Internship Repot

NATIONAL BANK OF PAKISTAN
INTERNSHIP REPORT ON NBP MALAKAND UNIVERSITY CAMPUS
SUBMITTED BY: M.BURHAN ID # 3289 MBA (FINANCE)
IQRA UNIVERSITY
PESHAWAR CAMPUS 11 B, OLD JAMRUD ROAD, UNIVERSITY TOWN, PESHAWAR SESSION: 2007 2009
IQRA UNIVERSITY PESHAWAR
APPROVAL SHEET
Head of Department: ______________________

Mr. ABID USMAN Iqra University, Peshawar
Internal Supervisor: ______________________________

Mr. ASIF MEHMOOD Iqra University, Peshawar
IQRA UNIVERSITY
PESHAWAR CAMPUS 11 B, OLD JAMRUD ROAD, UNIVERSITY TOWN, PESHAWAR SESSION: 2007 2009
ACKNOLEGEMENT
First of all, I am thankful to the most merciful and Almighty Allah who gives me the strength that I fulfill my task This report is a thorough essence of my internship which I carried out for a period of two months in The National Bank Of Pakistan at Malakand University Campus, I exclusively studied and observed the organizational structure, customer service and personnel administration of the bank. The purpose of this report is to evaluate the performance of NBP in these areas and give concrete recommendations for further improvement. Although the bank is functioning satisfactorily, but still there are some shortcomings, which have been pointed out along with recommendations to overcome them. Two months period is too less to understand the operation of a bank, but still it was a great experience for me to have a feel of the practical world and keeping in view the limitations. I tried to make this study useful and meaningful. I acknowledge the help of my adviser Sir.Asif Mehmood whose guidance helped me a lot to complete my task in a way I desired. I am thankful to the bank staff of the NBP University Branch Malakand for their valuable guidance in preparing this report. I am also thankful to my parents and friends for cooperation.
M.BURHAN ID # 3289
PREFACE
Research report is an opportunity for the students to apply theoretical knowledge and to gain practical experience about public and private organizations and their practices and procedures. I chose to do my internship report on NBP because of the fact that it is a part of the most successful organizational setup in the country and have had in recent years NBP has shown the will that it wants to stay the best bank in Pakistan with constant innovations in its services, and by making use of the emerging technologies. Research report is not sufficient to understand the operations of organizations. But still it was a great experience to have a feel of the practical world and keeping in view the limitations of the study, this seems a reasonable attempt. Working on NBP was a true learning experience for me. I have exclusively studied and observed the organizational structure, its departments and customer services.
M.BURHAN ID#3289
TABLE OF CONTENTS
S. No TOPIC CHAPTER # 1 INTRODUCTION 1.1 Introduction 1.2 Purpose Of The Study 1.3 Scope Of The Work 1.4 Limitation Of The Study 1.5 Methodology Of The Study CHAPTER # 2 BACKGROUND 2.1 Background Of The Banks 2.2 Types Of Banks 2.2.1 Commercial Banks 2.2.2 Saving Banks 2.2.3 Trust Companies 2.2.4 Credit Union 2.3 International Banking Group's 2.4 International Banking CHAPTER # 3 BACKGROUND OF THE ORGANIZATION 3.1 Intorduction 3.1.1 Early Inception 3.1.2 Modernization 3.1.3 Mission Statement and Vision Of NBP 3.2 Short List Of NBP Services 3.2.1 Demand Draft 3.2.2 Swift System 3.2.3 Letters Of Credit 3.2.4 Mail Transfer 3.2.5 Foreign Remittance 3.2.6 Short Term Investment 3.2.7 NBP ATM Network 3.2.8 Equity Investment 3.2.9 Commercial Finance 3.2.10 Agricultural Finance 3.2.11 Agricultural Finance Services 3.2.12 Agricultural Credit 3.2.13 Agricultural Credit Medium Term IQRA UNIVERSITY PESHAWAR PAGE. #
3.2.14 3.2.15 3.3
Production Loan Corporate Finance The Change Program CHAPTER # 4 ORGANIZATIONAL OVERVIEW 4.1 Organizational Structure
4.1.1 Head Office 4.1.2 Board Of Directors 4.1.3 Regional Headquarters 4.2 Regional Audit Office 4.3 Staff Collages 4.4 Overseas Operations CHAPTER # 5 FINANCIAL ANALYSIS 5.1 Financial Analysis 5.2 Common Size and Trend Analysis CHAPTER # 6 SWOT ANALYSIS 6.1 Strengths Of NBP 6.2 Weaknesses OF NBP 6.3 Opportunities 6.4 Financing 6.5 Threats CHAPTER # 7 FINDINGS AND RECOMMENDATIONS 7.1 Findings and Recommendations 7.2 Output Monitoring 7.3 Easy Producer Of Advancing Loans 7.4 Establish a Customer Complain Centers 7.5 Effective Appraisal System Of Employees 7.6 Recruitment 7.7 Friendly Environment 7.8 Technological Advancement CHAPTER # 8 IMPLEMENTATION 8.1 Implementation / Action Plan 8.2 Business Development Plan 8.3 Market Research and Analysis Plan 8.4 Plan For Monitoring and Evaluation Systems 8.5 Performance Evaluation Plan 8.6 Hiring Process and Job Description Plan 8.7 Internship Program Plan 8.8 Customer Retention Plan CHAPTER # 9 MY WEEKLY INTERNSHIP REPORT BIBLIOGRAPHY
EXECUTIVE SUMMARY
Banking industry of Pakistan is well established where growth rate is increasing every year. Its market is also becoming very competitive. There are a number of foreign and local banks including National Bank Of Pakistan. NBPs leading bank established on November 1949 ahead of schedule. Being in the field of Banking Industry for a long time the management of the NBP has developed a philosophy of harmony, service, and creativity and is providing quality products to its consumers. The purpose of this report is to study the overall activities, processes, and performance of the Bank with special focus on organizational structure, customer satisfaction, Advances and Foreign Exchange Department of the Bank. The NBP was founded as a public sector entity with 25 per cent of the paid up capital sponsored by the government of Pakistan. Both SBP and NBP performed well because the managements of these two banks was in the hands of the young professionals having rich experience of working in Reserve Bank of India and The Bank of India. Advances and Foreign Exchange Department is headed by the Advance and Foreign Exchange Managers followed by other Officers, they have their own duties and responsibilities. The bank has also a proper procedure for customer complaints, customer feedback and customer satisfaction. Finance and Accounting Department is headed by the finance executive of the bank followed by Chief Accountant and other officers and assistants all of them have their own duties and responsibilities. The bank maintains accounting books for initial accounting entries. Then the initial record is stored permanently in the computers. There is a Human Resource department, which has the responsibility to recruit and promote the officers and manager the salaries and other remuneration to the staff members. IQRA UNIVERSITY PESHAWAR
Report Findings are: Some of the major problems of NBP are: There is no program for extensive training and development programs, and employees are selected on previous experience and expertise The bank is relying mostly on short-term loans and funds, which is risky, because of not being able to provide adequate short term financing in tight money periods. The bank is following an extremely conservative set-up both in finance and general administration. The bank does not conduct any formal planning sessions. Too much reliance is made on ad hoc decision making. There is no concept of market promotional activities like advertising, although the bank is using some sales promotion tools, but it still needs some improvement. Report recommendations are: The bank should provide better training facilities to the employees within the limited resources available. The bank should provide better working environment and incentives to its employees. The bank needs to follow Management by Objectives (MBO) principle. NBP also needs to pay special attention to the promotion activities with special emphasis on advertising. The bank must improve the relations with its new and existing customers. To protect against risk of short term financing only in tight money period, the bank should also rely on long-term funding to cover short-term needs. The Bank needs to follow some aggressive policies of growth in its all departments. The Bank also needs to develop effective standards for monitoring and evaluation. As mentioned, the bank has no concept for promotion activities like advertising for which an action plan is given in which the kind of advertising, the timing and the channel for advertising is given.
After the recommendation at the end an action plan has been outlined along with its NBP implements these Plans into its corporate and consumer banking, it can achieve the highest levels of its targets in every division and department.
CHAPTER # 01
INTRODUCTION
1.1 INTRODUCTION We are doing the internship in the partial fulfillment of the requirements for the degree of the MBA-Finance in the NBP to equip ourselves with first hand knowledge about the NBP main Branch Malakand University Campus and improve our skills. NBP is the abbreviation of National Bank Pakistan. It was established in Nov 1949 for the purpose to do the international trade. 1.2 PURPOSE OF THE STUDY First purpose of the report is to observe, analyze and interpret the relevant data and 2 nd is to give insight to the readers about the organization and finally to represent the sketch of the organization and its operations and the services etc. 1.3 SCOPE OF THE WORK The scope of my work is based on complete observation of national bank during my internship. I worked in following departments of the branch. Deposit Department. Advance Department. Remittance Department.
Account Department. Foreign Exchange Department
1.4 LIMITATION OF THE STUDY The vast scope of operation of a bank is difficult to be analyzed in a limited time of two months. The lack of information is another limitation of study. 1.5 METHODOLOGY OF THE STUDY I used different methodologies depending upon both primary as well as secondary data. The sources of primary data. Interviews with bank employees. Personal observation. The sources of secondary data. Annual reports. Concerned books. Banks manuals and brochures. Internship reports on NBP available in IMS library. Internet.
CHAPTER # 02
BACKGROUND OF THE STUDY
2.1 BACKGROUNG OF THE BANKS In the beginning there was no exchange of goods and everybody was self sufficient, in that he provided all the basic needs, foods, clothing and shelter, for himself and his family through hunting and fishing. There was no need for money. Then came the barter system, in this system there is exchange of goods for goods. But there were some problems in the barter system due to which new system indirect exchange was established. Gradually this turns to exchange the goods for the precious metal like gold, silver, bronze etc the people use the precious metal because of their intrinsic value. About at the end of 13th century these precious metals were used and the first gold pound was introduced in the 14th century. But the person starts clipping and debasing the coinage. In the eighteenth century the value of gold was fixed for next two years. At the advent of civilization priests were the bankers and their temples were the banks. But in the London it was the goldsmiths, who initially kept peoples valuables for safe custody, then started giving loans out of these deposits and finally their receipts for deposits, started changing hands like currency note. The first such receipt was perhaps the first Bank note. Gradually some goldsmiths started concentrating on Banking instead of their own businesses. Others also joined them and thus many large private banks came into being, with them their own notes that circulates in the market. Series of legislation in the
19th century brought an end to the private note issue. Monopoly of note issue got vested in the Central Bank with the exception of some banks in Europe, who have still limited authority. In Banking companies ordinance 1962 section 5(b) of which say, Banking means the accepting the deposits for the purpose of lending or investment, repayable on demand or otherwise, draw able by cheques.This is the little history of Banks that how they originates from the revolution.
2.2 TYPES OF BANKS Banks have traditionally been distinguished according to their primary functions. Commercial banks, which include national- and state-chartered banks, trust companies, stock savings banks, credit unions, and industrial banks. 2.2.1 COMMERCIAL BANKS A bank that offers a broad range of deposit accounts, including checking, savings, and time deposits, and extends loans to individuals and businesses -- in contrast to investment banking firms such as brokerage firms, which generally are involved in arranging for the sale of corporate or municipal securities. Specializes in helping business and making investments. These were, until deregulation, the only banks that could make investments in commercial real estate were not interested in small depositors until mid 1800s. Were the only types of banks, until deregulation that could issue checking accounts? These are the big banks. They are for profit institutions. 2.2.2 SAVINGS BANKS Savings banks were originally founded in order to provide a place for lower-income workers to save their money. While of National importance, savings banks are chartered by the respective states in which they exist, and as such are distinctly local institutions. Unlike the National, the savings bank is not established as a money-making corporation. Unlike the National, the savings bank is not established as a money-making corporation.
The savings bank provides a safe place for the care of such deposits, and it pays such rates of interest on such deposits as are warranted by the earnings of its investments after paying the expenses incident to the proper conduct of its officers. 2.2.3 TRUST COMPANIES A trust company has been referred to as a near-bank; while technically it differs from a bank in mandate and services offered, it also provides banking services such as chequing accounts, savings and loans, investments and credit cards. A trust company may be owned by or be part of a chartered bank or building society. The "trust" name refers to the ability of the institution's trust department to act as a trustee - someone who administers financial assets on behalf of another. Trustee will manage investments, keep records, manage assets and prepare court accountings, paying bills and (depending on the nature of the trust) medical expenses, charitable gifts, inheritances or other distributions of income and principal. 2.2.4 CREDIT UNIONS Credit Unions are financial cooperative organizations of individuals with a common affiliation (such as employment, labor union membership, or place of residence). Credit unions accept deposits of members, pay interest (dividends) on them out of earnings, and primarily provide consumer installment credit to members. In the past costs were kept low because they borrowed office space, managerial help, etc. from the employer or union. This has changed as they have become more like full service banks but are not faced with some of the regulations other banks face. This gives Credit Unions an advantage that many other banks are fighting on the state and national level. Financial cooperative organization of individuals who have a common bond, such as a place of employment, residence, or membership in a labor union. Credit unions accept deposits from members, pay interest (in the form of dividends) on the deposits out of earnings, and use their funds mainly to provide consumer installment loans to members.
2.3 INTERNATIONAL BANKING GROUPS (IBG) Different forums are conducted in the field of banking but there is no specific organization or group to act as head but in every geographical area there is banking act according to the requirement of that place. Here is IBG, which say that International Banking Groups (IBG) principal line of business is trade finance. In our international units we are also active in financing local third country trade in niche segments, particularly by leveraging our network. IBG units have a well-established customer franchise in the South Asian origin communities. Activity with other customer segments has also been growing particularly in emerging markets and now forms an important part of our business. An additional strength of IBG is that all international units are entirely self funded through stable well diversified local customer deposits or capital which enables us to develop local commercial and, in specific markets, consumer businesses while minimizing the inherent cross border exposures.HBL has a sizable market share in the region like Africa, Nigeria that has resulted from focused marketing efforts. Gulf region generated improved earnings, due to participation in large syndications, enabling utilization of liquidity in viable business transactions. The turnaround efforts in the past few years have now been completed with balance sheet clean up and cost structure rationalization. In summary, IBG will continue to grow by focusing on its core strengths and further developing synergies with our domestic businesses and within the international network. Identifying opportunities, while keeping a balance in acknowledging and acceptance of diverse foreign cultures is a task that will continue to guide and control IBG in the future. 2.4 INTERNATIONAL BANKING (NBP) National Bank of Pakistan is at the forefront of international banking in Pakistan, which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, we have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The role of the Financial Institution Wing is
To effectively manage NBPs exposure to foreign and domestic correspondence Manage the monetary aspect of NBPs relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the banks profitability
Generation of incremental trade-finance business and revenues NBP offers The lowest rates on exports and other international banking products Access to different local commercial banks in international banking
CHAPTER # 03
BACKGROUND OF THE ORGANIZATION

3.1 INTRODUCTION Before we begin with a detailed explanation of the services offered by NBP let us give a brief introduction of the history of NBP. The organizational culture of any organization largely depends on its history. NBP is the beaurocratic organization and the history of NBP was very much affected by National Political changes that occurred as the Government implemented different policies. In order to meet the challenge of financing Pakistani exports, the government established the National Bank of Pakistan in November 1949 ahead of schedule. Originally the NBP was to be established in 1950. Since Dhaka was occupying an important position those days because of jute which was on top of the exports list in the early days of Pakistan hence the first branch of NBP was established in Dhaka, the capital of the then East Pakistan. The NBP was founded as a public sector entity with 25 per cent of the paid up capital sponsored by the government of Pakistan. Both SBP and NBP performed well because
the managements of these two banks was in the hands of the young professionals having rich experience of working in Reserve Bank of India and The Bank of India. National Bank of Pakistan maintains 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.
3.1.1 EARLY INCEPTION National Bank of Pakistan was established under the National Bank of Pakistan ordinance 1949 in Pakistan and Government of Pakistan having 76% share holding owns it. According to the order of Government of Pakistan the bank started functioning on November 20, 1949. The bank has 1183 branches in Pakistan and 16 in Overseas. In domestic banking industry of Pakistan National Bank of Pakistan possesses a unique position. It is also undertakes Government Treasury operations and it is the largest contributory agent of Government and semi Government requirements. It also acts as a trustee to the National Investment Trust, a premier financial institution charged with the responsibility of mobilizing small saving in the country 3.1.2 MODERNIZATION National Bank of Pakistan is the first bank, which has started a Foreign Exchange Company in order to regularize the inflows of foreign money and control the undesirable blackmailing of private foreign exchange companies in the country. It is the only domestic bank of the country, which has been awarded The Best Domestic Bank consecutively in 2001 and 2002.
National Bank of Pakistan (NBP) provides a wide range of services, including opening of account and acceptance of deposits, Remittances outward/inward, acceptance/issuance of Travelers cheques, issuance of Guarantees, collection of taxes, and deliveries of salaries. 3.1.3 MISSION STATEMENT AND VISION OF NBP Mission Statement To be recognized in the market place by Institutionalizing a merit & performance culture, Creating a powerful & distinctive brand identity, Achieving top-tier financial performance, and Adopting & living out our core values. Vision of NBP To be the pre-eminent financial institution in Pakistan and achieve market recognition both in the quality and delivery of service as well as the range of product Offering The Objectives All the objectives of the National Bank of Pakistan were compatible to the mission statement of the bank. As a business organization its main objective is profit maximization. National Bank of Pakistan (NBP) tries to maximize its profits by its two basic functions, deposits and finances. The tool used by the bank in order to increase its deposits was to provide the best of facilities to their customers. By the increase in profits of bank mean that bank becomes capable of lending more loans to the clients and hence earning profit from them. 3.2 SHORT LIST OF NBP SERVICES 3.2.1 DEMAND DRAFT If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBPs Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch. 3.2.2 SWIFT SYSTEM The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been introduced for speedy services in the area of home remittances. The system has built-in features of computerized test keys, which eliminates the manual application of
tests that often cause delay in the payment of home remittances. The Swift Center is operational at National Bank of Pakistan with a universal access numbers. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs. 3.2.3 LETTERS OF CREDIT NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.
3.2.4 MAIL TRANSFER Move your money safely and quickly using NBP Mail Transfer service. And we also offer the most competitive rates in the market. 3.2.5 FOREIGN REMITTANCES To facilitate its customers in the area of Home remittance, National Bank of Pakistan has taken a number of measures to: Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries New Features The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia. Zero Tariffs: NBP is providing home remittance services without any charges.
Strict monitoring of the system is done to ensure the highest possible security. Special courier services are hired for expeditious delivery of home remittances to the beneficiaries.
3.2.6 SHORT TERM INVESTMENT NBP now offers excellent rates of profit on all its short-term investment accounts. Whether you are looking to invest for 3 months or 1 year, NBPs rates of profit are extremely attractive, along with the security and service only NBP can provide.
3.2.7 NBP ATM Network NBP ATM Network
Burewala
Multan
Faisalabad
Muzaffarabad
Gujar Khan
Peshawar
Gujranwala
Quanta
Gujrat
Rawalpindi
Hyderabad
Sheikhupura
Islamabad
Sialkot
Karachi
Taxila
Lahore
Wah Cantt.
Mirpur
1 Link ATM Network *The link one (1) means network in Pakistan
3.2.8 EQUITY INVESTMENT
NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market. NBP is involved in the following Investment into the capital market Introduction of capital market accounts (under process) NBPs involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders. 3.2.9 COMMERCIAL FINANCE Let us help make your dreams become a reality. Our dedicated team of professionals truly understands the needs of professionals, agriculturists, large and small business and other segments of the economy. They are the customers best resource in making NBPs products and services work for them. 3.2.10 AGRICULTURAL FINANCE NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World. 3.2.11 AGRICULTURAL FINANCE SERVICES I Feed the World program, a new product, is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production. 3.2.12 AGRICULTURAL CREDIT The agricultural financing strategy of NBP is aimed at three main objectives:Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production Provide farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming. IQRA UNIVERSITY PESHAWAR
3.2.13 AGRICULTURAL CREDIT (MEDIUM TERM) Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing Solar energy Equipment for sprinklers
Farm Credit NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis Operating loans Land improvement loans Equipment loans for purchase of tractors, farm implements or any other equipment Livestock loans for the purchase, care, and feeding of livestock
3.2.14 PRODUCTION LOANS Production loans are meant for basic inputs of the farm and are short term in nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme If you require any further information, please do not hesitate to e-mail us.
3.2.15 CORPORATE FINANCE IQRA UNIVERSITY PESHAWAR
Working Capital and Short Term Loans NBP specializes in providing Project Finance Export Refinance to exporters Preshipment and Post-shipment financing to exporters Running finance Cash Finance Small Finance Discounting & Bills Purchased Export Bills Purchased / Preshipment / Post Shipment Agricultural Production Loans Medium term loans and Capital Expenditure Financing NBP provides financing for its clients capital expenditure and other long-term investment needs. By sharing the risk associated with such long-term investments, NBP expedites clients attempt to upgrade and expand their operation thereby making possible the fulfillment of our clients vision. This type of long term financing proves the banks belief in its client's capabilities, and its commitment to the country. Loan Structuring and Syndication National Banks leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because we understand our syndicate partners asset criteria, we help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry, geographic location and structure through syndicated debt offerings. Our syndication capabilities are complemented by our own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction. Cash Management Services With National Banks Cash Management Services (in process of being set up), the customers sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their companys total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, youll be provided everything, which takes to manage your cash flow more accurately.
3.3 THE CHANGE PROGRAM The Symbol of Change The Logo of National Bank of Pakistan is the symbol of change. The logo represents the tradition of intellect and security, the basis for the future of the bank. The Eagle represents Dynamisms, symbolizing the new customer focus and the new products, new way of working carrying the bank to be the best. Major Improvements In the change program the bank is giving great importance to its employees. The bank thinks that the changing environment will bring three major improvements. First, there will be far greater recognition of an individuals contribution to the bank. There will be an official reward and respect for the efforts and achievements. Second, the strengthening of the staff means that they can directly contribute to the shape of their future at the bank. Third, a steady improvement in working conditions both in terms of physical surroundings and relationships with the colleagues and customers.
CHAPTER # 04
ORGANIZATIONAL OVERVIEW
4.1 ORGANIZATIONAL STRUCTURE Organizational structure is the framework that defines the boundaries of the formal organization and with which the organization operates. A suitable organizational structure for the nature of the organization leads to better performance.The new organizational structure of the bank constitutes a board of directors and an executive committee as the governing bodies. The National Bank of Pakistan (NBP) has 1183 branches all over the country and 16 overseas branches. The head office is operationally in charge of central affairs including the delegation of power and authority to the regional headquarters all over the country. 4.1.1 HEAD OFFICE
The National Bank of Pakistan consists of a Head Office situated at I.I. Chundrigarh Road Karachi. All branches and regional offices work according to the rules and regulations issued by the Head Office from time to time. The Head Office of National Bank of Pakistan, which is primarily responsible for making policies and execution of policy decision include, 1. Board of Directors 2. Group or Divisional Chiefs The Head Office operationally in charge of central affairs including the delegation of powers and authority to the 29 Regional Headquarters all over the country. 4.1.2 BOARD OF DIRECTORS
The Board of Directors nominates the executive committee, which consists of one President or Chairman and seven Directors and among these seven members, one member perform functions of both member and Secretary.
4.1.3
REGIONAL HEADQUARTERS
On May 13, 2002 a circular was issued in which zones were abolished and the whole country and Azad Kashmir was divided into 29 regions. The changeover process started from 1st August 2002 and was completed by 31st August 2002. The new setup was made fully functional by 15th September. Regional Management Committee A regional management committee controls all regions. Regional management consists of Regional Business Chief, Regional Operations Chief, Risk management Chief, Compliance Chief. Provincial Level Region Regional Headquarters Balochistan Sindh NWFP Punjab Azad Kashmir Total 2 6 5 14 2 29 No of Regions
Name of Regions No 1 2 3 4 5 6 7 8 Region Karachi (South) Karachi (West) Hyderabad Larkana Sukkhar Quetta Gawadar Lahore Central No 16 17 18 19 20 21 22 23 Region Bahawalpur Dera Ghazi Khan Sahiwaal Federal Capital-Islamabad Rawalpindi Jehlum Gujrat Gilgit
9 10 11 12 13 14 15
Lahore East Gujranwala Sialkot Faisalabad Jhang Sargodha Multan
24 25 26 27 28 29 ****
Peshawar Mardan Dera Ismail Khan Abbotabad Muzaffarabad (A.K) Mirpur (A.K) ****
The Regional Head Quarters consist of the following Group 1. Management Support Group 2. Marketing Development Group 3. Inspection Group 4. Credit Policy & Management Group 5. Special Assets Management Group A Regional Chief Executive of the rank of Senior Executive, Vice President, or Executive Vice President heads each RHQ. The General Manager heads each Division. 4.2 REGIONAL AUDIT OFFICE
To keep check on the working of the Branches, and to ensure that their day to day operations conform to the laid down rules and procedures, there is a very effective system of audit and inspection in NBP. This system is implemented mainly through the 29 Regional Audit Offices. These Regional Audit Offices work directly under the Administrative Control of Head Office and are located with each RHQ. A Regional Audit Chief heads this Regional Audit Office.
4.3
STAFF COLLEGES
As earlier stated, the NBP is maintaining four staff colleges for optimum training of its employees. These staff colleges are located at all the provincial headquarters. The purpose of these staff colleges is very clear. They conduct different sort of courses. These include basic training course to newly appointed officers as well as those who have been newly elevated to the officer level. IQRA UNIVERSITY PESHAWAR
4.4
OVERSEAS OPERATIONS
National Bank of Pakistan has a strong international presence through 16 overseas branches and 5 representative offices situated in USA (Chicago), Canada, China, Azerbaijan, and Uzbekistan. Country Number of Branches USA 2 Germany 1 France 1 Hong Kong 2 Japan 2 South Korea 1 Afghanistan 1 Country Number of Branches Bahrain 1 Egypt 1 Bangladesh 1 Kyrgyzstan 1 Turkmenistan 1 Pakistan EPZ 1 ******** ***********
FIGURE-4.1ORGANIZATIONAL STRUCTURE OF HEAD OFFICE
BOARD OF DIRECTORS
PRESIDENT
EXECUTIVE COMMITTEE
SEVPs/CHIEF BALUCHISTAN
SEVPs/CHIEF PUNJAB
SEVPs/CHIEF NWFP
SEVPs/CHIEF SIND
SEVPs WINGS
FIGURE:4.2
BOARD OF DIRECTORS
Syed Ali Raza (President)
Dr. Waqar Masood Khan (Director)
Iftikhar Ali Malik (Director)
Mohammad Arshad Chaudhry (Director)
Syed Shafqat Ali Shah Jamote (Director)
M. Zubair Motiwala (Director)
Sikandar Hayat Jamali (Director)
Muhammad Khalid Malik (Director)
CHAPTER #05
FINANCIAL ANALYSIS
5.1 FINANCIAL ANALYSIS Financial analysis is an evaluation of a firms past financial performance and its prospects for the future. It consists of applying analytical tools and other relevant data to obtain useful information. The financial statement with the attached schedules and Directors report on past performance and future prospects give compact information. The interested parties need to interpret this information about performance of the company through the use of financial tools. The main purpose of financial analysis is to give a clear picture of the financial position by studying the relationship and comparisons between the items in the statement. Keeping in view its importance I have addressed financial analysis by using the Balance Sheet and Income Statement, their common, index, trend and ratio analysisIn addition, the banking sectors indicators like Deposits and Advances positions, the investments and Advances to Total Assets have been calculated and analyzed. 5.2 COMMON SIZE AND TREND ANALYSIS Common Size analysis can be extremely helpful to highlight the changes overtime in the financial performance and financial conditions of the bank. Analyses of percentage financial statements, where all balance sheet items are divided by total assets and on the other hand, all income statement items are divided by net sales or revenues.An analysis of percentage financial statements where all balance sheet or income statement figures for a base year equal 100 % and subsequent financial statement items are expressed as percentage of their values in their base year. Cash & Balances with treasury banks
In 2005 its cash & balances with treasury banks are Rs.79, 155, 081 million, in 2006 amounting to Rs.55, 531, 453 million and in 2007 amounting to Rs. 59, 420, 502 million. Based upon common size analysis there has been a fall of almost 6%, 6% in the year of 2006and 2007 respectively as compared to 2005. Based upon Change with year 2006 Cash & Balances with treasury banks are 55,531,453 and in 2007 are 59,420,502 and it is increased by 3,889,049 million. Based upon trend analysis in 2006 there is 29.8% decrease and in 2007 there is 7% increase in cash & balances. Investments In year 2005 its Total Investments are Rs.71, 759, 449 million, in 2006amounting to Rs.143, 524, 971 million and in 2007 amounting to Rs. 166, 195, 619 million. Based upon common size analysis there has been a rise of 17.29%, 33.16% and 35.22% in the years of 2005, 2006 and 2007 respectively. Based upon Change with year 2006 Investments are 143,524,971 and in 2007 are 166,195,619 and it is increased by 20,442,891 million. Based upon trend analysis in 2006 there is 100% increase and in 2007 there is 15.8% increase in Total Investments due to efficient management. Advances In year 2005 its Total Advances are Rs.170, 319, 096 million, in 2006 amounting to Rs.140, 547, 374 million and in 2007 amounting to Rs. 160, 990, 265 million. Based upon common size analysis there has been a rise of 41% in 2005but in 2006 there is a fall to 33% and again rise to 34 % in 2007.Based upon Change with year 2006 Advances are 140,547,374 and in 2007 are 160,990,265 and it is increased by 20,442,891 million. Based upon trend analysis in 2006 there is 17.5% decrease and in 2007 there is 14.5% increase in Advances. Liabilities Side Total Liabilities In year 2005 its Total Liabilities are 397,578,553 million, in 2006 amounting to Rs. 408,866,590 million and in 2007 amounting to Rs. 444,276,123 million. Based upon
common size analysis Total Liabilities was the 95.8% of the Total Assets in the year 2005 and there has been a fall of 94.5% and 94.15% in the years of 2005 and 2007 respectively due to little amount of rise in Total Liabilities as compare to Total Assets. Based upon Change with year 2006Total Liabilities are 408,866,590 and in 2007 are 444,276,123 and it is increased by 35,409,533 million. Based upon index analysis in 2006 there is 2.8% increase and in 2007 there is 8.6% increase in Total Liabilities. Deposits In year 2005 its Total deposits are Rs. 349,617,068 million, in 2006amounting to Rs. 362,865,637 million and in 2007 amounting to Rs. 395,568,490 million. Based upon common size analysis when we see the percentage of Deposits in Total Assets there has been a fall of 84.22%, 83.84% and 83.83% in the years of 2005, 2006 and 2007 respectively. Based upon Change with year 2006 Total Deposits are 362,865,637 and in 2007 are 395,568,490 and it is increased by 32,702,853 million. Based upon trend analysis in 2006there is 3.8% increase and in 2007 there is 9% increase in Deposits. Common size and Trend Analysis of Income Statement The following table shows an Income Statement of NBP their common size and trend analysis for the year ending December, 20062007.and 2008. Markup/Interest Expense In 2005 its markup/interest expense are Rs. 18,877,247 million, in 2006 amounting to Rs. 14,698,507 million and in 2007 amounting to Rs. 6,735,579 million. Based upon common size analysis there has been a fall of 60%, 54% and 39% in the years of 2005, 2006and 2007respectively. Based upon trend analysis in 2006 there is 22% decrease and in 2007there is 54% decrease in markup/interest expense. Total Non-Markup/Interest Income
In year 2005 its Total Non markup/interest income are Rs. 4,501,568 million, in year 2006 amounting to Rs. 5,209,092 million and in year 2007 amounting to Rs. 7,248,239 million. Based upon common size analysis there has been a rise of 14.38%, 19% and 37.26% in the years of 2005, 2006 and 2007respectively. Based upon trend analysis in year 2006 there is 5% increase and in 2007 there is 11.7% increase in Non markup/interest income due to the increase of fee, commission and brokerage income. Profit before Tax In year 2005 its profit before tax is Rs. 3,015,629 million, in 2006amounting to Rs. 6,044,811 million and in 2007 amounting to Rs. 9,008,708 million.Based upon common size analysis there has been a rise of 9.6%, 22.3% and 46.3% in the years of 2005, 2006and 2007 respectively. Based upon trend analysis in 2006 there is 100% increase and in 2007 there is 49% increase in profit before tax. Profit after Tax In year 2005 its profit after tax is Rs. 1,148,529 million, in 2006 amounting to Rs. 2,253,385 million and 2007 amounting to Rs. 4,198,103 million. Based upon common size analysis there has been a rise of 3.6%, 8.3% and 21.6% in the years of 2005, 2006 and 2007 respectively. Based upon tend analysis in 2006there is 96% increase and in 2007 there is 86% increase in profit after tax.
Fig 10.1.1 Assets and Liabilities Distribution in 2007
13% 35% 83.83%
Cash
34%
Investment Advance s Total Libilities Deposits
94%
Fig 10.1.2: Income Statement Distribution 2007 Markup/interest Expense

39%
22%
46% 37%
Non markup/interest income Profit before tax
profit after tax Adjustment made (Long term investment and advances were removed Current Ratio Current Ratio = Current Assets/Current Liabilities 276,289,721/ 351,862,417 289,103,079/366,231,381 306,360,400/401,065,228 = = = 0.79 times 0.79 times 0.76 times
Current Ratio (2005)= Current Ratio (2006) = Current Ratio (2007) = Interpretation
Current ratio of the Bank is decreased to 0.76 in 2007 as compared to 2006and 2005which are 0.79 and 0.79 respectively and indicates that the bank has not kept so much current assets to pay current liabilities. It should be known that too much liquidity decreases profitability. The reason is that cash on hand is the most unproductive asset and the surplus cash should be invested in short-term ventures. Cash Ratio Cash Ratio = Cash/ Current Liabilities 79,155,081/351,862,417 55,531,453/366,231,381 59,420,502/401,065,228 = = = 0.22 times 0.15 times 0.15 times
Ratio for the year 2005 = Ratio for the year 2006 = Ratio for the year 2007 = Interpretation
Cash Ratio has been the same for 2007and it is equal to 0.15% while it was 0.22% in 2005 because the bank has increased the lending to the people. This trend shows the efficient utilization of cash by NBP in meeting its current obligations as they arise. The reason is that cash on hand is most unproductive assets and too much liquidity decreases profitability. Advances-Deposit Ratio Advances Deposit Ratio = Advances/ Deposits X 100
Advances Deposit Ratio (2005) = 170,319,096/349,617,068 X 100 = 48.72% Advances Deposit Ratio (2006) =140,547,374/362,865,637 X 100 = 38.73% Advances Deposit Ratio (2007) =160,990,265/395,568,490 X 100 = 40.70% Interpretation The Advances deposit ratio of the Bank has declined to 40.70% in 2007 as compared to 48.72% in the 2005 but as compared to 38.73% in 2006 there is little increase in the
advances deposit ratio. This shows that the Bank has small concentrate on providing the loans to the customers due to lack of information about the background and assets of customers. Investment-Deposit Ratio Investment Deposit Ratio Investment Deposit Ratio (2005) Investment Deposit Ratio (2006) = = = Investments/ Deposit X 100 X 100 = 20.5%
71,759,449/349,617,068
143,524,971/362,865,637 X 100 = 39.55%
Investment Deposit Ratio (2007) = 166,195,619/395,568,490 X 100 = 42.0% Interpretation The investment-deposit ratio of the Bank was 42% in 2007 and 39.55% in 2006 and 20.5% in 2005 which is increasing with the passage of time and it shows that the bank using efficiently the deposits of the customers. Capital to Deposit Ratio Capital to Deposit Ratio = Capital/ Deposit X 100 X 100 X 100 X 100 = = = 5% 6.60% 6.97%
Capital to Deposit Ratio (2005) = Capital to Deposit Ratio (2006) = Capital to Deposit Ratio (2007) = Interpretation
17,510,437/349,617,068 23,936,263/362,865,637 27,584,014/395,568,490
According to this ratio we interpret that the bank has own equity is not so much as compared to deposit because there is large difference between capital and deposit. The capital is increasing but with the little percentage as compared to deposit.SBP Prudential Regulations that Capital should be 8% of Total Deposits and NBP is not fulfilling the Prudential Regulation of SBP. Capital to Deposit Ratio (Excluding Surplus on Revaluation of Assets) Capital to deposit ratio = Capital/Deposit X 100 X 100 = 3.42%
Capital to deposit ratio (2005) =
11,958,673/349,617,068
Capital to deposit ratio (2006) = Capital to deposit ratio (2007) = Interpretation
14,279,303/362,865,637 18,133,897/395,568,490
X X
100 = 100 =
3.93% 4.58%
After excluding surplus on revaluation of assets the amount of capital is very low because the capital should be 8% of the Total Deposits by Prudential Regulation of SBP. Capital to Advances Ratio Capital to Advances ratio = Capital/ Advances 17,510,437/170,319,096 X X 100 100 =
Capital to Advances ratio (2005) = 10.28% Capital to Advances ratio (2006) = 17.03% Capital to Advances ratio (2007) = 17.13% Interpretation
23,936,263/140,547,374
100
27,584,014/160,990,265
100
According to this ratio we analyze from the previous data that capital is not increasing proportionately to advances. In 2005 the ratio is 10.28% which increased in 2006 to 17.03% but in 2007 the ratio is increased with very little percentage which is 17.13% and indicates that stockholders contributing lesser amount of capital. Advances to Total Assets Ratio Advances to Total Assets Ratio = Advances/ Total Assets 170,319,096 X 100 = 41% X 100 Advances to
Advances to Total Assets Ratio (2005) = Total Assets Ratio (2006) =
140,547,374/432,802,853
X 100 = 33% X 100 = 34%
Advances to Total Assets Ratio (2007) = Interpretation
160,990,265/471,860,137
Advances was the 41% of the Total Assets in 2005 and fall to 33% in 2006 and again rise to 34% in 2007 because of fluctuation in advances. Deposit to Total Assets Ratio Deposit to Total Assets Ratio: = Deposit/ Total Assets X 100 100 =
Deposit to Total Assets Ratio (2005) = 84.22% Deposit to Total Assets Ratio (2006) = 83.84% Deposit to Total Assets Ratio (2007) = 83.83% Interpretation
349,617,068/415, 088, 9901 X
362,865,637/ 432,802,853
100 =
395,568,490/471,860,137
100 =
In year 2005 its total deposits are Rs.349, 617 million, in 2006amounting to Rs.362, 865 million and in 2007 amounting to Rs.395, 568 million but when we see the percentage of deposits in Total Assets there has been a fall of 84.22%, 83.84% and 83.83% in the years of 2005, 2006and 2007 respectively due to small increase in deposit as compare to Total Assets. Investment to Total Assets Ratio Investment to Total Assets Ratio = Investment/ Total Assets 71,759,449/415,088,990 143,524,971/432,802,853 X 100 X 100= 17.28% X 100 =
Investment to Total Assets Ratio (2005) = Investment to Total Assets Ratio (2006) = 33.16% Investment to Total Assets Ratio (2007) = 35.22% Interpretation
166,195,619/471,860,137
100 =
In year 2005 its total investments are Rs.71, 759 million, in 2006 amounting to Rs.143, 524 million and in 2007 amounting to Rs.166, 195 million.
There has been a rise of 17.29%, 33.16% and 35.22% in the years of 2005, 2006 and 2007 respectively due to the efficient management. Debt to Equity Ratio Debt-Equity Ratio Debt-Equity Ratio (2005) Debt-Equity Ratio (2006) Debt-Equity Ratio (2007) Interpretation The debt-equity ratio has been slightly declined in 2007. In the year 2003, the decrease in ratio was less than as compared to year 2006 because the decrease in ratio from 2005 to 2006 was greater. In the year 2007 creditors provided Rs. 16.10 rupees for Rs. 1 rupee provided by the shareholders. Debt to Assets Ratio Debt to assets ratio = Total Debt/ Total Assets 397,578,553/415,088,990 408,866,590/432,802,853 444,276,123/471,860,137 = = = 0.96 0.94 0.94 = = = = Total Debt/ Stock Holders Equity 397,578,553/17,510,437 408,866,590/23,936,263 444,276,123/27,584,014 = = = 22.76 17.9 16.10
Debt to Assets Ratio (2005) = Debt to Assets Ratio (2006) = Debt to Assets Ratio (2007) = Interpretation
The Debt to Assets ratio in 2007 was the same as compared to 2006 but as compared to 2005 there was very small decrease in ratio. Both Debt and Assets are increasing at the same rate. Gross Profit Margin Net mark up/interest income = Margin (2005) = Gross Profit/ Total Revenue X X 100 = 46.17% X 100 = 52.48% 100, Gross Profit
16,192,730/35,069,977
Gross Profit Margin (2006) =
16,224,586/30,923,09
Gross Profit Margin (2007) =
16,688,327/23,423,906 2007 Rupees in 000 2006
X 100
= 71.24% 2005 31,290,584 2,886,762 892,631 35,069,977 18,877,247 16,192,730
Mark-Up/Return/Interest Income Fee, Income Commission,
19,452,317
27,126,839 3,137,007 659,247 30,923,093 14,698,507 16,224,586
Brokerage 3,260,863
Income from dealing in foreign 710,726 currencies Total Revenue Less expense Net Mark-Up/Interest Income 16,688,327 (Gross Profit)1 Interpretation 23,423,906 markup/return/Interest 6,735,579
According to this ratio we interpret that the gross profit margin has increased in 2007 as compared to 2006and 2005, but on the other side the total revenue from regular activities has decreased. The Gross Profit Margin ratio increases due to decrease in Non markup/return/interest expense. As a result the regular activities of the bank were not good in 2007 as compared to 2006and 2005. Net Profit Margin Net Profit Margin = Profit after Taxation/ Total Revenue X = 1,148,529/35,069,977 = 2,253,385/30,923,093 = 4,198,129/23,423,906 X X X 100 100 = 11.97% 100 = 7.29% 100 = 4.90%
Net Profit Margin (2005) Net Profit Margin (2006) Net Profit Margin (2007) Interpretation
The net profit margin of NBP has also shown as fall to 4.90 percent in 2007 as compared to 7.29 percent in 2006 and 11.97 percent in 2001.This signal towards lower total revenues of the Bank during 2007.
Return on Equity Return on Equity 100 Return on Equity (2005) Return on Equity (2005) Return on Equity (2007) 15.22% Interpretation The return on equity has increased to 15.22 percent in 2007 as compared to 6.56 percent and 9.41 percent in 2005 and 2006 respectively. The return on equity indicates the net profit margin trends, with the Bank registering good performance because of better efficiency with respect to Equity. Return On Assets Return on Assets Return on Assets (2005) Return on Assets (2006) Return on Assets (2007) Interpretation The return on assets has improved to 0.89 percent in 2007as compared to 2006and 2005. While the assets of the Bank are not using efficiently because the return is very low as compared to Total Assets. = = = = Profit before Taxation/ Total Assets 1,148,529/415,088,990 2,253,385/432,802,853 X X 100 X 100 100 X 100 = 0.27% = 0.52% = = = 1,148,529/17,510,437 X 100 100 X = = 100 6.56% 9.41% = = Profit after Taxation/ Shareholders Equity X
2,253,385/23,936,263 X 4,198,129/27,584,014
4,198,129/471,860,137
= 0.89%
Assets Turnover Ratio Assets Turnover Ratio = Total Revenue/ Total Assets 35,069,977/415,088,990 30,923,093/432,802,853 23,423,906/471,860,137 = 0.084 times = 0.071 times = 0.050 times
Assets Turnover Ratio (2005) = Assets Turnover Ratio (2006) = Assets Turnover Ratio (2007) = Interpretation
The assets turnover ratio in 2007 was decreased to 0.050 times as compared to 0.071 times in 2006 and 0.050 times in 2005. It indicates that the bank is not using the assets efficiently because total revenue of the bank is very low as compare to Total Assets. Earning Per Share Earning per Share = Earning after tax/ Total shares outstanding = 3.08 rupees per share = 6.04 rupees per share.
Earning per share ratio (2005) = 1,148,529,000/373,038,350 Earning per share ratio (2006) = 2,253,385,000/373,038,350
CHAPTER # 06
SWOT ANALYSIS
SWOT ANALYSIS BASED ON OBSERVATION SWOT Analysis is the most important part of the report, because it depends on my personal observation. Only a good, keen and comprehensive analysis leads to good recommendations for the improvement of the existing conditions. Therefore in NBP I have observed many things and I have analyzed them to the best of my efforts & knowledge. 6.1 STRENGTHS Following are the main Strengths of NBP: Serving as an Agent National Bank of Pakistan main branch Bannu serve as an agent of State Bank of Pakistan. No other bank is allowed to do the Clearing task but NBP act on the behalf of SBP the clearing task. No of Branches Another strength of NBP is that there are 1183 branches in Pakistan and 16 branches in overseas of NBP. So NBP staff members are scattered on the land of Pakistan and World to provide benefits and serve the people. Experience Employees The staff members of NBP main branch are an experience, though they are not qualified people but yet they have enough experience to carry on the work of bank. It is said,
Knowledge is power and experience is wisdom but experience cannot be defeated by knowledge. Modernization National Bank of Pakistan is the first bank, which has started a Foreign Exchange Company in order to regularize the inflows of foreign money and control the undesirable blackmailing of private foreign exchange companies in the country. It is the only domestic bank of the country, which has been awarded The Best Domestic Bank consecutively in 2005 and 2006. 6.2 Weaknesses Following are the main weaknesses of NBP Delegation of Authority National Bank of Pakistan to great extent is a centralized bank. The manager of the main branch Nowshera as very limited authority, especially in case of advances. Lack of delegation of authority creates problems and when the manager is not present in his office and customers have to wait for many hours. There is top to bottom flow of authority and lower level of employees cannot participate in the decision making process. The top level of the organization takes all the decision. This completely centralized decision-making decreases the interest and also reduces efficiency of the bank. Seniority Based Promotions Promotion in NBP is purely on seniority basis rather than on performance. This really demotivates the employees because they know that it doesnt matter whether they perform well or bad. Job Rotation Most of the employees work in a particular department and they specialize only in one department. In case of absence of one employee, any other employee cannot perform this work. In this way bank not only loses the business but also results in dissatisfaction of the customer. Lack of Theoretical Knowledge of Employees IQRA UNIVERSITY PESHAWAR
There is a lack of theoretical knowledge of the employees of National Bank of Pakistan main branchNowshera..Although their work is mostly routine and practical but sometimes low background education can disturb the routine work. They have to consult the Regional Manager Office or General Manager Office. This factor affects their efficiency. Discouragement of Small Depositors The staff members give proper attention and respect to those customers who have deposited huge amount of money while the small depositors mostly; the salaried people are discouraged to open an account within the branch. In this way they discourage saving habits in the general public. Lack of Discipline During my training in National Bank of Pakistan, main branch Nowshera observed lack of discipline in the way that some of the employees do not care about the office timings. They usually come late in the morning. Similarly employees take long leaves without any valid reasons. Excessive Paper Work There is excessive paper work in NBP, which takes more time and reduces the effective banking performance Lengthy Process of Loan To meet the immediate requirements of the business, customers require quick financing but due to centralization of decision-making there are unnecessary delays in sanctioning of loans, resulting in dissatisfaction of the customers. Inadequate Fringe Benefits The main purpose of fringe benefits is to retain the employees in the organization on long-term basis. It has been analyzed that the package of fringe benefits offered by NBP is not much attractive as compared to other organizations. Recently NBP has furthermore reduced the fringe benefits of the employees that may result in de-motivation & reduction the performance of existing employees.
Low Rate of Return Due to low rate of return, the depositors are drawing their money from the banks and depositing in the saving centers, which are offering a good rate of return as compared to the banks.
Limited Application of Electronic Media NBP is not utilizing the electronic media for its promotional campaign. There is lack of awareness among the customers and general public about the schemes offered by NBP. Improper Working Conditions Most of the branches of NBP are facing the problem of shortage of space like NBP, main branch Nowshera. The frequent movement of the staff in the managers office discourages the customers and it is also risky from security point of view. The arrangement of foreign exchange department in main branch Nowshera is even worse. There is lack of furniture and inappropriate arrangements of the seating for the customers. Limited Application of Technology in Bank NBP branches are not fully computerized, which is very important to provide the quick and quality services. Political Interference Banks are not free from political influences. Due to political pressures on the management for sanctioning the loans in favor of their political persons resulted in huge amount of bad debts because in this way the bank is unable to recover the loan very difficult, and these loans are not used for productive purposes. 6.3 OPPORTUNITIES Following are the main weaknesses of NBP: 6.4 FINANCING
Now a days people have enough savings and they want some luxurious types products such as Car, House and Business etc. So the opportunity for NBP is to start car-financing scheme to be beneficial for the organization (Bank). Modernization Another opportunity for NBP is to modernize itself because all other banks have best methodologies to compete others and market their products. As I know that NBP have not enough modernize system to be compatible with other banks. Strong Competition As we know that todays era is the era of competition. In Nowshera all the banks are involved in struck competition so; it is an opportunity for NBP to develop a strong marketing policies and campaign to further develop itself. 6.5 THREATS Followings are the major threats for NBP: Other Banks The major threat for NBP is other banks that have started function in Nowshera such as Bank Alfalah, MCB, UBL, ABL, Khyber Bank etc. These are the banks that NBP face competition with them. These banks provides a vide variety of services as compared to NBP. Political Interference Banks are not free from political influences. Due to political pressures on the management for sanctioning the loans in favor of their political persons resulted in huge amount of bad debts because in this way the bank is unable to recover the loan very difficult, and these loans are not used for productive purposes.
CHAPTER # 07
FINDINGS AND RECOMMENDATIONS

7.1 FINDINGS AND RECOMMENDATIONS After critical and SWOT analysis both the operations and financial data of National Bank of Pakistan, I addressed the findings and recommendations of the report.The overall performance of NBP in terms of profitability and growth has been rise over the past few years. The reason is decrease in expenditure and change in the higher management of the bank. In order to survive and grow in intense competition, the Bank should pay more and more attention to carry out a detailed market research/analysis and prepare a new product plan before launching any venture or expansion plan. 7.2 OUTPUT MONITORING There are too many rules and regulations within the Organization, which adversely affects the performance of the employees. For continuous monitoring and evaluation, the systems and procedures must be dynamic and flexible. This is very important task as the objective of the systems must be to facilitate the functions and achieve the desired results. Thus, the changes must be made and improvements should be done. 7.3 EASY PROCEDURE OF ADVANCING LOANS Most of the customers face difficulties while getting the loan. The procedure for advancing loans should be simple and easy. In this regard the bank management can play an important role by means of simplifying the things to the customers.
7.4 ESTABLISH A CUSTOMER COMPLAINT CENTERS NBP is the public sector bank and due to heavy rush, customers have always complaints against the staff of the bank. It is essential to open a customer complaint centers at branch levels so that the management should better understand the problems of the customers and then try to overcome these problems. This might create a good reputation of the bank in the eyes of customers.
7.5 EFFECTIVE APPRAISAL SYSTEM OF EMPLOYEES Performance of employees within an organization cannot be the same and it is necessary to evaluate their performance. For this purpose proper employee appraisal system should be establish for identifying the right persons who are eligible for promotion. 7.6 RECRUITMENT Merit is not considering in the process of selection and recruitment of employees. The recruitment process suffers from serious drawbacks. There is no concept of job description. For recruiting, the hiring process and job description should be modified and improved. One of the cost-effective methods to select competent employees is to offer internship programmers to graduates from business and management schools. 7.7 FRIENDLY ENVIRONMENT A friendly environment should be created and separate section should be established for each activity because it will help to gain the interest of employees in work. 7.8 TECHNOLOGICAL ADVANCEMENT NBP main branch Nowshera is not fully computerized which is very important to provide the quick services. Therefore NBP main branch Nowshera should be fully computerized to expedite the dealing process among bank and customers. It also reduces the burden of work.
CHAPTER # 08
IMPLEMENTATION
8.1 IMPLEMENTATION / ACTION PLAN Every organization has its own strengths, weaknesses and opportunities and threats. Nothing is impossible in this world, as someone has rightly said, An impossible is often untried. Here are the implementation/action plans for the recommendations concluded in the previous chapter. 8.2 BUSINESS DEVELOPMENT PLAN In order to develop the implementation procedure to reach business development objectives, the following steps should be taken: Campaigns to open More Accounts In order to increase the number of accounts, there should be a clear market plan. The staff, branch managers and executives involved in business development should prepare lists of different groups of prospective account holders and their neighbors, friends and influential people and make efforts to open their volume of business and deposits by fixing monthly target. This should be done by coordination among the various branches of the Bank. Campaigns for Mobilization of Deposits
Deposits are the main source of commercial banks and it is very important for an individual bank to get funds, because its basic function is to put them to work safely and profitably. The act of attracting funds is important but there are so many other processes of obtaining the funds, like the Bank can get funds by advertising, by direct contact or by contacts through their officers, managers and executives. Thus, they can get the customers and acquire them ultimately by furnishing banking services.
Campaigns to Increase Business Share The management of the Bank should prepare a business development plan by taking into account the overall market position of the bank in the banking industry. In light of market share, business development targets should be fixed on an annual basis by fixing monthly targets for imports, exports, issuance of letters of guarantee, bills etc. The achievement of targets should be reviewed every month by the respective circles at the Head Office and necessary instructions and guidelines be provided to the respective area control and zones where the business performance are not according to the set targets. Training of Personnel We all know that the profitability, growth and survival of a bank depend upon business development. Therefore, the Bank should take steps to impart training to the probationary officers, senior officers, managers and executives in modern business development techniques and public relations. Business development training is the process of imparting knowledge creating skills and shaping attitude, work habits, and consists of telling, showing and teaching the trainee and then monitoring his/her results and making constructive corrections. 8.3 MARKET RESEARCH & ANALYSIS PLAN Before launching any venture or expansion plan, a detailed market research/analysis must be carried out using any and/or of the following methods: The best method is collecting first hand data from the potential market through surveys. The questionnaires must be unbiased and should not prompt desired results. Historical data, if available could be very useful in determining the potential and trends. In case there is lack of awareness about the service or non-existence of historical data makes it impossible to conduct research, data of the locations, which have similar or close characteristics, can be used.
8.4 PLAN FOR MONITORING & EVALUATION SYSTEMS The systems and procedures of the Bank must be dynamic, flexible and subject to continuous monitoring and evaluation. The pre-requisites of an effective monitoring and evaluation process are as follows: A good, open and unbiased feedback system should be established to identify the problems and suggesting improvements. The feedback system must include the customers and all the staff members from top to bottom within the Bank. The feedback system must allow both as needed and fixed interval information. The problems and errors must be analyzed and removed. The suggestions should be discussed at all levels and implemented if found useful. 8.5 PERFORMANCE EVALUATION PLAN Periodic performance evaluation is very important function to be performed. The objective of evaluation must not be limited for salary review only. It should include and be performed in the following manner: Objectives for each employee must be clearly defined in a measurable quantifiable manner. A proper system must be adopted, whereby the employees also participate in the evaluation process. The system must be such that where the performance against the given objectives can be measured systematically. The performance review must be done at short intervals. The periodical performance reporting and meetings could be effective tools. The performance review must be aimed at improving employees skills and productivity by identifying training needs. 8.6 HIRING PROCESS & JOB DESCRIPTION PLAN
The human resource professionals believe that the failure of sub-ordinate is in fact a failure of the manager as either he/she has not made the right selection or he/she has not able to manage people well. The problem could be in the hiring process or an unclear job description. To enable employees to be most productive at all levels; the Bank should improve its hiring process and job description. This can only be attained through the following: Preparing qualification and experience specification in accordance with the objectives to be achieved from the position. Implementing standardized selection criterion. Offering reasonable compensation package in accordance with job requirements, experience, and qualification keeping in view the salary packages of the existing staff at the same level. Preparing detailed job description. Arranging detailed orientation programmed. Setting objectives for the period.
8.7 INTERNSHIP PROGRAM PLAN One of the best and cost effective method to select the right people and hire graduates from business and management schools as internees. The internship programmed should spread over a period of at least six months. During the internship programmed, a close watch should be kept on the internees. At the end of the internship programmed, the performance of the internees should be evaluated and competent, diligent and energetic internees should be hired on permanent basis. 8.8 CUSTOMER RETENTION PLAN Retaining a customer is more difficult than acquiring a customer. Any disruption in continuity and quality of the service may result in a quick slump in the presence of a competitive environment. The Bank should set up the following for customer retention: Effective and Efficient Complaint Management System.
Customer Feedback System through independent sources. Effective and Efficient Management Information System.
CAHPTER# 09 MY WEEKLY INTERNSHIP REPORT During my internship at NIB in malakand university campus i worked in remittances, advances, foreign and customer services office department, and I successfully completed all tasks and duties that were assigned to me. This is one of ideal branches of NIB in Malakand, working there for the customers for almost one year, the duties which I performed and experiences that I gained during each task of the day explained below. Basically during the first two weeks I got used to the environments and was introduced to the bank staff, till that point I was not assigned any task and once I got familiar then I was given a green signal to work in different departments from week to week basis ,as explained below in brief from week 3. WEEK THREE I reported to the branch manager on the daily basiss who gave me brief introduction about the management and the working activities of the branch, he also interviewed me and look a test on my banking knowledge about the banking experience . In my first week in NBP they assigned me different tasks in reception department, and the qualified staff trained me where I gained experience about different activities which were practiced. WEEK FOUR In the second week of my internship I learned that the branch was having about holders with a few employees to deal with this hectic task of dealing with all these different clients. And my experience at this particular department was a very learning one, I learned how to handle different customers, how to fill account opening forms for the new customers,
what are the requirements of opening account for them, the facilities that an account holders enjoys and the interest rates clients are receiving. And I have also learned the procedure of maintaining an active account holder. WEEK FIVE Learning in Remittance and clearing department There was many qualified officers in this department, who assigned specific tasks of inward clearing and outward clearing, while the issuing of pay order, demand draft, pay slip etc were handled by other officers. After one week in this department I learned that how the transfer of money from one branch to the branch takes place, in this department it was my responsibility for performing the following tasks, Issuing of the Demand Draft and their computer feeding of data. Responsibility of DD advice and its payment, Issuance of telegraphic transfers and their feeding in computer. Payment of local bills of collections, outward bills of collection and their realization. WEEK SIX Learning from Accounts and finance department In this department I basically helped in checking and counting of vouchers and how to calculate the depreciation of all fixed assets, got familiar with formats of different bank reports, and this is one of those departments where there was no customers interaction is not involved at all rather the paper based interaction is very important. WEED SEVEN Learning in home finance department In this department the customer integration was also very much limited, and I basically learned the dept to equity ratio in home financing, calculating its monthly installments,
documentations required to get the product for the customers, clients, eligibility criteria for agreements and what is the producer. WEEK EIGHT Learning trade finance I learned that trade finance is the procedure involved in trade financing by NIB. Further, that in detail I learned about the different aspects like: reshipment credit, post-shipment credit and letter of credit. The tasks that I learned about in this department were. Different types of trade finance. The types of post-shipment credit facilities. Parties involved in letters of credit. Documentation for releasing letters of credit.
Basically that was all of my two months internship activities in different department performing different tasks, it was only possible with the help of friendly employees of NIB without it would have been one difficult task, and many to all those who assisted me any way during this internship period all along.
BIBLIOGRAPHY Asrar H. Siddiqi, (1998) Practice and Law of Banking in Pakistan, Karachi: Royal Book Company. M. Saeed Nasir, Money Banking and Finance. Bowlin, Oswald D. (1999) Financial Analysis. U.S.A: McGraw Hills International. Block, Stanley B and Hirt, Geottrey A. (7th edition). Foundation of Financial Management. Sydney: Ed Von Hoffmann Press. Bodie, Zvi and Mertan, Robert C. (1997). Finance, New Jersey: Prentice Hall. De Cenzo David A, Robbins Stephen P. Human Resource Management. Fifth Edition, New York, John Wiley & Sons, Inc. 1996. Horngren, Sundem. (2000). Introduction to Financial Accounting. New Jersey: Pentice Hall Press. Kock, Timothy W. (2001). Bank Management. Orlando: Dryden Press. Meenai, S.A. (2002). Money and Banking in Pakistan. Karachi: Oxford University Press. C.H. James and J.M. Wachowicz.JR. 11th Edition, Foundation of Financial Management. New Jersey: Prentice-Hall, Inc. p.150 National Bank of Pakistan, (2003). Annual Report, Karachi National Bank of Pakistan, (2004). Annual Report, Karachi. National Banking of Pakistan, (2005). Annual Report, Karachi. National bank of Pakistan of Pakistan, Brochures of Products & Services. www.nbp.com.pk

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NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NBP MALAKAND UNIVERSITY CAMPUS

SUBMITTED BY: M.BURHAN ID # 3289 MBA (FINANCE)

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

Head of Department: ______________________

Internal Supervisor: ______________________________

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

NATIONAL BANK OF PAKISTAN

3.2.14 3.2.15 3.3

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

Account Department. Foreign Exchange Department

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

BACKGROUND OF THE STUDY

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

BACKGROUND OF THE ORGANIZATION

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

3.2.7 NBP ATM Network NBP ATM Network

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

3.2.8 EQUITY INVESTMENT

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

NATIONAL BANK OF PAKISTAN

3.2.15 CORPORATE FINANCE IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR

NATIONAL BANK OF PAKISTAN

IQRA UNIVERSITY PESHAWAR