INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

KHOLA KEHAL BRANCH ABBOTTABAD (1876)

Submitted by:

Roll #

Supervised by:

Government College of Management Sciences Abbottabad

SESSION
2012-2016

INTERNSHIP REPORT ON
NATIONAL BANK OF PAKISTAN
KHOLA KEHAL BRANCH ABBOTTABAD (1876)

Submitted by:

Roll #

Supervised by:
This internship report is submitted in partial fulfillment of the
requirements for the degree of Bachelors of Business
Administration awarded by the Hazara University,
Mansehra

Government College of Management Sciences Abbottabad

SESSION
2012-2016

Government College of Management Sciences

Abbottabad

APPROVAL SHEET

Approval Committee

1. Supervisor
Signature______________________

Designation Assistant Professor GCMS Abbottabad

2. Head of department
Mr. Mushtaq Ahmad____________ Signature_____________________
Designation Principal GCMS Abbottabad

3. External Examiner
Mr.______________________ Signature______________________

DEDICATION

To my parents and siblings for their love & encouragement throughout my life.

ABSTRACT
Banks play very important and vital role for the economic growth and sustainability of
economy. The bank deals in money, such institution are also required to fulfill other financial
needs such as provision of place to deposit money, serving for the utilities and advancing
money in order to facilitate the needs of householders and the businesses. In this report the
financial position of NBP has been studied and analyzed.
****************************

TABLE OF CONTENTS
Chapter 1 ............................................................................................................................... 1
Introduction Of Study ......................................................................................................... 1
1.1 Background Of Study ................................................................................................... 1
1.2 Objectives Of Study ...................................................................................................... 1
1.3 Scope Of Study ............................................................................................................. 2
1.4 Limitations Of The Work .............................................................................................. 2
1.5 Benefits Of The Study .................................................................................................. 2
1.6 Research Methodology ................................................................................................. 3
1.6.1 The Major Sources For Primary Data Includes .................................................. 3
1.6.2 The Major Sources For Secondary Data Includes .............................................. 3
1.7 Scheme Of The Report.................................................................................................. 4
Chapter 2 ............................................................................................................................... 5
Introduction To Organization (NBP) .................................................................................. 5
2.1 They Aim To Be An Organization That Is Founded On ........................................... 5
2.1.1 They Aim To Be People Who ......................................................................... 5
2.1.2 They Have Confidence That Tomorrow They Will Be................................... 6
2.1.3 Evaluation Of Banking / Industry In Pakistan .................................................... 6
2.2 Historical Introduction To The Organization (National Bank Of Pakistan) ............... 7
2.2.2 Credit Rating ...................................................................................................... 9
2.2.3 Present Status...................................................................................................... 9
2.3 Organizational Structure Of NBP ................................................................................11
2.3.1 Board Of Directors ........................................................................................... 12
2.4 Senior Management .................................................................................................... 13
2.4.1 Senior Management For Overseas Operation................................................... 15
2.5 Vision And Mission Statements .................................................................................. 16
2.5.1 Mission ............................................................................................................. 16

2.6 Objectives Of National Bank Of Pakistan .................................................................. 16

2.7 Core Values ................................................................................................................. 16
2.8 Internal Structure Of Bank Branch ............................................................................. 18
Chapter 3 ............................................................................................................................... 20
Product And Services ........................................................................................................ 20
3.1 Deposit Department .................................................................................................... 20
3.1.1 Account Opening .............................................................................................. 20
3.1.2

Procedure Of Account Opening .................................................................. 20

3.1.3 Documents Required ........................................................................................ 21

3.1.4

Issuance Of Cheque Book ........................................................................... 21

3.1.5

Cheque Cancellation ................................................................................... 21

3.2 TYPES Of Accounts ................................................................................................... 21

3.2.1 Current Account................................................................................................ 21
3.2.2 Profit & Loss Sharing Saving Account ............................................................ 22
3.3 Problems In Personal Account .................................................................................. 26
3.4 Advances Department ................................................................................................. 27
3.5 Types Of Financing ..................................................................................................... 27
3.6 Western Union............................................................................................................. 30
3.7 Clearing Department ................................................................................................... 30
3.8 Foreign Exchange Department ................................................................................... 31
3.9 Types Of Cheque ......................................................................................................... 34
3.9.1 Bearer Cheque .................................................................................................. 35
3.9.2 Order Cheque.................................................................................................... 35
3.9.3 Crossed Cheque ................................................................................................ 35
3.9.4 Payment Of Cheque.......................................................................................... 35
3.10 Remittance Department ............................................................................................ 36
3.11

Demand Draft (Dd) .............................................................................................. 36

3.11.1 Charges For Issuance Of DD .......................................................................... 36

3.12 Telegraphic Transfer (TT) ....................................................................................... 36

3.13 Computer Department ............................................................................................... 38
3.14 Establishment Department ........................................................................................ 39
Chapter 4 ............................................................................................................................... 40
FINANCIAL ANALYSIS ................................................................................................. 40
4.1 Financial Analysis ....................................................................................................... 40
4.1.1 Common Size Analysis..................................................................................... 40
4.1.1.1 Vertical Analysis Of NBP .............................................................................. 40
4.1.1.2 Vertical Analysis Of NBP`S Income Statement ............................................ 43
4.1.1.3 Horizontal Analysis Of NBP`S Balance Interpretation ................................. 44
4.1.1.4 Horizontal Analysis Of NBP`S Income Statement An .................................. 45
4.2 Ratio Analysis ............................................................................................................. 46
4.2.1 Liquidity Ratios ................................................................................................ 47
CHAPTER -5 .................................................................................................................... 50
SWOT ANALYSIS ........................................................................................................... 50
5.1) STRENGTHS OF NBP .............................................Error! Bookmark not defined.
5.2) Weaknesses Of NBP .................................................Error! Bookmark not defined.
5.3) Opportunities Of NBP ...............................................Error! Bookmark not defined.
5.4) Threats ......................................................................Error! Bookmark not defined.
Chapter 6 ............................................................................................................................... 50
Conclusion And Recommendations .................................................................................. 50
6.1 Conclusion .................................................................................................................. 50
6.2 Recommendations ........................................................ Error! Bookmark not defined.
References ......................................................................................................................... 50

ACKNOWLEDGEMENTS
With the name of ALLAH the Most Beneficial and Merciful. I completed my internship in
National Bank of Pakistan Khola Kehal branch. I am really pleased to have a professional
learning experience in one of leading organizations of country. In these 8 weeks I worked in
different departments and I am truly thankful to all officers and staff who entirely give
assistance to me. I am also grateful to my honorable teacher, Sir Sardar Muhammad Arshad
and all other teachers who motivated me to work hard and taught me techniques to learn
work. The account of acknowledgement will remain incomplete if I do not express my
sincere appreciation, indebtedness and gratitude to my parents and siblings. They have
always been a source of encouragement for me.
And last but not the least I would like to express my gratitude to all the staff of NBP Khola
Kehal branch Abbottabad.

LIST OF ABBREVIATIONS

BOD

Board of Directors

D.D

Demand Draft

EBIT

Earning Before Income Tax

EPS

Earning per share

EVP

Executive vice president

I.T

Information technology

L/C

letter of credit

M/T

Mail Transfer

MIS

Management Information system

NBP

National Bank of Pakistan

PLS

Profit and loss saving

SBP

State bank of Pakistan

SEVP

Senior executive vice president

SVP

Senior vice president

SWOT

Strength Weaknesses Opportunities Threat

SS

Specimen signature

VP

Vice president

EXECUTIVE SUMMARY

My report is comprised upon six section 1st section denote the introduction of internship, and
purpose of purpose, and 2nd is over all role and functioning of bank (Highlights the operations
and functions of bank) and 3rd one is about NBP history, introduction, performance, policies
and strategies of NBP and 4th section denote the financial analysis and ratios analysis.5th is
about SWOT analysis, pest analysis and chapter 6th consist on some recommendations and
suggestion. Banks acts as financial agents to their customer; in return they get reward for
their services. Banks play important role in development of society. A strong economy must
have a good banking system.

National Bank of Pakistan is one of the leading banks in Pakistan. According to international
standards of banking system it is one of the best banks in South Asian region as well as the
bank, which is, come the top ten in the world. This report explains how different functions of
NBP works and what are their services.

Introduction denotes that what is the purpose of my internship. After that how banking enter
in the Pakistan. What is its working structure? It is review and organizational structure.

CHAPTER 1
INTRODUCTION OF STUDY
Starting with the name of Allah, I am going to write my internship report as
part of the academic requirement for the completion of Four years study in
BBA. Therefore, we the students of Management Sciences are required to
undergo an internship program for the period of 8 weeks as an internee in
an organization. This internship helps me to gain the practical knowledge of
working environment of the banking sector of Pakistan.
1.1 BACKGROUND OF STUDY
NBP established in 1949, National bank of Pakistan has grown to become
the largest commercial bank in the country, maintaining its position as
Pakistans premier bank determined to set higher standards of
achievements. The bank came in to existence by the order promulgated by
governor general and started functioning from Nov 20, 1949. NBP is the
major business partner for the government of Pakistan with special
emphasis on developing Pakistans economic growth through aggressive
and balanced lending policies, technologically oriented products and
services offered through its large network of more than 1403 branches
locally, 23 branches internationally and 11 regional offices (Annual report
NBP, 2015).
1.2 OBJECTIVES OF STUDY
As part of the academic requirement for completing BBA Hons students
are required to under go eight Weeks of internship with an organization.
The internship is to serve the purpose of acquainting the students with the
practice of knowledge of the discipline of banking administration.

To understand the various operations of the bank and work in

different departments.

To analyses the financial and operational performance of NBP.

To study the organizational management structure.

To make possible recommendation in the light of analyses.

To study the working environment of the organization.

To apply the knowledge gained in practical field.

1.3 SCOPE OF STUDY

The time duration of two months is insufficient for conducting complete
study and observation of a large bank. Being a student specializing in
finance, the focus of this study is on its financial aspects including the
financial health of the bank and its comparison with previous years
performance. Some of the problems faced by the bank have been identified
and some recommendations have been suggested to overcome these
problems and to improve the prevailing financial condition of the bank.
1.4 LIMITATIONS OF THE WORK
There are some limitations which internee had to face during the internship
program, which are described as under:
The period of two months was too short to properly understand and
analyze all the operations of bank.
Staff members avoided to give all information due to the matter of
secrecy. So it was very difficult to collect the relevant information and to
learn accordingly.
Manager and other staff members have busy schedule due to this reason it
was a great problem for them to spend time with internee, so it is not easy
to learn or to gain knowledge from them.
Some of the data was confidential and that was not made available to me.
1.5 BENEFITS OF THE STUDY
An internship grooms a person personally, academically and professionally.
At the end of internship, one gets a certificate, which acknowledges his
work for that specific company. This adds to his experience, an internship is
a great opportunity to improve interpersonal skills. Practical also provides

the opportunity to gain self-confidence. Moreover, it Figure out what ones

strengths are and also a good time to identify ones weakness so that he can
improve them.
1.6 RESEARCH METHODOLOGY
National bank of Pakistan is one of the leading and establishes banks of the
country. It has a large setup of departments and a big organizational
structure. While working in a Khola Kehal branch Abbottabad of the bank,
it is not possible to thoroughly cover all the areas of the bank, as it requires
more time and two months are in no way sufficient to do so. Different tools
and techniques were used to gather relevant information for writing the
report. Secondly, journals from regional head quarter and staff college was
also reviewed which gave very useful information about the functioning of
the bank. I also visited the national bank of Pakistans official web site,
which gave very useful information about the services provided by the
bank.
1.6.1 The major sources for Primary data includes
Personal observation
Personal observations during the internship period
Interviews of management
Short interviews of the banks management
Discussion with staff members
1.6.2 The major sources for Secondary data includes
Annual reports of Bank
Annual reports of the last three years
Books
Relevant course books

 Internet
Official web site of NBP and some other relevant sites mentioned in the
references
1.7 SCHEME OF THE REPORT
This internship report is divided into five chapters, which are:
Chapter 1 includes background, purpose of study, Scope of study, some
limitations, merits, and scheme of this Report.
Chapter 2 includes background and history of banking in Pakistan as well
as Introduction to NBP, Khola Kehal branch Abbottabad .
Chapter 3 includes the financial statement, Products, and services offered
by NBP to its valued customers.
Chapter 4 includes the SWOT and ratio analysis and their interpretation.
Chapter 5 includes some of the conclusion and some of the
recommendations.

CHAPTER 2
INTRODUCTION TO ORGANIZATION (NBP)
NBP contains 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.
2.1 THEY AIM TO BE AN ORGANIZATION THAT IS FOUNDED
ON

Growth through creation of sustainable relationships with our

customers.

Prudence to guide our business conduct.

A national presence with a history of contribution to our

communities.

They shall work to

Meet expectations through Market-based solutions and products.

Reward entrepreneurial efforts.

Create value for all stakeholders.

2.1.1 They aim to be People who

Care about relationships.

Lead through the strength of our commitment and willingness to

excel.

Practice integrity, honesty and hard work. We believe that these are
measures of true success.

2.1.2 They have confidence that tomorrow they will be

Leaders in industry.

An organization will take the trust of S&h.

2.1.3 Evaluation of Banking / Industry in Pakistan

At the time of independence in 1947, Pakistans commercial banking
facilities were almost jammed according to a plan in the whole sub
continent especially in the Muslim majority areas. Pakistans banking and
Industrial sectors were in very poor conditions. Banks largely depend for
their growth and development on industrial sector but at the time of
independence, Pakistan had patriotically on industry except a few textile
mills and only product food grains and agricultural raw materials, most of
the industries were situate in Hindu majority area now called India.
A number of banks closed their branches with the result that only 81
branches remain ed open on 30th June 1948 out of 487. The head offices
were in India and most of their employees were Hindu, and they fled to
India. Imperial Bank of India, Which was conducting government receipts
and payments, closed down most of its branches thus blocking the funds
needed by the government?
The country was in trouble and needed most of the general
commercial banking and credit facilities. This need was a little bit satisfied
with the transferring of the head offer of the HBL. To Karachi on 7th,
August 1947. This bank playing a great role in the next year in the
economic development of Pakistan as the Habib Bank was also new in the
new country it was asked to open more branches at new place this was a
difficult time foe H.B.L to open their branches in different places.
In view of the above mentioned circumstances and in order to
rehabilitee the banking in Pakistan without further delay, on the
recommendations of an committee it was decided to establish as early as
possible a central bank to control the banning and currency in Pakistan.
Accordingly state bank of Pakistan was Pakistan was inaugurated by

Quaid-e-Azam Muhammad Ali Jinnah on 1st July 1948. This bank lost on
time in meeting the national requirements of banking, currency and took
following remedial measures. Requested Government of state a new bank
of nation wide services accordingly National Bank of Pakistan was formed
in 1949 which opened many branches and in 1952 took over the emperor
Bank of India. It will draw Indian Currency notes of Rs: 125 crore from
General Circulation and send these for recovery to reserve Bank of India.
2.2 HISTORICAL INTRODUCTION TO THE ORGANIZATION
(NATIONAL BANK OF PAKISTAN)
National Bank of Pakistan main tains 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 nation wide branches.

2.2.1 History of NBP

National bank was establish in November 09, 1949 under NBP ,ordinance
1949, in order to handle the crises condition which was develop after
Deadlock with India and the devaluation of Indian Rupee in 1949. The
bank proved all type of banking services to the government in general
public. It works as agent of sent real bank because the SBP dose not has its
own branches.
The bank schedule commercial bank and its principally engaged in the
business of banking as defined in the banking company's ordinance 1962.
National Bank of Pakistan was basically established for reducing the
difficulties of east Pakistan farmers engaged in jute and patens after mass
migration of community from east and west Pakistan in India. The bank
commenced its operation in November 20.1949 at six centers of jute in the
then East Pakistan. Lahore and Karachi officers were opened subsequently
in December 1949. Before restructuring in 2002, national Bank of Pakistan

with its head office at Karachi operates through 9 regional headquarters at

Lahore, Karachi Hyderabad, Quetta, Peshawar, Multan, Muzaferabad,
Fasilabad and Islamabad.
The bank was incorporated with authorized capital of 60 millions .in 960
this amount was redacted to the 30 millions banks issued 15 millions of
which 25% was subscribed by the government and the balance was offered
to the general public .shears to the public where issued in 1950 and where
quickly taken up. In 190 banks ordinance was amended so that it take
ordinarily commercial banking business. On janvery-01-1974 national bank
along with thirteen others commotional banks where nationalized under the
promulgation of nationalization act 1974 and the shears not held by the
government where required after compensation them.
The period 1990s witnessed financial referees and the national bank also in
cooperated the change in its working and offered new services and products
to its clients .at present the bank is playing very important role in financing
the trade .commerce ,agricultural and important concerns and contributing
the best to word making the country prosperous. The improve its costumer
focus redacted decision making layers restructured its entire command and
control system in business and operational spheres zones and audit offices
in the year 2002 and eliminated the total numbers of regions in hands from
9 to 29 across the country .anew matrix structure has been introduced with
the objective to separate the office and the bank offices .to improve the
good governance and enhance the internal control.

Operation group

corporate and investment banking group

special assets management group

commercial and retail banking group

audit and inspection group

overseas Coordination and Management Group

Risk Management Group

National Bank of Pakistan is known as the premier commercial institution

of Pakistan provide the large diversified customer base of 9.009 millions,
which is the biggest figure, in the country and conduct the business
function of state bank of Pakistan in addition to provision of other financial
and allied services such as deposit banking financing and credit remittance
facilities collection government receipts and payments. sale and purchase
of government securities, Bands and other certificates, Foreign exchange
business, Safe custody, Safe deposited services and safe deposit, Lockers,
Hajji facilities Utility bills, Investment advice and other services, Special
deposits products / Schemes, pak rupee travelers choose, New product.
2.2.2 Credit Rating
NBP enjoys the highest rating of AAA in the industry assigned by M/s
JCR-VIS Credit Rating Company. The ratings assigned to NBP are
primarily driven by the banks role in the national economy as an agent of
the State Bank of Pakistan and as a bank to the Government of Pakistan.
Additionally, ratings also derive strength from the banks consistently high
capitalization levels, and nationwide access that has enabled it to secure a
cost effective and diversified deposit base.
2.2.3 Present status
National Bank of Pakistan has a network of 1,352 domestic branch
and 19,204 employees for subsidiaries, 23. Oversea branches, 4 reparative
offices, 1 joint venture and subsidiary (overseas) all the world the local
branches are controlled through 29 regional offices and overseas are
managed through 4 overseas regional offices. It is the largest contributory
agent of government requirement. NBP provide wide range of services and
including collection of taxes and deliveries of salaries, person to public
sector employees. It has lowest rate on exports and other borrowings.

National bank of Pakistan, overseas operation comprises 18

overseas branches, 5 representative offices, one international subsidiary
bank of NBP in Amatory and one joint venture with the United Kingdom.
NBP with its commitment to invest in development of the banks I.T
infrastructure have now developed on line branches with modern by highly
professional

bankers.

NBP has

launched

an

ambitious

business

reprocessing programmed to make the bank more attractive with the

eventual aim of privatization. The largest bank in the country with a
customer base 9.00 billion in poised for take off.

10

2.3 ORGANIZATIONAL STRUCTURE OF NBP

President and chairman

President Secretariat
Board of Director

Corporate and investment banking Group

Commercial and retail Banking Group

Operations Group

Audit & inspection group

Compliance group

Financial control division

Employees benefit, Disbursements and trustee

Special assist Management group

Organization development and training group

Overseas coordination and management group

Information technology group

Risk management group

11

2.3.1 Board of Directors

Mr. Muneer Kamal
Chairman

Mr. Syed Ahmed Iqbal Ashraf

President

Mr. Farrakh Qayyum

Director

Mr. Tariq Kirmani

Director
Mr. Iftikhar A. Allawala
Director

Mr. Muhammad Naeem

Director

Mr. Mir Balakh Sher Marri

Director

Mr. A. Akbar Sharifzada

Director

Mr. Syed Muhammad Ali Zamin

EVP, Secretary Board of Directors & Secretary Credit Committees

12

2.4 SENIOR MANAGEMENT

Syed Ahmed Iqbal Ashraf
President, NBP

Nausherwan Adil
SEVP & Group Chief Operations Group/Corporate Communication
Division

Mudassir H. Khan
SEVP & Group Chief, Commercial & Retail Banking Group

Nusrat Vohra
SEVP & Group Chief, Treasury Management Group

Tariq Jamali
SEVP & Group Chief, Logistics Support, Security & Engineering
Group

Kausar Iqbal Malik

SEVP & Group Chief, Compliance Group

Masood Karim Shaikh

SEVP & Group Chief, Overseas Banking Group/Global Home
Remittance Management Group

Asif Hassan
SEVP & Group Chief, Audit & Inspection Group

Wajahat A. Baqai
SEVP & Group Chief, Credit Management Group

13

Aamir Sattar
SEVP & CFO, Financial Control Division

Sultana Naheed
SEVP & Group Chief, Risk Management Group

Zahid Mahmood Chaudhry

SEVP & Group Chief, Human Resources Management &
Administration Group

Akbar Hasan Khan

EVP & Head, Corporate & Investment Banking Group

Sahibzada Rafat Raoof Ali Khan

EVP & Head, Assets Recovery Group

Khawaja Muhammad Aminul Azam

EVP & Head, Islamic Banking Group

Ovais Asad Khan

EVP - Divisional Head, Strategic Marketing Division

Mahmood Siddique
EVP, Divisional Head & CIO, IT Division

Shaharyar Qaiserani
EVP & Divisional Head, Agriculture & Business Development
Division

14

S.M. Ali Zamin

EVP, Secretary Board of Directors & Secretary Credit Committees

Mufti Ehsan Waquar Ahmad

Shariah Advisor

Mirza Babur Baig

EVP & Principal Staff Officer(PSO) to the President
Riffat Sultana Mughal
SVP - Head, Legal Division

2.4.1 Senior Management for Overseas Operation

Zubair Ahmed
SEVP & Regional Chief Executive, Middle East, Africa & South
Asia Region
M. Rafiq Bengali
SEVP & Regional Chief Executive, Americas Region
Khawar Saeed

EVP & Regional Chief Executive, Cationentral Asian Republics

Region
Muhammad Hanif Khan
SVP & Coordinator, Afghan Operations

15

2.5 VISION AND MISSION STATEMENTS

To be recognized as a leader and a brand synonymous with trust, highest
standards of service quality, international best practices and social
responsibility.
2.5.1 Mission
NBP will aspire to the values that make NBP truly the Nation's Bank by:

Institutionalizing a merit and performance culture.

Creating a distinctive brand identity by providing the highest standards

of services.

Adopting the best international management practices.

Maximizing stake holders value.

2.6 OBJECTIVES OF NATIONAL BANK OF PAKISTAN

Prime objectives of National Bank of Pakistan are tainting

distinguishing brand

identity, attaining quality financial

performance, achieving acknowledgment in the market in terms of

quality and performance.

National Bank of Pakistan also aims at providing assistance to

farmers, so that they can utilize their funds effectively to get the
best result.

By charging interest on loans provided to the private sector and

business community.

2.7 CORE VALUES

We aim to be an organization that is founded on

Growth through creation of sustainable relationships with our

customers.

Prudence to guide our business conduct.

16

A national presence with a history of contribution to our

communities.

2.7.1 Shall work to

Meet expectations through Market-based solutions and products.

Reward entrepreneurial efforts.

2.7.2 We aim to be people who

Care about relationships.

Lead through the strength of our commitment and willingness to

excel.

2.7.3 We have confidence that tomorrow we will be

Leaders in our industry.

An organization taining the trust of stakeholders.

An innovative, creative and dynamic institution responding to the

changing needs of the internal

and external environment

17

2.8 INTERNAL STRUCTURE OF BANK BRANCH

CHART

RRMC

Cad.

RBC

ROC

Manager

RCC

Operating

Complain
Officer

Manager

Officer

Deposit Sector

Remittance

Govt. Section

Accountant

Foreign Exchange

Credit Deptt:

Chief Cashier

Source: Self made by observations during internship

18

2.8.1

LOCATION

The Location of the Bank Branch is Sardar Peer Khan Plaza, Khola kehal
& kunj Kehal thats why this branch is named as khola kehal branch
Abbottabad .
2.8.2

OVERVIEW

The building of NBP Khola Kehal branch Abbottabad

consist of one

floor.The building of NBP Khola Kehal branch Abbottabad

gives a

pleasant look as it is a well furnished and decorated by fresh flowers both

inside and outside the bank. There is separate parking place for staff
members and also for general public which is helpful in reducing traffic on
road unlike other banks. Inside the bank there is a hall and on one side is
the managers office. In the hall there is separate seating facility for males
and females customers. In the hall all the officers of different departments
has their tables. The seating arrangement of all officers is same despite their
designation. Only cash department and government section is separated.
The facility of generator is also provided to the branch.
2.8.3

Number of Employees

In NBP Khola Kehal branch Abbottabad the employees are very

experienced. They are very loyal and committed to their jobs. They are also
very much cooperative with their colleges if anyone of them face any
problem in his work they never hesitate to help him. Number of Employees
currently working there is 11.

19

CHAPTER 3
PRODUCT AND SERVICES

Dividing an organization into different parts according to the functions is

called departmentalization. NBP can be divided into the following main
departments.
3.1 DEPOSIT DEPARTMENT
It controls the following activities:

A/C opening.

Issuance of cheque book.

Current a/c

Saving a/c

Cheque cancellation

3.1.1 Account opening

An account is relationship between account holder and Banker. OR
Account is an agreement between customer and banker. Preliminary
investigation is necessary because of the following reasons.

Avoid frauds.

Negligence.

Inquiries about clients.

3.1.2 Procedure of Account Opening

Accounts are opened after approval of manager. Customer has to fill in
prescribed application form properly particularly complete details of next
of kin. Customer has to sign terms and conditions of account opening.
Accounts are opened with cash. In case of issuance of check book at the
time of opening of an account Manager has to give justification that
customer is personally known to him. Details of account are entered into

20

computer system. Included non-deduction of zakat and services charges

whos applicable.
3.1.3 Documents Required

Copy of CNIC.

Copy of driving license in case CNIC is without photograph.

Applicant photograph and CNIC copy attested by gazetted officer in

case of CNIC without photograph.

Copy of service card/evidence of employment in case of salaried

person.

Photograph in case of illiterate person.

Zakat exemption declaration/certificate.

3.1.4 Issuance of Cheque Book

Requisition slips to verify that cheque books have been issued to the
account holder. Cheque book are issued after receipt of acknowledgement
of letter of thanks or with the remarks of managers or operation managers
giving justification for issuance of cheque book before receiving of
acknowledgment of letter of thanks. Cheque book series are recorded in
register. Charges for issuance of cheque books are recorded.
3.1.5 Cheque Cancellation

This department can cancel a cheque on the basis of;

Post dated cheque

Stale cheque

Warn out cheque

Wrong sign etc

3.2 TYPES OF ACCOUNTS

3.2.1 Current Account
It is also known as running account because it is always in
operations.Current accounts are opened on proper introduction and

21

submission of required documents along with an initial deposit prescribed

from time to time. The money can be deposited and withdrawal at any time
during the banking hours by the customers. Therefore the banks do not pay
interests on current deposits. The bank is authorized to deduct services
charges on current account levied through its half yearly schedule of
charges, in case the average balance falls below the minimum balance as
prescribed by the bank. Minimum balance required to open this account is
Rs 5000/3.2.2 Profit & Loss Sharing Saving Account
PLS saving accounts are opened on proper introduction and submission of
required documents along with an initial deposit prescribed from time to
time. PLS saving accounts are opened for individual (single/joint)
charitable institution, autonomous corporation, companies, associations,
educational institutions, firms etc. Interest is paid on six-monthly basis. The
amount withdrawn before 6months is deleted from assessment of profit.
3.2.3 Profit & Loss Sharing Term Account
Fixed accounts or term deposits are those deposits which are repayable
after certain period of time which may vary from 3months to 5years. In this
account no cheque book is issued to the customers. At the time of opening
account TDR is issued showing the amount of money deposited, period and
rate of interest payable. The rate of interest on fixed deposits is greater than
saving accounts which also varies with the length of period and amount
deposited. The longer the period of deposit, higher will be the rate of
interest. The shorter the period of deposit, lower will be the rate of interest.
PLS term deposit account can be opened by all who are allowed to open
current, PLS saving accounts.
3.2.4 Rates on term Deposit
3months

5.30%

6months

5.60%

22

1year

5.80%

2year

6.10%

3year

6.40%

4year

6.70%

5year

7.10%

Above 5

7.80%

3.2.5Foreign currency account

Foreign Currency Accounts are opened on proper introduction and

submission of required documents along with an initial deposit
prescribed from time to time. It can be operated singly or jointly by
individuals, partnerships, corporation, companies etc.Pakistani,
foreigners, Muslims, non Muslims can open this account in foreign
currency Dollars, Pounds sterling and Euro. In Pakistan only foreign
currency saving account is running. Minimum balance required for
foreign currency saving account is 500 Dollars.If balance is less than
required then Bank makes deductions.
3.2.6 National income daily accounts (NIDA)
NIDA are opened on proper introduction and submission of required
documents along with an initial deposit prescribed from time to time. NIDA
are opened for individual (single/joint) charitable institution, autonomous
corporation, companies, associations, educational institutions, firms etc.
Deposits in the NIDA accepted on the conditions that the depositor shall
always maintain minimum balance as prescribed by bank in his account.
3.2.7 Rates or profit on NIDA
2million to

25million=1.50%

23

25m

to

50m

=2%

50m

to

100m =2.30%

100m

to

2.50m =2.60%

2.50m

to

500m =2.80%

500m

to

1000m =3.10%

1000m to

2000m =3.30%

2000m to

5000m =3.50%

5000m &

above =3.75%

3.2.8 Premium saver account

Premium saver accounts are opened on proper introduction and submission
of required documents along with an initial deposit prescribed from time to
time. Premium saver accounts are opened for individuals (single or joint)
only. In case where prescribed minimum balance in Premium saver account
is not maintained no profit for the month will be paid to the account holder.
In case of Premium saver account a higher rate of profit as per bank
discretion will be paid to depositor maintaining deposit below the mark of
Rs 300,000/- as compared to depositor maintaining higher deposits in their
Premium saver account.
3.2.9 Premium Amdani account
Premium Amdani products account can be opened by all who are allowed
to open current, PLS saving account. The bank reserves the right of
refusing to accept deposit from any person in premium Amdani account
without assigning any reason. Premium Amdani deposits are accepted by
the bank with minimum sums prescribed by the bank from time to time. In
case of premium Amdani additional amount in the lots of 25000/- will be
accepted. Premium Amdani Certificates will only be issued for period of 5

24

year. Loan will be given 85% of face value of certificate. Loan will be
sanctioned for one year and lump sum payment will be made.
3.2.10 Rates
1 year

7.50%

2year

8.50%

3year

9.50%

4year

10.50%

5year

11%

3.2.11 Account of blind person

Blind person (both literate & illiterate) can open an account to be operated
jointly with a visually literate person on completion of all documents and
formalities as prescribed by the bank. Operations in the joint account will
not be subject to either or Survival. In the event of death of blind
account holder the entire credit balance will be paid to the legal heirs of the
deceased blind account. In the event of death of joint visually account
holder the entire credit balance will be payable to the surviving blind
account holder.
3.2.12 Dormant & inoperative account
All current accounts, which have not been operated upon for six months or
all saving accounts which have not been operated upon for one year shall
classify as Dormant account. All current account s, which have not been
operated upon for two years or all saving accounts, which have not been
operated upon for three year shall classify as Inoperative account.
3.2.13

Minors accounts

That person who has not up till attained the age of 18years is considered as
minor. Under section 11 of contract act, 1872 minor is incompetent to enter

25

into contract. Therefore in bank, contract with minor is avoided. There are
two types of minors account.
3.2.13.1 According to will of guardian
Bankers in Pakistan allow minor to open to an account but on the request of
his guardian. Title of account remain s on the name of both guardian &
minor Until age of 18 year minor cant made transaction, after 18 year both
can do transactions.
3.2.13.2 after death of guardian
In case of death of account holder the credit balance in his account will be
payable to his legal heirs. They have to prove themselves through court.
Bank will present the details of his account in court. If any one of them is
minor then he will not be given balance. His account will be opened in the
Bank according to orders of court and Senior Civil Judge will be guardian
of account until he attained the age of majority. After that he can withdraw
money from the account.
3.3 PROBLEMS IN PERSONAL ACCOUNT

3.3.1 Lunacy of customers

A customer who is incapable of understanding, is of unsound mind
cannot enter into contract with the banker as a customer.

3.3.2 Death of customer

In the event of death of an account holder, the credit balance, in any
account, in the name of an individual will be payable to the legal heirs of
the deceased individual account holder If the account is in the name of two
or more persons operated jointly the credit balance will be payable to the
legal heirs of the deceased account holders along with the remaining
account holders.

26

3.4 ADVANCES DEPARTMENT

The objective of Advances Department is. To facilitate people by giving
short term and long term loans on easy terms and conditions. The main
function of this Department is to take surplus money from the people at low
rates and lend this money to borrowers at high rates to earn profit. This
section is back born of bank. 50% of earning of bank comes from advance
department. Profitability depends on advances
3.5 TYPES OF FINANCING
There are two types of financing .

3.5.1 Long term finance;

Which are for 5years or more than 5 Years.

House building finance

NBP advance salary

Motor car loan

Agriculture development loan

Project financing

Staff loan

3.5.2 Short term finance

Which are for one year.

Gold finance

Cash finance

Running finance

3.5.2.1 Gold finance

Facility of Rs 1000 against 1 gm of gold.

No maximum limit of cash.

Mark-up 15.5% per annum.

27

Repayable after one year. (Lump sum).

Loan is given on net weight.

Minimum on 12 g loan is sanctioned.

If after one year no capacity to repay then loan can be rescheduled

by paying mark-up for one more year.

One person cannot take additional loan on other grams of gold with
same name.

If after one year payment is not made to bank. Bank send 3 notice to
borrower

Again if he doesnt reply to notice. Case will be sent to the court.

Court will give gold to bank and will order the borrower to pay
mark-up.

Documents

I.D. Card

Goldsmiths documents.

Gold loan insurance form

Promissory note, IB-12 (Here amount + mark-up).

Undertaking

IB/6A- Agreement for financing for Short/med/long term on mark-

up basis

IB-2 Letter of pledge (Here also A + mark-up).

ii) Cash finance

It is a very common form of borrowing by business concern, commercial
concern, and industrial concern. A borrower is granted an advance up to a
certain limit against securities such as pledge of goods and mortgage
securities. Borrower pay markup only on the amount which is actually
utilized. It is granted on long term basis. Cash Finance is not available in
Abbottabad , only in big cities Bank has its own lock on warehouses.
Industries cant reduce stock without the permission of bank. If he wants to
use the stock, the bank person will visit along with him. When stock

28

reduces he will pay the loan. Loan is sanction for one year. After one year it
can be renewed. Markup is paid in quarterly.

3.5.2.2 Running finance

In running finance property is kept as mortgage or any security.

(certificate)

The 85% loan is given because more liquid as property in the name
of bank.

Running finance is given for one year.

In running finance multi transaction are allowed.

He is given a check book.

In one year he can with draw & deposit amount several time but
cant exceed the loan limit.

3.5.2.3 Long term finance

3.5.2.4 Advance salary

20 months salaries in advance.

Minimum documentation.

Repayable in 5 Year (60 months).

Mark up 20% markup is paid monthly.

Before 18%, The new ratio is applied on loan taken after

01/07/2010

Loan sanction authority to different grade officers is

Grade 1

: 2 lacks

Grade 2

: 1 lack 50 thousand

Documents

Application form

I.D Card of borrower and two guarantors.

29

Three blank but signed cheques

Agreement for financing on mark-up basis, variable rate

Undertaking

Annexure A .It is issued by department of borrower which shows

how much

service is left and account no etc. His salary will be

transferred to this account.

Annexure C Agreement for financing on mark-up basis.

Annexure D Letter of hypothecation for stocks, machinery

And receivables.

Guarantee IB 29

3.6 WESTERN UNION

It is private not govt. (a kind of Hundi).On the spot cash payment is
made.No compulsion of account.10 Digits MTCN (Money transfer control
number) is allotted. On which payment is done.It can be taken any where in
Pakistan by showing the number.Receiver has to show any one of following
in

order

to

receive

money.Original

I.D.

card.Original

Driving

license.Original Passport.Duplicate or photo state is not accepted.

3.7 CLEARING DEPARTMENT
3.7.1 Clearing house
From many years there was clearing house in national bank of
Pakistan Khola Kehal branch Abbottabad . The agents of banks who were
members of clearing house daily gather 2 times in a day and exchange the
checks for clearance with each other.

3.7.2 NIFT (National institutional facilitation technology)

Now NIFT private ltd company is performing clearing functions for
banks.There office is at Abbott Abad. In this case the banks are in loss.

30

Before banks cut charges from parties account. But now they cant do so.
NIFT charges 8 Rs per instrument from bank, which bank can not deduct
from partys account. Now it is advantage for party.
Procedure
The agent of NIFT visits 3times a day.In morning he brings cheque
which is drawn on NBP Khola Kehal branch Abbottabad .After 2- hours he
visits again to take back if any cheque, draft or Government receipt is to be
returned with objection.In eve he visits to take cheque for next day
clearance from other banks. Which he will present to them in next
morning.All cheque of other banks are kept in a bag which is sealed with a
specific seal no.
3.7.2.1 In-Word Clearing Books
The bank uses this book for the purpose of recording all the cheque
that are being received by the bank in the first clearing. All details of the
cheque are recorded in this book.
3.7.2.2 Out-Word Clearing Book
The bank uses outward clearing register for the purpose of recording
all the details of the cheque that the bank has delivered to other banks.

3.8 FOREIGN EXCHANGE DEPARTMENT

In foreign exchange customer can open account in 3 currencies.US
Dollar code 40.Uk Pound

code 30.Euro code 51.Three Banks which

deal NBP transactions of F.C are.NBP New York deals the transactions of
dollar..United National Bank London (UNB) deal Pound.Same procedure
of opening account like in Pakistan Rs.Here minimum balance required is
1000$.If less then monthly $3 as services charges will be deducted.If

31

account is opened in any other foreign currency then amount will be

converted in $ to deduct charges.
Outward TT in foreign currency

Every foreign bank has opened a Nastro account in head office

Karachi.

In order to send TT to other country bank will debit account of

person who is sending TT and credit Head office. F-15 will be
prepared to credit HO.

Head office will credit the account of that bank which is dealing the
transactions of that F.C.

Remittance abroad through F.C account

Commission @ US $1.00 per US $1,000
Or minimum

US $5.00

Maximum

US $25.00

Plus telex/ SWIFT charges Rs.2.50 per telex/ SWIFT case of TT.
Inward TT in FC
If any one sends TT from foreign bank to National Bank in
Pakistan then NBP will be debited and credit account of that person.And
will take credit from H.O by F-16 & will also prepare FET along with that.
Head office will debit that bank and credit NBP.
When any one send TT to Dr foreign currency amount in F.C. account then
bank will Dr, Cr foreign currency amount at updating rates but when
anyone ask to deposit in Pak
Short Credit in F.C
If checks are of any bank out of country then bank will send these
cheque to standard chartered Bank Karachi for clearance.The account of
Standard Chartered is in H.O Standard Chartered Bank will credit the
required amount of cheques in their account in H.O But until 21 days bank

32

will not ask for money by FET. Standard chartered will physically present
those cheques in relevant banks out of country.
Revaluation of accounts
At the end of each month revolution of accounts is done by updating
rates. By revaluation of account there arise differences in account. If rate
increases bank take additional amount from head office through F-16. If
rate decreases then extra money will be debited to HO by F-15.
Revaluation of in-hand-cash account
Revaluation is also done here at the end of month but here Head
Office is not involved. It is loss or profit of bank itself. Bank has cash with
it which it has purchased and is its asset. It does not belong to customers.
Here bank Dr and Cr interest account.
Cash department
Cash department performs the following functions
Cash Receipts
The money, which either comes or goes out from the bank, its
record should be kept. Cash department performs this function. The
deposits of all customers of the bank are controlled by means of ledger
accounts. Every customer has its own ledger account and has separate
ledger cards When the bank receives the cash from the customer, the bank
credits the customers account which is then used for paying their bills or
remitting it to their creditors or suppliers as the case may be.
Cash Payments
It is a bankers primary contract to repay money received for this
customers account usually by honoring his cheque.

33

Cheque and their Payment

The Negotiable Instruments Act, 1881Cheque is a bill of exchange
drawn on a specified banker and not expressed to be payable otherwise than
on demand. Since a Cheque has been declared to be a bill of exchange, it
must have all its characteristics as mentioned in Section 5 of the Negotiable
Instruments Act, 1881. Therefore, one can say that a Cheque can be defined
as an
The Requisites of Cheque
There is no prescribed form of words or design of a Cheque, but in order to
fulfill the requirements mentioned in Section 6 above the Cheque must
have the following.

It should be in writing

The unconditional order

Drawn on specific banker only

Payment on Demand

Sum Certain in money

Payable to a specific person

Signed by the drawer

Parties to Cheque
The normal Cheque is one in which there is a drawer, a drawer banker and
a payee, or no payee but bearer.

The Drawer

The Drawer

The Payee

3.9 TYPES OF CHEQUE

Bankers in Pakistan deal with three types of cheque

34

3.9.1 Bearer Cheque

Bearer cheque is cashable at the counter of the bank. These can also
be collected through clearing.
3.9.2 Order cheque
These types of cheques are also cashable on the counter but its
holder must satisfy the banker that he is the proper man to collect the
payment of the cheque and he has to show his identification. It can also be
collected through clearing.
3.9.3 Crossed Cheque
These cheque are not payable in cash at the counters of a banker. It
can only be credited to the payees account. If there are two persons having
accounts at the same bank, one of the account holder issues a cross-cheque
in favor of the other account holder. Then the cheque will be credited to the
account of the person to whom the cheque was issued and debited from the
account of the person who has actually issued the cheque.
3.9.4 Payment of Cheque
It is a bankers primary contract to repay money received for his
customers account usually by honoring his cheques. It is a contractual
obligation of a banker to honor his customers cheques if the following
essentials are fulfilled.

Cheques should be in a proper form:

Cheque should not be crossed:

Cheque should be drawn on the particular bank:

Cheque should not mutilated:

Funds must be sufficient and available:

35

3.10 REMITTANCE DEPARTMENT

Remittance means a sum of money sent in payment for something.
This department deals with either the transfer of money from one bank to
other bank or from one branch to another branch for their customers. NBP
offers the following forms of remittances.

Demand Draft

Telegraphic Transfer

Pay Order

Mail Transfer

3.11

DEMAND DRAFT (DD)

It is the safe mode to transfer money. Customer has to fill in DD slip

in which following items are written in favors of which one wants to
make the draft, Amount, exchange and total amount. Then he has to
write his address and put signature on it. Customer will deposit
amount then draft will be prepared and given to him.
3.11.1 Charges for Issuance of DD

Up to

Rs.100, 000/-

0.10%

Minimum Rs.50/-

Up to

Rs.1, 000,000/-

0.05%

Minimum Rs.100/-

Over

Rs.1, 000,000/-

0.04%

Minimum Rs.400/-

paying bank for the payment of a specified amount of money. Account

holder and non account holder both can send MT. MT can only be issued to
NBP branches.
3.12 TELEGRAPHIC TRANSFER (TT)
Telegraphic transfer is the quickest method of making remittances.
Telegraphic transfer is an order by telegram to a bank to pay a specified
sum of money to the specified person. TT can be sent only to NBP
branches. The receiver must have an account in the bank where TT is sent.

36

If account is not in branch where TT has sent then the responding branch
will prepare TT payment order and will send to the address of the receiver
but it will take time and benefits of TT will not be availed
3.12.1 Charges for Issuance of TTS
Up to

Rs.100, 000/-

0.10%

Minimum Rs.50/-

Up to

Rs.1, 000,000/-

0.05%

Minimum Rs.100/-

Over

Rs.1, 000,000/-

0.04%

Minimum Rs.400/-

3.12.2 Telegram Charges on TTS

Whether through Telex/ SWIFT/ Fax

Actual, Minimum Rs.75/-

3.12.3 Trunk Call Charges on issuance of TTS

Rs.100/-(Flat)
3.13.4

Charges for TT Cancellation

For account holder

Rs.50/-

For non account holder

Rs.100/-

3.12.5

PAY ORDER (PO)

Pay order is made for local transfer of money. Pay order is the most

convenient, simple and secures way of transfer of money It is the property

of bank. It is payable only at the branch from where it is issued.
3.12.6

Charges for Issuance of Pay Order

For account holder

Rs.50/-

For non account holder

Rs.100/-

3.12.7

Charges for Issuance of duplicate Pay Order

For account holder

Rs.100/-

37

For non account holder

3.12.8

Rs.150/-

Charges for PO Cancellation

For account holder

Rs.50/-

For non account holder

Rs.100/-

3.12.9

Demand draft purchase (DDP)

NBP has an agency agreement with some Banks which includes Citibank,
Standard Chartered, Grand lay and Oman exchange etc. These Banks have
their accounts in Head Office Karachi. When instruments of these banks are
presented in NBP City Branch the Bank make the payment in advance.
NBP purchases the instrument from customer and make payment of
benevolent fund, pension funds etc on behalf of these banks.
3.12.10

Compliance department

In this department the review of all the works in the bank is done. The
responsibility of compliance officer is to check whether works are done
according to procedure recommended or not. His duty is just to point out
the mistakes, if any, and he will not be liable if relevant department has do
not correct the mistakes even after his notification. He reviews different
works at different time periods.
3.13 COMPUTER DEPARTMENT
The objective of this Department is to facilitate customers in payment of
their cheques. The main functions performed by this department are:

Checking balance.

Deduction from balance on clearing cheque.

Issuing bank statements.

Dealing Western Union.

38

3.14 ESTABLISHMENT DEPARTMENT

This department mainly deals with the branch employees. The main
objective of this department is to To regulate bank business. Main
functions of this department are:

Keeps the record of attendance of employees.

Employees salaries distribution.

Employees bonuses etc.

39

CHAPTER 4
FINANCIAL ANALYSIS
4.1 FINANCIAL ANALYSIS
Financial

analysis (also

referred

to

as financial statement analysis or

accounting analysis or Analysis of finance) refers to an assessment of the

viability, stability and profitability of a business, sub-business or project.
Typically, financial analysis is used to analyze whether an entity is stable,
solvent, liquid, or profitable enough to be invested in. When looking at a
specific company, the financial analyst will often focus on the income
statement, balance sheet, and cash flow statement.
4.1.1 Common size analysis
Common size analysis expresses comparisons in percentages. It includes
vertical analysis and horizontal analysis .Vertical analysis compares each
amount with a base amount elected from the same year. Horizontal analysis
compares each amount with a base amount for a selected base year.
4.1.1.1 Vertical Analysis of NBP
Table 4.1 Vertical Analysis of NBP`s Balance sheet
Year

2014

2014%

Rs in 000

2015

2015%

Rs in 000

ASSETS
Cash and balance

15,823,0033

11%

982,46,783

6%

18388738

1%

12543964

1%

with treasury bank

Balance with other
banks

40

Lending to financial

51941866

4%

111794127

7%

Investments

396411825

29%

561767518

36%

Advances

620163029

45%

630229649

41%

Operating fixed

34568864

2%

33353526

2%

Defferred Tax Assets

10968824

1%

9884256

1%

Other assets

81576084

6%

91839258

6%

1,372,249,263

100%

1,549,659,081 100%

Bills payables

13894667

1%

11011827

1%

Borrowings

23258971

2%

38208413

2%

Deposits and other

1101845283

81%

1234405050

80%

Finance lease

3636

0%

1691

0%

Deferred tax

0%

0%

Other Liabilities

72583176

5%

83439108

5%

Total liabilities

121,1585,733

89%

1,367066089

88%

Net Assets

160663530

11%

182592992

12%

Share capital

21275131

2%

21275131

1%

Reserves

33536713

2%

32996496

2%

inst

assets

LIABILITIES

accounts

liabilities

41

inappropriate profit

49734161

4%

59751578

4%

equity

104546005

7%

114023205

7%

Surplus on

55296862

4%

67852770

4%

160,663,530

11%

182,592,992

12%

revaluation of Assets

Sources: Annual reports 2014-2015

Interpretation
The major components in the balance sheet of banks are deposits, advances
and investments. Advances decreased from 2014 and o 2015, increased
from 41 % to 45%. Investment increased from 2014 to2015. Although it is
not comparable to previous years, still it is showing improvement from
2014. This is due to low interest rates in 2014 and higher interest rate
in2015 and . Bankers are left with only option of investing in short-term
investment, to increase their profit margin. Investments, as being a noninterest source of income are more promising than advances that are
becoming more profitable due to inclining interest rates. Bankers prefer to
give advances when the interest rate was high but then prefer to invest in
non interest income in 2015 .

42

4.1.1.2 Vertical Analysis of NBP`s Income Statement

Table 4.2 Vertical Analysis of NBP Income Statement
Year

2014

2014%

Rs in ooo

2015

2015%

Rs in ooo

Markup revenue

100,192,320

100

115,251,748 100

Markup Expense

60894358

61

70099505

39

Net Markup

39297962

47

45152243

61

Provision against 17459330

25

11083973

12

19

1441758

58

65

12

non

performing

advances
Reversal
provision
diminution

of 1397122
for
in

investment values
Bad debt written 3020
off

43

Provision against 70230

balance

64

3392200

64

14

9303015

14

26

35,849,228

28

sheet

obligations
19567702
Net

Markup 19,730,260

Income
SOURCE: Annual Report 2014-2015
Interpretation
The Vertical Analysis of Income Statement of NBP as given in the above
table shows a decreasing trend in 2014 and then increasing trend in 2015.
Markup expenses are actually cost of sale in case of a bank. Increasing
trend in gross profit shows the efficiency of the bank`s management in
controlling markup expenses. A look at the figure of total of total income of
the bank reveals a decrease. As total income is the sum of both markup
income and the non markup income, this decrease in total income

is due

to the decrease in the markup income. This organization`s total non markup
income consists of fee and commission, dividend income, exchange income
and other income.
4.1.1.3 Horizontal Analysis of NBP`s Balance interpretation
Year

2014

2015

2015 vs

Rs in 000

Rs in 000

158,230033

982,46783

37%

18388738

125,43964

-31%

2014 %

ASSETS
Cash and balance with treasury
bank
Balance with other banks

44

Lending to financial inst

519,41866

111794127

115%

Investments

396411825

561767518

41%

Advances

620163029

630229649

2%

Operating fixed assets

34568864

33353526

-3%

Defferred Tax Assets

10968824

9884256

-10

Other assets

81576084

91839258

13

Source: Annual Report 2014-2015

Interpretation
Common size horizontal analysis of NBP for the year 2014-2015, in asset
side of the NBP balance sheet. Cash and balance with treasury banks,
Balances with other bank shows positive trend in 2014 and 2015 in both
years. Lending to financial institution investment are decreased in 2015
than 2014. Advances shows increase in 2015 net advances. Operating fixed
assets are decreased in 2015. Deferred tax assets also decreased in 2015.
Other assets are increased in 2015 as compare to 2014.
************************************************************
************************************************************
*************************************
4.1.1.4 Horizontal Analysis of NBP`s income statement an
Year

2015

2014

Rs in ooo

Rs in ooo

Markup revenue

115,251,748

100,192,320

Markup Expense

70099505

60894358

Net Markup

45152243

39297962

2014

vs

2015%

45

Provision against non 11083973

17459330

performing advances
Reversal of provision 1441758
for

diminution

1397122

in

investment values
Bad debt written off
Provision
balance

3020

against 3392200

70230

sheet

obligations

Net Markup Income

9303015

19567702

35,849,228

19,730,260

Table 4.4 Horizontal analysis of NBP`s Income Statement

Source Annual Report 2014-2015
4.2 RATIO ANALYSIS
Ratio analysis is an important and old technique of financial analysis.
Ratios are important and helpful in the reference that:
These simplify the comprehension of financial statement and tell the whole
story of changes in the financial conditions of the business. These provide
data for inter-firm comparison. The ratios highlight the factors associated
with successful and unsuccessful firms, also reveal strong and weak firms.
These help in planning and forecasting these can assist management in its
basic functions of forecasting, planning, coordination and control. These
help in investment decision in case of investor and lending decision in case
of Bankers etc.
However, the ratios are only indicators, they cannot be taken as final
regarding good or bad financial position of the business other things have
also to be seen. Great care is needed while calculating meaningful ratios

46

and in interpreting them. Although there are several ratios, which an analyst
can employ yet the type of ratios he would, use entirely depends on the
purpose for which the analysis is done i.e., a creditor would keep him
abreast about the ability of a concern to cover up its current obligations and
so would care about current and liquid ratios, Turnover of receivables,
coverage of interest by the level of earnings etc.
4.2.1 Liquidity Ratios
In graphs 2015should be near origin. Round the figures upto 2 decimal
places We need to provide complete working of the ratios. we are required
to carefully study the table regarding maturities of assets and liabilities.
Where you can easily find the current and long term part of assets and
liabilities. Assets and liabilities having upto 1 year maturity are considered
as current assets and current liabilities. This table is given in the annual
report of the selected bank. You need to re-calculate the current and longterm parts of assets and liabilities according to this table.
These are includes:

Current Ratio:
Current ratio = current asset/current liabilities

Current assets=total assets-operating fix assets and other assets

Total Asset

1711874168

Fixed asset

33300674

Other asset

80091712

Current Asset=1711874168-(33300674+80091712)
1711874168-253208962
1549659081

47

Current Liability=Total Liablity-Other Liability

1540219076-77036022
1372249263

2015 Rs. In 000

2014 Rs. In 000

1549659081/1372249263

1372249263/1211585733

Comments:
The current ratio of 2015 and 2014 is almost same. It means that its current
ratio is less liquid. There is small increase in industrys ratio which can
meet the short term obligations of 2015 and 2014.

Current Ratio
100%
80%
60%
40%

Sales

20%
0%
2014
2015

Acid Test Ratio

48

Acid test ratio = current asset inventories prepaid expanses/current

liabilities.
Acid test ratio=1549659081-561767518-561767518/1367066089
2015 Rs. In 000

2014 Rs. In 000

1549659081-561767518-

1372249263-396411825-

40975977/1367066089

37677868/1211585733

0.69

0.73

Comments
the acid test ratio shows the liquidity by showing its ability to pay off its
current liabilities with quick assets has decreased from 0.73 to 0.69 in 2015.
If a firm has enough quick assets to cover its total current liabilities

Return on Total Assets

100%
80%
60%
40%

Return on Total Assets

20%
0%
2014

2015

Return on Total Equity:

Return on total equity = (Net income/ total equity)*100
16071184/114023205*100

49

5%

CHAPTER -5
SWOT ANALYSIS

CHAPTER 6
CONCLUSION AND RECOMMENDATIONS
6.1 CONCLUSION
To know how NBP can compete well and how to maintain its position in
the market as a best services organization. In conclusion we can say that the
global economic environment has changed, creating challenges and
opportunities for the worlds policy makers. The privatization drive has
emerged as a strong tool of transformation, which is being recognized as an

REFERENCES
1. Gibson, Charles H, (2002); Financial Reporting & Analysis, 7th Edition.
Prentice Hall International Corporation.
2. Lawrence J.Gitman, (2008); Principles of managerial Finance. 11th
Edition, San Diego State University.
3. Siddiqi, Asrar H (2008); Practices and law Banking in Pakistan, (8th Ed),
Royal Book Company, Karachi.
4. NBP Annual report (2014), (2015 National Bank of Pakistan
5. National bank of Pakistan 2015, executive committee, viewed 05 March,
2016, <http:// www.nbp.com.pk>
6. National bank of Pakistan 2015, publications, annual reports, accessed on
09 March 2016<http:// www.nbp.com.pk/Publications/index.aspx>
7. Business

recorder

2014,

highest

rating,

viewed

05

may,2015,

<http://www.brecorder.com/top-stories/0/1175012/>

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