internship repot

NATIONAL BANK OF PAKISTAN

“INTERNSHIP REPORT ON NBP MALAKAND UNIVERSITY CAMPUS”

SUBMITTED BY:

M.BURHAN ID # 3289

MBA (FINANCE)

IQRA UNIVERSITY PESHAWAR CAMPUS 11 B, OLD JAMRUD ROAD, UNIVERSITY TOWN, PESHAWAR

SESSION: 2007 – 2009

IQRA UNIVERSITY PESHAWAR


APPROVAL SHEET

Head of Department: ______________________Mr. ABID USMANIqra University, Peshawar

Internal Supervisor: ______________________________Mr. ASIF MEHMOODIqra University, Peshawar

IQRA UNIVERSITY PESHAWAR CAMPUS 11 B, OLD JAMRUD ROAD, UNIVERSITY TOWN, PESHAWAR

SESSION: 2007 – 2009



ACKNOLEGEMENT

First of all, I am thankful to the most merciful and Almighty Allah who gives me the

strength that I fulfill my task

This report is a thorough essence of my internship which I carried out for a period of two

months in The National Bank Of Pakistan at Malakand University Campus, I exclusively

studied and observed the organizational structure, customer service and personnel

administration of the bank. The purpose of this report is to evaluate the performance of

NBP in these areas and give concrete recommendations for further improvement.

Although the bank is functioning satisfactorily, but still there are some shortcomings,

which have been pointed out along with recommendations to overcome them.

Two months period is too less to understand the operation of a bank, but still it was a

great experience for me to have a feel of the practical world and keeping in view the

limitations. I tried to make this study useful and meaningful.

I acknowledge the help of my adviser Sir.Asif Mehmood whose guidance helped me a lot

to complete my task in a way I desired.

I am thankful to the bank staff of the NBP University Branch Malakand for their valuable

guidance in preparing this report.

I am also thankful to my parents and friends for cooperation.

M.BURHAN

ID # 3289



PREFACE

Research report is an opportunity for the students to apply theoretical knowledge and to

gain practical experience about public and private organizations and their practices and

procedures.

I chose to do my internship report on NBP because of the fact that it is a part of the most

successful organizational setup in the country and have had in recent years NBP has

shown the will that it wants to stay the best bank in Pakistan with constant innovations in

its services, and by making use of the emerging technologies.

Research report is not sufficient to understand the operations of organizations. But still it

was a great experience to have a feel of the practical world and keeping in view the

limitations of the study, this seems a reasonable attempt. Working on NBP was a true

learning experience for me. I have exclusively studied and observed the organizational

structure, its departments and customer services.

M.BURHAN

ID#3289



TABLE OF CONTENTS

S. No TOPIC PAGE. #CHAPTER # 1 INTRODUCTION1.1 Introduction1.2 Purpose Of The Study1.3 Scope Of The Work1.4 Limitation Of The Study1.5 Methodology Of The StudyCHAPTER # 2 BACKGROUND 2.1 Background Of The Banks2.2 Types Of Banks2.2.1 Commercial Banks2.2.2 Saving Banks2.2.3 Trust Companies2.2.4 Credit Union2.3 International Banking Group's2.4 International BankingCHAPTER # 3 BACKGROUND OF THE ORGANIZATION 3.1 Intorduction3.1.1 Early Inception3.1.2 Modernization3.1.3 Mission Statement and Vision Of NBP3.2 Short List Of NBP Services3.2.1 Demand Draft3.2.2 Swift System3.2.3 Letters Of Credit3.2.4 Mail Transfer3.2.5 Foreign Remittance 3.2.6 Short Term Investment 3.2.7 NBP ATM Network3.2.8 Equity Investment3.2.9 Commercial Finance3.2.10 Agricultural Finance3.2.11 Agricultural Finance Services3.2.12 Agricultural Credit3.2.13 Agricultural Credit Medium Term



3.2.14 Production Loan3.2.15 Corporate Finance3.3 The Change Program CHAPTER # 4 ORGANIZATIONAL OVERVIEW 4.1 Organizational Structure 4.1.1 Head Office 4.1.2 Board Of Directors 4.1.3 Regional Headquarters 4.2 Regional Audit Office4.3 Staff Collages 4.4 Overseas Operations CHAPTER # 5 FINANCIAL ANALYSIS 5.1 Financial Analysis 5.2 Common Size and Trend Analysis CHAPTER # 6 SWOT ANALYSIS 6.1 Strengths Of NBP6.2 Weaknesses OF NBP6.3 Opportunities 6.4 Financing 6.5 Threats CHAPTER # 7 FINDINGS AND RECOMMENDATIONS 7.1 Findings and Recommendations7.2 Output Monitoring 7.3 Easy Producer Of Advancing Loans7.4 Establish a Customer Complain Centers 7.5 Effective Appraisal System Of Employees 7.6 Recruitment 7.7 Friendly Environment 7.8 Technological Advancement CHAPTER # 8 IMPLEMENTATION 8.1 Implementation / Action Plan 8.2 Business Development Plan 8.3 Market Research and Analysis Plan8.4 Plan For Monitoring and Evaluation Systems 8.5 Performance Evaluation Plan8.6 Hiring Process and Job Description Plan8.7 Internship Program Plan8.8 Customer Retention PlanCHAPTER # 9 MY WEEKLY INTERNSHIP REPORT BIBLIOGRAPHY



EXECUTIVE SUMMARY

Banking industry of Pakistan is well established where growth rate is increasing

every year. Its market is also becoming very competitive. There are a number of

foreign and local banks including National Bank Of Pakistan.

NBP’s leading bank established on November 1949 ahead of schedule. Being in

the field of Banking Industry for a long time the management of the NBP has

developed a philosophy of harmony, service, and creativity and is providing

quality products to its consumers.

The purpose of this report is to study the overall activities, processes, and

performance of the Bank with special focus on organizational structure, customer

satisfaction, Advances and Foreign Exchange Department of the Bank.

The NBP was founded as a public sector entity with 25 per cent of the paid up

capital sponsored by the government of Pakistan. Both SBP and NBP performed

well because the managements of these two banks was in the hands of the young

professionals having rich experience of working in Reserve Bank of India and

The Bank of India.

Advances and Foreign Exchange Department is headed by the Advance and

Foreign Exchange Managers followed by other Officers, they have their own

duties and responsibilities. The bank has also a proper procedure for customer

complaints, customer feedback and customer satisfaction. Finance and

Accounting Department is headed by the finance executive of the bank followed

by Chief Accountant and other officers and assistants all of them have their own

duties and responsibilities. The bank maintains accounting books for initial

accounting entries. Then the initial record is stored permanently in the computers.

There is a Human Resource department, which has the responsibility to recruit



and promote the officers and manager the salaries and other remuneration to the

staff members.

Report Findings are:

Some of the major problems of NBP are:

There is no program for extensive training and development programs, and

employees are selected on previous experience and expertise

The bank is relying mostly on short-term loans and funds, which is risky, because

of not being able to provide adequate short term financing in tight money periods.

The bank is following an extremely conservative set-up both in finance and

general administration. The bank does not conduct any formal planning sessions.

Too much reliance is made on ad hoc decision making.

There is no concept of market promotional activities like advertising, although the

bank is using some sales promotion tools, but it still needs some improvement.

Report recommendations are:

The bank should provide better training facilities to the employees within the

limited resources available. The bank should provide better working environment

and incentives to its employees. The bank needs to follow Management by

Objectives (MBO) principle. NBP also needs to pay special attention to the

promotion activities with special emphasis on advertising. The bank must

improve the relations with its new and existing customers.

To protect against risk of short term financing only in tight money period, the

bank should also rely on long-term funding to cover short-term needs.

The Bank needs to follow some aggressive policies of growth in its all

departments. The Bank also needs to develop effective standards for monitoring

and evaluation.

As mentioned, the bank has no concept for promotion activities like advertising

for which an action plan is given in which the kind of advertising, the timing and

the channel for advertising is given.



After the recommendation at the end an action plan has been outlined along with

its NBP implements these Plans into its corporate and consumer banking, it can

achieve the highest levels of its targets in every division and department.

CHAPTER # 01

INTRODUCTION

1.1 INTRODUCTION

We are doing the internship in the partial fulfillment of the requirements for the degree of

the MBA-Finance in the NBP to equip ourselves with first hand knowledge about the

NBP main Branch Malakand University Campus and improve our skills. NBP is the

abbreviation of National Bank Pakistan. It was established in Nov 1949 for the purpose to

do the international trade.

1.2 PURPOSE OF THE STUDY

First purpose of the report is to observe, analyze and interpret the relevant data and 2nd is

to give insight to the readers about the organization and finally to represent the sketch of

the organization and its operations and the services etc.

1.3 SCOPE OF THE WORK

The scope of my work is based on complete observation of national bank during my

internship. I worked in following departments of the branch.

Deposit Department.

Advance Department.

Remittance Department.

Account Department.



Foreign Exchange Department

1.4 LIMITATION OF THE STUDY

The vast scope of operation of a bank is difficult to be analyzed in a limited time of two

months. The lack of information is another limitation of study.

1.5 METHODOLOGY OF THE STUDY

I used different methodologies depending upon both primary as well as secondary data.

The sources of primary data.

Interviews with bank employees.

Personal observation.

The sources of secondary data.

Annual reports.

Concerned books.

Bank’s manuals and brochures.

Internship reports on NBP available in IMS library.

Internet.



CHAPTER # 02

BACKGROUND OF THE STUDY

2.1 BACKGROUNG OF THE BANKS

In the beginning there was no exchange of goods and everybody was self sufficient, in

that he provided all the basic needs, foods, clothing and shelter, for himself and his

family through hunting and fishing. There was no need for money. Then came the barter

system, in this system there is exchange of goods for goods. But there were some

problems in the barter system due to which new system indirect exchange was

established. Gradually this turns to exchange the goods for the precious metal like gold,

silver, bronze etc… the people use the precious metal because of their intrinsic value.

About at the end of 13th century these precious metals were used and the first gold pound

was introduced in the 14th century. But the person starts clipping and debasing the

coinage. In the eighteenth century the value of gold was fixed for next two years. At the

advent of civilization priests were the bankers and their temples were the banks. But in

the London it was the goldsmiths, who initially kept peoples’ valuables for safe custody,

then started giving loans out of these deposits and finally their “receipts” for deposits,

started changing hands like currency note. The first such receipt was perhaps the first

Bank note. Gradually some goldsmiths started concentrating on Banking instead of their

own businesses. Others also joined them and thus many large private banks came into

being, with them their own notes that circulates in the market. Series of legislation in the

19th century brought an end to the private note issue. Monopoly of note issue got vested

in the Central Bank with the exception of some banks in Europe, who have still limited



authority. In Banking companies ordinance 1962 section 5(b) of which say, “Banking

means the accepting the deposits for the purpose of lending or investment, repayable on

demand or otherwise, draw able by cheques.This is the little history of Banks that how

they originates from the revolution.

2.2 TYPES OF BANKS

Banks have traditionally been distinguished according to their primary functions.

Commercial banks, which include national- and state-chartered banks, trust companies,

stock savings banks, credit unions, and industrial banks.

2.2.1 COMMERCIAL BANKS

A bank that offers a broad range of deposit accounts, including checking, savings, and

time deposits, and extends loans to individuals and businesses -- in contrast to investment

banking firms such as brokerage firms, which generally are involved in arranging for the

sale of corporate or municipal securities. Specializes in helping business and making

investments. These were, until deregulation, the only banks that could make investments

in commercial real estate were not interested in small depositors until mid 1800’s. Were

the only types of banks, until deregulation that could issue checking accounts? These are

the big banks. They are for profit institutions.

2.2.2 SAVINGS BANKS

Savings banks were originally founded in order to provide a place for lower-income

workers to save their money. While of National importance, savings banks are chartered

by the respective states in which they exist, and as such are distinctly local institutions.

Unlike the National, the savings bank is not established as a money-making corporation.

Unlike the National, the savings bank is not established as a money-making corporation.

The savings bank provides a safe place for the care of such deposits, and it pays such

rates of interest on such deposits as are warranted by the earnings of its investments after

paying the expenses incident to the proper conduct of its officers.



2.2.3 TRUST COMPANIES

A trust company has been referred to as a near-bank; while technically it differs from a

bank in mandate and services offered, it also provides banking services such as chequing

accounts, savings and loans, investments and credit cards. A trust company may be

owned by or be part of a chartered bank or building society. The "trust" name refers to

the ability of the institution's trust department to act as a trustee - someone who

administers financial assets on behalf of another. Trustee will manage investments, keep

records, manage assets and prepare court accountings, paying bills and (depending on the

nature of the trust) medical expenses, charitable gifts, inheritances or other distributions

of income and principal.

2.2.4 CREDIT UNIONS

Credit Unions are financial cooperative organizations of individuals with a common

affiliation (such as employment, labor union membership, or place of residence). Credit

unions accept deposits of members, pay interest (dividends) on them out of earnings, and

primarily provide consumer installment credit to members. In the past costs were kept

low because they borrowed office space, managerial help, etc. from the employer or

union. This has changed as they have become more like full service banks but are not

faced with some of the regulations other banks face. This gives Credit Unions an

advantage that many other banks are fighting on the state and national level.

Financial cooperative organization of individuals who have a common bond, such as a

place of employment, residence, or membership in a labor union. Credit unions accept

deposits from members, pay interest (in the form of dividends) on the deposits out of

earnings, and use their funds mainly to provide consumer installment loans to members.

2.3 INTERNATIONAL BANKING GROUP’S (IBG)

Different forums are conducted in the field of banking but there is no specific

organization or group to act as head but in every geographical area there is banking act



according to the requirement of that place. Here is IBG, which say that International

Banking Group’s (IBG) principal line of business is trade finance. In our international

units we are also active in financing local third country trade in niche segments,

particularly by leveraging our network. IBG units have a well-established customer

franchise in the South Asian origin communities. Activity with other customer segments

has also been growing particularly in emerging markets and now forms an important part

of our business. An additional strength of IBG is that all international units are entirely

self funded through stable well diversified local customer deposits or capital which

enables us to develop local commercial and, in specific markets, consumer businesses

while minimizing the inherent cross border exposures.HBL has a sizable market share in

the region like Africa, Nigeria that has resulted from focused marketing efforts. Gulf

region generated improved earnings, due to participation in large syndications, enabling

utilization of liquidity in viable business transactions. The turnaround efforts in the past

few years have now been completed with balance sheet clean up and cost structure

rationalization. In summary, IBG will continue to grow by focusing on its core strengths

and further developing synergies with our domestic businesses and within the

international network. Identifying opportunities, while keeping a balance in

acknowledging and acceptance of diverse foreign cultures is a task that will continue to

guide and control IBG in the future.

2.4 INTERNATIONAL BANKING (NBP)

National Bank of Pakistan is at the forefront of international banking in Pakistan, which

is proven by the fact that NBP has its branches in all of the major financial capitals of the

world. Additionally, we have recently set up the Financial Institution Wing, which is

placed under the Risk Management Group. The role of the Financial Institution Wing is

To effectively manage NBP’s exposure to foreign and domestic correspondence

Manage the monetary aspect of NBP’s relationship with the correspondents to

support trade, treasury and other key business areas, thereby contributing to the bank’s

profitability



Generation of incremental trade-finance business and revenues

NBP offers

The lowest rates on exports and other international banking products

Access to different local commercial banks in international banking

CHAPTER # 03

BACKGROUND OF THE ORGANIZATION

3.1 INTRODUCTION

Before we begin with a detailed explanation of the services offered by NBP let us give a

brief introduction of the history of NBP. The organizational culture of any organization

largely depends on its history. NBP is the beaurocratic organization and the history of

NBP was very much affected by National Political changes that occurred as the

Government implemented different policies. In order to meet the challenge of financing

Pakistani exports, the government established the National Bank of Pakistan in

November 1949 ahead of schedule. Originally the NBP was to be established in 1950.

Since Dhaka was occupying an important position those days because of jute which was

on top of the exports list in the early days of Pakistan hence the first branch of NBP was

established in Dhaka, the capital of the then East Pakistan.

The NBP was founded as a public sector entity with 25 per cent of the paid up capital

sponsored by the government of Pakistan. Both SBP and NBP performed well because

the managements of these two banks was in the hands of the young professionals having

rich experience of working in Reserve Bank of India and The Bank of India.

National Bank of Pakistan maintains its position as Pakistan's premier bank determined to

set higher standards of achievements. It is the major business partner for the Government

of Pakistan with special emphasis on fostering Pakistan's economic growth through



aggressive and balanced lending policies, technologically oriented products and services

offered through its large network of branches locally, internationally and representative

offices.

3.1.1 EARLY INCEPTION

National Bank of Pakistan was established under the National Bank of Pakistan ordinance

1949 in Pakistan and Government of Pakistan having 76% share holding owns it.

According to the order of Government of Pakistan the bank started functioning on

November 20, 1949. The bank has 1183 branches in Pakistan and 16 in Overseas. In

domestic banking industry of Pakistan National Bank of Pakistan possesses a unique

position. It is also undertakes Government Treasury operations and it is the largest

contributory agent of Government and semi Government requirements. It also acts as a

trustee to the National Investment Trust, a premier financial institution charged with the

responsibility of mobilizing small saving in the country

3.1.2 MODERNIZATION

National Bank of Pakistan is the first bank, which has started a Foreign Exchange

Company in order to regularize the inflows of foreign money and control the undesirable

blackmailing of private foreign exchange companies in the country. It is the only

domestic bank of the country, which has been awarded “The Best Domestic Bank”

consecutively in 2001 and 2002.

National Bank of Pakistan (NBP) provides a wide range of services, including opening of

account and acceptance of deposits, Remittances outward/inward, acceptance/issuance of

Travelers cheques, issuance of Guarantees, collection of taxes, and deliveries of salaries.



3.1.3 MISSION STATEMENT AND VISION OF NBP

Mission Statement

To be recognized in the market place by Institutionalizing a merit & performance culture,

Creating a powerful & distinctive brand identity, Achieving top-tier financial

performance, and Adopting & living out our core values.

Vision of NBP

To be the pre-eminent financial institution in Pakistan and achieve market recognition

both in the quality and delivery of service as well as the range of product Offering

The Objectives

All the objectives of the National Bank of Pakistan were compatible to the mission

statement of the bank. As a business organization its main objective is profit

maximization. National Bank of Pakistan (NBP) tries to maximize its profits by its two

basic functions, deposits and finances. The tool used by the bank in order to increase its

deposits was to provide the best of facilities to their customers. By the increase in profits

of bank mean that bank becomes capable of lending more loans to the clients and hence

earning profit from them.

3.2 SHORT LIST OF NBP SERVICES

3.2.1 DEMAND DRAFT

If you are looking for a safe, speedy and reliable way to transfer money, you can now

purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account

holder of the bank or not, can purchase a Demand Draft from a bank branch.

3.2.2 SWIFT SYSTEM

The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)

has been introduced for speedy services in the area of home remittances. The system has

built-in features of computerized test keys, which eliminates the manual application of

tests that often cause delay in the payment of home remittances. The Swift Center is

operational at National Bank of Pakistan with a universal access numbers. All NBP

overseas branches and overseas correspondents (over 450) are drawing remittances


http://www.nbp.com.pk/About_Us/CoreValues.htm


through SWIFT. Using the NBP network of branches, you can safely and speedily

transfer money for our business and personal needs.

3.2.3 LETTERS OF CREDIT

NBP is committed to offering its business customers the widest range of options in the

area of money transfer. If you are a commercial enterprise then our Letter of Credit

service is just what you are looking for. With competitive rates, security, and ease of

transaction, NBP Letters of Credit are the best way to do your business transactions.

3.2.4 MAIL TRANSFER

Move your money safely and quickly using NBP Mail Transfer service. And we also

offer the most competitive rates in the market.

3.2.5 FOREIGN REMITTANCES

To facilitate its customers in the area of Home remittance, National Bank of Pakistan has

taken a number of measures to:

Increase home remittances through the banking system

Meet the SBP directives/instructions for timely and prompt delivery of remittances to the

beneficiaries

New Features

The existing system of home remittances has been revised/significantly improved and

well-trained field functionaries are posted to provide efficient and reliable home

remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides

Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.

Zero Tariffs: NBP is providing home remittance services without any charges.

Strict monitoring of the system is done to ensure the highest possible security.

Special courier services are hired for expeditious delivery of home remittances to

the beneficiaries.



3.2.6 SHORT TERM INVESTMENT

NBP now offers excellent rates of profit on all its short-term investment accounts.

Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are

extremely attractive, along with the security and service only NBP can provide.

3.2.7 NBP ATM Network

NBP ATM Network

Burewala

Faisalabad

Gujar Khan

Gujranwala

Gujrat

Hyderabad

Islamabad

Multan

Muzaffarabad

Peshawar

Quanta

Rawalpindi

Sheikhupura

Sialkot



Karachi

Lahore

Mirpur

Taxila

Wah Cantt.

1 Link ATM Network

*The link one (1) means network in Pakistan

3.2.8 EQUITY INVESTMENT

NBP has accelerated its activities in the stock market to improve its economic base and

restore investor confidence. The bank is now regarded as the most active and dominant

player in the development of the stock market.

NBP is involved in the following

Investment into the capital market

Introduction of capital market accounts (under process)

NBP’s involvement in capital markets is expected to increase its earnings, which

would result in better returns offered to account holders.

3.2.9 COMMERCIAL FINANCE

Let us help make your dreams become a reality. Our dedicated team of professionals

truly understands the needs of professionals, agriculturists, large and small business and

other segments of the economy. They are the customer’s best resource in making NBP’s

products and services work for them.



3.2.10 AGRICULTURAL FINANCE

NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers

who produce some of the best agricultural products in the World.

3.2.11 AGRICULTURAL FINANCE SERVICES

“I Feed the World” program, a new product, is introduced by NBP with the aim to help

farmers maximize the per acre production with minimum of required input. Select farms

will be made role models for other farms and farmers to follow, thus helping farmers

across Pakistan to increase production.

3.2.12 AGRICULTURAL CREDIT

The agricultural financing strategy of NBP is aimed at three main objectives:-

Providing reliable infrastructure for agricultural customers

Help farmers utilize funds efficiently to further develop and achieve better production

Provide farmers an integrated package of credit with supplies of essential inputs,

technical knowledge, and supervision of farming.

3.2.13 AGRICULTURAL CREDIT (MEDIUM TERM)

Production and development

Watercourse improvement

Wells

Farm power

Development loans for tea plantation

Fencing

Solar energy

Equipment for sprinklers

Farm Credit

NBP also provides the following subsidized with ranges of 3 months to 1 year on a

renewal basis



Operating loans

Land improvement loans

Equipment loans for purchase of tractors, farm implements or any other

equipment

Livestock loans for the purchase, care, and feeding of livestock

3.2.14 PRODUCTION LOANS

Production loans are meant for basic inputs of the farm and are short term in

nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme If you require

any further information, please do not hesitate to e-mail us.

3.2.15 CORPORATE FINANCE

Working Capital and Short Term Loans

NBP specializes in providing Project Finance – Export Refinance to exporters – Pre-

shipment and Post-shipment financing to exporters – Running finance – Cash Finance –

Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-

shipment / Post Shipment Agricultural Production Loans

Medium term loans and Capital Expenditure Financing

NBP provides financing for its clients’ capital expenditure and other long-term

investment needs. By sharing the risk associated with such long-term investments, NBP

expedites clients’ attempt to upgrade and expand their operation thereby making possible

the fulfillment of our clients’ vision. This type of long term financing proves the bank’s

belief in its client's capabilities, and its commitment to the country.

Loan Structuring and Syndication



National Bank’s leadership in loan syndicating stems from ability to forge strong

relationships not only with borrowers but also with bank investors. Because we

understand our syndicate partners’ asset criteria, we help borrowers meet substantial

financing needs by enabling them to reach the banks most interested in lending to their

particular industry, geographic location and structure through syndicated debt offerings.

Our syndication capabilities are complemented by our own capital strength and by

industry teams, who bring specialized knowledge to the structure of a transaction.

Cash Management Services

With National Bank’s Cash Management Services (in process of being set up), the

customer’s sales collection will be channeled through vast network of NBP branched

spread across the country. This will enable the customer to manage their company’s total

financial position right from your desktop computer. They will also be able to take

advantage of our outstanding range of payment, ejection, liquidity and investment

services. In fact, with NBP, you’ll be provided everything, which takes to manage your

cash flow more accurately.

3.3 THE CHANGE PROGRAM

The Symbol of Change

The Logo of National Bank of Pakistan is “the symbol of change”. The logo represents

the tradition of intellect and security, the basis for the future of the bank. The Eagle

represents Dynamisms, symbolizing the new customer focus and the new products, new

way of working carrying the bank to be the best.

Major Improvements

In the change program the bank is giving great importance to its employees. The bank

thinks that the changing environment will bring three major improvements. First, there

will be far greater recognition of an individual’s contribution to the bank. There will be



an official reward and respect for the efforts and achievements. Second, the strengthening

of the staff means that they can directly contribute to the shape of their future at the bank.

Third, a steady improvement in working conditions both in terms of physical

surroundings and relationships with the colleagues and customers.

CHAPTER # 04

ORGANIZATIONAL OVERVIEW

4.1 ORGANIZATIONAL STRUCTURE

Organizational structure is the framework that defines the boundaries of the formal

organization and with which the organization operates. A suitable organizational

structure for the nature of the organization leads to better performance.The new

organizational structure of the bank constitutes a board of directors and an executive

committee as the governing bodies. The National Bank of Pakistan (NBP) has 1183

branches all over the country and 16 overseas branches. The head office is operationally



in charge of central affairs including the delegation of power and authority to the regional

headquarters all over the country.

4.1.1 HEAD OFFICE

The National Bank of Pakistan consists of a Head Office situated at I.I. Chundrigarh

Road Karachi. All branches and regional offices work according to the rules and

regulations issued by the Head Office from time to time. The Head Office of National

Bank of Pakistan, which is primarily responsible for making policies and execution of

policy decision include,

1. Board of Directors

2. Group or Divisional Chiefs

The Head Office operationally in charge of central affairs including the delegation of

powers and authority to the 29 Regional Headquarters all over the country.

4.1.2 BOARD OF DIRECTORS

The Board of Directors nominates the executive committee, which consists of one

President or Chairman and seven Directors and among these seven members, one

member perform functions of both member and Secretary.



4.1.3 REGIONAL HEADQUARTERS

On May 13, 2002 a circular was issued in which zones were abolished and the whole

country and Azad Kashmir was divided into 29 regions. The changeover process started

from 1st August 2002 and was completed by 31st August 2002. The new setup was made

fully functional by 15th September.

Regional Management Committee

A regional management committee controls all regions. Regional management consists of

Regional Business Chief, Regional Operations Chief, Risk management Chief,

Compliance Chief.

Provincial Level Region

Regional Headquarters No of Regions

Balochistan 2

Sindh 6

NWFP 5

Punjab 14

Azad Kashmir 2

Total 29

Name of Regions

No Region No Region

1 Karachi (South) 16 Bahawalpur

2 Karachi (West) 17 Dera Ghazi Khan

3 Hyderabad 18 Sahiwaal

4 Larkana 19 Federal Capital-Islamabad



5 Sukkhar 20 Rawalpindi

6 Quetta 21 Jehlum

7 Gawadar 22 Gujrat

8 Lahore Central 23 Gilgit

9 Lahore East 24 Peshawar

10 Gujranwala 25 Mardan

11 Sialkot 26 Dera Ismail Khan

12 Faisalabad 27 Abbotabad

13 Jhang 28 Muzaffarabad (A.K)

14 Sargodha 29 Mirpur (A.K)

15 Multan **** ****

The Regional Head Quarters consist of the following Group

1. Management Support Group

2. Marketing Development Group

3. Inspection Group

4. Credit Policy & Management Group

5. Special Assets Management Group

A Regional Chief Executive of the rank of Senior Executive, Vice President, or

Executive Vice President heads each RHQ. The General Manager heads each Division.

4.2 REGIONAL AUDIT OFFICE

To keep check on the working of the Branches, and to ensure that their day to day

operations conform to the laid down rules and procedures, there is a very effective system

of audit and inspection in NBP. This system is implemented mainly through the 29

Regional Audit Offices. These Regional Audit Offices work directly under the



Administrative Control of Head Office and are located with each RHQ. A Regional Audit

Chief heads this Regional Audit Office.

4.3 STAFF COLLEGES

As earlier stated, the NBP is maintaining four staff colleges for optimum training of its

employees. These staff colleges are located at all the provincial headquarters. The

purpose of these staff colleges is very clear. They conduct different sort of courses. These

include basic training course to newly appointed officers as well as those who have been

newly elevated to the officer level.

4.4 OVERSEAS OPERATIONS

National Bank of Pakistan has a strong international presence through 16 overseas

branches and 5 representative offices situated in USA (Chicago), Canada, China,

Azerbaijan, and Uzbekistan.

Country Number of Branches Country Number of Branches

USA 2 Bahrain 1

Germany 1 Egypt 1

France 1 Bangladesh 1

Hong Kong 2 Kyrgyzstan 1

Japan 2 Turkmenistan 1

South Korea 1 Pakistan EPZ 1

Afghanistan 1 ******** ***********



FIGURE-4.1ORGANIZATIONAL STRUCTURE OF HEAD OFFICE


BOARD OF DIRECTORS

PRESIDENT

EXECUTIVE COMMITTEE

SEVPs/CHIEF BALUCHISTAN

SEVPs/CHIEF

PUNJAB

SEVPs/CHIEF NWFP

SEVPs/CHIEF

SIND

SEVPs

WINGS


FIGURE:4.2 BOARD OF DIRECTORS


Syed Ali Raza

(President)

Dr. Waqar Masood Khan (Director)

Mohammad Arshad Chaudhry (Director)

Iftikhar Ali Malik

(Director)

Syed Shafqat Ali Shah Jamote (Director)

Sikandar Hayat Jamali

(Director)

M. Zubair Motiwala

(Director)

Muhammad Khalid Malik (Director)


CHAPTER #05

FINANCIAL ANALYSIS

5.1 FINANCIAL ANALYSIS

Financial analysis is an evaluation of a firm’s past financial performance and its

prospects for the future. It consists of applying analytical tools and other relevant data to

obtain useful information. The financial statement with the attached schedules and

Directors report on past performance and future prospects give compact information. The

interested parties need to interpret this information about performance of the company

through the use of financial tools. The main purpose of financial analysis is to give a

clear picture of the financial position by studying the relationship and comparisons

between the items in the statement. Keeping in view its importance I have addressed

financial analysis by using the Balance Sheet and Income Statement, their common,

index, trend and ratio analysisIn addition, the banking sectors indicators like Deposits and

Advances positions, the investments and Advances to Total Assets have been calculated

and analyzed.

5.2 COMMON SIZE AND TREND ANALYSIS

Common Size analysis can be extremely helpful to highlight the changes overtime in the

financial performance and financial conditions of the bank. Analyses of percentage

financial statements, where all balance sheet items are divided by total assets and on the

other hand, all income statement items are divided by net sales or revenues.An analysis of

percentage financial statements where all balance sheet or income statement figures for a

base year equal 100 % and subsequent financial statement items are expressed as

percentage of their values in their base year.

Cash & Balances with treasury banks



In 2005 its cash & balances with treasury banks are Rs.79, 155, 081 million, in 2006

amounting to Rs.55, 531, 453 million and in 2007 amounting to Rs. 59, 420, 502

million. Based upon common size analysis there has been a fall of almost 6%, 6% in the

year of 2006and 2007 respectively as compared to 2005. Based upon Change with year

2006 Cash & Balances with treasury banks are 55,531,453 and in 2007 are 59,420,502

and it is increased by 3,889,049 million. Based upon trend analysis in 2006 there is

29.8% decrease and in 2007 there is 7% increase in cash & balances.

Investments

In year 2005 it’s Total Investments are Rs.71, 759, 449 million, in 2006amounting to

Rs.143, 524, 971 million and in 2007 amounting to Rs. 166, 195, 619 million.

Based upon common size analysis there has been a rise of 17.29%, 33.16% and 35.22%

in the years of 2005, 2006 and 2007 respectively. Based upon Change with year 2006

Investments are 143,524,971 and in 2007 are 166,195,619 and it is increased by

20,442,891 million.

Based upon trend analysis in 2006 there is 100% increase and in 2007 there is 15.8%

increase in Total Investments due to efficient management.

Advances

In year 2005 it’s Total Advances are Rs.170, 319, 096 million, in 2006 amounting to

Rs.140, 547, 374 million and in 2007 amounting to Rs. 160, 990, 265 million. Based

upon common size analysis there has been a rise of 41% in 2005but in 2006 there is a fall

to 33% and again rise to 34 % in 2007.Based upon Change with year 2006 Advances are

140,547,374 and in 2007 are 160,990,265 and it is increased by 20,442,891 million.

Based upon trend analysis in 2006 there is 17.5% decrease and in 2007 there is 14.5%

increase in Advances.

Liabilities Side

Total Liabilities

In year 2005 it’s Total Liabilities are 397,578,553 million, in 2006 amounting to Rs.

408,866,590 million and in 2007 amounting to Rs. 444,276,123 million. Based upon



common size analysis Total Liabilities was the 95.8% of the Total Assets in the year

2005 and there has been a fall of 94.5% and 94.15% in the years of 2005 and 2007

respectively due to little amount of rise in Total Liabilities as compare to Total Assets.

Based upon Change with year 2006Total Liabilities are 408,866,590 and in 2007 are

444,276,123 and it is increased by 35,409,533 million.

Based upon index analysis in 2006 there is 2.8% increase and in 2007 there is 8.6%

increase in Total Liabilities.

Deposits

In year 2005 its Total deposits are Rs. 349,617,068 million, in 2006amounting to Rs.

362,865,637 million and in 2007 amounting to Rs. 395,568,490 million. Based upon

common size analysis when we see the percentage of Deposits in Total Assets there has

been a fall of 84.22%, 83.84% and 83.83% in the years of 2005, 2006 and 2007

respectively.

Based upon Change with year 2006 Total Deposits are 362,865,637 and in 2007 are

395,568,490 and it is increased by 32,702,853 million. Based upon trend analysis in

2006there is 3.8% increase and in 2007 there is 9% increase in Deposits.

Common size and Trend Analysis of Income Statement

The following table shows an Income Statement of NBP their common size and trend

analysis for the year ending December, 20062007.and 2008.

Markup/Interest Expense

In 2005 its markup/interest expense are Rs. 18,877,247 million, in 2006 amounting to Rs.

14,698,507 million and in 2007 amounting to Rs. 6,735,579 million.

Based upon common size analysis there has been a fall of 60%, 54% and 39% in the

years of 2005, 2006and 2007respectively.

Based upon trend analysis in 2006 there is 22% decrease and in 2007there is 54%

decrease in markup/interest expense.

Total Non-Markup/Interest Income



In year 2005 its Total Non markup/interest income are Rs. 4,501,568 million, in year

2006 amounting to Rs. 5,209,092 million and in year 2007 amounting to Rs. 7,248,239

million.

Based upon common size analysis there has been a rise of 14.38%, 19% and 37.26% in

the years of 2005, 2006 and 2007respectively.

Based upon trend analysis in year 2006 there is 5% increase and in 2007 there is 11.7%

increase in Non markup/interest income due to the increase of fee, commission and

brokerage income.

Profit before Tax

In year 2005 its profit before tax is Rs. 3,015,629 million, in 2006amounting to Rs.

6,044,811 million and in 2007 amounting to Rs. 9,008,708 million.Based upon common

size analysis there has been a rise of 9.6%, 22.3% and 46.3% in the years of 2005,

2006and 2007 respectively. Based upon trend analysis in 2006 there is 100% increase and

in 2007 there is 49% increase in profit before tax.

Profit after Tax

In year 2005 its profit after tax is Rs. 1,148,529 million, in 2006 amounting to Rs.

2,253,385 million and 2007 amounting to Rs. 4,198,103 million.

Based upon common size analysis there has been a rise of 3.6%, 8.3% and 21.6% in the

years of 2005, 2006 and 2007 respectively.

Based upon tend analysis in 2006there is 96% increase and in 2007 there is 86% increase

in profit after tax.

Fig 10.1.1 Assets and Liabilities Distribution in 2007



Fig 10.1.2: Income Statement Distribution 2007

Adjustment made (Long term investment and advances were removed

Current Ratio

Current Ratio = Current Assets/Current Liabilities

Current Ratio (2005)= 276,289,721/ 351,862,417 = 0.79 times

Current Ratio (2006) = 289,103,079/366,231,381 = 0.79 times

Current Ratio (2007) = 306,360,400/401,065,228 = 0.76 times

Interpretation



Current ratio of the Bank is decreased to 0.76 in 2007 as compared to 2006and

2005which are 0.79 and 0.79 respectively and indicates that the bank has not kept so

much current assets to pay current liabilities. It should be known that too much liquidity

decreases profitability. The reason is that cash on hand is the most unproductive asset and

the surplus cash should be invested in short-term ventures.

Cash Ratio

Cash Ratio = Cash/ Current Liabilities

Ratio for the year 2005 = 79,155,081/351,862,417 = 0.22 times



Interpretation

Cash Ratio has been the same for 2007and it is equal to 0.15% while it was 0.22% in

2005 because the bank has increased the lending to the people. This trend shows the

efficient utilization of cash by NBP in meeting its current obligations as they arise. The

reason is that cash on hand is most unproductive assets and too much liquidity decreases

profitability.

Advances-Deposit Ratio

Advances Deposit Ratio = Advances/ Deposits X 100

Advances Deposit Ratio (2005) = 170,319,096/349,617,068 X 100 = 48.72%

Advances Deposit Ratio (2006) =140,547,374/362,865,637 X 100 = 38.73%

Advances Deposit Ratio (2007) =160,990,265/395,568,490 X 100 = 40.70%

Interpretation

The Advances deposit ratio of the Bank has declined to 40.70% in 2007 as compared to

48.72% in the 2005 but as compared to 38.73% in 2006 there is little increase in the



advances deposit ratio. This shows that the Bank has small concentrate on providing the

loans to the customers due to lack of information about the background and assets of

customers.

Investment-Deposit Ratio

Investment Deposit Ratio = Investments/ Deposit X 100

Investment Deposit Ratio (2005) = 71,759,449/349,617,068 X 100 = 20.5%



Interpretation

The investment-deposit ratio of the Bank was 42% in 2007 and 39.55% in 2006 and

20.5% in 2005 which is increasing with the passage of time and it shows that the bank

using efficiently the deposits of the customers.

Capital to Deposit Ratio

Capital to Deposit Ratio = Capital/ Deposit X 100

Capital to Deposit Ratio (2005) = 17,510,437/349,617,068 X 100 = 5%

Capital to Deposit Ratio (2006) = 23,936,263/362,865,637 X 100 = 6.60%

Capital to Deposit Ratio (2007) = 27,584,014/395,568,490 X 100 = 6.97%

Interpretation

According to this ratio we interpret that the bank has own equity is not so much as

compared to deposit because there is large difference between capital and deposit. The

capital is increasing but with the little percentage as compared to deposit.SBP Prudential

Regulations that Capital should be 8% of Total Deposits and NBP is not fulfilling the

Prudential Regulation of SBP.

Capital to Deposit Ratio (Excluding Surplus on Revaluation of Assets)

Capital to deposit ratio = Capital/Deposit X 100

Capital to deposit ratio (2005) = 11,958,673/349,617,068 X 100 = 3.42%





Interpretation

After excluding surplus on revaluation of assets the amount of capital is very low because

the capital should be 8% of the Total Deposits by Prudential Regulation of SBP.

Capital to Advances Ratio

Capital to Advances ratio = Capital/ Advances X 100

Capital to Advances ratio (2005) = 17,510,437/170,319,096 X 100 =

10.28%


17.03%


17.13%

Interpretation

According to this ratio we analyze from the previous data that capital is not increasing

proportionately to advances. In 2005 the ratio is 10.28% which increased in 2006 to

17.03% but in 2007 the ratio is increased with very little percentage which is 17.13% and

indicates that stockholders contributing lesser amount of capital.

Advances to Total Assets Ratio

Advances to Total Assets Ratio = Advances/ Total Assets X 100

Advances to Total Assets Ratio (2005) = 170,319,096 X 100 = 41% Advances to

Total Assets Ratio (2006) = 140,547,374/432,802,853 X 100 = 33%

Advances to Total Assets Ratio (2007) = 160,990,265/471,860,137 X 100 = 34%

Interpretation



Advances was the 41% of the Total Assets in 2005 and fall to 33% in 2006 and again rise

to 34% in 2007 because of fluctuation in advances.

Deposit to Total Assets Ratio

Deposit to Total Assets Ratio: = Deposit/ Total Assets X 100

Deposit to Total Assets Ratio (2005) = 349,617,068/415, 088, 9901 X 100 =

84.22%

Deposit to Total Assets Ratio (2006) = 362,865,637/ 432,802,853 X 100 =

83.84%

Deposit to Total Assets Ratio (2007) = 395,568,490/471,860,137 X 100 =

83.83%

Interpretation

In year 2005 its total deposits are Rs.349, 617 million, in 2006amounting to Rs.362, 865

million and in 2007 amounting to Rs.395, 568 million but when we see the percentage of

deposits in Total Assets there has been a fall of 84.22%, 83.84% and 83.83% in the years

of 2005, 2006and 2007 respectively due to small increase in deposit as compare to Total

Assets.

Investment to Total Assets Ratio

Investment to Total Assets Ratio = Investment/ Total Assets X 100

Investment to Total Assets Ratio (2005) = 71,759,449/415,088,990 X 100= 17.28%

Investment to Total Assets Ratio (2006) = 143,524,971/432,802,853 X 100 =

33.16%

Investment to Total Assets Ratio (2007) = 166,195,619/471,860,137 X 100 =

35.22%

Interpretation

In year 2005 its total investments are Rs.71, 759 million, in 2006 amounting to Rs.143,

524 million and in 2007 amounting to Rs.166, 195 million.



There has been a rise of 17.29%, 33.16% and 35.22% in the years of 2005, 2006 and

2007 respectively due to the efficient management.

Debt to Equity Ratio

Debt-Equity Ratio = Total Debt/ Stock Holders’ Equity

Debt-Equity Ratio (2005) = 397,578,553/17,510,437 = 22.76



Interpretation

The debt-equity ratio has been slightly declined in 2007. In the year 2003, the decrease in

ratio was less than as compared to year 2006 because the decrease in ratio from 2005 to

2006 was greater. In the year 2007 creditors provided Rs. 16.10 rupees for Rs. 1 rupee

provided by the shareholders.

Debt to Assets Ratio

Debt to assets ratio = Total Debt/ Total Assets

Debt to Assets Ratio (2005) = 397,578,553/415,088,990 = 0.96



Interpretation

The Debt to Assets ratio in 2007 was the same as compared to 2006 but as compared to

2005 there was very small decrease in ratio. Both Debt and Assets are increasing at the

same rate.

Gross Profit Margin

Net mark up/interest income = Gross Profit/ Total Revenue X 100, Gross Profit

Margin (2005) = 16,192,730/35,069,977 X 100 = 46.17%

Gross Profit Margin (2006) = 16,224,586/30,923,09 X 100 = 52.48%



Gross Profit Margin (2007) = 16,688,327/23,423,906 X 100 = 71.24%

2007 2006 2005

Rupees in “000”

Mark-Up/Return/Interest Income 19,452,317 27,126,839 31,290,584

Fee, Commission, Brokerage

Income

3,260,863 3,137,007 2,886,762

Income from dealing in foreign

currencies

710,726 659,247 892,631

Total Revenue 23,423,906 30,923,093 35,069,977

Less markup/return/Interest

expense

6,735,579 14,698,507 18,877,247

Net Mark-Up/Interest Income

(Gross Profit)1

16,688,327 16,224,586 16,192,730

Interpretation

According to this ratio we interpret that the gross profit margin has increased in 2007 as

compared to 2006and 2005, but on the other side the total revenue from regular activities

has decreased. The Gross Profit Margin ratio increases due to decrease in Non

markup/return/interest expense. As a result the regular activities of the bank were not

good in 2007 as compared to 2006and 2005.

Net Profit Margin

Net Profit Margin = Profit after Taxation/ Total Revenue X 100

Net Profit Margin (2005) = 1,148,529/35,069,977 X 100 = 11.97%



1



Interpretation

The net profit margin of NBP has also shown as fall to 4.90 percent in 2007 as compared

to 7.29 percent in 2006 and 11.97 percent in 2001.This signal towards lower total

revenues of the Bank during 2007.

Return on Equity

Return on Equity = Profit after Taxation/ Shareholders’ Equity X

100

Return on Equity (2005) = 1,148,529/17,510,437 X 100 = 6.56%

Return on Equity (2005) = 2,253,385/23,936,263 X 100 = 9.41%

Return on Equity (2007) = 4,198,129/27,584,014 X 100 =

15.22%

Interpretation

The return on equity has increased to 15.22 percent in 2007 as compared to 6.56 percent

and 9.41 percent in 2005 and 2006 respectively. The return on equity indicates the net

profit margin trends, with the Bank registering good performance because of better

efficiency with respect to Equity.

Return On Assets

Return on Assets = Profit before Taxation/ Total Assets X 100

Return on Assets (2005) = 1,148,529/415,088,990 X 100 = 0.27%



Interpretation



The return on assets has improved to 0.89 percent in 2007as compared to 2006and 2005.

While the assets of the Bank are not using efficiently because the return is very low as

compared to Total Assets.

Assets Turnover Ratio

Assets Turnover Ratio = Total Revenue/ Total Assets

Assets Turnover Ratio (2005) = 35,069,977/415,088,990 = 0.084 times



Interpretation

The assets turnover ratio in 2007 was decreased to 0.050 times as compared to 0.071

times in 2006 and 0.050 times in 2005. It indicates that the bank is not using the assets

efficiently because total revenue of the bank is very low as compare to Total Assets.

Earning Per Share

Earning per Share = Earning after tax/ Total shares outstanding

Earning per share ratio (2005) = 1,148,529,000/373,038,350 = 3.08 rupees per share

Earning per share ratio (2006) = 2,253,385,000/373,038,350 = 6.04 rupees per share.



CHAPTER # 06

SWOT ANALYSIS

SWOT ANALYSIS BASED ON OBSERVATION

SWOT Analysis is the most important part of the report, because it depends on my

personal observation. Only a good, keen and comprehensive analysis leads to good

recommendations for the improvement of the existing conditions. Therefore in NBP I

have observed many things and I have analyzed them to the best of my efforts &

knowledge.

6.1 STRENGTHS

Following are the main Strengths of NBP:

Serving as an Agent

National Bank of Pakistan main branch Bannu serve as an agent of State Bank of

Pakistan. No other bank is allowed to do the Clearing task but NBP act on the behalf of

SBP the clearing task.

No of Branches

Another strength of NBP is that there are 1183 branches in Pakistan and 16 branches in

overseas of NBP. So NBP staff members are scattered on the land of Pakistan and World

to provide benefits and serve the people.

Experience Employees



The staff members of NBP main branch are an experience, though they are not qualified

people but yet they have enough experience to carry on the work of bank. It is said,

“Knowledge is power and experience is wisdom but experience cannot be defeated by

knowledge”.

Modernization

National Bank of Pakistan is the first bank, which has started a Foreign Exchange

Company in order to regularize the inflows of foreign money and control the undesirable

blackmailing of private foreign exchange companies in the country.

It is the only domestic bank of the country, which has been awarded “The Best Domestic

Bank” consecutively in 2005 and 2006.

6.2 Weaknesses

Following are the main weaknesses of NBP

Delegation of Authority

National Bank of Pakistan to great extent is a centralized bank. The manager of the main

branch Nowshera as very limited authority, especially in case of advances. Lack of

delegation of authority creates problems and when the manager is not present in his office

and customers have to wait for many hours. There is top to bottom flow of authority and

lower level of employees cannot participate in the decision making process. The top level

of the organization takes all the decision. This completely centralized decision-making

decreases the interest and also reduces efficiency of the bank.

Seniority Based Promotions

Promotion in NBP is purely on seniority basis rather than on performance. This really de-

motivates the employees because they know that it doesn’t matter whether they perform

well or bad.

Job Rotation

Most of the employees work in a particular department and they specialize only in one

department. In case of absence of one employee, any other employee cannot perform this



work. In this way bank not only loses the business but also results in dissatisfaction of the

customer.

Lack of Theoretical Knowledge of Employees

There is a lack of theoretical knowledge of the employees of National Bank of Pakistan

main branchNowshera..Although their work is mostly routine and practical but

sometimes low background education can disturb the routine work. They have to consult

the Regional Manager Office or General Manager Office. This factor affects their

efficiency.

Discouragement of Small Depositors

The staff members give proper attention and respect to those customers who have

deposited huge amount of money while the small depositors mostly; the salaried people

are discouraged to open an account within the branch. In this way they discourage saving

habits in the general public.

Lack of Discipline

During my training in National Bank of Pakistan, main branch Nowshera observed lack

of discipline in the way that some of the employees do not care about the office timings.

They usually come late in the morning. Similarly employees take long leaves without any

valid reasons.

Excessive Paper Work

There is excessive paper work in NBP, which takes more time and reduces the effective

banking performance

Lengthy Process of Loan

To meet the immediate requirements of the business, customers require quick financing

but due to centralization of decision-making there are unnecessary delays in sanctioning

of loans, resulting in dissatisfaction of the customers.

Inadequate Fringe Benefits

The main purpose of fringe benefits is to retain the employees in the organization on

long-term basis. It has been analyzed that the package of fringe benefits offered by NBP



is not much attractive as compared to other organizations. Recently NBP has furthermore

reduced the fringe benefits of the employees that may result in de-motivation & reduction

the performance of existing employees.

Low Rate of Return

Due to low rate of return, the depositors are drawing their money from the banks and

depositing in the saving centers, which are offering a good rate of return as compared to

the banks.

Limited Application of Electronic Media

NBP is not utilizing the electronic media for its promotional campaign. There is lack of

awareness among the customers and general public about the schemes offered by NBP.

Improper Working Conditions

Most of the branches of NBP are facing the problem of shortage of space like NBP, main

branch Nowshera. The frequent movement of the staff in the manager’s office

discourages the customers and it is also risky from security point of view. The

arrangement of foreign exchange department in main branch Nowshera is even worse.

There is lack of furniture and inappropriate arrangements of the seating for the customers.

Limited Application of Technology in Bank

NBP branches are not fully computerized, which is very important to provide the quick

and quality services.

Political Interference

Banks are not free from political influences. Due to political pressures on the

management for sanctioning the loans in favor of their political persons resulted in huge

amount of bad debts because in this way the bank is unable to recover the loan very

difficult, and these loans are not used for productive purposes.



6.3 OPPORTUNITIES

Following are the main weaknesses of NBP:

6.4 FINANCING

Now a day’s people have enough savings and they want some luxurious type’s products

such as Car, House and Business etc. So the opportunity for NBP is to start car-financing

scheme to be beneficial for the organization (Bank).

Modernization

Another opportunity for NBP is to modernize itself because all other banks have best

methodologies to compete others and market their products. As I know that NBP have

not enough modernize system to be compatible with other banks.

Strong Competition

As we know that today’s era is the era of competition. In Nowshera all the banks are

involved in struck competition so; it is an opportunity for NBP to develop a strong

marketing policies and campaign to further develop itself.

6.5 THREATS

Followings are the major threats for NBP:

Other Banks

The major threat for NBP is other banks that have started function in Nowshera such as

Bank Alfalah, MCB, UBL, ABL, Khyber Bank etc. These are the banks that NBP face

competition with them. These banks provides a vide variety of services as compared to

NBP.

Political Interference

Banks are not free from political influences. Due to political pressures on the

management for sanctioning the loans in favor of their political persons resulted in huge

amount of bad debts because in this way the bank is unable to recover the loan very

difficult, and these loans are not used for productive purposes.



CHAPTER # 07

FINDINGS AND RECOMMENDATIONS

7.1 FINDINGS AND RECOMMENDATIONS

After critical and SWOT analysis both the operations and financial data of National Bank

of Pakistan, I addressed the findings and recommendations of the report.The overall

performance of NBP in terms of profitability and growth has been rise over the past few

years. The reason is decrease in expenditure and change in the higher management of the

bank. In order to survive and grow in intense competition, the Bank should pay more and

more attention to carry out a detailed market research/analysis and prepare a new product

plan before launching any venture or expansion plan.

7.2 OUTPUT MONITORING

There are too many rules and regulations within the Organization, which adversely

affects the performance of the employees. For continuous monitoring and evaluation, the

systems and procedures must be dynamic and flexible. This is very important task as the

objective of the systems must be to facilitate the functions and achieve the desired results.

Thus, the changes must be made and improvements should be done.

7.3 EASY PROCEDURE OF ADVANCING LOANS



Most of the customers face difficulties while getting the loan. The procedure for

advancing loans should be simple and easy. In this regard the bank management can play

an important role by means of simplifying the things to the customers.

7.4 ESTABLISH A CUSTOMER COMPLAINT CENTERS

NBP is the public sector bank and due to heavy rush, customers have always complaints

against the staff of the bank. It is essential to open a customer complaint centers at branch

levels so that the management should better understand the problems of the customers

and then try to overcome these problems. This might create a good reputation of the bank

in the eyes of customers.

7.5 EFFECTIVE APPRAISAL SYSTEM OF EMPLOYEES

Performance of employees within an organization cannot be the same and it is necessary

to evaluate their performance. For this purpose proper employee appraisal system should

be establish for identifying the right persons who are eligible for promotion.

7.6 RECRUITMENT

Merit is not considering in the process of selection and recruitment of employees. The

recruitment process suffers from serious drawbacks. There is no concept of job

description. For recruiting, the hiring process and job description should be modified and

improved. One of the cost-effective methods to select competent employees is to offer

internship programmers to graduates from business and management schools.

7.7 FRIENDLY ENVIRONMENT

A friendly environment should be created and separate section should be established for

each activity because it will help to gain the interest of employees in work.

7.8 TECHNOLOGICAL ADVANCEMENT

NBP main branch Nowshera is not fully computerized which is very important to provide

the quick services. Therefore NBP main branch Nowshera should be fully computerized



to expedite the dealing process among bank and customers. It also reduces the burden of

work.

CHAPTER # 08

IMPLEMENTATION

8.1 IMPLEMENTATION / ACTION PLAN

Every organization has its own strengths, weaknesses and opportunities and threats.

Nothing is impossible in this world, as someone has rightly said, “An impossible is often

untried”. Here are the implementation/action plans for the recommendations concluded in

the previous chapter.

8.2 BUSINESS DEVELOPMENT PLAN

In order to develop the implementation procedure to reach business development

objectives, the following steps should be taken:

Campaigns to open More Accounts

In order to increase the number of accounts, there should be a clear market plan. The

staff, branch managers and executives involved in business development should prepare

lists of different groups of prospective account holders and their neighbors, friends and

influential people and make efforts to open their volume of business and deposits by



fixing monthly target. This should be done by coordination among the various branches

of the Bank.

Campaigns for Mobilization of Deposits

Deposits are the main source of commercial banks and it is very important for an

individual bank to get funds, because its basic function is to put them to work safely and

profitably. The act of attracting funds is important but there are so many other processes

of obtaining the funds, like the Bank can get funds by advertising, by direct contact or by

contacts through their officers, managers and executives. Thus, they can get the

customers and acquire them ultimately by furnishing banking services.



Campaigns to Increase Business Share

The management of the Bank should prepare a business development plan by taking into

account the overall market position of the bank in the banking industry. In light of market

share, business development targets should be fixed on an annual basis by fixing monthly

targets for imports, exports, issuance of letters of guarantee, bills etc. The achievement of

targets should be reviewed every month by the respective circles at the Head Office and

necessary instructions and guidelines be provided to the respective area control and zones

where the business performance are not according to the set targets.

Training of Personnel

We all know that the profitability, growth and survival of a bank depend upon business

development. Therefore, the Bank should take steps to impart training to the probationary

officers, senior officers, managers and executives in modern business development

techniques and public relations.

Business development training is the process of imparting knowledge creating skills and

shaping attitude, work habits, and consists of telling, showing and teaching the trainee

and then monitoring his/her results and making constructive corrections.

8.3 MARKET RESEARCH & ANALYSIS PLAN

Before launching any venture or expansion plan, a detailed market research/analysis must

be carried out using any and/or of the following methods:

The best method is collecting first hand data from the potential market through surveys.

The questionnaires must be unbiased and should not prompt desired results.

Historical data, if available could be very useful in determining the potential and trends.

In case there is lack of awareness about the service or non-existence of historical data

makes it impossible to conduct research, data of the locations, which have similar or

close characteristics, can be used.



8.4 PLAN FOR MONITORING & EVALUATION SYSTEMS

The systems and procedures of the Bank must be dynamic, flexible and subject to

continuous monitoring and evaluation. The pre-requisites of an effective monitoring and

evaluation process are as follows:

A good, open and unbiased feedback system should be established to identify the

problems and suggesting improvements.

The feedback system must include the customers and all the staff members from top to

bottom within the Bank.

The feedback system must allow both as needed and fixed interval information.

The problems and errors must be analyzed and removed. The suggestions should be

discussed at all levels and implemented if found useful.

8.5 PERFORMANCE EVALUATION PLAN

Periodic performance evaluation is very important function to be performed. The

objective of evaluation must not be limited for salary review only. It should include and

be performed in the following manner:

Objectives for each employee must be clearly defined in a measurable

quantifiable manner.

A proper system must be adopted, whereby the employees also participate in

the evaluation process.

The system must be such that where the performance against the given

objectives can be measured systematically.

The performance review must be done at short intervals. The periodical

performance reporting and meetings could be effective tools.

The performance review must be aimed at improving employees’ skills and

productivity by identifying training needs.

8.6 HIRING PROCESS & JOB DESCRIPTION PLAN



The human resource professionals believe that the failure of sub-ordinate is in fact a

failure of the manager as either he/she has not made the right selection or he/she has not

able to manage people well. The problem could be in the hiring process or an unclear job

description. To enable employees to be most productive at all levels; the Bank should

improve its hiring process and job description.

This can only be attained through the following:

Preparing qualification and experience specification in accordance with the objectives to

be achieved from the position.

Implementing standardized selection criterion.

Offering reasonable compensation package in accordance with job

requirements, experience, and qualification keeping in view the salary packages of the

existing staff at the same level.

Preparing detailed job description.

Arranging detailed orientation programmed.

Setting objectives for the period.

8.7 INTERNSHIP PROGRAM PLAN

One of the best and cost effective method to select the right people and hire graduates

from business and management schools as internees. The internship programmed should

spread over a period of at least six months. During the internship programmed, a close

watch should be kept on the internees. At the end of the internship programmed, the

performance of the internees should be evaluated and competent, diligent and energetic

internees should be hired on permanent basis.

8.8 CUSTOMER RETENTION PLAN

Retaining a customer is more difficult than acquiring a customer. Any disruption in

continuity and quality of the service may result in a quick slump in the presence of a

competitive environment.

The Bank should set up the following for customer retention:

Effective and Efficient Complaint Management System.

Customer Feedback System through independent sources.



Effective and Efficient Management Information System.

CAHPTER# 09

MY WEEKLY INTERNSHIP REPORT

During my internship at NIB in malakand university campus i worked in remittances,

advances, foreign and customer services office department, and I successfully completed

all tasks and duties that were assigned to me.

This is one of ideal branches of NIB in Malakand, working there for the customers for

almost one year, the duties which I performed and experiences that I gained during each

task of the day explained below.

Basically during the first two weeks I got used to the environments and was introduced to

the bank staff, till that point I was not assigned any task and once I got familiar then I

was given a green signal to work in different departments from week to week basis ,as

explained below in brief from week 3.

WEEK THREE

I reported to the branch manager on the daily basis’s who gave me brief introduction

about the management and the working activities of the branch, he also interviewed me

and look a test on my banking knowledge about the banking experience .

In my first week in NBP they assigned me different tasks in reception department, and

the qualified staff trained me where I gained experience about different activities which

were practiced.

WEEK FOUR

In the second week of my internship I learned that the branch was having about holders

with a few employees to deal with this hectic task of dealing with all these different

clients.

And my experience at this particular department was a very learning one, I learned how

to handle different customers, how to fill account opening forms for the new customers,

what are the requirements of opening account for them, the facilities that an account



holders enjoys and the interest rates clients are receiving. And I have also learned the

procedure of maintaining an active account holder.

WEEK FIVE

Learning in Remittance and clearing department

There was many qualified officers in this department, who assigned specific tasks of

inward clearing and outward clearing, while the issuing of pay order, demand draft, pay

slip etc were handled by other officers.

After one week in this department I learned that how the transfer of money from one

branch to the branch takes place, in this department it was my responsibility for

performing the following tasks,

Issuing of the Demand Draft and their computer feeding of data.

Responsibility of DD advice and its payment,

Issuance of telegraphic transfers and their feeding in computer.

Payment of local bills of collections, outward bills of collection and their

realization.

WEEK SIX

Learning from Accounts and finance department

In this department I basically helped in checking and counting of vouchers and how to

calculate the depreciation of all fixed assets, got familiar with formats of different bank

reports, and this is one of those departments where there was no customers interaction is

not involved at all rather the paper based interaction is very important.

WEED SEVEN

Learning in home finance department

In this department the customer integration was also very much limited, and I basically

learned the dept to equity ratio in home financing, calculating its monthly installments,

documentations required to get the product for the customers, clients, eligibility criteria

for agreements and what is the producer.



WEEK EIGHT

Learning trade finance

I learned that trade finance is the procedure involved in trade financing by NIB. Further,

that in detail I learned about the different aspects like: reshipment credit, post-shipment

credit and letter of credit.

The tasks that I learned about in this department were.

Different types of trade finance.

The types of post-shipment credit facilities.

Parties involved in letters of credit.

Documentation for releasing letters of credit.

Basically that was all of my two months internship activities in different department

performing different tasks, it was only possible with the help of friendly employees of

NIB without it would have been one difficult task, and many to all those who assisted me

any way during this internship period all along.



BIBLIOGRAPHY

Asrar H. Siddiqi, (1998) Practice and Law of Banking in Pakistan, Karachi:

Royal Book Company.

M. Saeed Nasir, Money Banking and Finance.

Bowlin, Oswald D. (1999) Financial Analysis. U.S.A: McGraw Hills

International.

Block, Stanley B and Hirt, Geottrey A. (7 th edition). Foundation of Financial

Management. Sydney: Ed Von Hoffmann Press.

Bodie, Zvi and Mertan, Robert C. (1997). Finance, New Jersey: Prentice Hall.

De Cenzo David A, Robbins Stephen P. Human Resource Management. Fifth

Edition, New York, John Wiley & Sons, Inc. 1996.

Horngren, Sundem. (2000). Introduction to Financial Accounting. New Jersey:

Pentice Hall Press.

Kock, Timothy W. (2001). Bank Management. Orlando: Dryden Press.

Meenai, S.A. (2002). Money and Banking in Pakistan. Karachi: Oxford

University Press.

C.H. James and J.M. Wachowicz.JR. 11th Edition, Foundation of Financial

Management. New Jersey: Prentice-Hall, Inc. p.150

National Bank of Pakistan, (2003). Annual Report, Karachi

National Bank of Pakistan, (2004). Annual Report, Karachi.

National Banking of Pakistan, (2005). Annual Report, Karachi.

National bank of Pakistan of Pakistan, Brochures of Products & Services.

www.nbp.com.pk


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