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PREFACE
Being aware of the importance of practical training, the department of commerce (IUB) requires every student of MBA student to go through training for practical purpose as trainee. The internship program is to broaden the vision of practical experiences with theoretical knowledge as it increases ones capabilities to handle problems at various stages and the ability of decision. I tried my best to collect the valuable information and its relevant facts. This report is the result of my internship with NIB Bank Ltd.

Arooj Abdullah MBA (3.5 years) Roll No. 106

DEDICATION

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

ACKNOWLEDGEMENT

I offer my humblest thanks to ALMIGHTY ALLAH, The most Beneficent and the Most Considerate and the entire source of all knowledge and wisdom. My respectable advisor, whose blessings gave me the insight and knowledge not only to carry out the jobs assigned to me but also to complete this report, I am also grateful to all the staff members of NIB in completing my assignments and for their kind cooperation during my internship, I offer special thanks to:

Mr. Rana Asad (Operations Manager)

There are many other people who have been very helpful to me right from the beginning whose names cannot be included due to the scarcity of space and time.

Table of Contents

Sr. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

NAME Preface Acknowledgement Executive Summary Introduction of organization Mission Vision Objectives of the organization Corporate level strategies Business level strategies Departmental level strategies Organizational structure Working of various departments Financial analysis SWOT analysis Suggestions and Recommendations Conclusion Annexure

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EXECUTIVE SUMMARY
A bank is a financial institution that serves as a financial intermediary. Pakistan has a welldeveloped banking system, which consists of a wide variety of institutions ranging from a central bank to commercial banks and to specialized agencies to cater for special requirements of specific sectors. NIB bank was launched in March 2003. NIB has acquired and merged with PICIC and PICIC Commercial Bank and is now the seventh largest commercial bank in Pakistan. NIB Banks emphasis on growth has resulted in a branch network that covers almost the whole

country offering high quality service to a wide spectrum of clients. Under the strong leadership and management, NIB BANK has achieved success in a short period of time. During the past three years it has assumed a brand new identity plied with a spurred vision and revived commitment. NIB Bank Limited provides various financial products and services in Pakistan. The Consumer and Small Enterprises segment offers various banking services, such as lending, deposits, and distribution of insurance products to individual and small businesses through retail banking and alternate distribution network. The banking sector plays a significant role in a contemporary world of money and economy. It influences and facilitates many different but integrated economic activities like resources mobilization, poverty elimination, production and distribution of public finance. The financial crisis accelerated an ongoing fundamental change in the banking industry as banks diversify their services to become more competitive. The financial crisis has allowed stronger banks to buy other banks and companies that provide other financial services at lower prices than before the crisis.

Mission & Vision of NIB Bank

Mission Statement:

NIBs Mission is to provide a banking experience so unique, that it compels each of our customers to want a long term, multi-product relationship with NIB Bank. Vision Statement: NIBs Vision is to: To be the bank of choice for the most discerning segments of the consumer and corporate markets in Pakistan. To revolutionize banking for distribution channels. To become a leading provider of investment banking and wealth management services. To be a top-5 choice of employer, a premier developer of human talent, and an organization that understands and honors its social responsibilities. the SME segment by creating new products and

Objectives of Organization
Followings are the some of the core objectives of NIB Bank Limited. To achieve sustained growth and profitability in all areas of the business. To build and sustain a high performance culture, with a continues improvement focus. To develop a customer-services oriented culture with special emphasis on customer care and convenience.

 To build an enabling environment, where employees are motivated to contribute to their full potential. To effectively manage and mitigate all kinds of risks inherent in the banking business. To maximize use of technology to ensure cost-effective operations, efficient management information system, enhanced delivery capability and high service standards. To manage the bank's portfolio of businesses to achieve strong and sustainable shareholders returns and to continuously build shareholders value. To deliver timely solutions that best meet the customer's financial needs. To explore new avenues for growth and profitability.

Corporate-Level Strategies
Strategies for an organization may be classified by the level of the organization responsible for the strategy. Corporate-level strategies concern top management and address strategic issues of facing the organization as a corporate whole. To determine the alignment among the set of businesses owned and the parent or corporate headquarters, corporate level strategy steams should look at four major aspects: critical success factors of the business,

parenting opportunities in the business, characteristics of the parent, and the financial results.

Then, to decide the businesses to retain and which to stop or divest, they should put them into five classes, being those that: align strongly; fit in some respects; may fit in some ways and have little potential; have a risk of value destruction; and fit parenting opportunities but not critical success factors.

Business-Level Strategies
Business-level strategies are similar to corporate-strategies in that they focus on overall performance. As distinct from corporate-level strategy, however, they focus on just one instead of a range of businesses. The corporate level strategy of a multi division operation is like a strategy for managing an investment portfolio.

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Business units are usually individual enterprise-like entities oriented toward a particular industry, product or service type, and or market. Business-level strategies are thus primarily concerned with: Managing unit activities so they conform to organizational corporate level

strategies, sometimes including cooperation with other business units to achieve strategic synergy. unit. Identifying product or service-market opportunities and developing strategies for Developing distinctive capabilities, resources and competitive advantage in each

succeeding in each. Monitoring the business industry environment so that strategies conform to the

needs of the markets at the current stage of development. In a single-product company, corporate-level and business-level strategies are the same. Business-level strategies look at the business unit strengths, weaknesses, opportunities and threats; much like corporate-level strategies, except the emphasis in business-level strategies is on the specific product or service, not on the corporate level investment portfolio. Business-level strategies thus contribute to corporate-level strategies. Corporatelevel strategies attempt to deliver benefits to the primary beneficiaries, such as increasing the wealth of shareholders through profitability of the overall corporate portfolio, and business-level strategies are concerned wit:

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matching their operations with the overall objectives of corporate-level strategy

while simultaneously navigating the environment in which they are active in such a way that they are

among the better performers in their industry.

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Departmental-Level Strategies
Functional-level strategies are concerned with managing the functional areas of the organization, such as product or service development and design, marketing and sales, finance, human resources, production, research and development, etc., so that each function upholds contributes to individual business unit strategies and the overall corporate-level strategy. Functional strategies are primarily concerned with: Efficiently deploying specialists within the functional area. Integrating activities within the functional area Making sure that functional strategies link effectively and efficiently with business

strategies and the overall corporate-level strategy.

INTRODUCTION TO ORGANIZATION
NIB bank was launched in March 2003. NIB has acquired and merged with PICIC and PICIC Commercial Bank and is now the seventh largest commercial bank in Pakistan. Management of NIB Bank accepted the challenge to transform this bank into a highly professional, most efficient & service oriented institution. The management has been 13

successful in fulfilling the undertaken challenge. It has been successful in making a significant contribution to both corporate and retail banking in Pakistan. Over the years, its emphasis on growth has resulted in a strong entity capable of offering high quality services to a wide spectrum of clients, in a highly challenging business environment. Its strategy is to maximize the synergies of branch network through an optimal allocation of financial resources in the face of dynamic challenges of present financial environment. NIB is now the second most highly capitalized bank in the country with paid up capital exceeding Rs.27.5 billion. Apart from commercial banking, NIB through its subsidiaries and affiliates is now also a significant player in the asset management and insurance businesses, thereby providing a wide range of services to their customers. Introduction of the Bank: NIB developed innovative and attractive products for its depositors and offered them branded deposit schemes. The market response to these has been more encouraging. Its successful products include are Car Financing, Rupee Travelers Cheques, Saving Certificates, Home Loans, Online Banking etc. Nibs advances and loan portfolio grew by 11.62% to Rs.10.220 billion. Credit rating by PACRA (Pakistan Credit Rating Agency) rated NIB BANK as AA for long term and A1+ for short term. Both ratings are investment grade and denote very high credit quality and very low expectation of credit risk Bank is in the process of acquiring a 15% stake in banking company in Bangladesh. This acquisition will not only help NIB in

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promoting bilateral trade with Bangladesh, but also help in the initiation of business with other countries. NIB invests heavily in the technological development and advancement of various procedures. It has achieved efficiency through automation and computerization of banking activities. IT department of NIB has developed PIBAS, which is an advanced computer program. NIB BANK is working on a program to increase its ATM installations. It also expects to be online with SWIFT soon. History of the Bank: NIB Bank Limited started as NDLC-IFIC Bank Ltd., which was incorporated in March 2003 as a public limited company. It started operations in October 2003 when all assets, liabilities, rights and obligations of the former National Development Leasing Corporation (NDLC) and Pakistan operations of IFIC were amalgamated with and into the bank with a paid up capital of Rs.1.2bn. In April 2004 the Pakistan operations of Credit Agricole Indosuez were also amalgamated with and into NIB. In March 2005 Temasek Holdings of Singapore acquired 25% shareholding in NIB Bank, through Bugis Investments. This shareholding was further enhanced to over 70% (Seventy Percent) in June 2005 following an increase in Nibs paid up capital to Rs.3.4bn. NIB Bank has since grown rapidly from a base of 2 branches in 2003 to 45 in the 4th quarter of 2007. Total assets have grown from Rs.9bn in December 2003 to Rs.87bn (excluding acquisition of PICIC through rights) as of September 30 2007, a CAGR of 85%. Loan growth has been equally rapid, increasing from Rs.7bn to Rs.43bn in the same period (a CAGR of 64%), resulting from successes in both the commercial and consumer business. Deposits for the same period have grown at a CAGR of 95%, reaching Rs.45.3bn.

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

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large and powerful bank. Going forward management is confident that the combined bank will be a top performer delivering a wide range of financial services through an extensive branch network. The asset management arms and insurance affiliate are also expected to perform well and provide an attractive dividend stream.

Organizational Structure
Company Information: Board of Directors Francis Andrew Rozario Mahmud al Huq Bhuiyan Phua Kok Kim Chairman Director Director

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

Director Director Director Director

Board Audit Committee Tan Soo Nan Mahmud al Huq Bhuiyan Syed Amir Zaidi

Chairman Member Member

Company Secretary Chief Financial Officer Registered Office

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

Auditors

M/S.M. Yousaf adil Saleem & Co

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

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B ra n c h m a n a g e r

B ra n c h S e rv ic e D e liv e ry m a n a g e r

B C IM

B u s in e s s D e v e lo p m e n t m anger

C o lle c tio n o ffic e r

C & T s u p e rv is o r

S u p p o rt A n a ly s t

RO

RO

CSO

C u s to m e r R e la tio n s h ip o ffic e r

RO

RO

O p e ra tio n s T ra in e e

RO

RO

This diagram shows the working network of the organization. At the top, the branch manager is working and than middle managers and than supervisors and relationship officers.

Terms and Conditions

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

Credit Card Terms and Conditions: Credit card services and benefits guide Credit card fees and charges guide Your guide to understanding interest Gold card Description of insurance cover Platinum card Description of insurance cover Non Cash Payment Facilities terms and conditions Telephone Direct Debit Request Service Agreement Business Banking Terms and Conditions: Business Transaction and Investment Accounts Terms and Conditions Business Visa Debit Transit Accident Insurance and Un-authorized Transactions Insurance Terms and Conditions Business Lending Supplementary Terms and Conditions Merchant Facilities Terms and Conditions Electronic Banking Terms and Conditions:

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 Electronic Banking Terms and Conditions Government Guarantee Terms and Conditions: Government Guarantee Wholesale Funding - Supplementary Product Disclosure Statement Government Deposit Guarantee - Terms and Conditions and Supplementary Product Disclosure Statement.

Working Of Various Departments

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

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There are so many departments in the bank and the working of each department is different from another. In the functioning of each bank, the central bank plays a very important role. A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on printing the national currency, which usually serves as the nation's legal tender. The primary function of a central bank is to provide the nation's money supply, but more active duties include controlling interest rates, and acting as a lender of last resort to the banking sector during times of financial crisis. It may also have supervisory powers, to ensure that banks and other financial institutions do not behave recklessly or fraudulently. Central banks in most developed nations are independent in that they operate under rules designed to render them free from political interference. Examples include the European Central Bank (ECB), the Bank of England, and the Federal Reserve System of the United States. Marketing: The function of the marketing department of a bank is to advertise about the bank and reach more potential customers who would open accounts with the bank. Just like a retail company, banks have products or services that they sell to the public to gain profits or funds to operate the business and make loans. Therefore they need a marketing department to produce brochures, radio, print or TV ads, and generally promote those products and

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services in the community. They may also organize events and sponsor local groups to raise awareness and increase loans, services and deposits. HR: Its wrong to think that HR is only about dealing directly with people face-to-face. Theres far more to it than just doing interviews, being a shoulder to cry on, and dealing with complaints about colleagues. In fact there are lots of different roles you can do in HR. In most banks youll find theres an opportunity to work in either a general role or to specialize. The existence of a human resources department is vital to overall productivity and efficiency of the strong workforce in any thriving company. In most professional organizations, the role of the human resources department is not sidelined or eclipsed by other departments. In fact, good human resources can be one of the most valued and respected departments in an organization; their job is people, and people are the companys most important asset. One of the major roles of a Human Resource Department in a successful business involves a lot of observation and analysis from behind the scenes. The intelligence of the human resource staffs involves a compilation of complex data and metrics that follows the performance of individual employees. Their specific job is to make the workforce competent is a vital task. The sensitive nature of human relations and the work of human resource will adequately needed in making the managements tough decisions. And the essential part is keeping a secret behind the close door meetings of who is going to let go, which is going to promote and who is going to hire. Finance:

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The role of finance department is very difficult because even the best risk management techniques cannot guarantee against losses, banks cannot rely on deposits alone to fund their investments. Funding also comes from shareowners equity, which means that bank managers must concern themselves with the value of the banks equity capital as well as the composition of the banks assets and liabilities. A banks shareholders, however, are residual claimants, meaning that they may share in the banks profits but are also the first to bear any losses stemming from bad loans or failed investments. IT: The role of information technology in the banking industry has changed dramatically. IT has made e-business possible in this industry. One of the internal networks that allow the bank to do e-business its sales force automation and analytics e-Business solutions which helps streamline operations and increase customer loyalty and sales effectiveness throughout its nationwide commercial sales force and network of all its branches. Clearing:

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

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

SWOT ANALYSIS

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The SWOT analysis is done by the organization for the environmental scanning. It is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning has been the subject of much research. Strengths: characteristics of the business or team that give it an advantage over others in the industry. Weaknesses: are characteristics that place the firm at a disadvantage relative to others. Opportunities: external chances to make greater sales or profits in the environment. Threats: external elements in the environment that could cause trouble for the business. NIB SWOT analysis is given below: Strengths: NIB Bank brand image is its major strength. It has always been considered as the pillar of the country economic scenario assets wise or balance sheet wise. Its image, work force, network and reputation have created a sentimental and emotional attachment of the people with the bank. Complete computerized working is other strength of the bank. Now the bank has the ability to complete with any multinational bank as to keep pace with the changing

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and fast growing world of today computer have become necessities. The reserve funds indicate positive sign as they have increased as compared to the previous years. Another competitive edge that the bank has on the rest of the competitors is its expanding business worldwide catering for a large and vast group of customer and maintaining standards of excellence globally and other strength of NIB. Organization Culture Nibs organization culture was very friendly and interesting. Employees have created a very cooperative environment among each other. They have created loyalty toward the organization by deviating their future efforts and energies. The employees take the organizational problem personals and try their best the prosperity of the organization. Industrial Policies NIB helps the government on the implementation of its industrial policies with respect to economical growth of the country. Best Research Appraisal Team Before the project financing NIB has the research appraisal team that justifies the economic and financial feasibility of not project in the future. That is the strength is the scare that it helps the organization from any loss that is to over in the future in case of failure of the project. Lenient Policy with the Clients This is one of the best policies of NIB that it does not rude behavior with this client if they make late in their repayment of loan. But it has adopts lenient way in dealing with them, it

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helps its customers in the repayment making rescheduling and restructuring of their loans. Young Generation NIB has young generation aged 27 to 30 graduates that would be helpful to maintain the quality of their service by hiring new graduates but also would be helpful changing the overall culture of the organization. Weaknesses: NIB Bank created its own weakness by downsizing. Due to downsizing various experienced and devoted employees were either forced or given the option to leave. Only those people were left who had no organization better to join. Due to right sizing a lot of confusions have taken place as well. For example higher-level management has come from institution or other organizations where everything is computerized. Whereas have by ten staff members hence, the higher management finds it difficult to get work done. Bank exhibits a downward trend indicating its low performanceshowing decline in total assets. Total deposits, saving deposits advances investment and total income. This downward trend can cause a great threat to the bank as its competitors are talking its market share, which can cause ruining the image and reputation of the thus posing danger in the long run, the graph depicts a decline in the performance of the bank. Less Attention to the Rural Development Nibs portfolio shows that it has made project financing only in the major cities of Pakistan. But a reasonable attention is needed in the project financing of the rural based industrial project of the country.

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 Poor Advertisement NIB is very poor in advertising itself and institution that works a lot in the development of the country but unfortunately in the business community most of the people are in award of it. Poor Network NIB has only 240 branches all over the Pakistan and in major cities of Pakistan in which other competitors has their branches NIB dont have: The formalities involved in getting loans are time concerning and complicated enough. It is observed that most of the loans, which have been granted on political basis, are either default or their loans are forcefully written off. It is seemed that the recovery system of NIB is not effective thats why number of defaulters is increasing at the growing age. Opportunities: NIB Bank has very bright prospects for the future. They plan to region their lost glory not only in terms of profitability but also include latest technology and competent work force. Furthermore, NIB is providing facility of bills collecting from 9 a.m. to 5 p.m. NIB is considering setting up an exclusive utility Bank in collaboration with a private firm, which would provide this service for 8 hours. Sponsor the IT Based Projects This is the best opportunity available to all banks and NIB as well, to sponsor the IT and computer based projects because the coming century is the century of information technology as now days all the business community is diverting its attention towards this 30

field. Goodwill and Better Image NIB has advantage of generating more deposits and attracting valuable customers due to its better image in the business community. NIB has also advantage of increasing credit lines. This is only due its good dealing and better image that NIB has directly acquired those lines of credit from abroad that are only acquired by it, this better image can help further NIB in explanation of its activities. Growth in the Industrial Sector Nibs major function is the project financing and it is doing it with full efforts. Fortunately industrial sector is nowadays is Pakistan is again growing thus increasing the business opportunities for NIB. Especially the textile sector is one again improving even the sick projects has resumed their operations. Threats: If there is a threat to the whole economy, it will pose a threat for NIB Bank, NIB Bank does not consider small bank a threat to its existence because the way NIB Bank can accommodate large customer, and these small banks cannot. Sanctions imposed against Pakistan will affect exchange business whereas the freezing of accounts by State Bank of Pakistan have also caused problems for NIB Bank. But the recent facts and figures indicate that the banks major rivals lime NIB Bank and SME are causing threats to the bank in the long run thus snatching away the market share by attracting a large number of customer due to the their rising standards giving service and value added products and other major

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threats as under: Political Influence and Instability This is the major threat for any business organization in Pakistan because the political officials influence NIB in financing those projects which are not viable or write off those loans which are still able to pay, this political influence cause many problems in daily business thus profitability of NIB. Sick Projects Nibs sick projects are increasing day by day due to economic downfall. As our economy is weakening day by day the number of side projects are becoming sick increasingly thus influencing the profitability even survival of NIB. Summarized Analysis: Complete computerized working is strength of the bank they are using T-24 (Banking Application) which is rated among top 5 banking applications of the world. Now the bank has the ability to complete with any multinational bank as to keep pace with the changing and fast growing world of today computer have become necessities. Due to downsizing various experienced and devoted employees were either forced or given the option to leave. Only those people were left who had no organization better to join. Because of their computerized working strength they plan to region their lost glory not only in terms of profitability but also include latest technology and competent work force. If there is a threat to the whole economy, it will pose a threat for NIB Bank, NIB Bank does not consider small bank a threat to its existence because the way NIB Bank can accommodate large

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customer, and these small banks cannot. This computerized technology can also be the reason for any major threat because due to downsizing various experienced and devoted employees after the coming of new technology.

FINANCIAL ANALYSIS
Financial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It refers to the assessment of a business to deal with the planning, budgeting, monitoring, forecasting, and improving of all financial details within an organization. There are various methods or techniques that are used in analyzing financial statements, such as comparative statements, schedule of changes in working capital, common size percentages, funds analysis, trend analysis, and ratios analysis. The process of evaluating businesses, projects, budgets and other finance-related entities to determine their suitability for investment. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and cash flow statement. In addition, one key area of financial analysis involves extrapolating the company's past performance into an estimate of the company's future performance. Horizontal Analysis Comparison of two or more year's financial data is known as horizontal analysis, or trend analysis. It is the division of every expense item in a specific year by an identical expense

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item derived from the base year. Calculation enables measurement of changes in the comparative importance of expense items over the years. Also evaluates how expense items influences changes in sales.

Horizontal analysis

31-Dec Assets
Cash and balances with treasury

2008

2009

2010

2011

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

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

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

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

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

100% 100% 100% 100% 100% 100% 100% 100% 100% 34

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

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

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

Surplus on revaluation of assets Total Equity

100% 100%

90.30% 182.80% 163.00% 258.00% 366.10% 445.00%

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

Vertical Analysis

31-Dec Assets
Cash and balances with treasury

2008

2009

2010

2011

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

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

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

Liabilities Customer deposits Inter bank borrowings Bills payable 97.20% 2.30% 1.50% 35 81.60% 83.80% 81.70% 8.10% 5.00% 7.30% 1.60% 1.30% 0.90%

Other liabilities Sub-ordinate loans Total Liabilities Share capital Reserves Un appropriated profit / (loss) Equity - Tier I Surplus on revaluation of assets Total Equity

2.40% 103.40% 0.90% 7.30% -5.50% -4.10% 0.80% -3.40%

2.10% 93.40% 2.80% 3.00% -4.10% 6.10% 0.50% 6.60%

2.30% 2.00% 1.00% 92.40% 93.00% 2.30% 1.80% 2.40% 1.90% 1.40% 2.25% 6.70% 6.40% 0.80% 0.60% 7.60% 7.00%

8.4 Ratio Analysis

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

RATIO ANALYSIS
Return on Shareholders Equity

Formulas
(100 x Net Profit After Tax) Shareholders Equity

2010
17.0962

2011
20.7706

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

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

Outstanding Shares

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TESTS

OF

INVESTMENT

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

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

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Common Size of Income Statement

COMMON SIZE OF PROFIT AND LOSS ACCOUNT

2010 Mark-up/returne/intrest earned Mark-up/returne/intrest expansed Net mark-up/intrest income Provision against non-performing advances Provision for diminution in value of investments Provision agaist off balance sheet obligations Bad debts written off directly Net mark-up/intrest income after provisions NON MARK-UP/INTEREST INCOME Fee commision and brokerage income Divedend income Income from dealing in foreign currencies Other Income Total non mark-up/intrest income NON MARK -UP/INTREST EXPENSES Administrative expense Other provision /write offs Other charges Total non mark-up/intrest expence Staff Welfare Fund Profit before tax Total Tax Profit after tax Unappropriated profit brought forward Transfer from surplus on revaluation of fixed assets Surplus/unappropriated profit 44.24 60.09 21.21 38.87 44.24 56.66 18.87 37.79 27.24 0.13 27.37 30.70 -0.04 0.48 31.14 60.09 33.29 0.59 0.19 34.06 56.66 14.03 6.60 3.05 4.09 27.78 91.22 14.65 5.11 3.58 4.68 28.02 90.72 0.01 5.42 63.45 0.07 6.61 62.70 100 31.14 68.86 7.02 -1.62 2011 100 30.69 69.31 7.27 -0.73

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Common Size Analysis of Balance Sheet

COMMON SIZE OF BALANCE SHEET

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

100

100

1.67% 1.84% 79.02% 0.00% 4.19% 0.38% 87

0.30 1.52 80.22 0.0029 4.32 0.77 87

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Index Analysis

Index Analysis of Balance Sheet

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

2009 83 82 219 97 143 148 105 116

2008 128 86 75 109 191 87 117 133

2007 100 100 100 100 100 100 100 100

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

Share capital Reserves Unappropriated profit

144 125 348

158 189 491

100 100 100

Recommendations
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First of all there is no Job security in the NIB Bank. The employees in the organization should be insured job security so that there is no pressure on the employees while performing their tasks. NIB needs to advertise its self as it is not so familiar among the people like other banks. They should give training to its staff about the knowledge of the products of different banks as they then able to compare the advantages of their product with respect to others. They should provide the facility of online submission of utility bills. They should launch home and car loans services. NIB should also introduce Dress-Down day i.e. employees should be given permission to wear dresses other than formal dresses on certain days so as to make them relaxed while work. I found many complaints regarding the ATM issues in NIB. Most of the time ATM remained offline. NIB needs to make sure the alternative links for the customer. At last they have a very small building and there is no space for sitting for customer they should try to expand their building. Assessment Of Performance Of Employees There are no proper criteria for assessment of performance of employees and most of the time it is on the personal judgment of the manager who forward the assessment sheets of all employees to area office for their promotions. Problem With Information System

41

NIB Bank Ltd information system is not very good and most of the time online transaction service of the Bank network is down, which occurs to be a big issue in smooth working, management really needs to work on it. No Rotation Of Employees From Department To Department There is not any rotation of employees within departments and cross departments. Therefore, the top management should immediately start thinking in terms of rotating the employees in various departments, as this alter work force into human capital. Implementation Of Management Policy NIB Bank Ltd Limited should develop a very serious management policy to attract multi NIB corporations as its clients. This action, if actualized, would not only prove to be highly profit generating, but it would also contribute a lot towards NIB Bank Ltds image building. Advertisements/Marketing Bank needs to use more In marketing channels to make public aware of its

products and services.

the presence of

intense competition NIB Bank Ltd

has to realize the importance of marketing.

Distribution Of Work 42

Management should distribute work equally among different employees. Some of the employees are overburdened while some sections are overstaffed. Staff Training & Improvement In Processes To keep staff well equipped and updated with enormous changes in current banking environment, training are an important part of survival. Especially

for the customer service staff and phone banking department as they are at front end and need more efficient performance for having satisfied customers.

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Conclusion
Today banks have to look much beyond just providing a multi-channel service platform for its customers. There are other pressing issues that banks need to address in order to chalkout a roadmap for the future. Here are some of the concerns in the mind of every bank's CEO. Customer retention is one of the main priorities for banks today. With the

entry of new players

and multiple channels, customers

have become more

discerning and less 'loyal' to banks. Given the various options, it is now possible to open a new account within minutes. Or for that matter shift accounts within a couple of hours. This makes it imperative that banks provide best levels of service to ensure customer satisfaction. Cost pressures come into play when banks are not able to afford the cost of a certain service or initiative although they want to or need to have it in place. This is primarily because the cost structure at the backend is not efficient enough to offer that kind of service to the marketplace. The need for more investments in IT has increasingly forced some banks to sell-out of certain banking operations. The cost of IT investment required to remain competitive and the uncertainty future profits has forced withdrawal. Security of information systems was found to be very vulnerable in general. The amount of resources that is required for security is lower than required. The fact that Hackers can still get into banking IT systems easily without inside help demonstrate the magnitude of the problem.

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 IT Fraud is also a major problem of the banking industry especially where plastic cards are concerned. The increased IT knowledge of the general public and proliferation of cheap computer technology mean that weaknesses in card payment systems are exploited fraudulently. Millions of Rupees is lost to plastic card fraud every year. This is simply because the cards are not secure enough. Bank IT and Security staff need to fully understand the organizations risks and vulnerabilities. Knowing the drivers for change, both the external & internal

influences. They must develop a corporate risk profile. Implement a strong Governance and Controls infrastructure. Monitor and maintain the security and risk profile to meet new challenges. Reputation risk associated with Denial of Service attacks can impact public opinion that results in a critical loss of funding or customers. During my stay at NIB bank limited I have learned lots of things about professional field like culture of the organizational culture and the behavior of the employees like how to deal with the customer to become a loyal customer of the organization.

NIB is a Singapore base business group. Group has diversified type of business all across the globe. In NIB bank employees have good relationship among themselves and also with the customers. NIB bank has since grown rapidly from a base of 2 branches in 2003 to 45 in the 4th quarter of 2007.

45

NIB bank views specialization and service excellence as the cornerstone of its strategy. The people of bank innovation, creativity, reliability, customized services and their execution are the key ingredients for their future growth. Based on this approach, their Treasury Division and the Structured Finance Unit have been geared to provide specialized services to the Corporate customers.

Revenues from these activities have started yielding dividends and they expect significant growth in these areas in the coming years. While building on their in-depth familiarity with their customers needs and anticipated developments in the banking industry, the Retail and Corporate areas of their operations will continue to provide a strong and stable base to the business of the Bank.

They are aware that they have stepped into the 21st century and they must meet its challenges by acquiring the highest levels of Technology. They will thus be accelerating their enable them distribute their products and services through most efficient and hightech means.

They say that they will invest in the modern tools and substantial allocation of resources will be made to achieve this objective during the current year. Their programme to launch real time on line Banking Services and introduction of ATMs at strategic locations have been firmed up and it will be fully operational during the year 2002.

46

Their focus would be to constantly seek out growth opportunities through increased quality assets and by offering a wider range of products and services to their esteemed customers. There are significant growth opportunities for NIB bank and they are confident in their ability to grasp them. They are committed to enhancing the shareholders value and look forward with greater optimism to a prosperous future for NIB bank.

Temasek Holdings remains the single largest investor in NIB. To realize its aggressive growth objectives NIB has developed a segmentation strategy through which it will offer a unique banking experience to customers in each of its Corporate, Commercial and Consumer business segments. For this purpose NIB has organized itself around two specific principles. First, NIB will be a customer-centric organization, which means that in whatever it does, the customer will always come first. Second, there will be a strong focus on efficiency, which means that whatever NIB it will does in the shortest possible time and at the lowest possible cost. Under the strong leadership and management, NIB BANK has achieved success in a short period of time. During the past three years it has assumed a brand new identity plied with a spurred vision and revived commitment. The board and management of the bank have implemented strategies and policies to carve a distinct position for the Bank in the market place. A paragon of strength has played a pivotal role in helping the Bank cross major milestones as a single source financial service provider of Corporate and Retail banking solution.

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The growing client base is a manifestation of its recognition in the market place. It made a significant progress despite the keen and challenging business environment. It made notable progress in business volume, efficiency and profitability following its increased involvement in trade finance, commercial lending, and foreign exchange and money market operations. By the year 2004 NIB has been successful on further mobilization of resources by attracting low cost and stable deposits. NIB Bank Limited provides various financial products and services in Pakistan. The company operates through four segments: Corporate and Investment Banking, Consumer and Small Enterprises, Small and Medium Enterprises and Commercial, and treasury. The Corporate and Investment Banking segment provides finance, export finance, trade finance, leasing, lending, guarantees, and bills of exchange relating to its corporate and commercial customers, as well as engages in advisory, underwriting, and initial public offering related activities. Banking services include transactional services, such as verification of account details, account balance details and the transfer of funds, as well as advisory services, that help individuals and institutions to properly plan and manage their finances. Online banking channels have become key in the last 10 years. The Consumer and Small Enterprises segment offers various banking services, such as lending, deposits, and distribution of insurance products to individual and small businesses through retail banking and alternate distribution network. The Small and Medium Enterprises, and Commercial segment provide funded and non-funded credit facilities,

48

deposit products and transaction services to manufacturing, trade, wholesale, and service sectors. This segment also offers trade finance; export and import finance, such as letter of credit, shipping guarantees, finance against trust receipt, and finance against imported merchandise; and guarantees. The Treasury segment offers foreign exchange services. The companys also provides capital market services, including money market services, and treasury marketing services. It has 223 branches. An inter-bank network, also known as an ATM consortium or ATM network, is a computer network that connects the ATMs of different banks and permits these ATMs to interact with the ATM cards of non-native banks. While inter-bank networks provide capabilities for all ATM cards within the same network to use other banks' ATMs that belong to the same network, the services vary. For instance, when a person uses their ATM card at an ATM that does not belong to their bank, the basic services, such as balance inquiries and withdrawals are usually available. However, special services, such as the purchase of mobile phone airtime, may not accessible to ATM cardholders of banks other than the ATM cardholders of the acquirer (the bank that owns the ATM). Furthermore, banks may charge a fee to users of cards that do not come that are members of the network when their own bank's ATM is unavailable. from their own bank (in addition to any fees imposed by the bank of the card the person is using). Inter-bank networks are convenient because people can access the ATMs of other banks.

49

NIB Bank, operating with the countrywide network of 240 branches plus an offshore until at end at 2009, commenced its operations in 2003. NIB Bank (Salam Segment) has a business interest spread across a wide range of economic and industrial sectors. NIB Bank offers a full range of services to the corporate, middle market and retail segments. The bank has established an image of efficiency and professionalism, attributable in part to its policy of maximum technology utilization offering facilities such as online real time banking, ATMs, telephone and Internet banking and cash management services. Off shore banking unit in Ukraine, established with the primary objective of capacity building of the bank, has started generating profits though the contribution is modest. The asset base of the bank has grown steadily over the years and the NIB Bank has emerged as one of the four local banks with assets base of over one billion rupees. While the bank continues to rely on organic growth, the management continues to explore the options of an acquisition that would lead to a quantum leap in the banks size. The new President subsequent to the completion of term of the previous one assumed the office. However except this change the senior management comprising experienced and distinguished bankers remains the same. While the new banking president has extensive banking services including two years at NIB Bank, he faces the daunting task of preserving the banks relative position in the fast changing sector dynamics. NIB Bank expanded its network mainly in the last quarter of 2007. The bank at the same time maintained the consistent growth during the year, which helped it in improving its system share. Although increasing concentration on consumer financing entails high risk,

50

the continuing focus on personal loans to corporate employees and increasing focus on mortgage loans has enabled the bank to keep delinquencies in consumer portfolio at relatively lower risks. The banks in terms of both ROA and ROE, declined during 2007 primarily in the absence of one off sizeable capital gains realized during the year. However the performance based on core business showed the marginal improvement. Investment portfolio comprises 33% of total assets. The portfolio is predominantly concentrated in government securities (79%) with higher proportion of treasury bills, implying low interest rate risks. NIB Bank is a global bank which is also operating in Pakistan. The organization behavior regarding goal setting for employees we have concluded that the management of NIB Bank is effective in setting goals according to the competition in the banking sector of Pakistan. As the requirement of growing banking sector it is necessary to set challenging and effective goals so as to become market leaders. Despite of setting challenging goals the employees of NIB Bank are satisfied with these challenging goals and performing well to achieve the goals which were provided to them. The management style in NIB Bank is kind of participative management in which employees are given chance to share their ideas for decision making so the NIB Bank is utilizing its employees by getting different ideas from different employees this provides greater chances for getting better and innovative ideas. Not only this but from this activity employees feel motivated because they think they also have the authority in decision making process and they are also a part of an organization.

51

During the interview of an employee NIB Bank he told us All the employees here are given title of relationship officer rather than any other designation and at the beginning of each month the top level management visits every branch and arrange meeting with all the employees of the branch and discuss the problems faced by every employee and immediately tries to resolve the problem and this is the major motivating factor for us. For motivating their employees management uses different types of motivating tools the innovative ones we found are ESOP (Employees Stock Ownership Plan) and the pay plan for less productive workers. By providing ESOP the employees gains the ownership of an organization and work hard not only for their benefit but also to maximize the profit of the organization. The next thing about the pay plan for less productive workers the company motivate their employees whose performance is not up to the mark by giving them the salaries equivalent to the market value of the any other employee of same rank. As the motivation and reward systems are up to the expectation of the employees so the employees are very much satisfied and dont want to leave the organization. The leadership styles in NIB Bank are mixture of both the task oriented and relationship oriented but it is little lean towards relationship oriented leadership style. The leaders behavior consisting of all the leaders behavior provided by Houses Path Goal Theory having almost same percentages with very low variation. NIBs business strategy envisages categorization of customers into various segments based on common attributes, and targeting each segment through separately designed business

52

models under programmed lending. This also involves

positioning, structuring, and

staffing of branches according to the requirements of each individual segment. A detailed research and analysis process is carried out for defining the value proposition for each segment, and business solicitation is started only after successful pilot testing. Meanwhile, assistance is being received from the principal shareholder and associated group banks, which are already running such models in their respective countries. Besides the traditional Corporate and Investment Banking Group, which the management will only pursue selectively as per the defined target market and in high value added products, going forward, the other two broad business segments being targeted are SME & Commercial (SMEC) and Consumer and Small Enterprises Group (CSEG), having many underlying sub-segments. While due to a greater proportion of Consumer and SME segments in the banks loan book the yields are high, its impact on the spreads is offset by higher funding costs due to comparatively lower proportion of Demand and Savings deposits. To fully exploit the potential of acquired branches, the management has budgeted significant expenditure on additional hiring, technology and infrastructure strengthening. Meanwhile, efforts are also being made to enhance staff productivity. These initiatives, while expected to put pressure on the profitability in the short-term, would help the management in aggressively pursuing growth in the targeted segments, while at the same time effectively leveraging the branch network to mobilize low cost deposits. However, given the intensifying competition in the industry, and a challenging operating

53

environment, the effective materialization of these initiatives will be dependent on effective execution. The management has instituted a strong risk management platform and control environment to effectively manage the risks associated with aggressive entry into relatively untapped business segments. To date, the banks track record of programmed lending has remained impressive. Although, the proportion of NPLs in the total loan book is relatively higher, a major part of it relates to the infected portfolio inherited from PICIC and PCBL, while the infection in case of NIB relates to a few major exposures. Meanwhile, the drag on equity is limited, as almost 80% of the portfolio is provided. Overall we concluded NIB Bank inherits strong organizational culture having values for leaders and as well as for employees and the organization behavior is up to the mark for any company being in Pakistan. We expect that the banking sector in Pakistan will remain extremely competitive for the foreseeable future. Therefore, the success of any new institution will be a function of its clarity of vision and efficiency of implementation. While we are confident that NIB Bank will achieve strong growth in revenues, we believe it is necessary to create the correct foundation for sustainable growth into the future. With an acceptable level of controls and an appropriate level of technology infrastructure, NIB Bank is poised to offer incomparable services to its valued clients through its countrywide network of branches.

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