INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

Submitted to:
Sir Yasin Zia
Prepared by:
Name:

Khurram Shahzad

Class:

M.Com

Roll No:
Session:

2014-2016

Registration No.

Institute of Business Management Science

UNIVERSITY OF AGRICULTURE, FAISALABAD

Dedication

I dedicated this research project to Almighty Allah.

This internship report is dedicated my Parents and Teacher

because whatever I am its due to my Parents and my Teachers
make me able to face different challenges and achieve those
challenges & all those who have a soft corner for me in their
hearts.

ACKNOWLEDGMENT

With the name of Allah most Merciful and Beneficent

I am very thankful to Almighty Allah who gave us the

opportunities, courage and insight to explore more knowledge
to complete this research project. I am also thankful to my
parents whose prayers always supported me in very task.
The research project is the check the impact of capital
structure on firms performance of the Automobile firms of
Pakistan.
I am glad to express my gratitude to my supervisor
Mr.Yasin Zia the Assistant professor of IBMS Department and
also a big thank to the University of Agriculture Faisalabad,
which provides me the opportunities to improve my skills.

TABLE OF CONTEN

Chapter no.1----------------------------------------------------------------------------------------------1
organization history and introduction-------------------------------------------------------------1
1.1

Organization history---------------------------------------------------------------------------1

1.1.1

Operations---------------------------------------------------------------------------------2

1.1.2

Subsidiaries--------------------------------------------------------------------------------3

1.2

Nature of National Bank of Pakistan--------------------------------------------------------3

1.3

Business volume of National Bank of Pakistan--------------------------------------------4

1.4

Vision--------------------------------------------------------------------------------------------4

1.5

Mission------------------------------------------------------------------------------------------5

1.6

Core values-------------------------------------------------------------------------------------5

Chapter No.2------------------------------------------------------------------------------------------6
Organizational Structure of National Bank of Pakistan----------------------------------------6
2.1

Board of Directors-----------------------------------------------------------------------------6

2.2

Senior Management---------------------------------------------------------------------------7

2.2.1

Corporate & Investment Banking Group----------------------------------------------7

2.2.2

Compliance Group-----------------------------------------------------------------------7

2.2.3

Islamic Banking Group------------------------------------------------------------------8

2.2.4

Treasury Management Group-----------------------------------------------------------9

2.2.5

Credit Management Group--------------------------------------------------------------9

2.2.6

Audit and inspection group------------------------------------------------------------10

2.2.7

Human Resource Management & Administration Group-------------------------11

2.2.8

Information technology group---------------------------------------------------------11

2.2.9

Financial control Division------------------------------------------------------------12

2.2.10

Overseas Coordination & Management Group-------------------------------------12

2.2.11

Commerce and retail banking group-------------------------------------------------12

2.3

Provincial & Regional Management-------------------------------------------------------13

2.4

Branch Management-------------------------------------------------------------------------13

2.5

Organizational (management) level at NBP----------------------------------------------14

2.5.1

Top managers----------------------------------------------------------------------------14

2.5.2

Middle managers------------------------------------------------------------------------14

2.5.3

First line/lower level managers-------------------------------------------------------14

2.6

Hierarchy of National Bank of Pakistan---------------------------------------------------14

2.7

Organizational structure of National bank of Pakistan----------------------------------15

2.7.1

Centralized Decision Making---------------------------------------------------------15

2.7.2

Downward Communication-----------------------------------------------------------16

2.7.3

Chain of Command---------------------------------------------------------------------16

2.7.4

Authority and Responsibility----------------------------------------------------------17

2.7.5

Delegation--------------------------------------------------------------------------------17

2.8

Departments of the branch------------------------------------------------------------------17

2.8.1

Clearing House Department-----------------------------------------------------------18

2.8.2

Remittance Department----------------------------------------------------------------18

2.8.3

Account Opening Department---------------------------------------------------------18

2.8.4

Cash Department------------------------------------------------------------------------19

2.8.5

Advances Department------------------------------------------------------------------20

2.8.6

Computer Department------------------------------------------------------------------20

2.9

Pension Disbursement Department--------------------------------------------------------20

2.9.1

Accounts Department------------------------------------------------------------------21

Chapter No.3----------------------------------------------------------------------------------------22
Product line of National Bank of Pakistan..........................................................................22
3.1

Deposits----------------------------------------------------------------------------------------22

3.1.1

Current deposits-------------------------------------------------------------------------23

3.1.2

PLS saving deposits--------------------------------------------------------------------23

3.1.3

Fixed deposit account------------------------------------------------------------------25

3.1.4

Foreign currency account--------------------------------------------------------------25

3.1.5

NBP Premium Aamdani----------------------------------------------------------------26

3.1.6

NBP premium saver--------------------------------------------------------------------26

3.2

Advances--------------------------------------------------------------------------------------27

3.2.1

NBP Saibaan-----------------------------------------------------------------------------27

3.2.2

NBP Advance salary--------------------------------------------------------------------28

3.3

NBP Cash and gold---------------------------------------------------------------------------29

3.4

Corporate Advances--------------------------------------------------------------------------29

3.4.1

Cash Finance----------------------------------------------------------------------------29

3.4.2

Running Finance/ Overdraft-----------------------------------------------------------29

3.4.3

Demand Finance------------------------------------------------------------------------30

3.5

Remittances-----------------------------------------------------------------------------------30

3.5.1

Demand drafts---------------------------------------------------------------------------30

3.5.2

Letter of credit---------------------------------------------------------------------------31

3.5.3

Foreign remittances---------------------------------------------------------------------31

3.5.4

Mail Transfer----------------------------------------------------------------------------32

3.5.5

Telegraphic Transfer--------------------------------------------------------------------32

3.5.6

Pay Order--------------------------------------------------------------------------------32

3.6

Miscellaneous---------------------------------------------------------------------------------33

3.6.1

Lockers-----------------------------------------------------------------------------------33

3.6.2

NBP Cash Card--------------------------------------------------------------------------33

Chapter No.4----------------------------------------------------------------------------------------34
work i done in National Bank of Pakistan ......................................................................... 34
4.1

i perform two task in two different department in NBP:-------------------------------34

4.1.1

E-remittances/foreign remittances----------------------------------------------------34

4.1.2

Govt receipts recording and depositing in Govt a/c--------------------------------35

Chapter No.6-----------------------------------------------------------------------------------------41
Financial statement analysis of NBP---------------------------------------------------------------41
6.2

Balance sheet ---------------------------------------------------------------------------------41

6.3

Income statement ----------------------------------------------------------------------------42

6.4

Horizontal analysis---------------------------------------------------------------------------43

6.4.1

Horizontal analysis of balance sheet-------------------------------------------------44

6.4.2

Horizontal Analysis of Income Statement-------------------------------------------45

6.5

VERTICAL ANALYSIS---------------------------------------------------------------------46

6.5.1

Vertical analysis of balance sheet-----------------------------------------------------47

6.5.2

Vertical analysis of income statement -----------------------------------------------48

6.6

Ratio analysis---------------------------------------------------------------------------------49

6.6.1

Profitability Ratios----------------------------------------------------------------------49

6.6.2

Assets Turnover-------------------------------------------------------------------------50

6.6.3

Return on Investment-------------------------------------------------------------------51

6.6.4

Return on Deposits----------------------------------------------------------------------51

6.6.5

Effective Tax Rate----------------------------------------------------------------------52

6.7

Liquidity Ratios-------------------------------------------------------------------------------53

6.7.1

Current ratio-----------------------------------------------------------------------------53

6.7.2

Cash Ratio-------------------------------------------------------------------------------54

6.7.3

Working capital--------------------------------------------------------------------------54

6.7.4

Advances to Deposit Ratio------------------------------------------------------------55

6.7.5

Debt to equity----------------------------------------------------------------------------56

6.7.6

Interest Coverage Ratio----------------------------------------------------------------56

6.8

Capital Adequacy Ratios--------------------------------------------------------------------57

6.8.1
6.9

Capital Funds to Total Assets----------------------------------------------------------57

Operating Performance Ratios--------------------------------------------------------------57

6.9.1

Fixed Assets Turnover------------------------------------------------------------------57

6.9.2

Sales or Revenue Per Employee------------------------------------------------------58

Chapter No.7-----------------------------------------------------------------------------------------59
Conclusion of the report------------------------------------------------------------------------------59
Chapter No.8--------------------------------------------------------------------------------------------60
Suggestions & Recommendation--------------------------------------------------------------------60

ORGANIZATION INTRODUCTION
Organization Name

Natinal Bank of Pakistan

Year of Foundation

1949

Authorized Capital

Rs.10 milliaon

National Tax Number

0700271-8

Business Nature

Subsidiary Company

Organization/Company Type

Government ownership

Principal Activity

Services

Major Product(s)/Service(s)

Loans, Credit Cards, Savings, Consumer Banking

Bi Product(s)/Service(s)

Services

Mailing Address

ibne.hassan@nbp.com.pk,

Phone No.

Phone:+92-21-99220100(30lines)
Phone: +92 -21- 99062000 (60 lines)

Fax

FAX:021-99220239

Website

www.nbp.com.pk

CHAPTER NO.1

1
1.1

ORGANIZATION HISTORY AND INTRODUCTION

Organization history
1949 National Bank of Pakistan (NBP) was established under the National Bank of
Pakistan Ordinance of 1949 and was government-owned. NBP acted as an agent of
the central bank wherever the State Bank did not have its own branch. It also undertook
government treasury operations. Its first branches were in jute growing areas in East
Pakistan. Offices in Karachi and Lahore followed.

1950 NBP established a branch in Jeddah, Saudi Arabia.

1955 By this time NBP had branches in London and Calcutta.

1957 NBP established a branch in Baghdad, Iraq.

1962 NBP established a branch in Dar es Salaam, Tanganyika.

1964 The Iraqi government nationalized NBP's Baghdad branch.

1965 The Indian government seized the Calcutta branch on the outbreak of hostilities
between India and Pakistan.

1967 The Tanzanian government nationalized the Dar es Salaam branch.

1971 NBP acquired Bank of China's two branches, one in Karachi and one
at Chittagong. At separation of East Pakistan NBP lost its branches there. NBP merged
with Eastern Mercantile Bank and with Eastern Bank Corporation.

1974 The government of Pakistan nationalized NBP. As part of the concomitant

consolidation of the banking sector, NBP acquired Bank of Bahawalpur.

1977 NBP opened an offshore brain Cairo.

1994 NBP amalgamated Mehran Bank.

1997 NBP branch in Ashgabat, Turkmenistan commenced operations.

2000 NBP opened a representative office in Almaty, Kazakhstan.

2001 State Bank of Pakistan and Bank of England agree to allow only 2 Pakistani
banks to operate in the UK. NBP and United Bank agreed to merge their operations to
form Pakistan International Bank, of which NBP would own 45% and United Bank 55%.

2002 Pakistan International Bank renamed itself United National Bank Limited
(UNB). The ownership structure of the UNB remained as before. The only change to the
shareholding structure is that UNB had recently been privatized in Pakistan and was now
owned 49% by the Government of Pakistan and 51% by a joint foreign consortium
of Abu Dhabi.

NBP needed to redefine its role and shed the public sector bank image, for a modern
commercial bank. It has offloaded 23.2 percent share in the stock market, and while it has not
been completely privatized like the other three public sector banks, partial privatization has
taken place. It is now listed on the Karachi Stock Exchange.

2003 NBP opened its branch in Kabul, and the first ATM in Afghanistan was installed
there.

2005 NBP closed its offshore branch in Cairo.

2010 NBP opened its branch in Karaganda (Kazakhstan).

2011 NBP opened its representative office in Toronto (Canada).

1.1.1 Operations

A number of initiatives have been taken, in terms of institutional restructuring, changes in the
field structure, in policies and procedures, in internal control systems with special emphasis
on corporate governance, adoption of Capital Adequacy Standards under Basel II framework,
in the upgradation of the IT infrastructure and developing the human resources.

National Bank of Pakistan has built an extensive branch network with 1250 branches in
Pakistan and operates in major business centre abroad. The Bank has representative offices in
Beijing, Tashkent, Chicago and Toronto . It has agency arrangements with more than 3000
correspondent banks worldwide.
The Bank saw significant growth between 2000 and 2006. In 2006, total assets were
estimated at PKR 635 billion, while deposits have grown to nearly PKR 502 billion. Pre-tax
profit rose to PKR 26 billion. Earnings per share have jumped to PKR 24.01. The increase in
profit was achieved through strong growth in core banking income. Interest income increased
by PKR 10 billion through growth in the loan portfolio as well as increase in spreads.
Advances increased by PKR 48 billion to PKR 316 billion. It ranges from providing credit to
the unbanked market segment under NBP Karobar, to small and medium enterprises, to
agricultural loans, to large corporate customers.
It has taken various measures to facilitate overseas Pakistanis to send their remittances. In
2002 the Bank signed an agreement with Western Union for expanding the base for
documented remittances.

1.1.2 Subsidiaries
The NBP's subsidiaries are Taurus Securities Ltd, NBP Exchange Company Ltd, NBP Capital
Ltd, NBP Modaraba Management Company Ltd, and CJSC Bank, Almaty, Kazakhstan. The
Bank's joint ventures are, United National Bank (UK), First Investment Bank and NAFA, an
Asset Management Company (a joint venture with NIB Bank & Fullerton Fund Management
of Singapore)

1.2 Nature of National Bank of Pakistan

National Bank of Pakistan was incorporated in Pakistan under the National Bank of Pakistan
Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. The bank is engaged in
providing commercial banking and related services in Pakistan and overseas. The bank
operates 1,249 (2007:1,232) branches in Pakistan and 22 (2007:18) overseas branches
(including the Export Processing Zone branch, Karachi). Under a Trust Deed, the bank also
provides services as trustee to National investment Trust (NIT) including safe custody of
securities on behalf of NIT.
3

The nature of responsibilities of the Bank is different and unique from other banks/financial
institutions. The bank also handles treasury transactions for the Government of Pakistan as an
agent to the State Bank of Pakistan for handling provincial/Federal Government receipts and
payments on their behalf. The National Bank of Pakistan has also played an important role in
financing the countrys growing trade, which has expanded through the years as
diversification took place. The bank is providing all banking services of mercantile and
commercial banking permissible in the country, which include:

Accepting of deposits of money on current, fixed, saving, term deposit and profit and

loss sharing accounts.

Borrowing money and arranging finance from other banks.
Advancing and lending money to its clients.
Financing of projects, including technical assistance, project appraisal through long

term/ short term loans, term finance and musharika certificates, etc.
Buying, selling, dealing, including entering into forward contracts of foreign

exchange.
Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.
Receiving of bonds, valuables, etc. for safe custody.
Carrying on agency business for any description other than managing agent, on behalf

of clients including Government and local authorities.

Generating, undertaking, promoting, etc. of issue of shares and, bonds etc.
Transacting guarantee and indemnity business.

1.3 Business volume of National Bank of Pakistan

Rupees in Millions
Year
Total Assets
Deposits
Advances
Reserves
Investments

2011
1,149,578
927,421
525,046
126,934
319,531

2012
1,309,528
1,036,739
654,690
139,981
343,538

2013
1,364,926
1,101,139
615,420
156,287
397,959

2014
1,543,054
1,233,525
626,704
178,329
561,764

1.4 Vision
To be recognized as a leader and a brand synonymous with trust,highest standards of service
quality, international best practices and social responsibility.
Mission
NBP will aspire to the values that make NBP
1.5

truly the Nations Bank, by:

4

Institutionalizing a merit and performance based 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.

1.6

Core values
Highest standards of Integrity
Institutionalising a teamwork and performance culture
Excellence in services
Advancement of skills for tomorrows challenges
Awareness of social and community responsibility
Value creation for all stakeholders

CHAPTER NO.2
2

ORGANIZATIONAL STRUCTURE OF NATIONAL BANK OF PAKISTAN

A well-developed and properly coordinate structure is an important requirement for the

success of any organization. It provides the basic framework within which functions and
procedures are performed. Any organization needs a structure, which provides a framework
for successful operations. The operation of an organization involves a number of activities,
which are related to decision making, and communication of these decisions. These activities
must be well coordinated so that the goals of the organization are achieved successfully

2.1 Board of Directors

Pursuant to Section 11 of The Banks (Nationalization) Act, 1974, the number of Directors of
the Bank shall not be less than 5 and not more than 7, excluding the President. The Federal
Government may, if deems necessary, appoint a Chairman of the Board in respect of the
Bank. At present National Bank of Pakistans Board of Directors consist of 6 Directors and a
President who is the Chief Executive of the Bank and presides over the meetings of the
Board. The responsibilities of Directors include the followings:
1.

The Board of Directors shall assume its role independent of the influence of the

Management and should know its responsibilities and powers in clear terms. it should be
ensured that the Board of Directors focus on policy making and general direction, oversight
and supervision of the affairs and business of the Bank and does not play any role in the dayto-day operations, as that is the role of the Management.
2.

The Board shall approve and monitor the objectives, strategies and overall business

plans of the institution and shall oversee that the affairs of the institution are carried out
prudently within the framework of existing laws & regulations and high business ethics.
3.

All the members of the Board should undertake and fulfill their duties &

responsibilities keeping in view their legal obligations under all the applicable laws and
regulations.
The Board shall clearly define the authorities and key responsibilities of both the Directors
and the Senior Management without delegating its policy-making powers to the Management
and shall ensure that the Management is in the hands of qualified personnel. The Following
table mentioned the names & designation of Board of Directors of National Bank of Pakistan:

Name
Muneer Kamal
Shahid Aziz Siddiqi
2.2 Farrakh Qayyum
Rana Assad Amin
Mr. Tariq Kirmani
Muhammad Naeem
Iftikhar A. Allawala
Syed Ahmed Iqbal
Ashraf

Designation
Chairman
Director
Director
Director
Director
Director
Director
president

S
e
n
i
o

r Management
The senior management of National Bank of Pakistan is consists of Group chiefs, who report
directly to the Directors of Bank. The whole functions of National Bank of Pakistan are
performed under these Groups. The National Bank of Pakistan has following groups and
division
2.2.1

Corporate & Investment Banking Group

The corporate & investment banking group is headed by Mr.Akbar Hasan Khan. This
group performs its function through its following two units:

Corporate Banking
Investment Banking

The corporate and investment banking will continue to play a major role in loan syndications,
structured financing and debt / capital raising transactions with the objective of providing
entire range of corporate and investment banking solutions to its valued clients under one
umbrella.
The Corporate Banking Group achieved excellent results in 2007 with a number of landmark
transactions in cement, energy, communication and fertilizer sectors. In addition to the funded
income, our corporate and investment banking has substantially increased its fee base income
this year by being the lead advisor in a number of transactions in the corporate world of
Pakistan.
2.2.2 Compliance Group

The Compliance Group of National Bank of Pakistan is headed by Mr. Kausar Iqbal Malik
and is report directly to the President/ Chief executive of NBP. In order to keep the working
of Audit Department aligned with the best international practices 'Compliance Group has
7

been created. This group is responsible for monitoring compliance of various administrative /
operative instructions, rules, and regulations by constantly reviewing and reporting status of
compliance and non-compliance. The Compliance Group of NBP is set to ensure that all
relevant laws are complied with, in letter and spirit, and, thus, minimize legal and regulatory
risks. The Compliance officers will primarily be responsible for Banks effective compliance
relating to:

Relevant provisions of existing laws and regulations.

Guidelines for KYC.
Anti money laundering laws and regulations.
Timely submission of accurate data / returns to regulator and other agencies.
Monitor and report suspicious transactions to President / Chief Executive Officer of
the bank and other related agencies.

2.2.3

Islamic Banking Group

The divisional head of Islamic Banking group is Mr Khawaja M Amin-ul-Azam.Islamic

Banking is one of the emerging field in global financial market, having tremendous potential
and growing at a very fast pace all around the world. Al-Hamdulillah, the progress of Islamic
Banking in Pakistan has also been commendable during the last Five years. The year 2007
marked the first year of Islamic Banking operations. During the year under review, in
addition to active participation in various Sukuk transactions, two more Islamic Banking
branches at Lahore and Peshawar started operations. NBP's plans for the year 2008 include
opening of Faisalabad and Rawalpindi branches with the focus on growing organically by
opening more standalone Islamic Banking branches, utilizing NBP's existing branch network
of 1,200 plus conventional branches and looking into strategic acquisitions for expansion in
this field. The products & services being offered by National Bank of Pakistans Islamic
Banking are fully Shariah Compliant and have been certified by NBPs Shariah Advisor.
Deposit Schemes being offered by NBPs Islamic Banking Branches include the following:
a) Current Deposit Scheme
b) Profit & Loss Sharing (PLS) Deposit Scheme

Commercial and Corporate customers requiring financing will have the following financing
facilities available to them to meet their requirements:
a) Murabaha
b) Murabaha Facility
c) Ijarah (Leasing)

2.2.4

Treasury Management Group

The group chief of Treasury management group of National Bank of Pakistan is

Mr.Muhammed Nusrat Vohra. The NBP treasury and capital market group has developed
a reputation of being the market leader in coming up with customized solutions for a large
and varied client base that is spread virtually all across the country. The client base does not
consist of only blue chips ones but encompasses public sector clients, retail sector,
multinationals, local conglomerates as well as individuals.
National bank treasury is currently regarded as a market leader in both foreign exchange and
rupee denominated products because of its emphasis on service quality. The Treasury
management group of National Bank of Pakistans offer: Narrowest bid / offer spread and
quickest on line quotesCustomized solutions to minimize risk and optimize returns as per the
needs and circumstances of the clients
Focus on building sustained and long term relationship with institutional, corporate and retail
clients.Local presence across the nation as well as internationally.Currently the National
Bank of Pakistan offer following Treasury Products:

2.2.5

Plain Vanilla FX Products

Pakistan Investment Bonds

Derivatives Products

Currency Options

Interest Rate Swaps and FRAs

Cross Currency Swaps

Credit Management Group

The group chief of Credit Management Group is Mr. Wajahat A.Baqai. This group usually
deals with Banks allocations of payments or cash application, internal fund movements,
reconciliations and also maintaining positive working relationships with customer during the
debt collection or credit review and approval process, screening of customers and only those
9

who is credit worthy are allowed to do business. The divisions of this group are distributed
according to different areas which are:
1) NWFP Azad Kashmir Sind & Balochistan area wing
2) Karachi area wing
3) Special Credit Cell & Punjab area Wing
The functions of this department include:

2.2.6

Enforcing the State Policies, financial regulations, and credit rules of the bank
Framing credit policies and regulations; supervising the staff to execute orders
Audit and inspection group

The group chief of National Bank of Pakistans Audit & inspection group is Mr Asif Hassan.
It is one of the core departments at NBP. Its mission is to strive for soundness & stability of
the financial system and safeguard interest of stakeholders through proactive inspection,
compatible with best international practices. This group plays a vital role in meeting NBPs
main responsibility of supervising the banks soundness of the system and protection of the
interest of depositors, thereby ensuring public confidence in the system. In order to assess the
branches, Audit & inspection group conducts regular audit & inspection of branches. Bank's
management has established and is managing an adequate and effective system of internal
control which encompasses the policies, procedures, processes and tasks as approved by the
Board of Directors that facilitate effective and efficient operations. The management and the
employees at all levels within the Bank are required to perform as per these approved Internal
Control System components. The Internal Control System ensures quality of external and
internal reporting, maintenance of proper records and processes, compliance with applicable
laws and regulations and internal policies with respect to conduct of business. The
management ensures that an efficient and effective Internal Control System is in place by
identifying control objectives, reviewing existing procedures and policies and ensuing that
control procedure and policies are amended for time to time wherever required. However,
Internal Control System is designed to manage rather than eliminate the risk of failure to
achieve objectives and provide reasonable but not absolute assurance against material
misstatement or loss. The audit system of National Bank of Pakistan consists of following:

Internal Audit

External Audit

Statutory Audit
10

2.2.7

Human Resource Management & Administration Group

The group chief of Human resource management & administration group is Mr. Qamar
Hussain..

This Division is responsible for fresh induction of employees and other

professionals through a rigorous induction process in order to ensure presence of quality

professionals. Following units and areas of work are the part of this division. This group is
responsible to develop annual manpower plan for National Bank of Pakistan, conduct job
analysis, prepare job descriptions, and conduct job evaluation process. The other functions of
this group include attracting, selecting and recruiting the right people from the market. The
group firmly works on adopting latest organizational theories & change management
processes to bring in efficiency. This group also performs following functions:

Deals from placing job advertisements to timely recruitment of competent personnel

by using modern selection techniques.. Encourages employees to seek
promotion/transfers to fill internal openings and meet employees personal
objectives.

2.2.8

Information technology group

The group chief of Information technology group is Mr. Qamar Hussain. This group is
formed to implement latest technology to keep National Bank of Pakistan online with the
domestic and international financial industry, and other stakeholders in order to promote
efficiency and stability in the financial market.The groups objective is to provide appropriate
technical solutions to business requirements and develop state of the art integrated system
that will facilitate internal and external stakeholders to acquire accurate information in the
most effective manner. The National Bank of Pakistan with its capabilities, methodologies
and experience aims at technological advancement in bank, focusing on solutions that intend
to reduce operating costs, improves end user performance, and meet overall business goal.
. The information technology group has following divisions:

In-house Development
Software development
Web development
Central Server
System Admin UNIX
System Admin Windows

11

2.2.9

Financial control Division

This division is headed by Mr. Aamir Sattar, who is also financial controller of National
Bank of Pakistan. The financial control division is responsible to perform and manage
following functions:

Maintenance of books of accounts and preparation of financial statements of the Bank

in accordance with the IAS, as adopted by the Bank.

Coordination and facilitation for Business planning and budgeting function in the

Bank and periodic reporting to the management and to the Board.

Preparation of Annual Financial Statements Accounting Policies for the bank.
Quarterly profit updates to the Board of Directors.
Consolidation of Departmental Budgets.
Maintenance of Federal & Provincial Government Account on the basis of receipt and
payments.

.
2.2.10

Overseas Coordination & Management Group

The group chief of NBPs overseas coordination & management group is Mr. Masood
Karim Shaikh.

This department is in charge of the management and operation of foreign

exchange business including marketing and operating of the financial products and trade
financing of foreign exchange in the light of National foreign exchange management policy,
and is the governing department of foreign exchange. The functions of this group are as
follows:

Establishing marketing strategy, policy and management system of foreign exchange.

Making annual operating and working plan.
Selecting and opening overseas account under supervision, and establishing and

harmonizing the business among agent banks.

Corresponding and dealing with foreign exchange business among branches.

2.2.11 Commerce and retail banking group

The group chief of National Bank of Pakistans commercial & retail Banking group is Mr.
Mudassir H. Khan.

Retail banking includes retail lending and deposits, banking services,

trust and estates, private lending and deposits, banking service, trust and estates investment
advice, merchant / commercial / corporate cards and private labels and retail. Commercial
banking includes project finance, real estate, export finance, trade finance, factoring, lending,
guarantees, bills of exchange and deposits.

12

This group is responsible for serving the needs of the retail and commercial market, focusing
on individual consumers and small and medium size enterprises. This group is responsible for
developing and managing brands which serve the investment needs of the consumer market,
and focuses on deposit mobilization, provision of value added services based on modern
technology and undertaking the centralized marketing and advertising for the Bank. This
group is engaged in the development and management of retail credit schemes. The consumer
market in Pakistan has not only grows exponentially over the last decade or so, but the needs
of this segment have become extremely diverse. In order to sustain competition, it is but
imperative to continue offering innovative consumer credit schemes.

Provincial & Regional Management

2.3

There are four executives of National Bank of Pakistan to supervise the Banks maters of
every province, as they are called Provincial Chiefs. These provincial chiefs are responsible
for the entire banking operations in their respective provinces. The provincial management
includes:

The Provincial Chief Punjab

The Provincial Chief Sind
The Provincial Chief Baluchistan
The Provincial Chief N.W.FP & Kashmir

These provinces are sub-divided into regions, the regions are controlled and manage by
Regional heads, which are responsible for the supervision in their circles and deal with the
problems of their respective Regions. The regional management of National Bank of Pakistan
is divided into two areas which are:

2.4

Overseas
Countrywide
Branch Management

The National Bank of Pakistan, in order to facilitate its functions on branch level appoints
Branch Managers & other staff according to branchs activities and volume of business. The
branch managers are responsible for all functions and staff within the branch office. The job
of branch managers is to take charge of the entire operation of his branch, making sure that
everything runs smoothly. The other functions involves scheduling of employee work hours,
overseeing training, hiring and firing, assuring that proper procedures are followed, and

13

reporting to upper management any problems or providing reports and updates as required by
banks protocol.

2.5 Organizational (management) level at NBP

2.5.1

Top managers

Top managers are responsible for making organization-wide decisions and establishing the
plans and goals that affect the entire organization. These individuals typically have titles such
as executive vice president, president, managing director, chief operating officer, chief
executive officer or chairman of the board. The NBP have its top management in their head
office at Karachi. They are responsible for making the plans and establishing goals the run
their business smoothly all over Pakistan & around the globe. Among seven member of group
Chief Executive is called the president. The bank has directors for superintendence and
direction of its business. The Government appoints six directors as members and one
president. These members are also responsible for making the policy of the bank.
2.5.2

Middle managers

Middle managers include all levels of management between the first line level and the top
level of the organization. These managers manage the work of first line managers and may
have titles such as department head, project leader, plant manager or division manager. NBP
divided his management into various regions such as Rawalpindi region, Gujranwala region
etc. In NBP, regional management falls under this category. They are responsible for the
planning, organizing, leading and controlling of the resources and staff of the whole region.
2.5.3

First line/lower level managers

First level managers are the lowest level of management and manage the work of nonmanagerial individuals who are involved with the production or creation of the organizations
products. The branch managers of NBP fall under this category. These managers are
responsible for planning, organizing, leading and controlling the staff and all affairs of the
branch.

2.6 Hierarchy of National Bank of Pakistan

The Hierarchy (An arrangement of objects, people, elements, values, grades, orders, classes
etc., any system of persons or things ranked one above another) of National Bank of Pakistan.
The hierarchy may include:

14

Categorization of a group of people according to ability or status.

A body of clergy organized into successive ranks or grades with each level

subordinate to the one above.

A series in which each element is graded or ranked
A body of officials disposed organically in ranks and orders each subordinate to the

one above it; a body of ecclesiastical rulers.

An organization with few things, or one thing, at the top and with several things
below each other thing.

The President of National Bank of Pakistan is ranked Top at the hierarchy. The other six
directors of National Bank of Pakistan are ranked second in the hierarchy. The Provisional,
Regional & Zonal chiefs are ranked 3rd, 4th& 5th respectively. The vice President & assistant
vice Presidents of National Bank of Pakistan are ranked 6 th& 7th respectively. The Officers
Grade I, II & III are ranked 8 th at the hierarchy of National Bank of Pakistan. The lower level
of National Bank of Pakistan is consist of Clerical & non- clerical staff.

2.7 Organizational structure of National bank of Pakistan

A well-developed and properly coordinate structure is an important requirement for the
success of any organization. It provides the basic framework within which functions and
procedures are performed. Any organization needs a structure, which provides a framework
for successful operations. The operation of an organization involves a number of activities,
which are related to decision making, and communication of these decisions. These activities
must be well coordinated so that the goals of the organization are achieved successfully.
This chart defines the line of authority in the branch and its departments. It is a sort of visual
presentation of the organizational structure. It specifies the duties and responsibilities of the
personnel or staff of the branch.The purpose of an organizational structure is to help in
creating an environment for human performance. Although the structure must define the task
to be done, the rules so established must also be designed in the light of abilities and
motivation of the human recourse available. By analyzing the organization structure of the
branch following elements can be found in the structure.

15

2.7.1

Centralized Decision Making

The Branch Manager of National Bank of Pakistan is responsible for all the affairs of the
Bank. All the decisions relating to Branch are made by him and the subordinates have to obey
these decisions. All the employees of the Bank are report directly to the Branch Manager. The
branch has two operation Managers. Operation Manager I controls Clearing house &
Remittance Department and Operation Manager II controls Deposits, Advance & Branch
accounts department. Both of them are report directly to the Manager regarding affairs of
their departments. The Chief Accountant controls Accounts department & is report directly
to branch Manager. The branch also has two cashiers responsible for cash & Pension
disbursement department reports directly to branch Manger. The BBO (Branch Back Office
System) Operator controls computer department of the branch and is report directly to
Operation Manager I and Branch Manager.
2.7.2

Downward Communication

Communication is the process by which information is exchanged and understood by two or

more people, usually with the interest to motivate or influence the behavior of others in the
organization. Downward communication is the message and information sent from top
management to subordinates in a downward direction. The same pattern is followed at
National Bank of Pakistan Rawat branch, the Manager of the branch sent orders, information
& messages to following subordinates

2.7.3

Operation Manager I
Operation Manager II
BBO ( Branch Back Office System) Operator
Chief Accountant
Cashier I
Cashier II
Clerk I
Clerk II
Non Clerical Staf
Chain of Command

The chain of command is an unbroken line of authority that links all persons in an
organization and shows who reports to whom. By analyzing the organizational structure of
the National Bank of Pakistan Rawat branch it can be found that there is a scalar principle
16

followed with in the branch because each and every employee of the branch knows to whom
they can report. The authority and responsibility for different tasks and duties are different, as
well as every one knows the successive levels of management all the way to the top.
2.7.4

Authority and Responsibility

The chain of command illustrates the authority structure of National Bank of Pakistan Rawat
Branch. Authority is the formal and legitimate right of the manger to make decisions, issues
orders and allocates resources to achieve organizational desired outcomes. By analyzing the
chain of command of NBP, one can come to the conclusion that, as there is scalar pattern
followed at the organizational setup of NBP, therefore it is implied that everyone in his
position knows that what is ones authority and what is the responsibility and the authority it
allocated.
2.7.5

Delegation

Delegation is the process, which managers use to transfer the authority and responsibility to
position below in the hierarchy. Most organizations today encourage managers to delegate
authority to the lowest possible level to provide maximum flexibility to meet customer needs
and adapts to the environment. At National Bank of Pakistan Rawat branch Operation
Managers have some authority & responsibility relating to affairs of the Branch.

2.8 Departments of the branch

Banking procedures are divided between various departments. Different departments do their
jobs in occurrence with the bank policies. In National Bank of Pakistan each branch is
divided into various departments depending on their size and volume of business. Head of
department manages each department & officials of the branch follow procedures. The
departments working within National Bank of Pakistan Rawat branch are as under:

Clearing House Department

Remittance Department
Computer Department
Deposits Department
Advances Department
Account Opening Department
Accounts Department
Cash Department
Pension Disbursement Department

17

2.8.1

Clearing House Department

As part of their daily business activity, banks receive cheques and other financial instruments
from their customers drawn on other banks, to be collected and credited to their accounts.
Similarly, banks receive cheques/instruments from other banks, deposited by customers of the
banks drawn on the customers of the drawee banks. Therefore, the banks act as Collecting
Banks when they send cheques/instruments for collection and as paying Banks, when they
receive cheques/instruments for collection from other banks. Since each bank receive and
sends cheques/instruments for collection to and from an number of banks, the process of
settlement would clearly be very cumbersome and

time

consuming if

every

cheques/instrument had to be sent by the collection bank to each of the drawee banks or
branch upon which different collection items are drawn and to individually pay the proceeds
to each of the bank sending cheques/instrument in for collection. Therefore, the banks have
evolved what is called the Bankers Clearing arrangement.
2.8.2

Remittance Department

The Remittance department deals with the transfer of money from one place to another.
Funds transfer facility or remittance of funds is on of the key functions of the banks all over
the world. Remittances through banking channels save time, costs less and eliminate the risks
involved in physical transportation of money from one place to another. National Bank of
Pakistan transfers money in the following ways.

2.8.3

Pay Order
Demand Draft
Mail Transfer
Telegraphic Transfer
Pay Slip
Call Deposit Receipt
Letter of Credit
Travelers Cheque
Account Opening Department

The opening of an account is the establishment of banker-customer relationship. This

department performs the duty of opening accounts for customers. It also issues checkbooks to
customers. A person who wishes to open an account with the bank has to fill an account
opening form obtained from any branch of National Bank of Pakistan. The bank officer
tactfully obtains information about character, integrity, responsibility, occupation and the
nature of business of the perspective customer.
18

The following requirements are necessary for opening an account.

Identification of the new customer.
Ascertaining the genuineness of the stated occupation business of the customer.
Determining the correct residential and permanent address.
Completion of all relevant columns of the Account opening form.
Proper completion of documentation.
Functions of Account Opening Department

2.8.4

Providing account opening form according to the customer's requirements,

Guide the customer about the requirements of the account opening and form filling,
Check the forms whether they are correctly completed or not,
Preparing checklist,
Stamping on the form,
Maintaining account opening register,
Pasting of forms in register after release from general banking in charge,
Issuance of cheque books,
Issuance of accounts maintenance certificate,
Closure of account
Verification of signature in case of cheque presented before releasing of account
opening from SS card is not yet scanned.
Cash Department

All physical movement of cash in the bank is made through the cash department. As bank is
borrowing and lending institution, therefore cash is the top most priority of Bank. Another
aspect is that cash department is for the security purpose, security in a sense that there should
be no embezzlement of funds or in money leaded to bank by any party or person. The
efficiency of bank is also related to this department the more efficient the bank is the stronger
and busy is the cash department. Cash department perform following functions:

Collection of funds
Acceptance of deposits
Collection of utility bills
Payment of checks
Remittances
Act according to any standing instructions
Transfer of funds from one account to another
Verification of signatures
Posting
Handling of Prize bond

19

2.8.5

Advances Department

The bank is profit seeking institution. It attracts surplus balance from the customer at low rate
of interest and makes advances at a higher rate of interest to the individuals and business
firms. Credit extensions are the most important activity of all the financial institutions,
because it is the main source of earnings. Advances department is one of the most sensitive
and important department of the bank. The major portion of the profit is usually earned
through this department. The job of this department is to make proposals about the loans; the
credit management division of head office directly controls all the advances.
The advances Department receive application from intending borrowers. After receiving
application the advance department processes it further. After analyzing and detailed
investigation, they decide whether to approve the loan or not. Some loan approvals are made
by the Manager of the branch within his powers as prescribed by the banks higher
authorities, while some loan applications are submit to higher authorities for their approval.
Some advances are of the following nature

2.8.6

Loan against Gold

Agriculture advance to farmers
Medium term advance for working capital
Long term advance for setting industry
Short term advance to businessman
Computer Department

This department is playing a very important role in making the banking procedures faster and
helping the bank for providing better services to its customers. The National Bank of Pakistan
has three types of branches in all over Pakistan, these included
2.8.7

Pension Disbursement Department

The National Bank of Pakistan was Pakistans leading institution which performs the function
of pension payments or disbursements to pensioners. The pension disbursement department is
responsible for making pension payments to Government Pensioners. The person who wants
to receive his/her pension from National Bank of Pakistan can open an account with any
branch of National Bank of Pakistan. The bank performs this function through Demand Draft
Purchase or simply called DD Purchase. This department performs following functions:

Making Pension Payments

Opening of Account of Pensioner
20

2.8.8

Entry of amount paid to pensioner in Government Pensioners Register

Verifications of Signatures of Pensioners
Making Demand Draft Purchase Register
Accounts Department

Accounts Department of the bank can be considered the most important department. This
department is basically concerned with processes and activities of recovering, sorting,
summarizing and reporting data resulting from the whole day transactions of all the
departments. Actually the process of this activity starts from the preparation of all the
required vouchers by different related departments. When these vouchers are prepared, these
are posted into respective computer terminals by the relevant departments. Before merging, a
batch list is printed out by Computer Department and duly checked by the respective
departments. After this, merging stage comes, after which a proof list is printed out. This is
the stage, where Accounts Department starts performing its function. Proof list is checked by
the Accounts Department. The account department prepare following vouchers and reports
Monthly Profit & Loss account- F48

General Ledger
General Ledger- Abstract
Check Book Issue Register
WesternUnion payments Register

CHAPTER NO.3
3

PRODUCT LINE OF NATIONAL BANK OF PAKISTAN

The most precise definition of product is anything capable of satisfying needs, including
tangible items, services and ideas. In marketing, a product is anything that can be offered to a
market that might satisfy a want or need.

Since 1575, the word "product" has referred to

anything produced. Since 1695, the word has referred to "thing or things produced. The
economic or commercial meaning of product was first used by political economist Adam
Smith. In general usage, product may refer to a single item or unit, a group of equivalent
21

products, a grouping of goods or services, or an industrial classification for the goods or

services. The consumer banking products include personal accounts, credit cards, loans,
investment products, treasury products and many more. The National Bank of Pakistan
offering for sale several related products individually, which is commonly known as product
lining. A product line is defined as A group of products that are closely related because they
function in a similar manner, are sold to the same customer groups, are marketed through
same types of outlets, or fall within the given price ranges. The followings are the main
consumer banking products of NBP.
NBP provides this fellowing prodects

Deposits

Advances

Corporate advances

Remittances

Miscellaneous

3.1 Deposits
The National Bank of Pakistan offers to their clients a variety of Deposit Schemes with
personalized services at competitive rates of interest. Any Pakistani citizen can open his/her
account for any deposit scheme at any of its Branches strategically located throughout
Pakistan. The Bank with its huge network of 1243 branches garners savings from both the
rich and the poor in urban as well as rural areas. Even a poor farmer in a remote village, with
his meager annual income, feels secure to safe keep his minuscule savings in National Bank
of Pakistan, Because National Bank of Pakistan has a long heritage of trust and professional
commitment

22

3.1.1

Current deposits

Ideal for customers looking for security of their funds along with absolute convenience in its
use, in the form of Current accountsFunds deposited with the bank will be utilized by the
bank at its sole discretion in Shariah acceptable avenues.The Customer will have the
flexibility to withdraw a part or the whole of their balances at any time as per their
requirement.This is a non remunerative deposit scheme and thus the customer will not be
sharing the profits nor will be sharing losses (if any). However, the Bank may at its absolute
discretion give rewards to these Depositors depending upon the operational results of the
Bank. Losses will not be passed on to these Depositors.Other terms, conditions and rules for
Current Deposit Accounts to be advised by the Bank at the time of opening of Account.
These are payable to the customer when ever they are demanded. When a banker accepts a
demand deposit, he incurs the obligation of paying all cheques etc, drawn against him to the
extent of the balance in the account. Because of their nature, these deposits are treated as
current liabilities by the banks. Bankers in Pakistan do not allow nay profit on these deposits,
and customers are required to maintain a minimum balance, failing which incidental charges
are deducted from such accounts. This is because Current Deposits may be withdrawn by the
depositors at any time, and as such the bank is not entirely free to employ such deposits
balance as prescribed by the bank. No balance maintenance condition is applied on basic
banking account.
3.1.2

PLS saving deposits

PLS Saving Deposits Scheme will accept deposits on Mudaraba basis, where the depositor
will be Rabb-ul-Mal and Bank will be Mudarib. The Bank will invest the deposited funds at
its (Banks) sole discretion in Shariah acceptable avenues.The Depositor will have the
flexibility to withdraw a part or the whole of their balances at any time as per their
requirement.
The Bank will give profit to the Depositors on the basis of agreed ratio of actual profits to be
announced by the Bank from time to time.In the event of financial loss, the PLS depositors
will bear the loss in proportion of their investment.The Depositors will not participate in the
management of the business of the BankOther terms and conditions as well as rules for PLS
Deposit Account to be advised by the Bank at the time of opening of Account.
In Pakistan a Savings Deposits Account can be opened with a very small amount of money,
and the depositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate
23

calculated on six monthly basis under the Interest Free Banking System. There is no
restriction on the withdrawals from the deposit accounts but the amount of money withdraw
is deleted from the amount to be taken for calculation of products for assessment of profit to
be paid to the account holder. It discourages unnecessary withdrawals from the deposits. In
order to popularize the scheme the SBP has allowed the Savings Scheme for school and
college students and industrial labour also. The purpose of these accounts is to inculcate the
habit of savings in the constituents. As such, the initial deposits required for opening these
accounts are very nominal. NBP charge Rs.500 for opening of PLS Savings deposits.
The silent features of profit and loss sharing and saving accounts of NBP are as fallows.
1.These accounts can be opened by individuals in their own single or joint name. The PLS
savings account can also be opened for provident fund or other benevolent funds of
companies, firms, organizations, NGOs and educational institutions.
2.PLS saving account can be opened with a minimum amount of Rs.500/- only
3.To share in the profit a minimum balance of Rs.500/- must be maintained in the account.
The minimum balance on sixth and last of month will qualify for the profits. The profits will
be calculated on the basis of monthly minimum balance for the periods of six months i.e.
from January to June and July to December
4.The head office of NBP determines the profit or loss on PLS saving deposits and advice its
branches the rate and time of distribution of these profits.
5.There shall be no restrictions on maintaining the maximum balance in PLS saving account.
6.On the first day of Ramzan each year the Zakat at the rate of 2.5% will be deducted from
these deposits on the balance of that day. But if depositors affix an affidavit of Zakat
deduction along with account opening form or he is a non-Muslim, no Zakat will be deducted
from his account.
3.1.3

Fixed deposit account

The deposits that can be withdrawn after a specified period of time are referred
to as Fixed or Term Deposits. The period for which these deposits are kept by the
24

bank ordinarily varies from three months to five years in accordance with the
agreement made between the customer and the banker. Profit/Return is paid to
the depositors on all fixed or Time deposits, and the rate of profit/Return varies
with the duration for which the amount is kept with the banker. By lending out or
investing these funds, the bank earns more than the Profit/Return that it has to
pay on them to the depositors.

By giving an advance notice to the bank the

deposit can be withdraw from the bank before the expiry of the period. Fixed
deposit accounts have higher rate of interest as compare to other accounts. The
rate of interest rises with the length of period and the amount of deposit. The
bank grants to the depositor a fix deposit (FDR) which is not transferable to any
other person. The silent features of fixed deposit account of NBP are as fallows

1.

The PLS term deposit are opened for individuals in their own single or joint names,

companies firms and other organizations.

2.

The PLS term deposit receipt are issued for any amount. There is minimum or

maximum limit or deposits in a single term deposit account.

3.

PLS term depositors may be allowed some facilities against the security of these

receipt credits, after making Lien on the relevant receipt and subject to recovery of service
charges.
4.

Under term deposit scheme the depositors not cease to earn the profit immediately,

after the respective maturity date

3.1.4

Foreign currency account

Government of Pakistan has introduced many important reforms in Foreign Exchange

Control in the country since February, 1990, for the purpose of strengthening the Foreign
Exchange Reserves. One of these reforms relates to foreign currency accounts, which can be
opened in United States Dollars, Pound Sterling, Euro and Japanese Yen in any of the
authorized branches of commercial banks throughout the country. Foreign currency accounts
are opened, on proper introduction and submission of required documents along with an
initial deposit prescribed from time to time. Rates of return on foreign currency deposits are
subject to fluctuation as determined in accordance with State Bank of Pakistan directives and
will be paid on six monthly basis whereas the return on term deposit/SNTD will be paid on
maturity or as prescribed by SBP. The bank shall have no responsibility for or liability to the
account holders for any diminution due to taxes imposed or depreciation in the value of funds
25

credited to the account whether due to devaluation or fluctuation in the exchange rate or other
wise.
3.1.5

NBP Premium Aamdani

NBP Premium aamdani is a retail product of the bank. The amount of investment required for
this account is Rs. 20,000/-to Rs. 5,000,000.The investment period is 5 years. Zakat and
withholding tax will be deducted as per rules. In NBP premium aamdani, the account holders
have benefit of free demand draft, pay order; free cheque book and NBP cash card
(ATM+Debit). The Financing facility is available up to 90% of the deposit value. Profit paid
every period as follows:

Earn up to 8.35 % p.a. +

Minimum deposit of Rs. 20,000/- with

maximum balance of Rs. 10 million for 5
years
Free Demand Draft, Pay Order and
Cheque Book*
Convenience of NBP online Aasan
Banking (for online banking customers)
Free NBP Cash Card (ATM+Debit)
Running finance facility up to 90%
Profit paid every month as follows:
3.1.6

NBP premium saver

NBPPremium saver is a retail product of the bank. The minimum saving balance of Rs.
20,001 and a maximum balance of Rs. 300,000 are required for opening a premium saver
account. Two debit withdrawals allowed in a month and no limit on number of deposit
transactions. The profit is calculated monthly and Paid on half yearly basis. Free NBP Cash
Card (ATM + Debit) facility is available to account holder.

3.2 Advances
National Bank of Pakistan plays a pivotal role in translating the government's development
plans in terms of growth in industrial, commercial and agricultural sectors in Pakistan.
26

Accordingly the Bank has formulated its Credit Policy under the guidelines of SBP-the
Central Bank of Pakistan.
3.2.1

NBP Saibaan

The NBP Saibaan is retail product of the bank. It has different product items which are home
purchase, home construction, home renovation and purchase of land plus construction. If
anyone has a Home Finance Facility outstanding with another bank he can have it transferred
to NBP through a hassle-free process. A brief description of these products is as fallows:
Product Items
Home Purchase
Home Construction
Home Renovation
Purchase of Land + Construction
Balance Transfer Facility (BTF)
Home Purchase (House or Apartment) *
Financing Amount
Upto 35 Million
Financing Period
3 to 20 Years
Debt to Equity
85:15 (Maximum)
Home Construction *
Financing Amount
Financing Period
Debt to Equity

Upto 35 Million
3 to 20 Years
85:15 (Maximum)

Home Construction * - Product Detail

Financing Amount
Upto 35 Million
Financing Period
3 to 20 Years
Debt to Equity
85:15 (Maximum)
Home Renovation *
Financing Amount
Financing Period
Debt to Equity

Upto 15 Million
3 to 15 Years
80:20 (Maximum)

Purchase of Land and for Construction thereon *

Financing Amount
Upto 35 Million
Financing Period
3 to 20 Years
Debt to Equity
80:20 (Maximum)

27

Eligibility *

Must be Pakistani Resident (National)

Aged between 21 and 65 years at the time of application/disbursement of loan.

Salaried Person, Self-employed professionals and businessmen.

Minimum income requirement Rs. 5000 for Govt. Employees, Rs. 10,000 for
other salaried persons and Rs. 15,000 for self employeed and businessmen.

Property located in NBP approved localities.

Service duration: Two years for salaried class Three years for selfemployed/business class.

3.2.2

NBP Advance salary

The NBP Advance salary has been the flag-ship product for NBP. NBP Advance Salary, the
leading personal loan product of the country, is maintaining its inimitability ever since it was
launched. This was only possible due to its swift growth and remarkable loan disbursement of
over 118 billion. You can avail up to 20 net take home salaries with easy repayment
installments. Its hassle free acquisition with no prior formalities and easy availability in a
short turn around time is attributed as the most distinguishing features of the product.

3.2.3

NBP Cash and gold

Rate of mark-up 15.50% p.a.

Facility of Rs. 30,000 against each 10 gms of net contents of gold

No minimum income requirement

Repayment after one year

One year Rollover tenure

Only gold ornaments acceptable

28

Weight and quality of gold to be determined by NBP's appointed schroffs

No penalty for early repayment

For education, marriage, consumer and other domestic needs

No maximum limits of cash

3.3 Corporate Advances

3.3.1

Cash Finance

This is a very common form of borrowing by commercial and industrial concerns and is
made available either against pledge or hypothecation of goods, produce or merchandise. In
cash finance, a borrower is allowed to borrow money from the banker up to a certain limit,
either at once or as and when required. The borrower prefers this form of lending due to the
facility of paying markup/services charges only on the amount he actually utilizes.If the
borrower does not utilize the full limit, the banker has to lose return on the un-utilized
amount. In order to offset this loss, the banker may provide for a suitable clause in the cash
finance agreement, according to which the borrower has to pay markup/service charges on at
least on self or one quarter of the amount of cash finance limit allowed to him even when he
does not utilize that amount.
3.3.2

Running Finance/ Overdraft

This is the most common form of bank lending. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess of the balance which
the borrowing customer has in credit, and an overdraft thus occurs. This accommodation is
generally allowed against collateral securities. When it is against collateral securities it is
called Secured Overdraft and when the borrowing customer cannot offer any collateral
security except his personal security, the accommodation is called a Clean Overdraft. The
borrowing customer is in an advantageous position in an overdraft, because he has to pay
service charges only on the balance outstanding against him. The main difference between a
cash finance and overdraft lies in the fact that cash finance is a bank finance used for long
term by commercial and industrial concern on regular basis, while an overdraft is a temporary
accommodation occasionally resorted to.

29

3.3.3

Demand Finance

When a customer borrows from a banker a fixed amount repayable either in periodic
installments or in lump sum at a fixed future time, it is called a loan. When bankers allow
loans to their customers against collateral securities they are called secured loans and when
no collateral security is taken they are called clean loans.
The amount of loan is placed at the borrowers disposal in lump sum for the period agreed
upon, and the borrowing customer has to pay interest on the entire amount. Thus the
borrower gets a fixed amount of money for his use, while the banker feels satisfied in lending
money in fixed amounts for definite short periods against a satisfactory security

3.4 Remittances
3.4.1

Demand drafts

Drafts drawn by one branch on another branch or on the Head Office of same bank or vice
versa, are not cheques or bills, as these have no distinct drawer and drawee. Section 85-A
reads:
Where any draft, that is, an order to pay money, drawn by one office of bank upon another
office of the same bank for a sum of money payable to order on demand, purports to be
issued by or on behalf of the payee, the bank is discharged by payment in due course.
Bankers drafts payable to order on demand are within the protection of Sections 10 and 131A of the Negotiable Instruments Act. However, if a demand draft drawn on a bank by its own
branch bears a forged endorsement, the person in possession of it cannot compel that bank to
pay it. As far as possible the bankers draft should be crossed and it should never be drawn
payable to bearer.
When a person requires a draft he should be asked to complete the prescribed application
form in which he should state the amount of the draft, the name of the payee, and the place of
payment. This application form should be signed by the purchaser or by those persons who
have been duly authorized to act on his behalf. When a customer requests his banker to
provide him with a bankers draft, the amount of which is to be debited to his account, he
should enclose with his written request a cheque covering the amount of the required draft
and other charges etc. payable to banker.

30

3.4.2

Letter of credit

Letters of credit are very useful instruments in facilitating commercial relations between
businessmen at various places. Letter of credit state the limit of the credit and the time during
which it is held at the disposal of the grantee, but they are neither negotiable nor transferable.
Letter of credit may be revocable. There are many kinds of letter of credit such as Revolving
credit, Back to Back credit, Claused credit etc.

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.
3.4.3

Foreign remittances

To facilitate its customers in the area of Home Remittances, 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.

The new features of NBP foreign remittances include:

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 United National Bank (the joint venture between NBP and UBL in UK)., 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.
3.4.4

Mail Transfer

A Mail Transfer is a form of remittance in which the amount remitted by a customer or a noncustomer is directly credited to the account of the beneficiary with another branch.Move your
money safely and quickly using NBP Mail Transfer service. And NBP also offer the most
competitive rates in the market. They charges Rs 50/- exchange rate and RS 75/- postage
31

charges on issuing mail transfer.When the money is not required immediately, the remittances
can also be made by mail transfer (MT). Here the selling office of the bank sends instructions
in writing by mail to the paying bank for the payment of a specified amount of money.
Debiting to the buyers account at the selling office and crediting to the recipients account at
the paying bank make the payment under this transfer. NBP taxes mail charges from the
applicant where no excise duty is charged. Postage charges on mail transfer are actual
minimum Rs. 40/- if sent by registered post locally Rs.40/- if sent by registered post inland on
partys request.
3.4.5

Telegraphic Transfer

Telegraphic Transfer is a form of remittance, which is advised by telegram, telex or fax

machines. The fundamental principles of such transfer are otherwise identical with the Mail
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. Payment to the beneficiary is affected directly by the drawee
office upon identification or through credit into beneficiarys bank account.

As such

remitting office is not required to issue any instrument payment to the remitter for delivery to
the beneficiary.
3.4.6

Pay Order

NBP provides another reason to transfer your money using our facilities. NBP pay orders are
a secure and easy way to move your money from one place to another. And, as usual, NBP
charges for this service are extremely competitive. The charges of NBP are very low all over
the Pakistan. It charges Rs 50/- for NBP account holders on issuing one payment order, and
charges Rs 100/- for NBP non-account holders on issuing one payment order. It charges Rs
25/- for students on payment of fees of educational institutions. If some one want a duplicate
of payment order they charges Rs 100/- for NBP account holders and Rs 150/- for non
account holders.

3.5 Miscellaneous
3.5.1

Lockers

National of Pakistan also provides lockers facility in the country. The lockers issued only to
the depositors. No lockers are issued to any unknown person. The dual control system is used
for lockers. The officer has master key to apply on the locker but he cannot open the locker of
32

any person. The locker holder provides the bank has specimen signature. Whenever the
locker holders come to open the locker, his signatures are verified by the officer and then will
be able to open his locker. If the key of the locker is lost company providing these lockers
breaks the locker and new lock is fitted in its locker and lock is destroyed in the presence of
the locker holder and bank charges RS 1200 for that. In case the locker holder dies, the court
opens his locker in the presence of his heir as mentioned in his will or and his belongings are
given to them and the locker is closed.
3.5.2

NBP Cash Card

NBP Cash Card is a 24-hour direct access ATM/Debit card to your bank account, which lets
you pay directly from your account as an alternative payment method to cash. The transaction
is authorized and processed by entering PIN. The NBP Cash Card holders are able to transact
at any of the 4000 + Merchants where Orix logo is displayed and can withdraw cash from
NBP, 1-Link & M-NET ATMs across the country. The followings are the main features of
this product:

You won't need to carry a lot of cash with you every time you go out.
Secure and Safe transaction.
Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill

Payment etc.)
Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs.
Enable to Make Purchases from Around 4000 POS (Merchants) Countrywide

including 2500+ POS in Karachi.

No Card Issuance Fee for first 12 Months

CHAPTER NO.4
4

WORK I DONE

4.1 i perform two task in two different department in NBP:

E-remittances/foreign remitances department

Govt receipts and payment department

33

4.1.1

E-remittances/foreign remittances

A remittance is a transfer of money by a foreign worker to an individual in his or her home

country.he Remittance department deals with the transfer of money from one place to
another. Funds transfer facility or remittance of funds is on of the key functions of the banks
all over the world. Remittances through banking channels save time, costs less and eliminate
the risks involved in physical transportation of money from one place to another.
I lean how to make payment to remittee.A specific software that is used to make payment to
remittee.
Documents Required for make payments
When a person come to bank to receive his money ,bank requires fellowing documents .

Unique reference number (Global ID)

Expected amount of payment

Correct Sender & Receiver Name

Valid photo ID (CNIC / Passport / Driving License)

Name of the remitting Country

Telephone/Cell Number

Parties involve in remittance

Remitter

The person who request for remittance or a person who send the money

Remittee

A Remittee is also called the beneficiary, or the payee. The person in whose name the
remittance is made. A Remittee is also the one who receive the payment.

34

4.1.2

Govt receipts recording and depositing in Govt a/c

Government revenue is money received by agovernment. It is an important tool of the fiscal

policy of the government and is the opposite factor of government spending.
I learn how bank record this revenue in his system and how to deposit the Govt revenue into
Govt account.
In the bank this process is called punching.A specific software that is used for punching.
These are the types of GOVT revenue and also thier head of account number for
deposting.
Provincial/Punjab

Govt revenue

Head of Account

Provincial:Punjab

Sale of stump

B02701

Provincial:Punjab

Court fee realized in stump

B02734

Provincial:Punjab

Fee for registration

B02801

Provincial:Punjab

Traffic fines

B02638

Provincial:Punjab

Tolls on road and bridge

B02712

Provincial:Punjab

Agricultureal

C03136

Provincial:Punjab

Fee for registraing documents

B01311

Federal

Income tax

B01131

Federal

Citicenship passport

C03806

Required informtion for punching.

35

Provincial/Punjab
Head of account
Amount

These are some importent information whish is required for punching.

CHAPTER NO.6

36

5
5.1

FINANCIAL STATEMENT ANALYSIS

Balance sheet

ASSETS
Cash and balances with treasury banks
Balances with other banks
Lendings to financial institutions
Investments
Advances
Oper: fixed assets
Deferred tax assets
Other assets

Rupees in Millions
2011

43,973,531
319,353,392
528,121,596
29,064,564
7,972,636
66,567,009

NET ASSETS
REP: BY
Share capital
Reserves
UnappropriatProfit
Noncontroling int:
Surplus

2013

2014

98,246,783
12,543,964
1
11,794,127
8,280,997
51,941,866
5
61,767,518
342,964,635
396,411,825
6
30,229,649
661,344,807
620,216,609
33,353,526
29,714,221
34,568,864
9 ,884,256
3,466,503
10,968,824
91,839,258
80,737,483
80,991,187
1,
549,659,08
1,316,160,457 1,371,717,946 1

131,843,344 158,756,638
28,070,350 30,895,173

1,154,966,422
LIABILITIES
Bills payable
Borrowings from financial institutions
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to
finance lease
Deferred tax liabilities net
Other liabilities

2012

158,230,033
18,388,738

9,104,710
14,367,639 13,894,667
11,011,827
27,671,746
51,112,248 23,014,353
38,208,413
927,410,553 1,038,094,985 1,101,845,283 1 ,234,405,050
_
_
_
_
92,739
_
54,732,458

38,353

57,215

56,369,170

72,242,898

1,691

83,439,108
1,367,066,
1,019,012,206 1,159,982,395 1,211,054,416
089
182,592,99
135,954,216
156,178,062
160,663,530
2
16,818,285
18,500,114
21,275,131
26,212,505
30,305,210 33,536,713
69,640,893
70,629,475
49,734,161
112,671,683
119,434,799 104,546,005
720,518
790,878
820,663

21,275,131
32,996,496
59,751,578
114,023,205
717,017

113,392,201

120,225,677

105,366,668

114,740,222

22,562,015

35,952,385

55,296,862

67,852,770

135,954,216

156,178,062

160,663,530

182,592,99
2

37

5.2

Income statement

Rs. In Millions
2011

2012

2013

2014

Markup/return/interest earned
Markup/return/interest expensed

95,956,361

101,125,889

100,192,320

115,251,748

48,566,973

56,552,485

60,894,358

Net markup/interest income

Provisions against non-performing advances
provision for/(reversal of) diminution in the value
of investments
provision against off balance sheet obligations
bad debts written off directly

47,389,388

44,573,404

39,297,962

70,099,505
45,152,2
43

6,219,671

7,154,800

1 7,459,330

1 1,083,973

3,138,494

864,296

1 ,397,122

( 1,441,758)

_
9,358,165

Net markup/interest income after provisions

NON MARKUP/ INTEREST
INCOME
Fee, Commission & brokerage income

708,230
3,020

8,019,096

1 9,567,702

38,031,223

36,554,308

19,730,260

9,948,547

11,145,569

12,346,947

Dividend income

1,587,692

2,079,795

2 ,661,077

Income form dealing in foreign currencies

3,196,630

3,795,448

3 ,926,204

Gain on sale & redemption of securities-net

Investments classified as held for trading

2,390,211
(35,039)

3,220,442
976

3 ,887,164
(1 39)

Other income

2,650,284

2,562,331

Total non-markup/ Interest income

19,738,325

24,804,561

Total income ( Interest + non-Interest)

NON MARKUP/ INTERSET
EXPENSES

57,769,548

61,358,869

Administration expenses

Total non markup/ Interest expenses

PROFIT BEFORE
TAXATION
Taxation

Current
Prior years
Deferred
38

45,681,938

9,
303,015
35,849,2
28

12,931,130
2,
076,669
4,
735,988
8,
660,224
1 45,454
3,910,52
9
31,399,7
07
67,248,9
35

137,852

160,324

31,637,865

37,295,445

38,653,395

26,131,683

24,063,424

9,229,434

7,556,102

7,028,543
6,230,22
2

260,000
(1,082,597)

_
(379,735)

130,079
(4,638,541)

(4,204)
(2,501,05

554,810

Other charges

25,951,678

4
0,975,97
7
1,
400,434
1,
736,674
44,113,0
85
23,135,8
50
9,569,92
8

30,945,203

Other provisions written off

3,722747

(3 39,200)

36,733,708

3 7,677,868

401,413

9 52,132
2 3,395

PROFIT AFTER
TAXATION

8,406,837

7,176,367

1,721,760

17,724,846

16,887,057

5 ,306,783

8)
7,064,66
6
1
6,071,18
4

5.3 Horizontal analysis

This technique is also known as comparative analysis.It is conducted by setting consecutive
balance sheet, income statement or statement of cash flow side-by-side and reviewing
changes in individual categories on a year-to-year or multiyear basis. The most important
item revealed by comparative financial statement analysis is trend. A comparison of
statements over several years reveals direction, speed and extent of a trend(s). The horizontal
financial statements analysis is done by restating amount of each item or group of items as a
percentage.Such percentages are calculated by selecting a base year and assign a weight of
100 to the amount of each item in the base year statement. Thereafter, the amounts of similar
items or groups of items in prior or subsequent financial statements are expressed as a
percentage of the base year amount. The resulting figures are called index numbers or trend
ratios.
Formula = Current Year amount / Base Year amount * 100
Horizontal analysis, whilst simple to execute and useful to a certain extent, has its limitations.
These limitations include:

Being highly dependent on the selection of base year and the period under

examination in the financial model.

Horizontal analysis provides little insight into why the trend occurred in a financial

model.
Horizontal analysis does not provide insight into whether the trend in the financial
model results was superior/inferior to some benchmark.

Horizontal analysis does not address the challenge of negative numbers.

39

5.3.1

Horizontal analysis of balance sheet

Horizontal Analysis
(%)
2010

2011

2012

2013

2014

100

113

137

136

Balances with other banks

84
4

100

91

100

59

Lendings to fin. institutions

Investments
Advances
Operating fixed assets
Deffered tex assets
Other assets
Total
Assets
LIABILITIES
Share Capital
Reserves
Unappropriated profit
Surplus On Reval. of assets

100
100
100
100
100
100

190
106
110
105
114
123

35
113
138
107
49
149

225 484
131
129
125
157
149

186
131
120
142
169

100

111

126

132

149

2010

2011

2012

2013

2014

100
100
100
100

124
104
103
87

137
120
105
143

158
131
89
270

Bills payable

158
133
74
220
1

100

113

179

Borrowings
Deposits and other accounts
Liabilities against assets
subject to finance lease
Deferred tax liabilities net

100
100
100

140
111
75

260 117
124
81

132
46

194
148
1

Other liabilities
Total Liabilities

100
100

116
111

120
125

154
132

178
149

ASSETS
Cash

73

137

100

40

5.3.2

Horizontal Analysis of Income Statement

Rupees in Millions
Markup/return/interest earned
Markup/return/interest expensed
Net markup/interest
income
Provisions against non-performing
advances
provision for/(reversal of) diminution in
the value
of investments
provision against of balance sheet
obligations
bad debts written of
directly
Net markup/interest income after
provisions
NON MARKUP/ INTEREST
INCOME
Fee, Commission & brokerage
income
Dividend
income
Income form dealing in foreign currencies
Gain on sale & redemption of securitiesnet
Investments classified as held for trading
Other income
Total non-markup/ Interest
41

2011
100
100

2012
105
116

2013
104
125

2014
120
144

100

94

82

95

100

115

280

170

100

275

445

Nil

100

nil

Nil

100 nil
100
85

Nil
Nil Nil
209
99

100

96

51

94

100

112

124

129

100

130

167

100

118

122

130
1
48

100

134

162

302

100
nil
100
96
100
125

Nil Nil
140
147
131
159

income
Total income ( Interest + nonInterest)
NON MARKUP/ INTERSET
EXPENSES
Administration expenses
Other provisions written
of
Other charges
Total non markup/ Interest
expenses
PROFIT BEFORE
TAXATION
Taxati
Curren
on
t

100

106

79

116

100

40

41

132

100

72

171

252

116

169

125

100

117

122

139

100

92

26

88

100

81

67

103

100

Nil

50 Nil

100
100

Nli
84

Nil
20

Nil
84

100

95

29

90

100

Prior years
Deferr
ed
PROFIT AFTER
TAXATION

5.4 Vertical analysis

When using vertical analysis, the analyst calculates each item on a single financial statement
as a percentage of a total. The term vertical analysis applies because each year's figures are
listed vertically on a financial statement. The total used by the analyst on the income
statement is net sales revenue, while on the balance sheet it is total assets. This approach to
financial statement analysis, also known as component percentages, produces common-size
financial statements. Common-size balance sheets and income statements can be more easily
compared, whether across the years for a single company or across different companies.
Vertical analysis is a technique for identifying relationship between items in the same
financial statement by expressing all amounts as the percentage of the total amount taken as
42

100. In a balance sheet, for example, cash and other assets are shown as a percentage of the
total assets and, in an income statement, each expense is shown as a percentage of the sales
revenue.
In Vertical analysis, various components of the financial statements are standardized by
expressing them as a percentage of some bases.
Examples of common-sized statements include:

Components of the balance sheet expressed as a percentage of total assets

Components of the income statement expressed as a percentage of sales or revenue

43

5.4.1 Vertical analysis of balance sheet

Vertical Analysis (%)
ASSET
S
Cash
Balances with other banks
Lendings to fin. institutions
Investments
Advances
Opr:fixed assets
Defferd tax assets
Other assets
Total
LIABILITIES
Share Capital
Reserves
Unappropriated profit

2011

2012

2013

2014

11
2
4
28
46
2
1
6
100

10
2
3
24
40
2
1
5
100

12
1
4
29
45
2
1
6
100

6
1
7
36
41
2
1
6
100

2011

2012

2013

2014

1
2
6

1
2
5

2
2
4

1
2
4

Surplus On Reval.of assets

Bills payable
Borrowings
Deposits and other accounts
Liabilities against assets
subject to finance lease
Deferred tax liabilities net
Other liabilities
Total

2
1
2

1
2

1
2

71
0

81
0

0
5
100

0
4
100

0
5
100

81

5.4.2 Vertical analysis of income statement

Markup/return/interest earned

2011 %
100

44

2012%
100

1
2
80
0

0
5
100

2013%

2014%

100

100

Markup/return/interest expensed
Net markup/interest
income
Provisions against non-performing
advances
provision for/(reversal of) diminution in
the value
of investments
provision against of balance sheet
obligations
bad debts written of
directly
Net markup/interest income after
provisions
NON MARKUP/ INTEREST
INCOME
Fee, Commission & brokerage
income
Dividend
income
Income form dealing in foreign currencies
Gain on sale & redemption of securitiesnet
Investments classified as held for trading
Other income
Total non-markup/ Interest
income
Total income ( Interest + nonInterest)
NON MARKUP/ INTERSET
EXPENSES
Administration expenses
Other provisions written
of
Other charges
Total non markup/ Interest
expenses
PROFIT BEFORE
TAXATION
Taxati
Curren
on
t
Prior years
Deferr
ed

50

55

60

60

49

44

39

39

17

0.8

Nil

Nil

Nil

Nil
7

Nil Nil
19

39

36

19

31

10

11

12

11

1
3

2
3

2
3

1
4

2
Nil
2

3
3
2

3
Nil
3

7
0.1
3

20

24

25

27

60

60

45

58

32

36

37

35

0.5
0.1

0.3
0.1

0.9
Nil

1
1

32

38

38

38

27

20

9
0

0.1

Nil

45

0.7

Nil
9

.2

PROFIT AFTER
TAXATION

Nil

Nil

0.1 Nil

Nil
1

18

Nil
6
13

5.5 Ratio analysis

Ratio analysis enables the analyst to compare items on a single financial statement or to
examine the relationships between items on two financial statements. After calculating ratios
for each year's financial data, the analyst can then examine trends for the company across
years.

5.5.1 Profitability Ratios

These ratios indicate the firms overall effectiveness of operations and give us idea how well
firm utilized its resources in generating profit and shareholder value.

5.5.1.1

Gross Profit Margin Ratio

Gross profit margin indicates the relationship between gross profit and interest earned. A high
gross profit margin indicates that a Bank can make a reasonable profit
Formula = Gross Profit / Interest earned (Revenue)
2011
27.23

Year
Ratio %

2012
23.79

Gross Profit Margin

30
25
20
15
10
5
0
2011

2012

2013

2014

46

2013
23.34

2014
20.07

Analysis

The Year 2011 has been an outstanding year with the bank recording the highest profit in its
history i.e.., 27.23%.The National Bank of Pakistans wide range of product offering, large
branch network and committed workforce are some of fundamental strengths that enabled
NBP to achieve exceptional in a very competitive market. The gross profit is 20.07% in 2014.
The lowest percentage among all years.
5.5.1.2 Net Profit Margin Ratio
Net profit margin measures the percentage of revenue remaining after all cost and expenses,
including interest and taxes have been deducted.
Formula = Net Profit after Taxes / Interest earned
2011
18.47

Year
Ratio %

2012
16.69

2013
17.29

2014
13.94

Net Profit Margin

20
15
10
5
0
2011

2012

2013

2014

Analysis

Net profit margin shows positive trend till 2011 and was the highest in the same year as it
was 18.47%, the percentage is decreased in 2012 as it was 16.69 %. The net profit margin is
on its lowest level at the end of 2014 as it indicates a percentage of 13.94%. The primary
reason of this decline is current global economic conditions and current political crisis in
Pakistan.

47

5.5.2

Assets Turnover

This ratio is useful to determine the amount of revenue that is generated from each Rupee of
assets. TheBanks with low profit margins tend to have high asset turnover, those with high
profit margins have low asset turnover.
Formula = Revenue/ Total Assets
2011
0.08

Year
Ratio

2012
0.07

2013
0.07

Assets Turnover
0.09
0.08
0.08
0.07
0.07
2011

2012

2013

2014

Analysis

In 2011 the assets turonver is 0.08 and from 2012 to 2014 that is 0.07 constantly.
5.5.3

Return on Investment

This ratio indicates the profit earned by the bank on the resources employed.
Formula = Net income after taxes / Total Assets
Year
Ratio

2011
0.015

2012
0.012 0.003
48

2013 2014
0.010

2014
0.07

Return on Investment
0.02
0.02
0.01
0.01
0
2011

5.5.4

2012

2013

2014

Return on Deposits

This ratio indicates to what extent deposits which represent funds mobilization on the part of
the bank contribute towards income generation.

Formula = Net income before taxes / Total Deposits

2011
0.028

Year
Ratio

2012
0.023

2013 2014
0.0063

Return on Deposits
0.03
0.02
0.01
0
2011

2012

2013

49

2014

0.018

Analysis

During all five years the return on deposits ratio of National Bank of Pakistan shows a mix
trend. The year 2011 (0.028) was the best year for bank in terms of its funds mobilization.
Although the ratio was decreasing in 2013(0.023).
5.5.5

Effective Tax Rate

This ratio is a measurement of a company's tax rate, which is calculated by comparing its
income tax expense to its pretax income. This amount will often differ from the company's
stated jurisdictional rate due to many accounting factors, including foreign exchange
provisions. This effective tax rate gives a good understanding of the tax rate the company
faces.

Formula = Income Tax expense/ Pretax Income

2011
32.1

Year
Ratio %

2012
29.8

2013
24.4

Effective Tax rate

40
30
20
10
0
2011

2012

50

2013

2014

2014
30.5

Analysis

The effective tax rate of National Bank of Pakistan was highest in the year 2011 (32.1%).
However bank is able to reduce its tax burden because the Bank is able to adopt Tax
management techniques to lessen the tax burden.A relatively stable effective tax rate
percentage, and resulting net profit margin, would seem to indicate that the Bank's
operational managers are more responsible for a company's profitability than the company's
tax accountants.

5.6 Liquidity Ratios

Theliquidity position of a bank is like a reservoir. It may be adequate, although nearly
depleted, just before the start of the rainy season. Or it may be inadequate, although three
quarters full just before the summer drought.
Liquidity can be defined as:
The banks ability not only to meet possible deposit withdrawals but also to provide for the
legitimate needs of the economy as well
5.6.1

Current ratio

Current ratio is a measure of the current adequacy of company's current assets to meet its
current obligations. It must be greater than 1. If it is less than 1, liabilities exceed current
assets. For every Rs.1 of liabilities, the company has a ratio amount of current assets
available
Formula = Current Assets / Current Liabilities
Year
Ratio

2011
1.22

2012
1.43

Current Ratio
2
1.5
1
0.5
0
2011

2012

2013

2014

51

2013 2014
1.12

1.10

Analysis

The year 2011(1.22) and 2012 (1.43) in 2013 (1.12) the management of National Bank of
Pakistan is work good for maintaein this ration. The year 2014 (1.10) is also good for bank
as per standards of this ratio.
5.6.2

Cash Ratio

This ratio shows that the cash is enough for payment of current liabilities or not.
Formula = Cash / Current Liabilities
2011
2.40

Year
Ratio

2012
2.81

2013
2.19

2014
1.17

Cash Ratio
3
2
1
0
2011

2012

2013

2014

Analysis

The cash ratio of National Bank of Pakistan shows a mixed trend during 4 years of
operations. During all years, the ratio is satisfactory as per standards of this ratio. The year
2011 (2.40), and in 2012 (2.81) that is highest & 20013(2.19), and in 2014(2.17 representing
lowest ratio in all 4 years.

52

5.6.3

Working capital

Formula=current assets-current liabilities

Liabilities
2011
11834551

Year
Ratio

2012
24368313

2013
8748289

2014
8400150

working capital
30000000
20000000
10000000
0
2011

2012

2013

2014

In 2014 the highest working capital as compared to other years that is 8400150.
5.6.4

Advances to Deposit Ratio

It demonstrate the degree to which bank has already used up its available resources to
accommodate the credit needs of its customers.
Formula = Advances / Total Deposits
2011
56.94

Year
Ratio%

2012
63.70

2013 2015
56.28
51.05

Advances to Deposits
80
60
40
20
0
2011

2012

53

2013

2014

Analysis

This ratio, a comparison of funds generation and its funds mobilization, indicates the total
loans sanctioned by the bank in relation to total amount of money deposited with the bank,
stands highest in 2012 ( 63.70%)as compared with the previous year figures. This shows that
the bank has greater potential to advance additional loans. During all other years the ratio is
quiet satisfactory representing National Bank of Pakistans credit management decisions.
5.6.5

Debt to equity

The debt-equity ratio compares a company's total liabilities to its total shareholders' equity.
This is a measurement of how much suppliers, lenders, creditors and obligors have
committed to the company versus what the shareholders have committed.
Formula = Total Liabilities/ Total Shareholders equity
2011
0.48

Year
Ratio

2012
0.46

2013
0.68

2014
0.72

Debt to Equity
0.8
0.6
0.4
0.2
0
2011

2012

2013

2014

Analysis

The debt to equity ratio of National Bank of Pakistan shows 0.48 in 2011. In 2012 this is
0.46 maintained and in 2013 this is increase to 0.68.and again in 2014 is 0.72
5.6.6

Interest Coverage Ratio

It shows whether the bank is earning enough profit before mark up charges to be paid to the
financiers and the taxation obligations due to the government in order to remain solvent.The
interest coverage ratio is used to determine how easily a company can pay interest expenses
on outstanding debt.
Formula = Earnings before interest & Taxes / Interest expense
54

2011
0.538
times

Year
Ratio

2012
0.425
times

2013 2014
0.115
0.330
times
times

Interest Coverage
0.6
0.4
0.2
0
2011

2012

2013

2014

5.7 Capital Adequacy Ratios

5.7.1

Capital Funds to Total Assets

This ratio indicates the extent of the funds employed by the bank in the total resources as
shown in the balance sheet.
Formula = Capital Funds / Total Assets
Year
Ratio%

2011
1.02

2012
1.10

2013
1.07

2014
1.09

Analysis

The National Bank of Pakistans Capital funds to Total Assets ratio is increased during all
years.The ratio is increased in 2011, 2012 and 2013 as the graph shows ratios of 1.02, 1.10 &
1.07 respectively. The ratio is keeping its trend and also increases in the year 2014as it was
1.09.

5.8 Operating Performance Ratios

Each of these ratios have differing inputs and measure different segments of a company's
overall operational performance, but the ratios do give users insight into the company's
performance and management during the period being measured.
These ratios look at how well a company turns its assets into revenue as well as how
efficiently a company converts its sales into cash.

55

5.8.1

Fixed Assets Turnover

This ratio is a rough measure of the productivity of a company's fixed assets (property, plant
and equipment etc) with respect to generating revenue.
Formula = Revenue/ Operating Fixed Assets
2011
3.30

Year
Ratio %

2012
3.40

2013
2.89 3.45

2014

Fixed Assets Turnover

3.6
3.4
3.2
3
2.8
2.6
2011

5.8.2

2012

2013

2014

Sales or Revenue Per Employee

As a gauge of personnel productivity, this indicator simply measures the amount of Rupees
sales or revenue, generated per employee. The higher the Rupee figures the better.
Formula = Revenue/ Number of Employees
Year
Ratio

2011
5669.83

2012
2013
5976.35 6028.78

56

2014
7118.69

Revenue Per Employee

8000
6000
4000
2000
0
2011

2012

2013

2014

Analysis

The ratio has been showing an increasing trend till 2014(7118.69)in 2011( 5669.83) in2012,
(5976.35 )in 2013 (6028.78) .

57

CHAPTER NO.7
6

CONCLUSION OF THE REPORT

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.

CHAPTER NO.8
SUGGESTIONS & RECOMMENDATION

The National bank of Pakistan should be fully prepared in its management of financial
crises and its business continuity planning, within the standing committee framework,
and should work with others to strengthen national crises management preparations.

References
NBP annual report 2011,12,13,14
www.nbp.com.pk

58