Professional Documents
Culture Documents
on
Class : M.com(Finance)
Registration No : 2014-GCUF-013357
Roll No : 9838
Session : 2014-2016
COLLEGE OF COMMERCE
Our worthy parents and the respected teachers who always try to find ways and
thinks to provide which
I am highly thank full to the staff member of NBP. Who really cooperated with
me and provide me their complete guidance. As banks are very much sensitive
about their secrecy, even then after taking an understanding, they let me handle
their delicate operations.
Executive summary
CONTENTS
Chapters Titles P#
1 Introduction
1.1 Vision Statement
1.2 Mission Statement
1.3 Reginal Branches of NBP
1.4 Objectives of NBP
2 Organizational Structure / Hierarchy
2.1 Organization Structure of Head Office
2.3 Hierarchy of NBP
3 Product Introduction
3.1 Products Line of NBP
4 Own Work
4.1- 1st& 2ndWeek
4.2- 3rd& 4thWeek
4.3- 5th& 6thWeek
5 SWOT Analysis
5.1 Strenght
5.2 Weakness
5.3 Opportunities
5.4 Threats
6 Financial Analysis
6.1 Financial Statements
6.2 Ratio Analysis
6.3 Trend Analysis
6.3.1 Horizental Analysis
6.3.2 Vertical Analysis
7 Suggestion / Recommendation
8 Conclusion
CHAPTER NO.1
NBP INTRODUCTION
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Mailing Address
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Website www.nbp.com.pk
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E-Mail
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History of the National Bank
1.2 Mission
NBP will aspire to the values that make NBP trulythe 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 stakeholders value
• Discharging our responsibility as a good corporate citizen of Pakistan
and in countries where we operate.
1.3 Branch Network of NBP
The Branch network of National Bank of Pakistan in year 2013 is divided into
following categories:
Types of Branches
There are main branches in every city. In one city there is only one main
branch, it is directly under the zonal office.
Then there are commercial branches. These are the ordinary branches and
are in the commercial areas such as the Mall Road Branch.
The Industrial Branches are exclusively in industrial zones.
There are also Residential Branches. These are exclusively in residential
colonies.
Another type is the Mixed Branch such as civil secretariat branch. Every
kind of work is done.
There are also Project Branches created for specific purposes i-e the
project and are at the site.
Another unique type is the Model Branch. No other bank in Pakistan has
these. In these branches all the work is done by the officers. Even the
officers sit on the counters. Model Branches are in Karachi, Lahore and
Islamabad.
1.4 Core Values
1.4.1 Goals
Name Designation
Mr. Muneer Kamal Chairman
Centralized
Decentralized
NBP has a centralized type of management because all the decisions are taken
by the top management.
2.1.4 Senior Management of National Bank of Pakistan
Khalid Bin Shaheen SEVP & Group Chief, Global Home Remittance
Management Group/Corporate Communication
Division
Masood Karim Shaikh SEVP & Group Chief, Overseas Banking Group
Asif Hassan SEVP & Group Chief, Audit & Inspection Group
Akbar Hasan Khan EVP & Head, Corporate & Investment Banking
Group
President
Board Directors
Provincial Chief
Zonal Chief
Voice President
PRODUCT / SERVICES
ATM + Debit Use it as Debit Card in any of the outlets with ORIX
Card POS
machine across nationwide.
Cash withdrawal up to Rs. 20,000/- per day
Account Balance Enquiry
Mini Statement (Only at NBP ATM)
PIN Change facility (Only at NBP ATM)
Demand Draft
It is a simple, safe, rapid and reliable way to shift money. For the transformation
of the money an individual has an account in the bank or not can purchase it
from any branch of NBP at very affordable rates.
Mail Transfers
One can move one’s money safely and quickly using NBP Mail Transfer
service. NBP also offers the most competitive rates in the market.
Pay Order
Another reason to move money from one place to another by using NBP’s
services is Pay Order. The charges of this service are very reasonable. Pay
orders of NBP are a safe and straightforward way to shift money from one place
to another.
Foreign Remittances
To facilitate its customers in the area of Home Remittances, National Bank of
Pakistan has taken a number of measures to:
Letter of Credit
NBP is faithful to present its industrial clients the widest variety of options in
the part of money move. If someone is interested then Letter of Credit service
by NBP is a service for business enterprise and it is fulfill the necessities of
commercial enterprises. With rational rates, safety, and easiness of transaction,
NBP Letters of Credit are the best way to do business transactions.
CHAPTER NO. 4
OWN WORK
ACCOUNT DEPARTMENT
During the period of six weeks I learned a number of things through direct
contact with the persons at the concerned departments and other times I was
also provided with the journals magazines and manuals to enhance my
understanding of the activities.
• Deposit Department
I worked in this department and learned that the acceptance of deposit is the real
source of income of a bank. Deposit Department is the backbone of commercial
banking. Deposit is often used to describe the money which customers of all
kinds leave with the bank. Deposit account can be defined as an account, which
is opened to earn interest.
The term deposit is highly misleading. It is not something deposited for safe
deposit box. Bank deposit is not like that; when one brings currency to the bank
for deposit the bank does not put the currency in the vault. Bank put this
currency to meet the need of others customer.
The procedure undertaken upon receiving deposits from the customer is as
follows:
1) Examining the deposit slip to ensure that the name and the account numbers
are clearly indicated.
2) Counting the cash/cheque and agree the total with the amount on the deposit
slip.
3) After that the pay-in-slip is validated for cash transaction/ transfer/ clearing
transfer as appropriate before the counterfoil a handed over the customer.
Head office given the cord to deferent branch’s and controls the money transfer.
If Toba Tek Singh branch code (0414) transfer the money (request) toVhari
branch code (0342) the head office treat in this case, debit the Vehari branch
and credit the Toba Tek Singh branch. After a specific time these branch’s settle
their account.
4.1.1 Departments of NBP:
Deposit Department
Account Opening Department
Remittance Department
Foreign exchange
Cash Department
Clearing Department
Advances Department
Government Department
a) Deposit Department
This account is also known as running balance account. Simply we can say “A
bank account which may be used to lodge payments or to withdraw money on
demand.”Its main purpose is to serve the businessman.
This type of account is designed to encourage the saving habit of the customer
and lead to a long-term banking or investment relationship.
NBP offered the two types of saving accounts
In general it is also called saving account .To provides interest free banking
facilities in Pakistan.
• Instead of having fixed return in the form of interest the deposited money
will be shared in profit and loss of the bank.
• Zakat at the rate 2.50% is deducted from the PLS Saving Accounts.
• No limit of withdrawals
• This scheme did not gain popularity so NBP close this scheme.
These are the accounts in US $, Pound, Euro, yen etc. of different account
holders and either saving or current accounts. . The transactions in these
accounts are translated into Pak. Rupees at the exchange rate prevailing on the
date of transaction..
This account is the major source of funds for the banks. This account is best for
people who have surplus money and don’t need such funds in nearer future.
Main features of this account are: -
• Higher will be the time period, higher will be the rate of profit, and
vice versa.
• A receipt is used for the amount deposited called fixed deposit receipt.
• Period of deposit can vary from 3 months to 5 years depending upon
the nature of scheme offered by bank.
f) Cheque cancellation
• Post datedcheque
• Stale cheque
Account opening section of the bank can be considered the most important
department because banking starts with the account opening. Every customer of
the bank either he is of credit section or foreign section or any other department
must have his account in order to get benefit and transaction with the bank.
Account opening officer take special consideration for the proper recognition of
the customers.
Opening of Accounts
Closing of accounts
Opening of Accounts
Avoiding frauds, Safe guard against unintended over draft, Negligence and
There are certain formalities, which are to be observed for opening an account
with a bank.
• Formal Application
• Specimen Signature
Qualification of Customer
The relation of the banker and the customer is purely a contractual one,
however, he must have the following basic qualifications.
• The agreement should be made for lawful object, which create legal
relationship
After entering into bank premises the person goes through the following steps
for opening an account in the bank and for becoming a bank customer.
Verification
Letter of Thanks
Letter of thanks is the letter issued by the bank to the customer for two
purposes
• 1st purpose is to say thanks to the customer for opening the account
in their bank
First Cheque book is issued to the customer after sending the letter of
thanks when the customer comes with the latter of thanks and requests for
the issuance of the cheque book.
The concerned officer records the name and amount deposited with the
bank in to general ledger. Separate ledgers are maintained for different
types of accounts e.g.
Stampingand Scrutinizing
After the fulfillment of all the necessary terms and conditions and checking of
the form the relevant officer of Account Opening then affixed stamps on the
AOF for the sake of completion of all the formal rules and regulations. He
affixed two types of stamps on the form.
Affixed stamps:
Affixed Documents:
LoosseCheque
If any customer forgets or leaves his cheque book at his home, which is far
away from the bank or whatever the case may be, the customer applies with the
bank for the issuance of loose cheque by the bank as he does not has his cheque
book with him and the money is urgently required, the this cheque is called the
loose cheque.
Closing of Accounts
Dormant Account:
All current accounts which have not been operated for sixmonths or all saving
accounts which have not been operatedupon for one year classify as dormant
account.
Inoperative Account:
All the current accounts which have not been operated uponfor 2 years or all
saving accounts which have not beenoperated since 3 years are classified under
inoperativeaccounts.
Unclaimed Deposit
A debt payable owing by bank due to the reason of deposit inrespect of which
no transaction has taken place and nostatement of account has been requested
by the creditor duringa period of ten years are classified under unclaimed
deposit.
4.3 5th& 6th Week
REMITTANCE DEPARTMENT
Pay Order
Mail Transfer
Demand Draft
Telegraphic Transfer
Pay Order
Pay order issued from one branch is only payable from the same branch. It is
issued for payment in the same city.
Mail Transfer
The same application form is used for draft and mail transfers generally in
NBP.The mail transfer is not delivered to purchaser but instead the issuing
office to beneficiary’s branch on its own risk and responsibility sends it. This
type of remittance facility is provided only when the beneficiary happens to be
customer of the bank.
Demand Draft
Telegraphic Transfer
It is the message, which is sent from one branch to another on the order of payer
to payee through wire. It is one of the quickest means to transfer fund through
the use of Telex/fax/internet or cable. It is quickest way of transfer funds from
one branch to another of the same bank through telephone, fax/telex.
• Open Account
• Advance Payment
• Collection
CASH DEPARTMENT
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.
Payments
Cash Receipts
The depositor uses pay-in-slip for depositing the amount in their account. There
are two types of pay-in-slip. Both are in different colors for clear identification.
Cash Pay-in-Slip
It is used whenever the account holder deposit cash in his account.
Cheque Pay-in-Slip
It is used whenever the account holder deposit amount in his account by the
cross cheques.
Cash Payment
It is the primary function of bank to repay the money received from his
customer’s account usually by honoring the cheques. It is the contractual
obligation of a banker to honor his customer’s cheque. Bankers in Pakistan deal
with three types of cheques.
Types of Cheque
Bearer Cheques
Bearer cheques are cashable at the counter of the bank. These can also be
collected through clearing.
Order Cheques
These types of cheques are also cashable on the counter but its holder must
satisfy the banker that he is the proper man to collect the payment of the cheque
and he has to show his identification. It can also be collected through clearing.
Crossed Cheques
These cheques are not payable in cash at the counters of a banker. It can only
be credited to the payee’s account.
CLEARING DEPARTMENT
The major function of Clearing Department is to receive the cheques, which are
drawn on some other bank. The customer can get the money in his account at
NBP, from the cheques drawn on another bank. The bank accepts these cheques
and collects the amount from that bank on which cheque is drawn through the
Clearing House. Bank charges some commission for this function.
The bank uses outward clearing register for the purpose of recording all the
details of the cheques that the banks have delivered to other banks.
ADVANCES DEPARTMENT
Principles of Lending
• Character
• Capacity
• Capital
• Collateral
• Condition
Forms of Loans
Demand Finance
One time disbursement of the whole amount sanctioned, as the limit for the
credit allows.Any person, individual, group, company, firm and all others can
achieve this Mode of financing. The mark-up or interest is calculated on the
total amount disbursed and requires to be paid before the date of final
adjustment. Regarding the amount, limit and period, it depends on the nature of
the case in review.
Cash Finance
Running Finance
GOVERNMENT DEPARTMENT
• It acts as an agent of the Central Bank wherever the State Bank does not
have its own Branch.
5.2 Weaknesses
• The Major problem with NBP is its image as it is a Govt. bank so the
vision of the customer is not positive about it.
• People think it will not provide them satisfactory services.
• In many branches management is not up to date.
• In small area’s branches employees have less education.
• Award and promotion policies are not implemented in all branches.
• There is no concept of job rotation
• Employees have low coordination level among each other in some
branches.
• Inefficient Counter Services in the rush Hours
• Technical education and training of staff is insufficient. The work load in
NBP disturbs the workers.
5.3 Opportunities
• Its vast network of domestic and overseas branches can help to expand
business.
• Being an agent of State Bank of Pakistan it can play vital role in local
economy.
• Employee benefits
• Award for employee performance
• Promotions
• Corporate planning learning.
5.4 Threats
Liabilities
Bills payable 10,621,169 8,006,631 9,104,710
Borrowings 44,828,138 19,657,207 26,371,675
Deposits and other account 727,513,013 832,134,054 927,415,132
Sub-ordinate loan _ _ _
Liabilities against assets 42,629 123,413 92,739
Deferred tax liabilities- net _ _ _
Other liabilities 42,455,768 46,798,330 54,701,435
Total Liabilities 825,460,717 906,719,635 1,017,685,691
Net Assets 58,436,054 69,740,013 79,204,209
Owner’s Equity 2011 2012 2013
Share capital 10,763,702 13,454,629 16,818,286
Reserves 23,395,059 25,129,425 26,206,507
Inappropriate profit 61,696,594 67,103,611 69,712,113
Surplus on revaluation of 24,826,267 25,113,091 22,462,015
assets
Non controlling 110,930 498,076 495,488
Total Owner’s Equity 120,681,622 130,800,756 135,298,921
3 Years Profit & Loss A/C
Non-mark-up/ interest
expenses
Administrative expenses 22,816,665 26,732,045 30,760,815
Other provision- net 628,391 179,819 554,810
Other charges 321,647 118,887 137,852
Total Non-mark-up/ interest 23,766,703 27,030,751 31,453,477
expenses
Profit before taxation 21,198,842 24,662,287 26,116.002
Liquidity Ratios
A class of financial metrics that is used to determine a company's ability to pay
off its short terms debts obligations.Generally, the higher the value of the ratio
the larger the margin of safety that the company possesses to cover short-term
debts.
Current Ratio:
The current ratio is the ratio of current assets to current liabilities.
Formula
Current Ratio = Current Assets / Current Liabilities
The current ratio of NBP decreasing in 2012 and in 2013 because of the
increase in current liabilities. The ratio is 0.82 in 2011 and 0.75 in 2012 and in
2013 it is 0.76.This means that for every 1 rupee liability of the bank it has 0.76
rupees IN 2012.It shows the poor short term financial position of NBP.
Solvency analysis of a firm indicates the amount of the other people‟s money
being used to generate profit.
Proprietary ratio
Proprietary ratio refers to a ratio which helps the creditors of the company in
seeing that their capital or loans which the creditors have given to the company
are safe.
Formula:Proprietary Ratio = Total Asset / Total Equity
Analysis
This ratio shows the solvency position of the bank. In 2011, 2012 there is an
increases trend as 0.12 but in 2013 it decline 0.10. It shows that very small
amount of shareholders in asset contribution.
Profitability Analysis
Profitability analysis of a firm indicates the overall efficiently of the
management.Without profit a company cannot attract the outside capital.
Profitability analysis
includes
The return on total assets ratio: provides a standard for evaluating how
efficiently financial management employs the average dollar invested in the
firm's assets,whether the dollar came from investors or creditors.
Formula
Return on total assets ratio= Net Profit after Tax/ Total Assets*100
Analysis
It shows the decrease trend of profitability. It means the assets of business are
fully utilized in 2011 and ratio is 1.80 but the assets of the business are fully not
utilized in more and efficient way in 2013 and ratio is 1.53 and also shows the
unfavorable trend of the business.
Return on investment
A performance measure used to evaluate the efficiency of an investment or to
compare the efficiency of a number of different investments
Formula:Return on investment= Net Profit after Tax/ Investment *100
Analysis
It means the investment of the business are fully utilized in more and efficient
way it also shows that NBP have large amount of investment.
Return On Equity
Net profit margin is the percentage profit your business makes for every dollar
of revenue – whether you‟re making a profit after covering all of your costs.
Formula = net profit/ Interest Earned
Analysis
Although bank is earning huge income but its expenses increased quite a bit
simultaneously. Ultimately result is decrease in the net profit of the bank. It is
decreased 20%to 19% in 2013.
Market analysis
Investor analysis or market analysis are related to firm market valve, as measure
by its current share price to certain accounting values. Investor analysis includes
Earnings per Share – EPS
Analysis
The P/E looks at the relationship between the stock price and the company‟s
earnings. Formula: Market price/ Earnings per share
Price to Earnings (PE) is ratio often considered to be the most important ratio in
the fundamental analysis of stocks. in 2013 it is high and more attractive for
investors.
Dividend PerShare
The amount of dividend that a stockholder will receive for each share of stock
held
Formula: =Total Dividends/ No of shares
Analysis
DPS shows positive trend in 2012 and 2013 due to increase in shares of bank
there is a little decline in 2013, but over all better.
6.3 Trend Analysis
Rupees in „000
Borrowings 5% 1% 2%
Sub-ordinate loan
Liabilities against assets 0.0042% 0.0012% 0.0011%
Other liabilities 3% 3% 4%
Owner Equity
Dividend income 3% 1% 2%
Income from dealing in foreign currencies 4% 2% 3%
SUGGESTION / RECOMMENDATION
CONCLUSION
The National Bank of Pakistan plays a key role in the strategic national
development. The bank has historically been the financial arm of the
government and has enjoyed the blessings of state support in the form of
huge public sector funds and deposits.
In contract to other banks populating the FSI sector, NBP is mandated to
uphold public interest. It is critical too as all other banks and NBFIs in
public sector have been closed down or merged with NBP.
In contract to other banks populating the FSI sector, NBP is mandated to
uphold public interest. It is critical too as all other banks and NBFIs in
public sector have been closed down or merged with NBP.
The current management of National Bank of Pakistan was hired purely
for their international experience, business orientation to turn around a
purely public institution into a sustainable and commercially viable bank
serving public interest along the lines of a large modern commercial
bank.
The National Bank of Pakistan has a comprehensive framework of
written policies and procedures on all major areas of operations such as
Credit, Treasury Operations, Finance, Internal audit and Compliance
approved by the Board.
The National Bank of Pakistan provides sustainable financing for growth
of industries of critical national importance such as energy, education,
healthcare, transport, shipping, Research & development.