faheem hashmi roll no 42 bs commerce
TRANSCRIPT
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2012
Muhammad Faheem Hashm
contact (0301-7656169)
Department of Commerce
Islamia University Bahawalp
11/21/2012
NATIONAL BANK OF PAKISTAN
INTERNSHIP REPORT
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Internship Report on,
National Bank of Pakistan
Submitted to:
Mr. FarrukhNaveed
Submitted by:
Mr. Muhammad Faheem
Roll # 42
From BS (Hons) (6th
Semester)
Session 2009-2013
Submitted on: November 21st
2012
Department of Commerce
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EXECTIVE SUMMARY
I have completed my six weeks internship at National Bank of Pakistan. I tried my best
to gain something practically from this opportunity. This report starts from the
introduction ofword Banking, and then History of National Bank of Pakistan. History
of NBP shows that how it helps its Nation and Country in both war & peace.
Bank Mission statement & Vision shows its focus on overall performance of the bank and
quality of services and products.
After restructuring of the bank the objectives of the bank are changed. Now it has
objectives to overcome past mistakes, realize the real importance of customer so now it
has main objective to achieve customization.
A commercial bank has basic functions that are must be performed by them as a bank i.e.
Accept money as deposits.
Investing deposits to earn profit.
Miscellaneous functions.
Each branch of the bank is divided on the basis of these functions into different sections.
Deposit section opens different accounts of clients and maintains record of deposited
money from the customer & credited it into his account. It also maintains record of
payment to the customer when he presents cheque.
Advances section deals the customers who demand loans against required security.
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Remittance & collection section deals customers who want to transfer or collect their
money from/to other city.Foreign Exchange section deals customers who have foreign
account in the bank & deals exchange of foreign currencies.
Bank also provides facility of L.C to support export and import in the region.
SWOT analysis of National Bank of Pakistan shows that it has small number of strengths
and lot of weaknesses. The bank should give attention to this drawback. But bank has lot
of opportunities to improve its quality of services, and do efficient banking. Bank should
give proper attention to overcome its threats.
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ACKNOWLEDGEMENT
With the name of Allah who is the most beneficial & merciful. I am very thankful to
Allah for his unlimited blessings for me. I have completed this task with the help of my
Allah, my parents & my Teachers especially Mr. Farrukh Naveed (Incharge Internship).
I am very thankful to the staff members of NBP Branch for their cooperation & kindness,
especially I am thankful to Mr. Zia ulhaq (Branch Manager) MrDilshadHussainAbbasi
(Operatin Manager) MrTahir Sahib &Ghazali Sahib (Remittance&Clearience Dept)
Mian Saeed Sahib (pension Dept)) Tariq Mehmood Sahib(Credit Dept). Mr A.D Semab
Sahib (Public Relation, Maintaince)AsifZawar Sahib(Deposit Incharge) Waseem
Sahib(Cashier) Saeed Sb(Head Cashier) Akhtar Sahib(Deposit) Rizwan Sahib(Deposit) I
cannot forget their cooperation & kindness, many regards to them.
I have gain practical knowledge of Banking functions & their processes during my
internship. I have tries to get more & more information & knowledge about banking
from senior & experienced employers of NBP during my internship period.
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Who always prayed for my success and their love and
affection have always been a source of inspiration for me
Who always provide us knowledge and guidance that
become a successful way in our life.
I am very thankful to all my sweet friendswho always
help me and cooperate with me in all difficulties.
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PREFACE
Internship, a practical training, is an integral part of BS (Commerce) study.
For internship I was sent to National Bank of Pakistan Farid Gate Branch
Bahawalpur. It is a Six weeks training period in which I tried my best to get
complete knowledge and training in different sections of the branch. This
report contains the necessary information about the sections and functions of
NBP. This report is prepared in simple and understandable format so that
ordinary person can also take benefit from this report.
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TABLE OF CONTENTS
S.No INTRODUCTION Page No.1 HISTORY OF NBP 10
2 VISION 11
3 MISSION 12
4 CORE VALUES 13
5 GOAL 14
6 CORPORATE INFORMATION 15
7 OBJECTIVE OF NBP 16
8 FUNCTION OF NBP 17
9 F.GATE BRANCH STRUCTURE 18
10 DEPARTMENTS 19
11 DEPOSIT DEPARTMENT 20
12 ACCOUNT OPENING PROCEDURE 22
13 REMITTANCE DEPARTMENT 26
14 Govt.RECEIPT& PAYMENT DEPARTMENT 31
15 ESTABLISHMENT DEPARTMENT 33
16 CASH DEPARTMENT 38
17 DISPATCHES DEPARTMENT 41
18 ADVANCE DEPARTMENT 42
19 MAIN REQUIREMENTS FOR SANCTIONING LOAN 45
20 PRODUCT LINES & IMPORTANT BRANDS 47
21 ACCOUNT DEPARTMENT 52
22 FOREIGN EXCHANGE DEPARTMENT 53
23 INCOME STATEMENT 56
24 BALANCE SHEET 57
25 RATIO ANALYSIS 58
26 PROFITABILITY RATIOS 58
27 LIQUIDITY RATIOS 66
28 DEBT RATIOS 73
29 HORIZONTAL ANALYSIS OF BALANCE SHEET 77
30 HORIZONTAL ANALYSIS OF INCOME STATEMENT 88
31 VERTICAL ANALYSIS OF BALANCE SHEET 98
32 PEST ANALYSIS 108
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33 SWOT ANALYSIS 109
34 SUGGESTION & RECOMMENDATIONS 113
35 CONCLUSION 114
36 REFERENCE 115
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Department of Commerce 10
HISTORY OF NBP
National Bank of Pakistan was established as a semi-public commercial bank on
November 8, 1949 The primary objective of the bank was to purchase jute from the
growers in the East Pakistan and to perform the commercial banking functions in the
country. The bank is also authorized to act as an agent of State Bank of Pakistan and
operate treasury where State Bank does not have its own branches.The paid up capital of
National Bank is 4924.106 million rupees. This is 14 percent of the combined paid up
capital of the 18 listed commercial banks amounting to Rs.3.528 billion. Such a large
paid up capital places National Bank at the number one slot in the entire financial
sector.The bank maintained its position as the largest bank deposit holder in Pakistan.
The integration of corporate and investment banking efforts in enabling the bank to offer
wider products range besides making it a major player in debt and equity market. The
Bank has one joint venture in U.K. and one wholly owned subsidiary in Kazakhstan. The
U.K. Operations of the Bank were merged with that of United Bank Limited to form a
Joint Venture Bank namely Pakistan Investment Bank (PIB) incorporated in U.K. NBP
has 45% of share holding while the balance 55% is with UBL.Today the bank has 1428
branches and 84 regional offices in Pakistan and 24 overseas branches with 4
representative offices are working out side the country.The general superintendent and
direction of the affairs and business of the bank shall be entrusted to the Central Board
which may exercise all powers and things as may be exercised or done by the ordinance
expressly directed or required to be done by the bank in general meeting.
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Vision
To be recognized as a leader and a brand synonymous
With trust, highest standards of service quality, international
Best practices and social responsibility.
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Mission
NBP will aspire to the values that make NBP truly
the Nations Bank, by:
Institutionalizing a merit and performance culture
Creating a distinctive brand identity by providing the highest standards of services
Adopting the best international management practices
Maximizing stakeholders value
Discharging our responsibility as a good corporate citizen of Pakistan and in countries
where
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Core Values
Highest standards of Integrity
Institutionalizing team work and performance culture
Excellence in service
Advancement of skills for tomorrows challenges
Awareness of social and community responsibility
Value creation for all stakeholders
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Goal
To enhance profitability and maximization of NBP share
through increasing leverage of existing customers base
and diversified range of products
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Corporate Information
Board of Directors Audit Committee
QamarHussain President/ Chairman
Nazrat Bashir Director
Tariq Kirmani Director
HaniyaShahidNaseem Director
Tariq Kirmani Chairman
Nazrat Bashir Member
HaniyaShahidNaseem Member
Auditors Legal Advisor
AnjumAsimShahidRahmanChartered Accountants
KPMG TaseerHadi& CoChartered Accountants
Mandviwala&Zafar
Advocates & Legal Consultants
Registered & Head Office Registrar & Share Registration Office
NBP Building, I.I. Chundrigar Road,
Karachi, Pakistan
Central Depository Co. of Pakistan (CDC),
CDC House, 99-B, Block-B, S.M.C.H.S.,
Main Shara-e-Faisal, Karachi, Pakistan. 111-111-500
Website
www.nbp.com.pk
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OBJECTIVES OF NBP
The main objective of NBP
Maximize the deposits.
Give attractive return to its shareholders.
Maximize the market share.
Modernize the bank.
Export/import promotion.
Development of human resource.
Improvement in the quality of customer service.
Provide customers reliability and convenience.
The major objective of NBP is to handle the crises because when it came into being there
were jute crises in East Pakistan and it was assigned to handle those crises. At present the
main objective of NBP is to support the economy with the help of its financial policies
rather to maximize profit. It is objective of NBP to capture the deposits of the Govt. as
well as public. The National bank provides different types of loans to the industrial sector
to increase their business activity. It provides the different types of loans to assist the
formers on short-term basis.Other objectives of the bank are to promote agriculture &
business activities in the country, to dominate the financial market by excellence of
services & product, to emerge one of the top ranking bank of Pakistan, to promote trade
related activities in the global scenario, to strengthen relations with the financial market,
to position NBP as a bank of Choice in the customers mind & to get satisfaction of the
customers by meeting their expectations through market based solutions and products.
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FUNCTIONS OF NBP
The following are the services which are used by the Pakistani customers
Transfer of money
The bank accepts deposits from public and payback on demand
Issuing the letter of credit
Acquiring loans
Use it as media of exchange
ATM services in large cities
People receive pension, dividend, rent and interest through the banking services.
Buy and sell the securities through the services. The payment of insurance and
other expenses are also made through the banking system.
Bankers services can also be rendered to work as executor and trustee.
The bank is also collecting Zakat.
Dealing in foreign currency is another service that consumer are enjoying.
The security of the costly goods like Gold, other people enjoying the facility of
lockers.
Evening banking system of billing
Foreign currency account
Lockers facilities
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FARID GATE BRANCH STRUCTURE
Operation Manager
DilshadHussainAbbasi
Public Relation
A.D Semab
Remitance
GhazaliSb
Subincharge
MrRizwan
Clearing Officer
TahirMehmood
Pension
MianSaeed
Cashier
MrWaseem
Head Cashier
MrSaeed
Credit Officer
Tariq MehmoodSb
Deposit Incharge
AsifZawar
Branch Manager
Zia-ul-Rahman
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DEPARTMENTS
Deposit department
Bills and Remittance department
Govt. receipt & payment department
Establishment department
Cash department
Dispatch department
Advance department
Accounts department
Foreign exchange department
All types of cash transactions are deled under this section. Now we see the types of
accounts, which are opened in this section
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ACCOUNT OPENING PROCEDURE
The customer can open an account with the National Bank of Pakistan in the following
categories:-
Individually
Jointly
Sole proprietorship
Partnership
1.Individual AccountIn National Bank of Pakistan a person can open an account in Pakistani-rupee.
First of all they have to fill the account opening form provided by the bank. Then his
introduction is done before the branch manager. An existing account holder of the bank
or an officer of the bank who know him very well can do this introduction. A copy of his
identity card is must attached with his account opening form. If the account holder is
illiterate then he/she provides his/her three recent photographs to the branch.
2.Joint AccountIn open an account an account opening form given that branch, where he wants to
open his account. In that opening form he provides complete information about the
account holders. If any one or both of them are illiterate then they ask to provide the
photographs to the bank. Then the introduction of the person is done. A copy of their
identity card is must attached with his account opening form. He or she also states the
made of operation which is clearly written in their account opening form. In jointly mode
both the persons must sign the cheque. And for any kind of transaction they must dually
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signed the documents while the either any one of them can sign the cheque and withdraw
his money.
3.Sole ProprietorshipThe person who is the owner of a business can open an account in National Bank
of Pakistan after providing the following documents to the bank officer. Current
municipal license, commercial registration certificate and copy of identity card.
In some special cases when the officer of branch is doubtful about the authenticity
of the documents he can get additional documents for proper verification. The branch
manager studies all documents of the business. If he is satisfied then the account of the
party is opened with the bank. Normally these types of accounts maintained under
Current account system.
4.Partnership FirmsThe partnership firms can also open an account with the bank. But for this
purpose they have to provide the certain type of information to the bank. For this purpose
a form is provided to the account holder in which they provide the following information
to the concerned branch, name of the firm, name of parties, identity card of partners,
registration certificate of the firm.
Issuance of Cheque Book
National Bank of Pakistan issue cheque books. Size of cheque book is varies. It
contains 25 leaves to 100 leaves. The assistant writes the following information on the
title page of the cheque book and cheque book issuance register.
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Issuance date
Name of account holder
Account number
Type of account
After authentication by the authorized officer on the cheque book register, the cheque
book is handed over to the account holder.
Depositing of the Amount
Account holder can deposit the amount in cash or draft etc. in his account through
credit voucher. In N.B.P. two types of vouchers are used for this purpose.
Green and blue voucher which is used for Cash Receipts
Pink voucher, which is used for all Non Cash Receipts like drafts,
cheques, payment orders etc.
Encashment of Cheques
Issuance of Token:
After apparent tenure of cheque a token is issued to the account holder.
Verification of Signature
After affixing the two stamps i.e. Pay Cash and Signature Verified, a cheque is sent to the
accountant for the verification of signature from signature specimen card. After
authentication of signature and posting in his account the cheque is sent to the cash
department for the payment.
Payment of Cash
Cashier pays the amount to the token holder after getting back the token from customer.
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Deduction of Zakat
From the PLS Saving account Zakat is deducted at the rate of 2.5% annually on
the outstanding balance of account on the first day of every valuation date i.e. first day of
Ramadan. Minimum balance of the deduction of Zakat is fixed by the Central Zakat
Authority (CZA) before the valuation date.
Exemption from Zakat
The accounts of foreigners (including Muslims of other nations) and Pakistani
non-Muslims are exempted from the compulsory deduction of Zakat. The accounts of
followers of Fiqah-I-Jafria are also exempted from the deduction of Zakat after the
submission of affidavit on a legal stamp paper.
Closing of Account
There are many reasons for closing of an account. It is not a good indication for
the business of the bank. Some of the more common reasons are as follows:
Account holders own request
Death of the account holder
Closing of account due to bad conduct of account holder etc.
At the request of account holder the account is closed or as a result of improper
conduct of the accept holder or because of nil balance of the account. But bank before
closing the account first sends a letter to the account holder that his account will be
closed. So after fulfilling the legal requirements, it is marked of the accounts holders
number that the account has been closed.
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Short Credit (SC)
All the bills for remittance & collection from customer and bank outside the
city/country are recorded under this SC book. If bill is drawn on the book itself then it
passed along with covering schedule & advice directly by courier service to the
concerned branch on which is drawn for realization.
National Bank of Pakistan deals with the following type of remittances:-
Demand Draft (DD)
Mail Transfer (MT)
Telegraphic Transfer (TT)
Pay Order
Now we discuss all these in detail:-
Demand Draft (DD)
Demand draft is a written order given by the one branch of a bank on behalf of
customer to another branch of the same bank to a certain amount to the certain person.
PROCEDURE
1. A draft voucher is filled which contains the following information
Name of the parties involved
Date
Amount to be sent
Account number (if DD is crossed)
Branch name and code number
Name of the city
2. A credit voucher is filled in order to get the excise duty, exchange commission.
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3. The sender deposits the total amount of the two vouchers i.e. the debit and credit
vouchers.
4. Then the cashier sends the cash receipt voucher to the accounts department and
the account records the amount paid in his cash scroll.
5. Accountant gives the DD leaf along with the DD voucher to his assistant who
records the senders name, amount and receivers name. After writing all the
information in the DD register he gives it to the officer along with the DD for
authentication.
6. After authentication the DD is handed over to the sender and bank sends theadvice to the concerned branch. So when the party presents the DD in the
concerned branch its payment could be made.
Mail Transfer (MT)
It is the transfer of money from one branch to another branch of the same bank
through mail service. In mail transfer there is no need of advice as the amount is directly
credited to the receivers account.
PROCEDURE
1. First a voucher is filled in which the sender writes the amount to be sent, name,
account number of the receiving person with the branch name and date.
2. A credit voucher is filled in order to deduct exchange, postage charges and
withholding tax according to the amount of the mail transfer.
3. The sender deposits the total amount of the two vouchers in the cash department.
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4. The cashier gives the vouchers to the accountant after affixing received stamp and
writing the amount in red ink.
5. Then the accountant writes the amount paid in the cash scroll and gives the MT to
his assistant.
6. MT leaf is filled according to the information provided in credit voucher. He also
writes the same information in the MT register. Then he gives the MT leaf and
MT register to the officer for authentication.
7. He takes two signature of the sender on the counterfoil of the MT and counter foil
is handed over to the sender, at the end the MT along with the fan fold is sent to
the concerned branch through mail.
Telegraphic Transfer (TT)
This is the most urgent method of remitting the money from one place to another
place. This method is used when the sender desires to send urgently, in this case the
sender request the manager of the branch to issue TT.
PROCEDURE
For sending the TT the manager applies a test. In the test the manager uses a
coding technique. He writes his own code number, which is allotted, to him as the bank
branch code. After making all the conformation the concerned branch makes the payment
to the receiver. If the sender wants to convey the same message through telephone then
he has to pay the charges of telephone along with the TT charges. First the person deposit
the TT amount along with the charges through the credit voucher then his TT sent to the
relevant branch.
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Disbursement of Pension
National bank is fully authorized to disburse the pension to the Govt. and army retired
personnel.
PROCEDURE
For the distribution of pension the branch maintains the pension register. In order
to get the pension, first the pensioner submits his pension voucher with his pension book
that voucher sent to the cash department for the payment to the pensioner after posting
into his account.
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ESTABLISHMENT DEPARTMENT
In National Bank establishment department works for the maintenance of different type
of the expenses and for the provision of funds for different activities in the branch. The
manager of this department has two types of register.
1. Charges account register
2. Suspense accounts register
Charges Account Register
In the charges account register following accounts are maintained:
Basic Salary
This account deals with the salaries of the employees within that branch when
bank have to pay the salary of any employee the amount of salary is debited to the
charges account.
Allowances
Under this head different allowances are paid to employees. But these are
attached with salary and paid with the salary.
Provident Fund
It is deduction from the employees salaries, which is paid out at his retirement.
Medical Attendance
When some employee suffers from any disease the bank allocate fund for him and
this amount is debited to charges account of the patient.
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Honorarium to Staff
This is that types of funds, which are not part of salary, like bonus profit.
Staff Welfare
To improve the efficiency, the bank provides some special facilities and the fund
is provided from the welfare account. These funds are similar to honorarium fund.
Bonus
When the efficiency of employees increases and bank earn profit more then
expectation then bank gives extra bonus to the employees. The provision of bonus is done
through bonus account by debiting to the charges account.
Suspense Account Register
Some employee needs some advance amount for them. He can withdraw that
amount from suspense account, which is then adjusted, from his salary account. But the
bank provides funds in advance within some limits under this account.
Other Expenses of the Establishment Department
Traveling Expenses
In this account the transportation expenses of employees are maintain for
example, when a manager goes to attend the meeting in any other city or country his
expenses on transportation are paid from this account. Similarly when some one goes for
any official work to other branch or head office the traveling expenses are paid from this
account.
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Auditor Fee
When any team comes for the auditing of some branch then all of their expenses
are beard by active branch. Also bank paid them fix amount as fee. The funds for this
purpose provided from this account.
Rent
For paying the rent of building under the branch is running is paid from rent
account.
Residence
To pay the rent of employees residence, because they are given this facility some
rank. To allocate funds for this purpose rent account is used.
General Insurance
The property in the branch like cash, gold, prize bonds are insured the maximum
limit of insured property that is 5.00 millions. In case of any incident insurance company
will pay the damages.
Taxes
Tax on bank property like building and vehicles this account is debited.
Lighting and Power
To furnish the branch with lights and provides the branch air conditional
environment. The funds paid from this account.
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Telephone
Bank provides the facility to his officer to pay their telephone bills .
Pay of Security Guards
In national bank security are provided by some private companies. So to pay their
salaries the bank used this account. Withdebiting this account and crediting the security
companys account.
Depreciation of Bank Property
Under this account the depreciation of branch building, vehicles
and other machinery are treated. Annually 10% of any property is
considered depreciated.Repairs and Renovation Expenses
The expenses on repairing the building, furniture, power generator and
automobiles are paid from this account.
Postage, Telegrams and Stamps
The charges of dispatch section like expenses of dispatching all the mail and
expenses of telegram are paid through this account. The charges of postage and stamp
collected from customers are credited to current account and at the end of month this
amount is transferred to the postage telegram and stamp account to pay the expenses for
the next month.
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CASH DEPARTMENT
The cash department is that through which all the receipts and payments of bank are
made. Also the banks cash record remains with this department. There are two types of
books used in this department.
Cash Receipts Book
Cash Payment Book
Cash Receipt Book
In this cashier records the entry when some one comes to deposit some amount.
The clients come with pay in slips and the cashier the amount according to the pay in
slip, sort out the notes, put a signature, stamps it and record in his book. After stamping
the slip the cashier returns the pay in slip to the customer. Then customer goes to the
another bank officer, he again record this voucher into his cash scroll and returns one part
of the pay in slip to the customer and keeps the other part for the record.
Cash Payment Book
When some client comes to the branch to withdraw some amount from the
account, after getting the token from deposit section he goes to the cashier, cashier checks
his token and cheque which is referred to him from deposit section. The cashier makes to
him required payment and receives the token from the customer. After recording all the
cheques in his book he returned the cheques in to the deposit section.
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General Ledger
In this ledger the posting is done from the cashbook. With the help of this ledger
any discrepancy in balance of accounts can be easily found out.
General Ledger Abstract
It is like trial balance. In this ledger debit or credit balance of each balance of
each type of account is posted from the cash book. If total debit and credit is equal then it
means the clean cash book and general ledger is maintained correctly.
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DISPATCHES DEPARTMENT
In this department posting of every mail into the dispatches register. For this purpose
bank hire the services of different courier services to send the documents from one place
to another. Before the handing over the mail to the courier service clerk, the dispatch
section assistant notes the document in a register and issues a number, which is used to
maintain the proper records. After handing over to the courier service, now it is the
responsibility of the courier service company. In case of misplacement they have to pay
for the damages. Assistant of this department sort out the receiving mail and then sent to
the different sections.
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Department of Commerce 44
Non-Fund Base loans are those which given other than cash e.g. Guarantee, L.C,
Promissory Note etc.Banks run their business with the money of depositor, which is
repayable to them on demand. Banker is very conscious while using these funds. They
think thousands times before lending to the borrower. They must keep in mind the
following factors before advancing the loan.
1) CharacterThe first and most important factor considered in the credit analysis is character.
The credit character is base on the borrowers willingness to pay his obligation. The
willingness can be judged by the banker to see his family background, stability of
employment, personal habits, nature of business, previous record moral reputation,
importance of values to him etc.
2)CapitalThe asset of the consumer may be in form of horse motorcar, furniture etc. The
businessman may own assets in the form of new material, plant, machinery, building etc.
The bank should extend the loan in the proportion to the asset head by them. If the assets
of borrower are liquid, he may be giver large amount of credit. If assets are not liquid,
then less amount of credit may be given against the value of assets. Before landing the
loan the banker should examine the value of his business and its prospectus in future.
The banker should keep in his maid the owners participation in his business. The
banker should not provide loan more than capital.
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Department of Commerce 46
References (at least two)
Latest Financial statements.
Financing Agreement on a prescribed form.
Authority letter.
Trust Receipt.
Insurance of securities.
Securities
Before giving a loan to borrower a bank required a valuable security in three ways:
Hypothecation
Pledge
Mortgage
Hypothecation
In This type of security, immovable property is pledged by the bank & bank is required a
real value of that property for sanctioning a loan. Margin for this security is 50%. In
hypothecation bank does not interfere in the business of borrower.
Pledge
In Pledge the bank have 90% shares in business of the borrower. The bank has a
right to sold the production & interfere in business transactions. In this type of security
bank pledge the stock & raw material. The stock must be insured. Stock is controlled &
managed by the bank;borrower cannot use raw material & cannot sell its production
without the presence & permission of the agent of bank.
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Department of Commerce 48
Home Renovation *
Financing Amount Upto 15 Million
Financing Period 3 to 15 Years
Debt to Equity 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)
Re-Financing (Balance Transfer Facility (BTF)*
If you have a Home Finance Facility outstanding with another bank you can have it
transferred to NBP through a hassle-free process.
NBP Advance Salary Scheme
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 138 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
timeare attributed as the most distinguishing features of the product. The product is
offered countrywide
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Department of Commerce 49
National Bank Cash Gold Scheme
Rate of mark-up 15.50% p.a.
Facility of Rs. 20,000 against each 10 gms of net contents of gold
No maximum limits of cash
Repayment after one year
Roll over facility
Only gold ornaments acceptable
Weight and quality of gold to be determined by NBPs appointed schroffs
No penalty for early repayment.
National Bank Kisan Dost Scheme
Agriculture Farming Program
Competitive mark-up rate.
Quick & easy processing.
Provision of technical guidance to farmers at their doorstep.
Wide range offinancing schemes for farmers.
Finance facility up to Rs. 100,000/- for landless farmers on personal guarantee.
Financing available against Pass Book, Residential / Commercial property, Gold
ornaments and paper security.
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Department of Commerce 51
NBP Karobar Schemevernment provides the balance markup to NBP on
monthly basis.
NBPS loan available for: Utility Store, Mobile General Store, Transport,
PCO/Tele-centers. National Bank of Pakistan providing financing under President
Karobar Scheme. The purpose of this scheme to reduce unemployment from the
country.
Main features are as under.
Age limit is 18-45 years.
Finance limit to Rs. 200,000/-.
Tenure of this loan 1-5 years.
Markup rates are variable. i.e. KIBOR +2% per annum. The customers will
pay 6% as long as go
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Department of Commerce 52
ACCOUNT DEPARTMENT
Accounts Section
This is the last section of the branch; whole days work is officially ended in this
section. Incharge of this section send information of whole days business in branch to
Main branch Multan via computer networking.
Computer operator retained a copy of that information in floppy for branch record daily.
He also reconciled all transactions with Head Office transactions received daily.
This section maintains its record in three books that are;
1. Cash Scroll
Daily transactions of cash are recorded in cash scroll at the end of each day. Total
cash received in the date is added up in opening balance (closing balance of previous
day) then cash payments are subtracted from it. End balance is recorded in computer &
mails it directly through networking to Multan IT section of NBP.
2. Transfer Scroll
All transfers inward & outward of the branch are recorded with all details of accounts in
transfer scroll. It is also mailed to Multan (IT) section of NBP daily at the end of day .
3.NBP General Account
General account is an account of each branch of the bank in its Head Office for
transactions among branches. All transactions among branches are through Head Office
by sending F-16 Frankfort that is reconciled at Head Office.
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Department of Commerce 55
Foreign Mail Transfer
The debtor can make the payment to the creditor in foreign currency by Foreign
Mail Transfer. The branches of NBP issue the order for the payment to the responding
branch by mail. After receiving the letter responding branch will make the payment to the
creditor.
Foreign Telegraphic Transfer
The debtor make the payment in his branch and his branch manager sends a
telegraphic message to the responding branch to make the payment to the ultimate client.
This is the quickest method to transfer the funds from one place to another place.
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Department of Commerce 57
Balance Sheet
ASSETS 2007 2008 2009 2010 201
Cash and balances with treasury banks 94,873,249 106,778,346 116,668,514 115,657,025 131,843,29
Balances with other banks 37,472,832 39,490,729 28,786,397 30,743,368 28,069,89
Lendings to financial institutions 21,464,600 17,139,081 19,683,526 23,051,171 44,360,72
Investments 210,787,868 171,204,890 217,596,037 301,078,498 319,527,25
Advances 340,677,100 413,076,390 475,338,439 478,886,755 527,109,20
Operating fixed assets 25,922,979 24,271,964 25,200,870 27,620,697 28,126,75
Deferred tax assets 3,203,565 3,064,459 6,954,228 7,973,08
Other Assets 30,994,965 44912236 59565027 54026725 66,469,884
762,193,593 820,077,201 945,903,269 1,038,018,467 1,153,480,10
LIABILITIES
Bills payable 7,061,902 10,219,061 10,621,169 8,006,631 9,104,71
Borrowings from financial institutions 10,886,063 40,044,291 44,828,138 19,657,207 26,371,67
Deposits and other accounts 591,907,435 625,349,269 726,513,013 832,134,054 927,415,13
Sub-ordinated loans _ _ _ _ _
Liabilities against assets subject to finance
lease 33,554 25,274 42,629 123,413 92,73
Deferred tax liabilities
net 5,097,831
Other Liabilities 30,869,154 39,988,101 42,455,768 46,798,330 5470143
645,855,939 715,625,996 824,460,717 906,719,635 1,017,685,691
NET ASSETS 116,337,654 104,451,205 121,442,552 131,298,832 135,794,409
REPRESENTED BY
Share capital 8,154,319 8,969,751 10,763,702 13,454,629 16,818,28
Reserves 15,772,124 20,476,863 23,395,059 25,129,425 26,206,50
Unappropriated Profit 45,344,188 53,567,323 62,346,594 67,103,611 69,712,11
69,270,631 83,013,937 96,505,355 105,687,665 112,736,90
Non Controlling Interest_
112,699 110,930 498,076 495,48
69,270,631 83,126,636 96,616,285 106,185,741 113,232,394
Surplus 47,067,023 21,324,569 24,826,267 25,113,091 22,562,01
Contigencies And Commitments 116,337,654 104,451,205 121,442,552 131,298,832 135,794,409
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Department of Commerce 58
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. Since ratios adjust for size, using this analytical tool facilitates
intercompany as well as intercompany comparisons. Ratios are often classified using the
following terms: profitability ratios (also known as operating ratios), liquidity ratios, and
solvency ratios. Profitability ratios are gauges of the company's operating success for a
given period of time. Liquidity ratios are measures of the short-term ability of the
company to pay its debts when they come due and to meet unexpected needs for cash.
Solvency ratios indicate the ability of the company to meet its long-term obligations on a
continuing basis and thus to survive over a long period of time. Financial ratios allow for
comparison:
Between companies
Between industries
Between different time periods for one company
Between a single company and its industry average
a) Profitability Ratios
The continued viability of any bank depends on its ability to earn an appropriate return on
its assets and capital. Good earning performance enables a bank to fund its operations,
remain competitive in the market and increase or decrease in market funds. Profitability
ratios relate profit to sales and investments. These ratios indicate the firms overall
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Department of Commerce 59
Effectiveness of operations and give us idea how well firm utilized its resources in
generating profit and shareholder value.
Gross Profit Margin Ratio
Gross profit margin ratio is used to assess the profitability of a Bank's core activities.
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)
Analysis
The Year 2007 has been an outstanding year with the bank recording the highest profit in
its history i.e.(66.05%).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 (48.85%) in 2010.The lowest percentage among all years.
0
20
40
60
80
2007 2008 2009 2010 2011
Ratio %
Year 2007 2008 2009 2010 2011
Ratio % 66.5 60.95 49.5 48.85 49.29
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Department of Commerce 60
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
Year 2007 2008 2009 2010 2011
Ratio % 37.63 25.42 23.21 19.85 18.50
Analysis
Net profit margin shows Negative trend till 2007to 2011 and was the highest in the same
year as it was (37.63%), the percentage is decreased in 2008 as it was (25.42%). The net
profit margin is on its lowest level at the end of 2011 as it indicates a percentage of
(18.50%). The primary reason of this decline is current global economic conditions and
current political crisis in Pakistan.
0
5
10
15
20
25
30
35
40
2007 2008 2009 2010 2011
Ratio %
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Department of Commerce 61
Assets Turnover
This ratio is useful to determine the amount of revenue that is generated from each Rupee
of assets. The Banks with low profit margins tend to have high asset turnover, those with
high profit margins have low asset turnover.
Formula = Revenue/ Total Assets
Year 2007 2008 2009 2010 2011Ratio 0.066 0.074 0.082 0.085 0.082
Analysis
The year 2007 represents a ratio of (0.066%), lowest among all years. The years 2009,
2011 indicates almost same percentage of (0.082%) on account of banks assets turnover.
The National Bank of Pakistans assets turnover in 2010 is (0.085%), peak ratio among
all years
0
0.05
0.1
2007 2008 2009 2010 2011
Ratio
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Department of Commerce 63
Return on Investment
This ratio indicates the profit earned by the bank on the resources employed.
Formula = Net income after taxes / Total Assets
Year 2007 2008 2009 2010 2011
Ratio 0.024 0.019 0.019 0.016 0.015
Analysis
There was an increase in the utilization of the resources in 2007. The year 2008 and 2009
have Almost same percentage ie.(0.019) 2008, (0.019) (2009). The ratio was decreased to
(0.016) 2009 and (0.015) 2011.
0
0.005
0.01
0.015
0.02
0.025
2007 2008 2009 2010 2011
Series 1
Column1
Column2
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Department of Commerce 65
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
Analysis
The effective tax rate of National Bank of Pakistan was highest in the year 2007
(0.321%).
2008 tax rate has reduce to (0.032%) and from 2008 to 2011 is increasing trend in tax ie
2008 (0.032%), 2009 (0.184%), 2010 (0.280%), 2011 (0.321%).
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
2007 2008 2009 2010 2011
Ratio %
Year 2007 2008 2009 2010 2011
Ratio % 0.321 0.032 0.184 0.280 0.321
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Department of Commerce 66
b) 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
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. The concept behind this ratio is to ascertain whether a company's short-term
assets (cash, cash equivalents, marketable securities, receivables and inventory) are
readily available to pay off its short-term liabilities (notes payable, current portion of
term debt, payables, accrued expenses and taxes). In theory, the higher the current ratio,
the better.
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Department of Commerce 68
Cash Ratio
This ratio shows that the cash is enough for payment of current liabilities or not. This
ratio is obtained by dividing cash by current liabilities. For a bank this is the cash held by
the bank as a proportion of deposits in the bank.
Formula = Cash / Current Liabilities
Year 2007 2008 2009 2010 2011
Ratio 15.55 15.80 14.91 13.45 13.69
Analysis
The cash ratio of National Bank of Pakistan shows a mixed trend during five years of
operations. During all years, the ratio is satisfactory as per standards of this ratio. The
year 2008 (15.80), representing highest and 2010 (13.45) & 2011 (13.69), representing
lowest ratio in all five years.
12
12.5
13
13.5
14
14.5
15
15.5
16
2007 2008 2009 2010 2011
Ratio
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Department of Commerce 69
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
Year 2007 2008 2009 2010 2011
Ratio% 57.55 66.08 65.42 57.54 56.83
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 2008 ( 66.08%) as compared with all year. 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.
52
54
56
58
60
62
64
66
68
2007 2008 2009 2010 2011
Ratio%
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Department of Commerce 71
Due from Banks to Due to Banks
It shows the relationship between what the bank owes from other banks and what is due
to it.
Formula = Due from banks / Due to banks
Year 2007 2008 2009 2010 2011
Ratio% 197.17 42.33 43.90 117.26 168.21
Analysis
The ratio indicates decreasing trend till 2008 that is (42.33%).And increasing trend till
2011,ie 2009(43.90%), 2010 (117.26%), 2011(168.21%). The year 2008 represents the
lowest percentage of 42.33 on account of due from banks to due to banks.
0
50
100
150
200
2007 2008 2009 2010 2011
Ratio%
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Department of Commerce 73
c) Debt Ratios
These ratios give users a general idea of the company's overall debt load as well as its
mix of equity and debt. Debt ratios can be used to determine the overall level of financial
risk a company and its shareholders face. In general, the greater the amount of debt held
by a company the greater the financial risk of bankruptcy
The Debt to Equity Ratio
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.
To a large degree, the debt-equity ratio provides another vantage point on a company's
leverage position, in this case, comparing total liabilities to shareholders' equity, as
opposed to total assets in the debt ratio. Similar to the debt ratio, a lower the percentage
means that a company is using less leverage and has a stronger equity position.
Formula = Total Liabilities/ Total Shareholders equity
Year 2007 2008 2009 2010 2011
Ratio 79.20 79.78 76.59 67.39 60.51
0
10
20
30
40
50
60
70
80
2007 2008 2009 2010 2011
Ratio
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Department of Commerce 75
Formula = Earnings before interest & Taxes / Interest expense
Year 2007 2008 2009 2010 2011
Ratio 2.94 2.17 1.93 1.92 1.82
Analysis
The amount of interest a Bank pays in relation to its revenue and earnings is
tremendously important. The National Bank of Pakistans interest coverage ratio is 1.82
times in the year 2011.
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
0
0.5
1
1.5
2
2.5
3
2007 2008 2009 2010 2011
Ratio
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Department of Commerce 76
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.
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Department of Commerce 78
Analysis
The National Bank of Pakistans Cash & balance with treasury banks shows aincreasing
trend till 2009. It was decreased by 1% in 2010 and again increased 17% in 2011. There
was a marginal increase in the year 2011. In 2011 the percentage is increased by 38.9%
as compare to base year.
Analysis
The Balances of National Bank of Pakistan with other banks shows aincreasing trend in
2008 (5.3%) as compare to base year. The percentage decreased in 2009 by (-24.2%),
2010 (-18%), 2011 (-26.1%)
100112.5 122.9 121.9
138.9
0
50
100
150
2007 2008 2009 2010 2011
Cash
100 105.3
76.8 82 74.9
0
20
40
60
80
100
120
2007 Base
Year
2008 2009 2010 2011
Balances with other banks
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Department of Commerce 79
Analysis
The lendings to financial institutions by National Bank of Pakistan. The lendings
decreased(21.2 %) in 2008. The year 2011 represents highest percentage of (106%)
among all years on account of lendings to financial institutions. The year 2010 and 2011
also shows an increase of (7.3 %) and (106.6%) as compare to base year.
Analysis
The investments made by National Bank of Pakistan fluctuate during all years. There was
decreased of (19 %) in 2008. The year 2009 indicates aincrease of (3.2%) in investments.
The year 2010 represents an increase of (42.8 %). The investments are increased (51.5 %)
in 2011 as compare to base year.
100 79.8 91.7107.3
206.6
050
100
150200250
2007 Base
Year
2008 2009 2010 2011
Lending's to financial insitutions
10081.2
103.2142.8 151.5
0
50
100
150
200
2007 Base
Year
2008 2009 2010 2011
Investments
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Department of Commerce 83
Analysis
The Inappropriate profit are Earnings of National Bank of Pakistan not paid out as
dividends but instead reinvested in the core business or used to pay off debt.
Inappropriate profit is part of shareholder equity. The banks Inappropriate profit is
increasing very sharply during all years as compare to base year, indicated banks strict
dividend payout policy and concern towards reinvestment options.
100 118.1137.4 147.9 153.7
0
50
100
150
200
2007 Base
Year
2008 2009 2010 2011
Unappropriated Profit
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Department of Commerce 84
Analysis
The National Bank of Pakistans surplus on revaluation of assets fluctuates and shows a
mixed trend during all years. It was decreased 54.7% in 2008 and 47.3% in 2009. The
year 2010 has 46.7% decreased form base year. The percentage is decreased by 52.1% in
2011 as compare to base year.
Analysis
The National Bank of Pakistans bills payable is showing a mix trend during all years.
The year 2010 is best for bank in terms of reduction in bills payable. The year 2009
represents a higher percentage of banks liability as it increase 50.4% as compare to base
year. The year 2011 also shows an increase in banks bills payable as it increases to
28.9% as compare to base year.
100
45.3 52.753.3 47.9
020
40
60
80
100
120
2007 Base
Year
2008 2009 2010 2011
Surplus on revaluation of assets
100144.7 150.4
113.3 128.9
0
50
100
150
200
2007 Base
Year
2008 2009 2010 2011
Bills Payable
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Department of Commerce 87
Analysis
The National Bank of Pakistans Liabilities against assets subject to finance lease were
fluctuate during all years, with the year 2008 (24.7% decrease) and 2009 (27% increase)
and the year 2010 (267.8% increase) & 2011 (176.3 % increase) shows an increasing
trend as compare to base year.
Analysis
The other liabilities of National Bank of Pakistan are increasing during all years and
show an increasing trend. The year 2008 indicates an increase of 29.5 % and 2009
indicates an increase of 37.5%. The other liabilities in the year 2010 represent an increase
of 51.6%. There was a sharp increase in 2011 as it indicates a percentage of 77.2%,
highest among all years
100 75.3 127
367.8276.3
0100200300400
2007 Base
Year
2008 2009 2010 2011
Liabilities against assets subject to finance
lease
100129.5 137.5
151.6177.2
0
50
100
150
200
2007 Base
Year
2008 2009 2010 2011
Other Liabilities
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Department of Commerce 88
Horizontal Analysis of Income Statement
Rupees in Millions
2007 2008 2009 2010 2011
Markup/return/interest earned 100 121 154 175 189
Markup/return/interest expensed 100 141 233 267 286
Net markup/interest income 100 111 115 129 140
Provisions against non-performing advances 100 225 236 148 131
provision for/(reversal of) diminution in the value
of investments 100 -923 -1618 -7341 -7797
provision against off balance sheet obligations Nil Nil Nil Nil Nil
bad debts written off directly 100 Nil Nil Nil Nil
100 233 250 211 198
Net markup/interest income after provisions 100 91 93 115 130
NON MARKUP/ INTEREST INCOME
Fee, Commission & brokerage income 100 117 132 142 146
Dividend income 100 88 58 34 49
Income form dealing in foreign currencies 100 386 298 212 307
Gain on sale & redemption of securities-net 100 17 196 107 102
Investments classified as held for trading 100 -5.34 -7.36 -21.05 110
Other income 100 852 375 1473 1726
Total non-markup/ Interest income 100 122 141 130 145
Total income ( Interest + non-Interest) 100 101 108 120 135
NON MARKUP/ INTERSET EXPENSES
Administration expenses 100 129 161 184 217
Other provisions written off 100 447 374 88 330
Other charges 100 3403 1876 694 804
Total non markup/ Interest expenses 100 137 165 184 219
PROFIT BEFORE
TAXATION 100 823 79 87 93
Taxation Current 100 142 111 118 111
Prior years 100 -0.46 -1057 -240 66
Deferred 100 1307 -316 -631 -335
100 84 45 76 93
PROFIT AFTER TAXATION 100 82 95 92 93
Unappropriated Profit brought forward 100 144 164 189 Nil
Transfer from surplus on revaluation of fixed
assets on account of incremental depreciation 100 334 318 302 Nil
Profit available for appropriation 100 121 138 75 35
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Department of Commerce 91
Analysis
The net markup/ interest income after provisions fluctuates and shows a mixed trend
during all years. It was decreased 9% (2008), 7% (2009) and 15% increase in 2010. The
income is increased 30% as compare to base year.
100 91 93115
130
0
50
100
150
2007 Base
Year
2008 2009 2010 2011
Net merkup/ Interest income after provisions
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Department of Commerce 93
Analysis
The other income of National Bank of Pakistan fluctuates during all years as it shows a
mixed trend. It was increased 752 % in 2008 and 275% in 2009 as compare to base year.
There was a sharp increase in 2011as it was increased to 1626% as compare to base year
and 1373%,in 2010increase as compareto base year.
Analysis
The Total non- markup/ Interest income of National Bank of Pakistan shows an
increasing trend till 2009. It was increased 22% in 2008 and 41% in 2009. The income is
decreased 30 % in 2010,. There was an increase of 45% in 2011, highest among all years.
100
852
375
14731726
05001000
15002000
2007 Base
Year
2008 2009 2010 2011
Other income
100
122141 130
145
0
50
100
150
200
2007 Base
Year
2008 2009 2010 2011
Total non markup/ Interest income
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Department of Commerce 94
Analysis
The total income of National Bank of Pakistan shows an increasing trend. It was
increased 1% in 2008 and 8% in 2009. The total income is increased 20% in 2010
and also increase very marginally in 2011(35%).
Analysis
The administration expense of National Bank of Pakistan is increased 29 % in 2008 and
61 % in 2009 as compare to base year. The year 2010 represents an increase of 84%. The
percentage is increased 117 % in 2011, highest among all years.
100 101 108120
135
0
50
100
150
2007 Base
Year
2008 2009 2010 2011
Total income ( Interest + non-Interest)
100129
161184
217
0
50
100
150
200
250
2007 Base
Year
2008 2009 2010 2011
Adminstration expenses
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Department of Commerce 95
Analysis
The Total non markup/ Interest expenses of National Bank of Pakistan shows an
increasing trend as compare to base year. It was increased 27%, 65% and 84% in the
years 2008, 2009 and 2010 respectively. The year 2011 represents peak percentage of
119%.
Analysis
The profit before taxation of National Bank of Pakistan fluctuates and shows a mixed
trend during all years. It was increased 723% in 2008 and decrease 21% in 2009. The
year 2008 represents highest percentage on account of profit before taxation as it was
increased by723%. The year 2010 indicates decrease of 13% as compare with base year
but it was decreased in 2011 by 7% as compare to base year.
100
137165
184219
0
50
100
150
200
250
2007 Base
Year
2008 2009 2010 2011
Total non markup/ Interest expenses
100
823
79 87 93
0
200
400
600
800
1000
2007Base
Year
2008 2009 2010 2011
Profit before Taxation
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Department of Commerce 97
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 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
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Department of Commerce 103
Analysis
The other assets of National Bank of Pakistan fluctuate during all years. The year 2007
has a percentage of 4.07% and 5.47% (2008) and 6.29% (2009). 5.20% in (2010) 5.76%
in (2011)
Analysis
The share capital of National Bank of Pakistan shows increasing trend in all years. It was
1.06% in 2007 and shows an increasing trend of 1.09% in 2008. The percentage of share
capital is further increased in 2009 and shows 1.14%. There was aincrease in 2010
4.07
5.476.29
5.25.76
0
2
4
6
8
2007 2008 2009 2010 2011
Other Assets
1.06 1.09 1.141.3
1.46
0
0.5
1
1.5
2
2007 2008 2009 2010 2011
Share Capital
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Department of Commerce 105
Analysis
The surplus on revaluation of assets is fluctuating and shows a mix trend. It shows a
percentage of 6.18% in 2007. The year 2008 represents percentage of 2.6%, and it was
slight increase to 2.62% in 2009and in (2010) 2.41% and then decreased to 1.96% in
2011.
Analysis
The bills payable by National Bank of Pakistan indicates a percentage of 0.92% in 2007.
The percentage is increased in 2008 as it shows aincrease of 1.25%, and there is
decreasing trend in 2009, 2010 and 2011 as it shows percentage of 1.12%, 0.77%, 0.79%
respectively
6.18
2.6 2.62 2.411.96
0
2
4
6
8
2007 2008 2009 2010 2011
Surplus on revaluation of Assets
0.92
1.251.12
0.77 0.79
0
0.5
1
1.5
2007 2008 2009 2010 2011
Bills Payable
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Department of Commerce 106
Analysis
The Borrowings of National Bank of Pakistan shows a mixed trend in all years. The
percentage is 1.42% in 2007 with increase in 2008 shows a percentage of 4.88%. The
borrowings are decreased in 2009 shows a percentage of 4.74%. The year 2010
represents lowest percentage of 0.89% of banks borrowing among all years. There was
increase in banks borrowing in the year 2011 as it shows a percentage of 2.29%.
Analysis
The deposits and other accounts of National Bank of Pakistan decreased during 2008 and
2009 as (76.25%) and (76.81%) respectively. The year 2010 represents peak percentage
of 80.16%. The deposits are about (80.04%) in 2011.
1.42
4.88 4.74
0.89
2.29
0
1
2
3
4
5
6
2007 2008 2009 2010 2011
Borrowings
77.65
76.2576.81
80.16 80.4
74
76
78
80
82
2007 2008 2009 2010 2011
Deposits & other accounts
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Department of Commerce 107
Analysis
The other liabilities of National Bank of Pakistan fluctuate and show a mix trend in all
years. The percentage of other liabilities in 2007 is (4.05%). The year 2008 represents
percentage (4.88%) of banks other liabilities. The otherliabilities were increased in 2009
and 2010 shows a percentage of (4.49%) and (4.51%) respectively.
4.05
4.884.49 4.51 4.74
0
1
2
3
4
5
6
2007 2008 2009 2010 2011
Other liabilities
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Department of Commerce 109
SWOT ANALYSIS
STRENGTHS
The most important point of National bank is that it is agent of State bank of
Pakistan, where the State bank branches are not working National bank control its
function.
It is the oldest Bank established in having years of experience.
Only the NBP is authorized to advance loan against Gold. This function makes
the NBP able to earn profit on the Gold. This function becomes the major source
of income of NBP.
National bank of Pakistan is a government owned bank. This is the reason that the
Pakistani nation has complete trust over the bank that its deposits are fully
secured.
Government has providing facilities through National Bank of Pakistan to get the
knowledge of computer, for this purpose IT Centers have been set up at different
places where short courses of computer are taught.
It provides courteous services to its customers.
There are more than six million clients of National bank. Their customers are
served all over the Pakistan and abroad. Its branch network is one of the largest in
Pakistan.
National bank of Pakistan is enjoying the deposit of different government
organization like P.I.A., Pakistan Railway, WAPDA and Sui gas.
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Department of Commerce 110
When Govt. starts some scheme of loan to assist the public normally NBP is
authorized to implement it. For this it is provided with the funds from the Govt.
But the advances this loan to public he earns profit on its which increase his over
all income.
WEAKNESSES
The staff of National Bank of Pakistan is working partially on the bases manual
record system and computer record system. It should be computerized, after all
we have to adopt electronic media for IT revolution in future.
In National Bank of Pakistan the political involvement in bank affairs resulted in
lake of strategic decisions.
There are less customer oriented schemes are started by the Bank, i.e it acts like
selling oriented Bank and no promotions and incentives are offered to the general
public.
The human resource department of NBP is not performing its duties as well,
recruiting, training and development.
There are no bonuses and other cash prizes are given to employees for
motivational purposes against extra time on job.
The rate of the loans converted in to bad debts is high.
In National Bank of Pakistan, lake of adequate modern computerized techniques
that are emerging in Pakistan e.g. concept of online banking.
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Department of Commerce 113
SUGGESTIONS & RECOMMENDATIONS
More Foreign branches should be opened instead on relaying on local branches.
NBP has only four foreign branches their number should be increased
All the branches should be online so that customer can get quick services.
NBP should hire people whose education are related to banking fields instead of
hiring graduates by this standard of bank will increase.
In NBP branches work load high it should be divided equally
The equal employment opportunity especially in case of men and women
In NBP an effective recovery system should be adopted in order to low the
increasing bad debt.
NBP should increase its product line in order to compete with foreign banks.
The employees of NBP should have to change behavior so that to attract
customers.
They should be investing in car financing and other similar business.
NBP should provide ATM at extensive level.
To improve the productivity the payee of employees should be increased to
banking industry.
NBP should improve loaning and finance structure
The competent persons to enhance performance and quality of work should run all
these three segments separately.
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References
www.nbp.com
www.google.com
www.Scribd.com
http://www.nbp.com/http://www.nbp.com/http://www.google.com/http://www.google.com/http://www.scribd.com/http://www.scribd.com/http://www.google.com/http://www.nbp.com/