1 includes background, purpose of study, Scope of study, some

limitations, merits, and scheme of this Report.

Chapter 2 includes background and history of banking in Pakistan as well

as Introduction to NBP, City branch Mansehra .

Chapter 3 includes the financial statement, Products, and services offered

by NBP to its valued customers.

Chapter 4 includes the SWOT and ratio analysis and their interpretation.

Chapter 5 includes some of the conclusion and some of the

recommendations.

4
 CHAPTER 2
INTRODUCTION TO ORGANIZATION (NBP)

NBP contains its position as Pakistan's premier bank determined to set

higher standards of achievements. It is the major business partner for the
Government of Pakistan with special emphasis on fostering Pakistan's
economic growth through aggressive and balanced lending policies,
technologically oriented products and services offered through its large
network of branches locally, internationally and representative offices.

2.1 THEY AIM TO BE AN ORGANIZATION THAT IS FOUNDED

ON…

 Growth through creation of sustainable relationships with our

customers.
 Prudence to guide our business conduct.
 A national presence with a history of contribution to our
communities.

They shall work to…

 Meet expectations through Market-based solutions and products.

 Reward entrepreneurial efforts.
 Create value for all stakeholders.

2.1.1 They aim to be People who…

 Care about relationships.

 Lead through the strength of our commitment and willingness to
excel.
 Practice integrity, honesty and hard work. We believe that these are
measures of true success.

5
2.1.2 They have confidence that tomorrow they will be…

 Leaders in industry.
 An organization will take the trust of S&h.
2.1.3 Evaluation of Banking / Industry in Pakistan

At the time of independence in 1947, Pakistan’s commercial banking

facilities were almost jammed according to a plan in the whole sub
continent especially in the Muslim majority areas. Pakistan’s banking and
Industrial sectors were in very poor conditions. Banks largely depend for
their growth and development on industrial sector but at the time of
independence, Pakistan had patriotically on industry except a few textile
mills and only product food grains and agricultural raw materials, most of
the industries were situate in Hindu majority area now called India.

A number of banks closed their branches with the result that only 81
branches remain ed open on 30th June 1948 out of 487. The head offices
were in India and most of their employees were Hindu, and they fled to
India. Imperial Bank of India, Which was conducting government receipts
and payments, closed down most of its branches thus blocking the funds
needed by the government?

The country was in trouble and needed most of the general

commercial banking and credit facilities. This need was a little bit satisfied
with the transferring of the head offer of the HBL. To Karachi on 7th,
August 1947. This bank playing a great role in the next year in the
economic development of Pakistan as the Habib Bank was also new in the
new country it was asked to open more branches at new place this was a
difficult time foe H.B.L to open their branches in different places.

In view of the above mentioned circumstances and in order to

rehabilitee the banking in Pakistan without further delay, on the
recommendations of an committee it was decided to establish as early as
possible a central bank to control the banning and currency in Pakistan.
Accordingly state bank of Pakistan was Pakistan was inaugurated by

6
Quaid-e-Azam Muhammad Ali Jinnah on 1st July 1948. This bank lost on
time in meeting the national requirements of banking, currency and took
following remedial measures. Requested Government of state a new bank
of nation wide services accordingly National Bank of Pakistan was formed
in 1949 which opened many branches and in 1952 took over the emperor
Bank of India. It will draw Indian Currency notes of Rs: 125 crore from
General Circulation and send these for recovery to reserve Bank of India.

2.2 HISTORICAL INTRODUCTION TO THE ORGANIZATION

(NATIONAL BANK OF PAKISTAN)

National Bank of Pakistan main tains its position as Pakistan's premier

bank, determined to set higher standards of achievements. It is the major
business partner for the Government of Pakistan with special emphasis on
fostering Pakistan's economic growth through aggressive and balanced
lending policies, technologically oriented products and services offered
through its nation wide branches.

2.2.1 History of NBP

National bank was establish in November 09, 1949 under NBP ,ordinance
1949, in order to handle the crises condition which was develop after
Deadlock with India and the devaluation of Indian Rupee in 1949. The
bank proved all type of banking services to the government in general
public. It works as agent of sent real bank because the SBP dose not has its
own branches.

The bank schedule commercial bank and its principally engaged in the
business of banking as defined in the banking company's ordinance 1962.
National Bank of Pakistan was basically established for reducing the
difficulties of east Pakistan farmers engaged in jute and patens” after mass
migration of community from east and west Pakistan in India. The bank
commenced its operation in November 20.1949 at six centers of jute in the
then East Pakistan. Lahore and Karachi officers were opened subsequently
in December 1949. Before restructuring in 2002, national Bank of Pakistan

7
with its head office at Karachi operates through 9 regional headquarters at
Lahore, Karachi Hyderabad, Quetta, Peshawar, Multan, Muzaferabad,
Fasilabad and Islamabad.

The bank was incorporated with authorized capital of 60 millions .in 960
this amount was redacted to the 30 millions banks issued 15 millions of
which 25% was subscribed by the government and the balance was offered
to the general public .shears to the public where issued in 1950 and where
quickly taken up. In 190 banks ordinance was amended so that it take
ordinarily commercial banking business. On janvery-01-1974 national bank
along with thirteen others commotional banks where nationalized under the
promulgation of “nationalization” act 1974 and the shears not held by the
government where required after compensation them.

The period 1990’s witnessed financial referees and the national bank also in
cooperated the change in its working and offered new services and products
to its clients .at present the bank is playing very important role in financing
the trade .commerce ,agricultural and important concerns and contributing
the best to word making the country prosperous. The improve its costumer
focus redacted decision making layers restructured its entire command and
control system in business and operational spheres zones and audit offices
in the year 2002 and eliminated the total numbers of regions in hands from
9 to 29 across the country .anew matrix structure has been introduced with
the objective to separate the office and the bank offices .to improve the
good governance and enhance the internal control.

 Operation group
 corporate and investment banking group
 special assets management group
 commercial and retail banking group
 audit and inspection group
 overseas Coordination and Management Group
 Risk Management Group

8
National Bank of Pakistan is known as the premier commercial institution
of Pakistan provide the large diversified customer base of 9.009 millions,
which is the biggest figure, in the country and conduct the business
function of state bank of Pakistan in addition to provision of other financial
and allied services such as deposit banking financing and credit remittance
facilities collection government receipts and payments. sale and purchase
of government securities, Bands and other certificates, Foreign exchange
business, Safe custody, Safe deposited services and safe deposit, Lockers,
Hajji facilities Utility bills, Investment advice and other services, Special
deposits products / Schemes, pak rupee travelers choose, New product.

2.2.2 Credit Rating

NBP enjoys the highest rating of ‘AAA’ in the industry assigned by M/s
JCR-VIS Credit Rating Company. The ratings assigned to NBP are
primarily driven by the bank’s role in the national economy as an agent of
the State Bank of Pakistan and as a bank to the Government of Pakistan.
Additionally, ratings also derive strength from the bank’s consistently high
capitalization levels, and nationwide access that has enabled it to secure a
cost effective and diversified deposit base.

2.2.3 Present status

National Bank of Pakistan has a network of 1,352 domestic branch

and 19,204 employees for subsidiaries, 23. Oversea branches, 4 reparative
offices, 1 joint venture and subsidiary (overseas) all the world the local
branches are controlled through 29 regional offices and overseas are
managed through 4 overseas regional offices. It is the largest contributory
agent of government requirement. NBP provide wide range of services and
including collection of taxes and deliveries of salaries, person to public
sector employees. It has lowest rate on exports and other borrowings.

9
 National bank of Pakistan, overseas operation comprises 18
overseas branches, 5 representative offices, one international subsidiary
bank of NBP in Amatory and one joint venture with the United Kingdom.
NBP with its commitment to invest in development of the bank’s I.T
infrastructure have now developed on line branches with modern by highly
professional bankers. NBP has launched an ambitious business
reprocessing programmed to make the bank more attractive with the
eventual aim of privatization. The largest bank in the country with a
customer base 9.00 billion in poised for take off.

10
2.3 ORGANIZATIONAL STRUCTURE OF NBP

President and chairman

President Secretariat

Board of Director

Corporate and investment banking Group

Commercial and retail Banking Group

Operations Group

Audit & inspection group

Compliance group

Financial control division

Employees benefit, Disbursements and trustee

Special assist Management group

Organization development and training group

Overseas coordination and management group

Information technology group

Risk management group

Human resources
Treasurymanagement
managementand Admin Group
group

11
2.3.1 Board of Directors

Mr. Muneer Kamal

Chairman

Mr. Syed Ahmed Iqbal Ashraf

President

Mr. Farrakh Qayyum

Director

Mr. Tariq Kirmani

Director

Mr. Iftikhar A. Allawala

Director

Mr. Muhammad Naeem

Director

Mr. Mir Balakh Sher Marri

Director

Mr. A. Akbar Sharifzada

Director

Mr. Syed Muhammad Ali Zamin

EVP, Secretary Board of Directors & Secretary Credit Committees

Source: www.nbp.gov.pk/BOD

12
2.4 SENIOR MANAGEMENT

Syed Ahmed Iqbal Ashraf

President, NBP

Nausherwan Adil
SEVP & Group Chief Operations Group/Corporate Communication
Division

Mudassir H. Khan
SEVP & Group Chief, Commercial & Retail Banking Group

Nusrat Vohra
SEVP & Group Chief, Treasury Management Group

Tariq Jamali
SEVP & Group Chief, Logistics Support, Security & Engineering
Group

Kausar Iqbal Malik

SEVP & Group Chief, Compliance Group

Masood Karim Shaikh

SEVP & Group Chief, Overseas Banking Group/Global Home
Remittance Management Group

Asif Hassan
SEVP & Group Chief, Audit & Inspection Group

Wajahat A. Baqai

13
SEVP & Group Chief, Credit Management Group

Aamir Sattar
SEVP & CFO, Financial Control Division

Sultana Naheed
SEVP & Group Chief, Risk Management Group

Zahid Mahmood Chaudhry

SEVP & Group Chief, Human Resources Management &
Administration Group

Akbar Hasan Khan

EVP & Head, Corporate & Investment Banking Group

Sahibzada Rafat Raoof Ali Khan

EVP & Head, Assets Recovery Group

Khawaja Muhammad Aminul Azam

EVP & Head, Islamic Banking Group

Ovais Asad Khan

EVP - Divisional Head, Strategic Marketing Division

Mahmood Siddique
EVP, Divisional Head & CIO, IT Division

Shaharyar Qaiserani
EVP & Divisional Head, Agriculture & Business Development

14
 Division

S.M. Ali Zamin

EVP, Secretary Board of Directors & Secretary Credit Committees

Mufti Ehsan Waquar Ahmad

Shariah Advisor

Mirza Babur Baig

EVP & Principal Staff Officer(PSO) to the President

Riffat Sultana Mughal

SVP - Head, Legal Division

2.4.1 Senior Management for Overseas Operation

Zubair Ahmed

SEVP & Regional Chief Executive, Middle East, Africa & South
Asia Region

M. Rafiq Bengali

SEVP & Regional Chief Executive, Americas Region

Khawar Saeed

EVP & Regional Chief Executive, Cationentral Asian Republics

Region

Muhammad Hanif Khan

SVP & Coordinator, Afghan Operations

15
2.5 VISION AND MISSION STATEMENTS

To be recognized as a leader and a brand synonymous with trust, highest

standards of service quality, international best practices and social
responsibility.
2.5.1 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 holder’s value.

2.6 OBJECTIVES OF NATIONAL BANK OF PAKISTAN

 Prime objectives of National Bank of Pakistan are tainting

distinguishing brand identity, attaining quality financial
performance, achieving acknowledgment in the market in terms of
quality and performance.
 National Bank of Pakistan also aims at providing assistance to
farmers, so that they can utilize their funds effectively to get the
best result.
 By charging interest on loans provided to the private sector and
business community.

2.7 CORE VALUES

We aim to be an organization that is founded on

 Growth through creation of sustainable relationships with our

customers.
 Prudence to guide our business conduct.

16
  A national presence with a history of contribution to our
communities.
2.7.1 Shall work to

 Meet expectations through Market-based solutions and products.

 Reward entrepreneurial efforts.
2.7.2 We aim to be people who…

 Care about relationships.

 Lead through the strength of our commitment and willingness to
excel.
2.7.3 We have confidence that tomorrow we will be…

 Leaders in our industry.

 An organization taining the trust of stakeholders.
 An innovative, creative and dynamic institution responding to the
changing needs of the internal and external environment

2.8 INTERNAL STRUCTURE OF BANK BRANCH

CHART

RRMC RBC ROC RCC

Cad. Manager Operating

Complain

Officer Manager Officer

Deposit Sector Remittance

17
 Govt. Section Accountant

Foreign Exchange Credit Deptt:

Source: www.nbp.go.pk/about Chief Cashier

18
2.8.1 LOCATION

The Location of the Bank Branch is City Mansehra

2.8.2 OVERVIEW

The building of NBP City branch Mansehra consist of one floor.The

building of NBP City branch Mansehra gives a pleasant look as it is a well
furnished and decorated by fresh flowers both inside and outside the bank.
There is separate parking place for staff members and also for general
public which is helpful in reducing traffic on road unlike other banks.
Inside the bank there is a hall and on one side is the manager’s office. In the
hall there is separate seating facility for males and females customers. In
the hall all the officers of different departments has their tables. The seating
arrangement of all officers is same despite their designation. Only cash
department and government section is separated. The facility of generator is
also provided to the branch.

2.8.3 Number of Employees

In NBP City branch Mansehra the employees are very experienced. They
are very loyal and committed to their jobs. They are also very much
cooperative with their colleges if anyone of them face any problem in his
work they never hesitate to help him. Number of Employees currently
working there is 35

2.9 PRODUCT AND SERVICES

Dividing an organization into different parts according to the functions is

called departmentalization. NBP can be divided into the following main
departments.

2.9.1 DEPOSIT DEPARTMENT

It controls the following activities:

19
  A/C opening.
 Issuance of cheque book.
 Current a/c
 Saving a/c
 Cheque cancellation
2.9.1 Account opening

An account is relationship between account holder and Banker. OR

Account is an agreement between customer and banker. Preliminary
investigation is necessary because of the following reasons.

 Avoid frauds.
 Negligence.
 Inquiries about clients.
2.9.2 Procedure of Account Opening

Accounts are opened after approval of manager. Customer has to fill in

prescribed application form properly particularly complete details of next
of kin. Customer has to sign terms and conditions of account opening.
Accounts are opened with cash. In case of issuance of check book at the
time of opening of an account Manager has to give justification that
customer is personally known to him. Details of account are entered into
computer system. Included non-deduction of zakat and services charges
who’s applicable.

2.9.3 Documents Required

 Copy of CNIC.
 Copy of driving license in case CNIC is without photograph.
 Applicant photograph and CNIC copy attested by gazetted officer in
case of CNIC without photograph.
 Copy of service card/evidence of employment in case of salaried
person.
 Photograph in case of illiterate person.

20
  Zakat exemption declaration/certificate.
2.9.4 Issuance of Cheque Book

Requisition slips to verify that cheque books have been issued to the
account holder. Cheque book are issued after receipt of acknowledgement
of letter of thanks or with the remarks of managers or operation managers
giving justification for issuance of cheque book before receiving of
acknowledgment of letter of thanks. Cheque book series are recorded in
register. Charges for issuance of cheque books are recorded.

2.9.5 Cheque Cancellation

 This department can cancel a cheque on the basis of;

 Post dated cheque
 Stale cheque
 Warn out cheque
 Wrong sign etc
2.9..2 TYPES OF ACCOUNTS

2.9..2.1 Current Account

It is also known as running account because it is always in

operations.Current accounts are opened on proper introduction and
submission of required documents along with an initial deposit prescribed
from time to time. The money can be deposited and withdrawal at any time
during the banking hours by the customers. Therefore the banks do not pay
interests on current deposits. The bank is authorized to deduct services
charges on current account levied through its half yearly schedule of
charges, in case the average balance falls below the minimum balance as
prescribed by the bank. Minimum balance required to open this account is
Rs 5000/-

2.9..2.2 Profit & Loss Sharing Saving Account

PLS saving accounts are opened on proper introduction and submission of

required documents along with an initial deposit prescribed from time to

21
time. PLS saving accounts are opened for individual (single/joint)
charitable institution, autonomous corporation, companies, associations,
educational institutions, firms etc. Interest is paid on six-monthly basis. The
amount withdrawn before 6months is deleted from assessment of profit.

2.9.2.3 Profit & Loss Sharing Term Account

Fixed accounts or term deposits are those deposits which are repayable
after certain period of time which may vary from 3months to 5years. In this
account no cheque book is issued to the customers. At the time of opening
account TDR is issued showing the amount of money deposited, period and
rate of interest payable. The rate of interest on fixed deposits is greater than
saving accounts which also varies with the length of period and amount
deposited. The longer the period of deposit, higher will be the rate of
interest. The shorter the period of deposit, lower will be the rate of interest.
PLS term deposit account can be opened by all who are allowed to open
current, PLS saving accounts.

2.9.2.4 Rates on term Deposit

3months 5.30%

6months 5.60%

1year 5.80%

2year 6.10%

3year 6.40%

4year 6.70%

5year 7.10%

Above 5 7.80%

2.9.2.5Foreign currency account

22
Foreign Currency Accounts are opened on proper introduction and
submission of required documents along with an initial deposit
prescribed from time to time. It can be operated singly or jointly by
individuals, partnerships, corporation, companies etc.Pakistani,
foreigners, Muslims, non Muslims can open this account in foreign
currency Dollars, Pounds sterling and Euro. In Pakistan only foreign
currency saving account is running. Minimum balance required for
foreign currency saving account is 500 Dollars.If balance is less than
required then Bank makes deductions.

2.9.2.6 National income daily accounts (NIDA)

NIDA are opened on proper introduction and submission of required

documents along with an initial deposit prescribed from time to time. NIDA
are opened for individual (single/joint) charitable institution, autonomous
corporation, companies, associations, educational institutions, firms etc.
Deposits in the NIDA accepted on the conditions that the depositor shall
always maintain minimum balance as prescribed by bank in his account.

2.9.2.7 Rates or profit on NIDA

2million to 25million=1.50%

25m to 50m =2%

50m to 100m =2.30%

100m to 2.50m =2.60%

2.50m to 500m =2.80%

500m to 1000m =3.10%

1000m to 2000m =3.30%

2000m to 5000m =3.50%

5000m & above =3.75%

23
2.9.2.8 Premium saver account

Premium saver accounts are opened on proper introduction and submission

of required documents along with an initial deposit prescribed from time to
time. Premium saver accounts are opened for individuals (single or joint)
only. In case where prescribed minimum balance in Premium saver account
is not maintained no profit for the month will be paid to the account holder.
In case of Premium saver account a higher rate of profit as per bank
discretion will be paid to depositor maintaining deposit below the mark of
Rs 300,000/- as compared to depositor maintaining higher deposits in their
Premium saver account.

2.9.2.9 Premium Amdani account

Premium Amdani products account can be opened by all who are allowed
to open current, PLS saving account. The bank reserves the right of
refusing to accept deposit from any person in premium Amdani account
without assigning any reason. Premium Amdani deposits are accepted by
the bank with minimum sums prescribed by the bank from time to time. In
case of premium Amdani additional amount in the lots of 25000/- will be
accepted. Premium Amdani Certificates will only be issued for period of 5
year. Loan will be given 85% of face value of certificate. Loan will be
sanctioned for one year and lump sum payment will be made.

2.9.2.10 Rates

1 year 7.50%

2year 8.50%

3year 9.50%

4year 10.50%

5year 11%

24
2.9.2.11 Account of blind person

Blind person (both literate & illiterate) can open an account to be operated
jointly with a visually literate person on completion of all documents and
formalities as prescribed by the bank. Operations in the joint account will
not be subject to ‘’either or Survival’’. In the event of death of blind
account holder the entire credit balance will be paid to the legal heirs of the
deceased blind account. In the event of death of joint visually account
holder the entire credit balance will be payable to the surviving blind
account holder.

2.9.2.12 Dormant & inoperative account

All current accounts, which have not been operated upon for six months or
all saving accounts which have not been operated upon for one year shall
classify as ‘’Dormant account’’. All current account s, which have not been
operated upon for two years or all saving accounts, which have not been
operated upon for three year shall classify as ‘’Inoperative account’’.

3.2.13 Minor’s accounts

That person who has not up till attained the age of 18years is considered as
minor. Under section 11 of contract act, 1872 minor is incompetent to enter
into contract. Therefore in bank, contract with minor is avoided. There are
two types of minor’s account.

2.9.2.13.1 According to will of guardian

Bankers in Pakistan allow minor to open to an account but on the request of

his guardian. Title of account remain s on the name of both guardian &
minor Until age of 18 year minor cant made transaction, after 18 year both
can do transactions.

2.9.2.13.2 after death of guardian

In case of death of account holder the credit balance in his account will be
payable to his legal heirs. They have to prove themselves through court.

25
Bank will present the details of his account in court. If any one of them is
minor then he will not be given balance. His account will be opened in the
Bank according to orders of court and Senior Civil Judge will be guardian
of account until he attained the age of majority. After that he can withdraw
money from the account.

2.9.3 PROBLEMS IN PERSONAL ACCOUNT

2.9.3.1 Lunacy of customers

A customer who is incapable of understanding, is of unsound mind

cannot enter into contract with the banker as a customer.

2.9.3.2 Death of customer

In the event of death of an account holder, the credit balance, in any

account, in the name of an individual will be payable to the legal heirs of
the deceased individual account holder If the account is in the name of two
or more persons operated jointly the credit balance will be payable to the
legal heirs of the deceased account holders along with the remaining
account holders.

2.9.4 ADVANCES DEPARTMENT

The objective of Advances Department is”. To facilitate people by giving

short term and long term loans on easy terms and conditions”. The main
function of this Department is to take surplus money from the people at low
rates and lend this money to borrowers at high rates to earn profit. This
section is back born of bank. 50% of earning of bank comes from advance
department. Profitability depends on advances

26
2.9.5 TYPES OF FINANCING

There are two types of financing .

2.9.5.1 Long term finance;

 Which are for 5years or more than 5 Years.

 House building finance
 NBP advance salary
 Motor car loan
 Agriculture development loan
 Project financing
 Staff loan

2.9.5.2 Short term finance

 Which are for one year.

 Gold finance
 Cash finance
 Running finance
2.9.5.2.1 Gold finance

 Facility of Rs 1000 against 1 gm of gold.

 No maximum limit of cash.
 Mark-up 15.5% per annum.
 Repayable after one year. (Lump sum).
 Loan is given on net weight.
 Minimum on 12 g loan is sanctioned.
 If after one year no capacity to repay then loan can be rescheduled
by paying mark-up for one more year.
 One person cannot take additional loan on other grams of gold with
same name.

27
  If after one year payment is not made to bank. Bank send 3 notice to
borrower
 Again if he doesn’t reply to notice. Case will be sent to the court.
Court will give gold to bank and will order the borrower to pay
mark-up.
Documents

 I.D. Card :
 Goldsmiths documents.
 Gold loan insurance form
 Promissory note, IB-12 (Here amount + mark-up).
 Undertaking
 IB/6A- Agreement for financing for Short/med/long term on mark-
up basis
 IB-2 Letter of pledge (Here also A + mark-up).
ii) Cash finance

It is a very common form of borrowing by business concern, commercial

concern, and industrial concern. A borrower is granted an advance up to a
certain limit against securities such as pledge of goods and mortgage
securities. Borrower pay markup only on the amount which is actually
utilized. It is granted on long term basis. Cash Finance is not available in
Mansehra , only in big cities Bank has its own lock on warehouses.
Industries can’t reduce stock without the permission of bank. If he wants to
use the stock, the bank person will visit along with him. When stock
reduces he will pay the loan. Loan is sanction for one year. After one year it
can be renewed. Markup is paid in quarterly.

2.9.5.2.2 Running finance

 In running finance property is kept as mortgage or any security.

(certificate)
 The 85% loan is given because more liquid as property in the name
of bank.

28
  Running finance is given for one year.
 In running finance multi transaction are allowed.
 He is given a check book.
 In one year he can with draw & deposit amount several time but
cant exceed the loan limit.
2.9.5.2.3 Long term finance

2.9.5.2.4 Advance salary

 20 months salaries in advance.

 Minimum documentation.
 Repayable in 5 Year (60 months).
 Mark up 20% markup is paid monthly.
 Before 18%, The new ratio is applied on loan taken after
01/07/2010
 Loan sanction authority to different grade officers is
 Grade 1 : 2 lacks
 Grade 2 : 1 lack 50 thousand

Documents

 Application form
 I.D Card of borrower and two guarantors.
 Three blank but signed cheques
 Agreement for financing on mark-up basis, variable rate
 Undertaking
 Annexure “A” .It is issued by department of borrower which shows
how much service is left and account no etc. His salary will be
transferred to this account.

29
  Annexure “C” Agreement for financing on mark-up basis.
 Annexure “D” Letter of hypothecation for stocks, machinery
 And receivables.
 Guarantee IB 29

2.9.6 WESTERN UNION

It is private not govt. (a kind of Hundi).On the spot cash payment is

made.No compulsion of account.10 Digits MTCN (Money transfer control
number) is allotted. On which payment is done.It can be taken any where in
Pakistan by showing the number.Receiver has to show any one of following
in order to receive money.Original I.D. card.Original Driving
license.Original Passport.Duplicate or photo state is not accepted.

2.9.7 CLEARING DEPARTMENT

2.9.7.1 Clearing house

From many years there was clearing house in national bank of

Pakistan City branch Mansehra . The agents of banks who were members
of clearing house daily gather 2 times in a day and exchange the checks for
clearance with each other.

2.9.7.2 NIFT (National institutional facilitation technology)

Now NIFT private ltd company is performing clearing functions for

banks.There office is at Abbott Abad. In this case the banks are in loss.
Before banks cut charges from parties account. But now they can’t do so.
NIFT charges 8 Rs per instrument from bank, which bank can not deduct
from party’s account. Now it is advantage for party.

Procedure

The agent of NIFT visits 3times a day.In morning he brings cheque

which is drawn on NBP City branch Mansehra .After 2- hours he visits
again to take back if any cheque, draft or Government receipt is to be

30
returned with objection.In eve he visits to take cheque for next day
clearance from other banks. Which he will present to them in next
morning.All cheque of other banks are kept in a bag which is sealed with a
specific seal no.

2.9.7.2.1 In-Word Clearing Books

The bank uses this book for the purpose of recording all the cheque
that are being received by the bank in the first clearing. All details of the
cheque are recorded in this book.

2.9.7.2.2 Out-Word Clearing Book

The bank uses outward clearing register for the purpose of recording
all the details of the cheque that the bank has delivered to other banks.

2.9.8 FOREIGN EXCHANGE DEPARTMENT

In foreign exchange customer can open account in 3 currencies.US

Dollar code 40.Uk Pound code 30.Euro code 51.Three Banks which
deal NBP transactions of F.C are.NBP New York deals the transactions of
dollar..United National Bank London (UNB) deal Pound.Same procedure
of opening account like in Pakistan Rs.Here minimum balance required is
1000$.If less then monthly $3 as services charges will be deducted.If
account is opened in any other foreign currency then amount will be
converted in $ to deduct charges.

Outward TT in foreign currency

 Every foreign bank has opened a Nastro account in head office
Karachi.
 In order to send TT to other country bank will debit account of
person who is sending TT and credit Head office. F-15 will be
prepared to credit HO.

31
  Head office will credit the account of that bank which is dealing the
transactions of that F.C.
Remittance abroad through F.C account

Commission @ US $1.00 per US $1,000

Or minimum US $5.00

Maximum US $25.00

Plus telex/ SWIFT charges Rs.2.50 per telex/ SWIFT case of TT.

Inward TT in FC
If any one sends TT from foreign bank to National Bank in
Pakistan then NBP will be debited and credit account of that person.And
will take credit from H.O by F-16 & will also prepare FET along with that.
Head office will debit that bank and credit NBP.

When any one send TT to Dr foreign currency amount in F.C. account then
bank will Dr, Cr foreign currency amount at updating rates but when
anyone ask to deposit in Pak

Short Credit in F.C

If checks are of any bank out of country then bank will send these
cheque to standard chartered Bank Karachi for clearance.The account of
Standard Chartered is in H.O Standard Chartered Bank will credit the
required amount of cheques in their account in H.O But until 21 days bank
will not ask for money by FET. Standard chartered will physically present
those cheques in relevant banks out of country.

Revaluation of accounts

At the end of each month revolution of accounts is done by updating

rates. By revaluation of account there arise differences in account. If rate
increases bank take additional amount from head office through F-16. If
rate decreases then extra money will be debited to HO by F-15.

32
Revaluation of in-hand-cash account
Revaluation is also done here at the end of month but here Head
Office is not involved. It is loss or profit of bank itself. Bank has cash with
it which it has purchased and is its asset. It does not belong to customers.
Here bank Dr and Cr interest account.

Cash department

Cash department performs the following functions

Cash Receipts

The money, which either comes or goes out from the bank, its
record should be kept. Cash department performs this function. The
deposits of all customers of the bank are controlled by means of ledger
accounts. Every customer has its own ledger account and has separate
ledger cards When the bank receives the cash from the customer, the bank
credits the customer’s account which is then used for paying their bills or
remitting it to their creditors or suppliers as the case may be.

Cash Payments

It is a banker’s primary contract to repay money received for this

customer’s account usually by honoring his cheque.

Cheque and their Payment

The Negotiable Instruments Act, 1881“Cheque is a bill of exchange

drawn on a specified banker and not expressed to be payable otherwise than
on demand”. Since a Cheque has been declared to be a bill of exchange, it
must have all its characteristics as mentioned in Section 5 of the Negotiable
Instruments Act, 1881. Therefore, one can say that a Cheque can be defined
as an

The Requisites of Cheque

33
There is no prescribed form of words or design of a Cheque, but in order to
fulfill the requirements mentioned in Section 6 above the Cheque must
have the following.

 It should be in writing
 The unconditional order
 Drawn on specific banker only
 Payment on Demand
 Sum Certain in money
 Payable to a specific person
 Signed by the drawer
Parties to Cheque

The normal Cheque is one in which there is a drawer, a drawer banker and
a payee, or no payee but bearer.

 The Drawer
 The Drawer
 The Payee

34
 CHAPTER 3
FINANCIAL ANALYSIS

3.1 FINANCIAL ANALYSIS

Financial analysis (also referred to as financial statement analysis or

accounting analysis or Analysis of finance) refers to an assessment of the
viability, stability and profitability of a business, sub-business or project.

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.

3.1.1 Common size analysis

Common size analysis expresses comparisons in percentages. It includes

vertical analysis and horizontal analysis .Vertical analysis compares each
amount with a base amount elected from the same year. Horizontal analysis
compares each amount with a base amount for a selected base year.

35
3.1.1.1 Vertical Analysis of NBP

Table 3.1 Vertical Analysis of NBP`s Balance sheet

Year 2015 2015% 2016 2016%

Rs in “000” Rs in “000”

ASSETS

Cash and balance 151190845 8.8 160085598 8.0

with treasury bank

Balance with other 20639421 1.2 14395805 0.7

banks

Lending to financial 7694515 0.4 121709399 6.1

inst

Investments 829190763 48.4 896280784 45

Advances 580323536 33.8 668883928 33

Operating fixed 30071124 1 34058289 1.7

assets

Defferred Tax Assets 9672251 0.5 5172496 0.2

Other assets 80091712 4.6 80830263 4.0

1711874167 100 1981416562 100

LIABILITIES

Bills payables 9171616 0.5 10187250 0.56

Borrowings 22384853 1.4 44863930 2.4

Deposits and other 1431535397 92 1657132405 91.6

accounts

36
Finance lease 91188 5.9 83007 4.6

Deferred tax -- -- - --
liabilities

Other Liabilities 77036022 5 89011304 4.9

Total liabilities 1540219076 100 1801277896 100

Sources: Annual reports 2015-2016

Interpretation

Vertical analysis is the proportional analysis of a financial statement, where

each line item on a financial statement is listed as a percentage of another
item. Typically, this means that every line item on an income statement is
stated as a percentage of gross sales, while every line item on a balance
sheet is stated as a percentage of total assets.

The most common use of vertical analysis is within a financial statement

for a single time period, so that one can see the relative proportions of
account balances. Vertical analysis is also useful for timeline analysis, to
see relative changes in accounts over time, such as on a comparative basis
over a five-year period.

The major components in the balance sheet of banks are deposits, advances
and investments. Advances are same 33% both in 2015 and 2016,
Investment decreased from48% in 2015 to 45% in 2016. Although it is not
comparable to previous years, that means it isno showing improvement
from 2015. This is due to low interest rates in 2015 and higher interest rate
in2016 and . Bankers are left with only option of investing in short-term
investment, to increase their profit margin. Investments, as being a non-
interest source of income are more promising than advances that are

37
becoming more profitable due to inclining interest rates. Bankers prefer to
give advances when the interest rate was high but then prefer to invest in
non interest income in 2016 .

Cash and balances with treasury banks Rs. 42568141 result is 8.0% in 2016

which is increased than 2015 result i.e 8.8% which is a good sign for the

organization. The second component in the balnce sheet is Balances with

other banks which is Rs.5845748 in 2016 the analysis result for this item is

0.9% which definitely decreased than 2015’s Rs. 8358930 result is

1.5%.Lending to financial institutions is 1.10% in 2016 while in 2015 it is

0.75% which means that it increased than the previous year. A

linvestment is an account on the asset side of a company's balance

sheet that represents the company'sinvestments, including stocks, bonds,

real estate and cash, that it intends to hold for more than a year.The next

item in the statement of financial position is Investments which is

Rs.295486254 which is 47% in 2016 increased than the previous year 2015

46% increase in investment is very helpful for the growth of the

organization so it is a good sign for the bank. Advances are same 37% in

both 2015-2016. Operating fixed assets in 2016 are Rs. 11019555 and Rs.

9278150 in 2015 the result is same 1.7% for both years 2015 and 2016 A

firm's assets that do not include cash, securities, receivables, inventory and

prepaid assets, and can be convertible into cash within one business cycle,

which is usually one year. Other assets are listed on a firm's balance sheet,

and are a component of a firm's total assets Other Assets of are Rs.

21596324 the result is 3.48% in 2016 while in 2015 the other assets are

Rs.20068057 the result is 3.7% which is more than 2015.

38
The Total Assets in 2016 are Rs. 618876528 and Rs.536188740 in 2015

which is the base amount in the vertical Analysis and always 100%.

Horizontal analysis allows investors and analysts to determine how a

company has grown over time. Additionally, analysts and investors could
use horizontal analysis to compare a company's growth rates in relation to
its competitors and industry. For example, when you hear someone saying
that revenues increased by 10% this past quarter, that person is using
horizontal analysis. Horizontal analysis can be used on any item in a
company's financials from revenues to earnings per share (EPS) and is
useful when comparing the performance of various companies.

39
3.1.1.3 Horizontal Analysis of NBP`s Balance interpretation

Year 2015 2016 2015 vs

2016%
Rs in “000” Rs in “000”

ASSETS

Cash and balance with 151190845 160085598 5.8

treasury bank

Balance with other banks 20639421 14395805 -30

Lending to financial inst 7694515 121709399 1481

Investments 829190763 896280784 8.0

Advances 580323536 668883928 18.7

Operating fixed assets 30071124 34058289 2.9

Defferred Tax Assets 9672251 5172496 -46

Other assets 80091712 80830263 0.9

1711874167 1981416562 15

LIABILITIES

Bills payables 9171616 10187250 11

Borrowings 22384853 44863930 100

Deposits and other 1431535397 1657132405 15

accounts

Finance lease 91188 83007 -8.9

Deferred tax liabilities -- - -

40
Other Liabilities 77036022 89011304 15

Total liabilities 1540219076 1801277896 16

Net Assets 171655092 180138666 4.9

Share capital 21275131 21175131 0

Reserves 45202342 46031075 1.8

inappropriate profit 52724525 55795351 5.8

Surplus on revaluation of 51731278 56299137 8.8

Assets

171655092 180138666 4.9

Table4.3 Horizontal analysis of NBP`s Balance Sheet

Source: Annual Report 2015-2016

Interpretation

Horizontal analysis of the balance sheet is also usually in a two-year

format, such as the one shown below, with a variance showing the
difference between the two years for each line item. An alternative format
is to add as many years as will fit on the page, without showing a variance,
so that you can see general changes by account over multiple years. A less-
used format is to include a vertical analysis of each year in the report, so
that each year shows each line item as a percentage of the total assets in
that year.

Common size horizontal analysis of NBP for the year 2015-2016, in asset
side of the NBP balance sheet. Cash and balance with treasury banks,
Balances with other bank shows positive trend in 2015 and 2016 in both
years. Lending to financial institution investment are decreased in 2016
than 2015. Advances shows increase in 2016 net advances. Operating fixed

41
assets are decreased in 2016. Deferred tax assets also decreased in 2016.
Other assets are increased in 2016 as compare to 2015.

The NBP Cash & balance with treasury banks shows a mixed trend during

all years. In 2016 the percentage is increased by 5.8% as compare to base

year

The Balances of NBP with other banks shows a decreasing trend as

compare to base year which is 30%.

The lending’s to financial institutions by NBP fluctuates during all years.

The year 2016 represents highest percentage of 1481 % among all years on

account of lending’s to financial institutions.

The investments made by NBP fluctuate during all years. The investments

are increased 8.1 % in 2016 as compare to base year.

The advances made by NBP shows an increasing trend in all years as

compare to base year. This implies that NBP is keener to advance money to

lenders. The year 2016 represents increasing percentage that is 18.7% as

compare to base year.

The operating fixed assets of NBP shows a mixed trend during all years.

There was an increase of 163% in 2015 as compare to base year but in year

2016 the Operating fixed assets increase 2.9% as compare to base year.

Deferred Tax Assets decreased 46% as compare to base year.

42
The other assets of NBP are fluctuating during all years. The other assets of

NBP are increase small percentage of 0.9 % in 2016 as compare with base

year.

The Share capital refers to the portion of a Bank's equity that has been

obtained by trading stock to a shareholder for cash or an equivalent item of

capital value. The share capital of NBP shows an increasing trend in all

years as compare to base year. The increase in share capital during all years

indicates share holder’s concern toward NBP and efficient bank’s

Management policies.

The Banks’ reserves are banks' holdings of deposits in accounts with their

central bank plus currency that is physically held in bank vaults (vault

cash). The reserves of NBP fluctuate during all years as they show an

increasing trend. The year 2016 represents increasing percentage of 1.8% as

compare to base and previous years.

The Inappropriate profit are Earnings of NBP not paid out as dividends but

instead reinvested in the core business or used to pay off debt.

Inappropriate profit is part of shareholder equity. The bank’s Inappropriate

profit is increasing very sharply during all years as compare to base year,

indicated bank’s strict dividend payout policy and concern towards

reinvestment options. The year 2016 Inappropriate profit increase 5.8 % as

compare to base year

43
The NBP surplus on revaluation of assets fluctuates and shows a mixed

trend during all years. The percentage is increased by 8.8% in 2016 as

compare to base year.

The NBP bills payable is showing a mix trend during all years. The year

2016 shows an increase in bank’s bills payable as it increases to 11% as

compare to base year.

The borrowings of NBP are fluctuating during all years and show an

increasing trend that is 100% in 2016 as compare to base year

Financial statement analysis is an evaluative method of determining the

past, current and projected performance of a company. Several techniques
are commonly used as part of financial statement analysis
including horizontal analysis, which compares two or more years of
financial data in both dollar and percentage form; vertical analysis, where
each category of accounts on the balance sheet is shown as a percentage of
the total account; and ratio analysis, which calculates statistical
relationships between data.

3.2 HORIZONTAL ANALYSIS OF INCOME STATEMENT

2016 2015 2016 vs

2015%

Profit after taxation 23087260 2076583 14.9

Other comprehensive income 2566582 513915 399

Comprehensive income 31002985 34269066 -9.5

transferred to equity

Comprehensive income 31002985 34269066 -9.5

transferred to equity attributable

44
to

Components of Comprehensive 583551 383542 52.1

income not reflected to equity

Items not to be re classified 264569 1529866 -82.7

Total comprehensive income 32535439 35415390 -8.1

Interpatition

Horizontal analysis of financial statements involves comparison of a

financial ratio, a benchmark, or a line item over a number of accounting
periods. This method of analysis is also known as trend analysis. Horizontal
analysis allows the assessment of relative changes in different items over
time. It also indicates the behaviour of revenues, expenses, and other line
items of financial statements over the course of time.

Accounting periods can be two or more than two periods. Accounting

period can be a month, a quarter or a year. It will depend on the analyst’s
discretion when choosing an appropriate number of accounting periods.
During the investment appraisal, the number of accounting periods for
analysis is based on the time horizon under consideration. Cash and
balances with treasury banks Rs. 42568141 in 2016 which is increased 0.43
which is a good sign for the organization. The second component in the
balnce sheet is Balances with other banks which is decreased -0.30 in 2016
than 2015’s .Lending to financial institutions is increased 7.41% than
2015.A investment is an account on the asset side of a company's balance
sheet that represents the company' sinvestments, including stocks, bonds,
real estate and cash, that it intends to hold for more than a year. The next
item in the statement of financial position is Investments which is increased
0.10% increase in investment is very helpful for the growth of the
organization so it is a good sign for the bank. Advances are also increased
0.17% Operating fixed assets increased 0.18% A firm's assets that do not
include cash, securities, receivables, inventory and prepaid assets, and can

45
be convertible into cash within one business cycle, which is usually one
year.

Horizontal analysis of financial statements can be performed on any of the

item in the income statement, balance sheet and statement of cash flows

An income statement is a financial statement that reports a

company's financial performance over a specific accounting period.
Financial performance is assessed by giving a summary of how the
business incurs its revenues and expenses through both operating and non-
operating activities. It also shows the net profit or loss incurred over a
specific accounting period.

The income statement is divided into two parts: operating and non-
operating. The operating portion of the income statement discloses
information about revenues and expenses that are a direct result of regular
business operations. For example, if a business creates sports equipment, it
should make money through the sale and/or production of sports
equipment. The non-operating section discloses revenue and expense
information about activities that are not directly tied to a company's regular
operations. Continuing with the same example, if the sports company sells
real estate and investment securities, the gain from the sale is listed in the
non-operating items section.

A horizontal analysis, or trend analysis, is a procedure in fundamental

analysis in which an analyst compares ratios or line items in a
company's financial statements over a certain period of time. The analyst
uses his discretion when choosing a particular timeline; however, the
decision is often based on the investing time horizon under consideration.

3.3VERTICAL ANALYSIS OF INCOME STATEMENT

2016 2016 2015 2016 vs

Profit after taxation 34206254 50 35101591 60

46
Other comprehensive 2566582 10 513915 5
income

Comprehensive income 31002985 12 34269066 10

transferred to equity

Comprehensive income 31002985 3 34269066 10

transferred to equity
attributable to

Components of 583551 10 383542 5

Comprehensive income
not reflected to equity

Items not to be re 264569 15 1529866 10

classified

Total comprehensive 32535439 100 35415390 100

income

Interpatition

Horizontal analysis of financial statements involves comparison of a

financial ratio, a benchmark, or a line item over a number of accounting
periods. This method of analysis is also known as trend analysis. Horizontal
analysis allows the assessment of relative changes in different items over
time. It also indicates the behaviour of revenues, expenses, and other line
items of financial statements over the course of time.

Accounting periods can be two or more than two periods. Accounting

period can be a month, a quarter or a year. It will depend on the analyst’s
discretion when choosing an appropriate number of accounting periods.
During the investment appraisal, the number of accounting periods for
analysis is based on the time horizon under consideration.

Horizontal analysis of financial statements can be performed on any of the

item in the income statement, balance sheet and statement of cash flows

47
An income statement or profit and loss account statement of profit or
loss, revenue statement, statement of financial performance, earnings
statement, operating statement, or statement of operations) is one of
the financial statements of a company and shows the
company’s revenues and expenses during a particular period. It indicates
how the revenues (money received from the sale of products and services
before expenses are taken out, also known as the “top line”) are
transformed into the net income (the result after all revenues and expenses
have been accounted for, also known as “net profit” or the “bottom line”).
The purpose of the income statement is to show managers and investors
whether the company made or lost money during the period being reported.

One important thing to remember about an income statement is that it

represents a period of time like the cash flow statement. This contrasts with
the balance sheet, which represents a single moment in time.

3.4 RATIO ANALYSIS

Ratio analysis is the most commonly used analysis to judge the financial
strength of a company. It is a quantitative relation between two magnitudes
of the same kind. This comparison allows the firm to detect major operating
differences. the main categories of ratios are.

Acid-test ratio

The acid-test ratio is a strong indicator of whether a firm has

sufficient short-term assets to cover its immediate liabilities.
Commonly known as the quick ratio, this metric is more robust
than the current ratio, also known as the working capital ratio,
since it ignores illiquid assets such as inventory.

The basic formula for the acid-test ratio is: ATR = (Cash +
Accounts Receivable + Short-term Investments) / Current
Liabilities. Short-term investments include marketable securities
that can be liquidated quickly.

48
 Cash + Accounts Receivable + RESULT
YEARS
Short-term Investments) / Current
Liabilities.

2015 151190845+7694515+829190763/ 0.72

1463091866
2016 0.06
160085598+121709399+896260784/
1712183585

Interpretation

Acid test ratio is not same for both years 2015-2016 2015 it is 0.7% and 2016
0.06% due to equal increase in the items used to calculate this ratio

3.4.1 Liquidity Ratio

Current ratio
The current ratio is a liquidity and efficiency ratio that measures a firm's
ability to pay off its short-term liabilities with its current assets. The current
ratio is an important measure of liquidity because short-term liabilities are
due within the next year.
This means that a company has a limited amount of time in order to raise
the funds to pay for these liabilities. Current assets like cash, cash
equivalents, and marketable securities can easily be converted into cash in
the short term. This means that companies with larger amounts of current
assets will more easily be able to pay off current liabilities when they
become due without having to sell off long-term, revenue generating assets.

FORMULA

The current ratio is calculated by dividing current assets by current

liabilities. This ratio is stated in numeric format rather than in decimal
format. Here is the calculation:

49
Current Ratio
Current Assets 2015= 151190845+20639421+7694515+829190763
+580323536= 1589039080
Current Libalities 2015= 9171616+22384853+1431535397= 1463091866

Current Assets 2016= 160085590+ 14395805+121709399+ 896280784+

668883928= 1861355514

Current Libalities 2016= 10187250+44863930+1657132405 =1861355514

CURRENT ASSET/CURRENT RESULT

YEARS LIABILITIES
2015 1589039080/1463091866 1.0

2016 1861355514/1712183585 1.0

Interpretation
Current ratio showed a huge increase in the year 2016 to 1.0% from the last
year’s 1.0% which is a good sign for the organization

NET WORKING CAPITAL

Net working capital is a liquidity calculation that measures a company’s

ability to pay off its current liabilities with current assets. This
measurement is important to management, vendors, and general creditors
because it shows the firm’s short-term liquidity as well as management’s
ability to use its assets efficiently.

Much like the working capital ratio, the net working capital formula
focuses on current liabilities like trade debts, accounts payable, and vendor
notes that must be repaid in the current year. It only makes sense the
vendors and creditors would like to see how much current assets, assets that

50
are expected to be converted into cash in the current year, are available to
pay for the liabilities that will become due in the coming 12 months.
If a company can’t meet its current obligations with current assets, it will
be forced to use it’s long-term assets, or income producing assets, to pay
off its current obligations. This can lead decreased operations, sales, and
may even be an indicator of more severe organizational and financial
problems.

FORMULA

The net working capital formula is calculated by subtracting the current

liabilities from the current assets. Here is what the basic equation looks
like.

YEARS CURRENT ASSETS –CURRENT RESULT

LIABILITIES
2015 1589039080-1463091866 125947214
2016 1861355514-1712183585 149171929

Interpretation
The calculation of this ratio show that net working capital in 2015 was Rs.
125947214while in 2016 it is Rs. 149171929

DEBT TO EQUITY RATIO

The debt to equity ratio is a financial, liquidity ratio that compares a

company's total debt to total equity. The debt to equity ratio shows the
percentage of company financing that comes from creditors and investors.
A higher debt to equity ratio indicates that more creditor financing (bank
loans) is used than investor financing (shareholders).

51
FORMULA

The debt to equity ratio is calculated by dividing total liabilities by total

equity. The debt to equity ratio is considered a balance sheet ratio because
all of the elements are reported on the balance sheet.

YEARS TOTAL LIABITIES/TOTAL RESULT

EQUITY
2015 1540219076/171655092 8.9
2016 1801277896/180138666 9.9

Interpretation
Debt to equity ratio for the year 2015 is 8.9% while it increased in the
current year 2016 to 9.9, due to constant increase in the liabilities

3.4.2 SOLVENCY RATIO

DEBT RATIO
Debt ratio is a solvency ratio that measures a firm's total liabilities as a
percentage of its total assets. In a sense, the debt ratio shows a company's
ability to pay off its liabilities with its assets. In other words, this shows
how many assets the company must sell in order to pay off all of its
liabilities.
This ratio measures the financial leverage of a company. Companies with
higher levels of liabilities compared with assets are considered highly
leveraged and more risky for lenders.
This helps investors and creditors analysis the overall debt burden on the
company as well as the firm's ability to pay off the debt in future, uncertain
economic times.

52
FORMULA

The debt ratio is calculated by dividing total liabilities by total assets. Both
of these numbers can easily be found the balance sheet. Here is the
calculation:

YEARS TOTAL LIABILITIES/ TOTAL RESULT

ASSETS

2015 1540219076/1711874167 0.8

2016 1801277896/1981416562 0.9

Interpretation
Debt ratio slightly decreased in 2016 as compare to 2015 it was 0.8 % in
2015 while in 2016 it decline to 9 %

EQUITY RATIO

The equity ratio is an investment leverage or solvency ratio that measures

the amount of assets that are financed by owners' investments by
comparing the total equity in the company to the total assets.
The equity ratio highlights two important financial concepts of a solvent
and sustainable business. The first component shows how much of the total
company assets are owned outright by the investors. In other words, after
all of the liabilities are paid off, the investors will end up with the
remaining assets.

The second component inversely shows how leveraged the company is with
debt. The equity ratio measures how much of a firm's assets were financed
by investors. In other words, this is the investors' stake in the company.
This is what they are on the hook for. The inverse of this calculation shows
the amount of assets that were financed by debt. Companies with higher
equity ratios show new investors and creditors that investors believe in the
company and are willing to finance it with their investments.

53
FORMULA

The equity ratio is calculated by dividing total equity by total assets. Both
of these numbers truly include all of the accounts in that category. In other
words, all of the assets and equity reported on the balance sheet are
included in the equity ratio calculation.

YEARS TOTAL EQUITY/TOTAL ASSETS RESULT

2015 171655092/1711874167 0.1
2016 180138666/1981416562 0.09

Interpretation
Equity ratio for the year 2015 is 0.1% and in 2016 it is 0.09% which means it
slightly decreased than the year 2015 in current year which is a good sign.

3.4.3 PROFITABILITY RATIO

RETURN ON ASSETS RATIO - ROA

The return on assets ratio, often called the return on total assets, is a
profitability ratio that measures the net income produced by total assets
during a period by comparing net income to the average total assets. In
other words, the return on assets ratio or ROA measures how efficiently a
company can manage its assets to produce profits during a period.

Since company assets' sole purpose is to generate revenues and produce

profits, this ratio helps both management and investors see how well the
company can convert its investments in assets into profits. You can look at
ROA as a return on investment for the company since capital assets are

54
often the biggest investment for most companies. In this case, the company
invests money into capital assets and the return is measured in profits.

In short, this ratio measures how profitable a company's assets are.

FORMULA

The return on assets ratio formula is calculated by dividing net income by

YEARS NET INCOME / AVERAGE RESULT

TOTAL ASSETS
2015 15513375/2837353646 5.4
2016 3368238/2837353646 1.18

average total assets.

Average total assets = Current year assets + previous year Assets / 2

1981416562+1711874167/2=2837353646

Interpretation
This ratio for both years 2015it is 5.4% 2016 is 1.18%. which is not a good
sign for the firm it should always increase than the previous year

 Net Interest Margin:

Net interest margin (NIM) is a measure of the difference between the
interest income generated by banks or other financial institutions and the
amount of interest paid out to their lenders, relative to the amount of their
assets. It is similar to the gross margin of non-financial companies

Interest Expenses / Interest Income

Years

2015 59999374/54386990 1.10

2016 59594350/55434478 1.0

55
Interpretation.

This ratio examines how successful a firm's investment decisions are

compared to its debt situations. The interest margin ratio in 2016 is
increased as compared to 2015 not favourable for the bank, because
investment decisions are not well planed.

Earning Asset to total assets

An asset that produces money for a company without any work needing to
be
done. Earning assets include such things as loan, Lease, stocks, bonds,
certificates of deposit, and generally anything that earns interest or
dividends.
Earning assets include loan, Lease, investment securities and money market
assets. This ratio show that the contribution of these assets to total assets.

Interest Earned/Total
Years Assets
2015 114386364/1711874167 0.06
2016 115028828/1981416562 0.05

Interpretation

The ratio of earning to total assets in 2016 is 0.05 and in 2015 it is

0.06which is almost same, but the increase could be favorable.

Net Interest Margin to Average Earning Assets

 Return on Earning Assets.

An indicator of how profitable a company is relative to its earning
assets. ROEA gives an idea as to how efficient management is at using its
assets to generate earnings.

56
 Years Net income/interest income

2015 15513375/54386990 0.28

2016 3368238/55434478 0.06

Interpretation

Return on earning assets is decreases in 2016 as compared to previous year,

due to inefficient management of NBP showing unfavorable trend.

 Equity to Total Assets.

The equity to debt ratio show how much NBP have equity out of total
assets.

YEARS EQUITY/TOTAL ASSETS

2015 171655092/1711874167 0.10
2016 180138666/1981416562 0.09

Interpretation.

This ratio shows the ownership of the bank. In 2015 it is 0.10 and 2016 it
is 0.0.09 which shows in 2016 bank equity are same.

3.4.4 Efficiency Ratio

Non Performing Loan to Total Loan

NPL, are loans that are no longer producing income for the bank that owns
them. Loans become nonperforming when borrowers stop making
payments and the loans enter default. The exact classification can vary from
institution to institution, but a loan is usually considered to be
nonperforming after it has been in default for three consecutive months.

57
Credit to Deposit ratio(CD ratio)

YEARS ADVANCES/ DEPOSITS

2015 580323536/1431535397 0.40
2016 668883928/1657132405 0.40

Interpretation.

Credit to deposit ratio shows how much bank uses deposit to advances. In
2015 bank use 0.40% deposit for advances also in 2016 bank use 0.40%
deposit for advances.

58
3.5SWOT ANALYSIS

The word “SWOT” stands for strengths, weakness, opportunities and

threats respectively. SWOT analysis is a tool with the help of which we can
measure the performance and the prevailing condition of an organization.
In SWOT analysis we can easily identified the problem facing by the
organization and its remedial actions.

The SWOT analysis is used to focus NBP’s business to enhance strengths

and eliminate weakness, take advantage of opportunities edge against
threats.

3.5.1 STRENGTHS OF NBP

1 NBP is one of the oldest banks of Pakistan therefore people have

confidence on that bank. It is the largest commercial bank in
Pakistan with a network of over 1199 branches inside the country in
which there are 9 RHQ and 40 zonal offices and one subsidiary in
17 different countries.
2 It has a pleasant working environment as compare to other bank
branches in the area.
3 It provides many facilities to its employees. Like provide interest
free loans for different purposes.
4 It provides loan facilities to its general client against jewelry.(Gold)
5 Provision of different types of officers loan of 4% mark up lower
staff is given spend benefits. They are given loan to four lacks
without interest. Bank staff is also given three types of bonuses in
every year i.e. on Eid-ul-Fittar, Eid-ul-Azha and the last one is
given annually.
6 Highest profitability
7 It deals in almost all the affairs of the government.

59
 8 In order to give loan to the farmers they provide special services
while rendering the loan.
9 NBP open different branches in rural areas in order to facilitate the
farmers.
10 It Provides loan named as NBP (SAIBBAN) for the construction of
houses to the salaried persons.
11 Provide 15 advance salary packages to the needy people.
12 Act as an agent of SBP.
13 Staff College is also the part of the national bank of Pakistan; it
helps the trainee to get some practical knowledge.
14 Not a tough competition, because it is nationalized bank.
15 Highest deposits.
16 Staff gives the importance to internees.
17 The attitude of the staff with internees and customers is very
cooperative.
3.5.2 WEAKNESSES OF NBP

1 Complaint of the customer is not taken into consideration. It

hampers the image of the bank.
2 During the rush hours due to the lack of staff, clients wait for their
turn for long time.
3 Marketing efforts are not make to promote the bank.
4 Common people didn’t have the knowledge about the polices and
new packages of the national bank of Pakistan.
5 NBP is under the political pressure.
6 It is a nationalized bank, so the government influence is very much
in the management of national bank of Pakistan.
7 Favoritism and nepotism during appointment, transfer, promotion,
and increments.
8 No job rotation according to rules and regulation.
9 The number of branches of NBP is decreasing every year.
10 Poor quality counters service during the rush hours.
11 Lack of scheme and projects to invest the money.

60
 12 Limited staffing and no adequate span of management.
13 Unequal distribution of work.
14 No much use of computer as it is required.
15 No library for internees as well as students to get the relevant
material.
16 Delay in decision making.
17 No note counting machine.
18 No online banking system.
19 Employee does not follow the basic rules and regulation of banking.
3.5.3 OPPORTUNITIES OF NBP

19 Location of the branch is very suitable place.

20 Near to all major business owners.
21 NBP is the only bank which is providing facilities of collecting
from 9.00am to 5.00pm.
22 Better management.
23 Provide many utility services.
24 Micro financing scheme for the farmers and NBP also provides
monthly income to the pensioners.
25 Introduction of new technology and electronic banking.
26 Introduction of new financial scheme with higher rate in order to
attract the customers.
3.5.4 THREATS

1 National bank is the only Government bank so there is political

interference time to time and every political government wants to
impose its own policies.
2 The bank cannot introduce the various earning schemes like (Allied
Bank kar Amad scheme, Muhafiz travelers Cheque HBL etc).
3 In area there are also other bank present (like HBL, UBL) employee
and most of the employee are under graduate and graduate.
4 There is also an interest policy present in the bank.
5 Sanctions imposed against Pakistan will affect exchange business

61
 where as the freezing of account by SBP have also caused problems
for NBP.
6 Rapidly growing business of other foreign banks and expansion of
their brands networks in the country.
7 Strike regulation by the government and credit facilities to the
customers as well as to meet the production regulators.
8 Lack of public confidence to open foreign currency account NBP
due to political instability due to tear of economic sanctions on the
country

62
 CHAPTER 4
CONCLUSION AND RECOMMENDATIONS

4.1 CONCLUSION

I will briefly explain my internship in National Bank of Pakistan, City

branch Mansehra . NBP has very strong network there are many
opportunities available for qualified persons, they can join it for long-term
career, and Overall working environment of NBP is very comfortable.
Furthermore, Management of City branch Mansehra concentrates on its
employees and considers them as the Asset of bank. Behavior of branch
manager is very polite and the whole management focuses on the
individual’s career and their growth.
I found my internship at NBP to be a very knowledgeable experience and
training was very much beneficial for me, because it helped me to be aware
of a real life working environment, As far as my learning is concerned; all
the employees at branch were very much cooperative. Related to this,
management of this branch helped me to understand the procedures of a
bank to possible extent; their good behavior also gave me more confidence
to learn more about the banking operations and to ask if I have found any
query in my mind.

I had made an honest effort to present the working & operations of NBP,
specifically to City branch Mansehra in simplest way. Moreover, I feel
pleased that I have really learned a lot during two months & enjoyed
working with experienced cooperative & intelligent staff.

4.2 RECOMMENDATIONS

National bank of Pakistan is an effectively operating and profit making

organization and carrying out its activities under a specified system of
procedures. These procedures and regulations changes with the passage of
time. The state bank of Pakistan, which is the main regulatory body,

63
provides all the procedures and information to ensure the effective
operations of the commercial banks. The man regulatory body is state
bank of Pakistan, which provide the policy guide lines and ensure that the
money market operate on sound professional bases. While the head offices
specifies the whole procedure of functions and operations.

Here some suggestions are recommended, which can increase the efficiency
of the workers and as well as the performance of the NBP.

Recommendations are given in the following,

Professional Training:

The staff members do not have the strong professional background. They
do not have modern techniques and knowledge regarding the bank
procedures.

Although staff training colleges are working in all major cities but they are
not performing well. For this purpose these staff colleges should be
reorganized and their syllabus should be made in such a way to help the
employee understand the ever-changing economic conditions.

Banking council, of Pakistan should also initiate some programs to equip

the staff with much needed professional knowledge.

Delegation of Authority:

To make the environment of the work place more cohesive proper authority
delegation is required in the bank. Staff members of the bank should be
given a task and authority and he or she should be ask for their
responsibility. In this way no one can put the blame of their mistake on
others.

64
Performance Appraisal:

The manager should strictly monitor the performance of every staff

member. All of them should be awarded according to their performance.
Special bounces and incentives should be given to motivate them.

On The Job Training:

On the job training should be carried out by the management to make their
staff better concerning the global changing economic environment. For
these purpose seminars, conferences and debates should be organized.

Transfer:

Transfer is not properly carried out. Some of the employees are continually
serving at the same post. They are simply rotated at the same branch.

Therefore it is recommended that rotation of every employee should take

place in every three years in different branches of the bank.

Changes in Policies:

There should not be any abrupt polices by the upper management, as this
practice damage the customer confidence in the bank. Policies should be
made in such a manner that any new government could not alter it.

Qualified Staff:

Required qualified staff should be provided to branch in order to improve

the functioning of the branch. Especially a telephone operator should be
appointed. Number of people should also increase in order to facilitate the
work smoothly.

Availability of computers:

Most of the work in City branch is carried out manually. Therefore it is

very time consuming and difficult task

65
It is recommended that every department should keep their data in
computers; similarly advance department should also keep the profile of the
borrowers in computers which will make their job easier while calculating
different installments. Special computer programs should be designed
according to their needs, ensuring full reliability and security.

Utility bills charges:

The banks are entitled to levy special charges on utility bills (electrically,
gas, telephones etc.) from consumer. It was fixed by the government. These
charges are so less that they are unable to meet the cost of the bank. These
charges should be increased to Rs.10 per bill to enable the branch to cover
there handling costs and earn some profit.

Link with the Head Quarter:

100 major branches of NBP should establish a direct link with the head
quarter in Karachi, through internet. This will make the functions and
decision making of the management easier and convenient.

Credit Cards:

National bank of Pakistan should start its operations in credit cards. These
cards are very helpful for the ordinary customer in general and the business
in particular.

To make it more secure and to eliminate the misuse of it, the management
is required to keep proper security against the card.

Installing Valuator

Valuator machine is used to count the currency notes and its installation
will help to eliminate the counting errors and will save time as well.

So for the purpose of saving time the installation of valuator is

compulsory.

66
Forecasting:

Efficient forecasting may increase the profitability of the any organization.

So Forecasting needs to be introduced at NBP. Before taking any major
decision it is necessary to judge decision, which they are likely to take.
Whether it has good or any bad impacts for the bank and for the economy
as a whole. It will also help in better planning.

Interest On Overdraft:

Overdraft is a short term credit facility provided by the bank to its

trustworthy customers free of interest. Only bank commission is charge on
the amount of credit availed. It is recommended that the bank should charge
small amount of mark-up on the overdraft, which will help the bank to
improve its revenue position.

Clean Loan:

Clean loan or clean overdraft is the credit facility extended to the customers
without any security. These types of small term loans should not be extend
to any body, because some times these loans are provided to blue-eyed
people of the management and they become a part of bad debts.

Cash Financing:

In this mode of financing the amount of credit not utilized by the borrower
is remain ed tax free. It is recommended that a small amount of interest
should be charged on this mode of financing. Because the bank does not
utilize this amount anywhere.

Staff Relationship:

Good relationship among the staff members leads to the better performance
in any organization. It is observed that the staff relationship was normal but
some time it is noted that their existed a little conflicts among the staff
members. So this sort of attitude is not good because it weak the spirit of
team work.

67
Improper Distribution of Work:

Proper distribution of work leads to success in every organization. Proper

distributions of work prevent the employee from overwork and under work
situation. For a smooth running of an organization proper distribution of
work is very essential.

During the internship I observed that there was no proper distribution of

work in the bank, some of the employee work like ants while others sat idle
staring here and there. So this created a lot of overwork situation for some
employees.

Favoritism and Nepotism:

In the City branch during the internship, it is observed that there is lot of
nepotism and favoritism.

When some of the employees are transfer to other places, due to there
relations with top management they can cancel their transfer in few weeks.

So I suggest that in the organization there should be no favoritism,

nepotism and politics and their transfer and promotion should be made on
merit and provide favorable environment to all the employees equally. They
should be rewarded on their performance.

Inter Department Transfer:

It is observed during the internship that, there are number of employees

who are working on one seat since last two years. It can affect the
performance and motivation of the employees negatively. Therefore there
should be the interdepartmental transfer of the employees to make the jobs
and the working environment interesting. And this transfer should be for a
reasonable time period.

68
Marketing Policy: The branch should adopt various marketing strategy
and promotion strategy to promote the bank and its products. These
marketing strategies may be very helpful. For this purpose the bank should
conduct the seminars and conferences within and outside the bank.

The NBP should adopt various prizing scheme just like allied bank (kar –
amed scheme) bank Alfalah (monthly income earning scheme) and various
others. Media and newspapers can be helpful in this regard.

Facilities In branch:

There is no proper facility for the customers in the bank when they enter
the bank. The proper furniture is not available for the customers. In the time
of rush the people move here and there in the bank which really create the
disturbance.

So in order to main tain the good working environment the customer should
be served properly so that they can feel that they have taken the right
decision to choose this bank for the safety of their money. If the bank takes
steps in this direction then, it will increase the goodwill of the bank.

Complaint Of Customer:

There should be an inquiry desk to provide the information and to receive

the complaints of the customer in the bank.

There is no complaint box available in the branch and not any person
appointed to hear the complaints.

So I suggest that management should install a complaint box in the branch,

and recruit a special person for the guidance of the customer in the bank.

Analysis of the Business:

Proper analysis of the business should be conducted before extending any

type of loan. For this purpose professional training of the staff member is
required.

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 REFERENCES
1. Gibson, Charles H, (2002); Financial Reporting & Analysis, 7th Edition.
Prentice Hall International Corporation”.
2. Lawrence J.Gitman, (2008); Principles of managerial Finance. 11th
Edition, San Diego State University”.
3. Siddiqi, Asrar H (2008); Practices and law Banking in Pakistan, (8th Ed),
Royal Book Company, Karachi.
4. NBP Annual report (2014), (2015 –National Bank of Pakistan
5. National bank of Pakistan 2015, executive committee, viewed 05 March,
2016, <http:// www.nbp.com.pk>
6. National bank of Pakistan 2015, publications, annual reports, accessed on
09 March 2016<http:// www.nbp.com.pk/Publications/index.aspx>
7. Business recorder 2015, highest rating, viewed 05 may,2016,
<http://www.brecorder.com/top-stories/0/1175012/>

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