www.vustudents.ning.com mba (finance). internship report national bank of pakistan

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MBA (Finance)


Internship Report

National Bank of Pakistan


Brief Introduction of the Organization

Overview of business •1949

•Start work at micro level

•Single largest public bank

•Role play in the development of economy


Business volume I observed all the financial indicators are in

growing trend

Items 2007 2008 2009

Total assets 762194 817758 944233

Deposits 591907 624.939 726,465

Advance-net 340,319 412.987 475,243

Investment-net 211,146 170.822 217,643

Shareholder’s equity

69,271 81.367 94,792

Pre tax profit 28,061 23,001 22,300


Competitors of National Bank of Pakistan

All Commercial banks like (, HBL MCB , ABL etc.)

Islamic banks like (Meezan Bank, Bank Islami, etc)


Organizational Hierarchy Chart

.

President

SEVP

RM

BM


Training Program

.

I have got training in major 3 departments during my internship . Account opening department Remittance department Clearing department


Account opening department

I had worked in this department 2 weeks I opened the current account, PLS account I have filled the KYC and also posted the

confirmation letter to customers.


I had worked in this department 2 weeks I have learned the procedure theoretically of

Pay Order, Demand Draft,etc. I also fill the Pay Order and Demand Draft slips It was my duty to issue the cheque books.

Remittance department


Clearing department

I had worked in this department 2 weeks It was my duty to enter all the in-ward clearing

cheques in-word “clearing register.” It was also include in my duties to enter all the

out-ward clearing cheques in-out word “clearing register.”


Structure of Finance Department

Hierarchy of NBP of Finance Department

SVP Finance

President

GM Finance


Structure of Finance Department

Finance & accounting operations

Almost 1000 employees are working and handle lots of assignments. Preparation of budget Investment decision Budget allocation Assets and liability management Handling the accounting matters


Function of Finance Department

Accounting system of Organization NBP use the “double entry system”

NBP use “BBO” and “EBS “software to generate the electronic data

NBP raise funds from different sources like deposit, borrowing from other institution and equity

NBP allocate the source of funds in loan, reserves, investment,


Ratio Analysis

Ratio Analysis

National Banks of Pakistan

Year 2007 Year 2008 Year 2009

Current Ratio

646,338,217 / 588,363,674

=1.098

690,313,112 / 635,158,077

= 1.086

1,059,935,515 / 737,085,994

= 1.438

Ratio Analysis

0

0.5

1

1.5

2007 2008 2009

currentratio

Current Ratio is showing Mixed trend


Ratio Analysis

Ratio Analysis



Working Capital

646,338,217 -

588,363,674 =57,974,543

690,313,112 -635,158,077

= 55,155,035

1,059,935,515 - 737,085,994

= 322,849,521 0

100000000

200000000

300000000

400000000

2007 2009

WorkingCapital

3-D Column2

3-D Column3

Working Capital is showing Mixed trend


Ratio Analysis

Ratio AnalysisNational Banks of Pakistan

Year 2007

Year 2008

Year 2009

Sales to working capital

50569481 / 57973547

=87.22

60942798 /

55,155,035

= 110.5

77947697 /

322,849,521 = 24.14

0

20

40

60

80

100

120

2007 2008 2009

Sales toworking capital

3-D Column 2

3-D Column 3

Working Capital is showing Mixed trend


Ratio Analysis



Debt to equity

ratio

1,235,301,130 /

69,270,631 =17.832

135388232/9670595

= 13.90

1,607,040,516 / 94,791,919

= 16.953

0

2

4

6

8

10

12

14

16

18

2007 2008 2009

East

3-D Column 2

3-D Column 3

It is showing Mixed trend


Ratio Analysis



Debt to total

assets 1,235,301,130 / 762,193,593

= 1.620

1390916111 / 817758326

= 1.700

1,607,040,516 / 944,232,762

= 1.701

Debt to total assets trend is increasing

1.56

1.58

1.6

1.62

1.64

1.66

1.68

1.7

1.72

2007 2008 2009

East

3-D Column 2

3-D Column 3


Ratio Analysis


Year 2007

Year 2008

Year 2009

Fixed asset to equity ratio

25,922,979 /

8,154,319 = 21.03

24,217,655 /81,367,002

= 23.6

25,147,192 /

94,791,919 =

22.2

Fixed asset to equity ratio has mixed trend

19.5

20

20.5

21

21.5

22

22.5

23

23.5

24

2007 2008 2009

Fixed asset toequity

3-D Column 2

3-D Column 3


Ratio Analysis



Net profit

margin

19,033,773 /50,569,481 *100

= 37.6388 %

= 15,458,590 / 60,942,798 *100

= 25.365 %

= 18,211,846 / 77,947,697 *100

= 23.364 % 0

5

10

15

20

25

30

35

40

2007 2008 2009

Net Profit

3-D Column 2

3-D Column 3

It is showing decreasing




Return on asset:

= 19,033,773 / 762.193,593 *100

= 2.497 %

= 15,458,590 / 817,758,326 *100

= 1.890 %

= 18,211,846 / 944,232,762 *100

= 1.928 %

0

0.5

1

1.5

2

2.5

2007 2008 2009

Return NonAssest

3-D Column 2

3-D Column 3

It is showing Mixed Trend


Ratio Analysis



Return on Equities

= 19,033,773 / 69,270,631 *100

= 27.477 %

= 15,458,590 / 81,367,002 *100

= 18.998 %

= 18,211,846 / 94,791,919 *100

= 19.212 %

0

5

10

15

20

25

30

2007 2008 2009

Return onEquite

3-D Column 2

3-D Column 3





Total Asset turn over

ratio

= 50,569,481 / 762,193,593

= 0.0663 Times

= 60,942,798 / 817,758,326

= 0.07452 Times

= 77,947,697 / 944,232.762

= 0.0825 Times

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

2007 2008 2009

Total Assets

3-D Column 2

3-D Column 3

It is showing Increasing Trend


Ratio Analysis



Fixed asset turn over:

= 50,569,481 / 25,922,979

= 1.950 Times

= 60,940,798 / 24,217,655

= 2.516 Times

= 77,947,697 / 25,147,192

= 3.099 Times

0

10

20

30

40

50

60

70

80

90

2007 2008 2009

Fexed AssetsTo turn over

3-D Column 2

3-D Column 3

It is showing increasing trend




Earning per Share

= 19,033,773 / 8,154,319

= 21.22 per share

= 15,458,590 / 81,367,002

= 14.36 per share

= 18,211,846 / 94,791,919

=16.92 per share

0

10

20

30

40

50

60

70

80

90

2007 2008 2009

EPS

3-D Column 2

3-D Column 3

It is showing Increasing Trend


Ratio Analysis



Cash Flow Ratios

= 78,804,419 /1,235,301,130 *100

= 6.379 %

= 2,532,681 / 1,390,916,111 *100

==0.182 %

= 45,451,673 / 1,607,040,516 *100

= 2.828 %

0

1

2

3

4

5

6

7

2007 2008 2009

Cash flowratios

3-D Column 2

3-D Column 3



Horizontal analysisNBP Balance SheetHorizontal Analysis for 3 years

2007% 2008 % 2009 %

Assets

Cash and balances with treasury bank 100 112.259 122.087

Balances with other bank 100 102.3264 75.80309

Lending to finance department 100 79.79665 91.25339

Investment 100 80.90253 103.0769

Advances 100 121.3529 139.6465

Operation fix assets 100 93.42157 97.00734

Differed assets 100 100 100

Other assets 100 143.7341 191.3744

Total Assets 100 107.2901 123.8836


Horizontal analysisNBP Balance Sheet

Horizontal Analysis for 3 yearsLiabilities %

Bills payable 100 144.7069 150.401

Brewing 100 374.094 418.6537

Deposits and other accounts 100 105.5805 122.7328

sub ordinate loans

Liabilities against Assets subject to Finance 100 75.32336 127.046

Differed tax Liabilities 100 0 0

other Liabilities 100 128.1732 136.6179

Total Liabilities 100 110.7521 127.6874

Net Assets

Share Capital 100 110 132

Reserves 100 126.4322 143.8088

Unappropriated Profited 100 115.6845 135.2908

Surplus on Revaluation of assets 100 #VALUE! 52.61531

Net Capital 100 88.07056 102.7667

Owner Equity+ Liabilities 100 107.2901 123.8836


Horizontal AnalysisNBP Income Statement

Horizontal Analysis for 3 years

% 2007% 2008 2009

Marks ,returns, interest earned 100 120.513 154.1398

Markup, return, interest expense 100 140.9962 233.1147

Net markup 100 110.1951 114.3582

Provision against non performing advances 100 224.2934 233.819

Provision against of balance sheet obligations 100 -927.373 -1504.74

Provision against

Bad debts written off directly 100 0 0

100 232.2979 247.0885

Net mark up 100 90.24615 92.67291

Non Mark up ,interest income

Fee, commission and brokage income 100 116.8644 131.684

Dividend income 100 88.22295 58.84742

Income from dealing in foreign currencies 100 380.6055 290.3804

Gain of sale and redemption of Security 100 16.88639 196.0932

Unrealized gain 100 -5.34038 -7.36766

Other Income 100 845.1029 374.7318

Total Non Markup 100 121.1964 140.462

100 100.1213 107.9208


Horizontal AnalysisNBP Income Statement

Horizontal Analysis for 3 years

NON Mark Up / Interest Expenses

Administrative Expense 100 127.9129 158.8879

Other Provision 100 444.8815 369.4525

Other Charges 100 3404.462 1876.149

Total Non Mark Up/Interest Expenses 100 135.5151 163.3922

Extra ordinary/Unusual Item

Profit Before Taxation 100 81.96931 79.47176

Taxation- Current 100 141.5226 0

Prior Period 100 0 -1055.76

Deferred 100 -1303.63 -308.869

100 83.55639 45.29135

Profit After Taxation 100 81.21664 95.68174


Vertical analysis for 3 years1

Balance Sheet Items Change

%2009 Change

%2008 Change

%2008

Assets

Cash and balances with treasury banks

12.266 115,827,868

13.023 106,503,756

12.447 94,873,249

Balances with other banks

3.008 28,405,564

4.688 38,344,608

4.916 37,472,832

Lending to financial institutions

2.074 19,587,176

2.094 17,128,032

2.816 21,464,600

Investments - net 23.049 217,642,822

20.889 170,822,491

27.702 211,146,038

Advances - net 50.331 475,243,431

50.502 412,986,865

44.649 340,318,930

Operating fixed assets

3.663 25,147,192

2.961 24,217,655

3.401 25,922,979

Deferred tax assets 0.324 3,062,271 0.391 3,204,572 4.066 30,994,965

Others assets - net 6.281 59,316,438

5.447 44,550,347

4.066 30,994,965

Total Assets 100% 944,232,762

100% 817,758,326

100% 762,193,593


Vertical analysis for 3 years Balance Sheet2

items Change%

2009 Change%

2008 Change%

2008

Libilities

Bills payable 1.124 10,621,169

1.249 10,219,061

0.926 7,061,902

Borrowings 4.795 45,278,138

4.947 40,458,926

1.418 10,815,176

Deposits and other accounts

76.937 726,464,825

76.420 624,939,016

77.658 591,907,435

Sub ordinated loan

Liabilities against assets subject to finance lease

4.514 42,629 1 3.090 25,274 4.402 33,554

Deferred tax liabilities - net 0.668 5,097,831

Other liabilities 4.476 42,269,623

4.849 39656,831

4.059 30,940,041

T. Liabilities 87.338 824,676,384

87.470 715,299,108

84.736 645,855,939

Total Assets 119,556,378

102,459,218

116,337,654


Vertical AnalysisNBP Income Statement

Vertical Analysis for 3 years

Share capital 1.139 10,763,702

1.096 8,969,751

1.069 8,154,319

Reserves 2.402 22,681,707

2.438 19,941,047

2.069 15,772,124

Unappropriated profit 6.496 61,346,510

6.414 52,456,204

5.949 45,344,188

Total Equity 10.039 94,791,919

9.950 81,367,002

9.088 69,270,631

Surplus on revaluation of assets - net of tax

2.622 24,764,459

2.579 21,092,216

6.175 47,067,023

Total Liabilities & Equity

100 % 944,232,762

100% 817,758,326

100% 762,193,593


Vertical AnalysisNBP Income StatementVertical Analysis for 3 years

NON Mark Up / Interest Expenses

Administrative Expense 22571470 18171198 14205911

Other Provision 620780 747521 168027

Other Charges 321647 583661 17144

Total Non Mark Up/Interest Expenses 23513897 19502080 14391079

Extra ordinary/Unusual Item

Profit Before Taxation 22300173 23000998 28060501

Taxation- Current 11762650 8311500

Prior Period -4133282 391497

Deferred -999904 -4220242 323731

4088327 7542408 9026728

Profit After Taxation 18211846 15458590 19033773

Unappropriated Profit 52456204 45344188 32074677

Transfer from Surplus on revaluation 123934 130456 39007

Profit Available for appropriate 70791984 60933234 51147457


Industry Analysis1. Earning Per Share

Earning Per Share

2009 Rs 2008 Rs 2007 Rs

Bank Alfalah 0.24 0.38 1.04

Meezan Bank 0.98 0.82 1.70

Allied Bank 1.7 1.12 1.27

National Bank of Pakistan

16.92 14.36 21.22


Industry Analysis2.Net Profit Margin

Net Profit Margin 2009 % 2008 % 2007 %


Meezan Bank 8.76 8.27 16.27

Allied Bank 50.30 40.47 48.14

National Bank of Pakistan 23.36 25.36 37.63


Industry Analysis3. Return on Assets

Return on Assets2009 2008 2007


Meezan Bank 0.98 0.82 1.70

Allied Bank 1.7 1.12 1.27



Industry Analysis4.Return on Equity

Return on Equity2009 % 2008 % 2007 %

Bank Alfalah 5.22 9.17 25.72

Meezan Bank 13.29 10.30 3.39

Allied Bank 23.89 18.41 2.05



Industry Analysis5.Debt to Equity

Debt to Equity2009 2008 2007

Bank Alfalah 0.06 0.05 0.052

Meezan Bank 12.5 13.27 10.77

Allied Bank 12.98 15.48 15.11



Industry Analysis6.Debt to Total Assets

Debt to Total Assets2009 2008 2007

Bank Alfalah 94.3% 95.1% 95.06%

Meezan Bank 92.60% 92.99% 91.50%

Allied Bank 92.85% 93.93% 93.79%

National Bank of Pakistan 1.70% 1.70% 1.62%


Industry Analysis7.Assets Turn over Ratio

Assets Turn over Ratio2009 2008 2007

Bank Alfalah 0.176 0.019 0.021

Meezan Bank 0.081 0.080 0.068

Allied Bank 0.033 0.027 0.026



Industry Analysis8.Gross profit margin

Gross profit margin2009 % 2008 % 2007 %

Bank Alfalah 30.67 % 3.32 % 35.54 %

Meezan Bank 50.80 % 54.61% 46.39%

Allied Bank 45.51% 43.58% 52.74%

National Bank of Pakistan 66.50% 60.80% 49.34%


Future prospectus of NBP NBP higher management has set the future goal that NBP will issue the GDR to raise source of finance.

Increasing trend in NBP assets, profits. liability which will make more strong financial health of the NBP.

The bank will also participate in the multinational projects which NBP can make more profit.

NBP will also introduce the more social schemes with the co-ordination of Govt which will enhance more market value of the bank.

More future growth will be expected in NBP source of fund ,investment and assets because all the financial indicators of NBP are in positive direction.

Policies, strategy has revised according to desire of modern consumer demand.

A SWOT (Strengths, Weaknesses, Opportunities, and Threats) is a tool used to provide a general or detailed snapshot of a company's health.


SWOT Analysis of the Organization

•Government Bank•Strong liquidity position of the bank due to large portfolio of deposit.•A variety and multiple source of fund like Govt accounts , Govt institutional account etc.•Good market repute and better rating.•All financial indicators of NBP are in positive increasing trend.•Qualified and experienced stall is major strength •Sound financial policies •Successful history•All kinds of government payments done by NBP.


Weakness • Finance depart provide financing to Govt at very cheaper rate.• Provide lending to political persons due to this it increase non

performing loans of NBP.• Working Environment is so complex • Information system of NBP is so poor condition. In this modern

age NBP 80% is taking manual basis. • Product delivery process is so complex and lengthy. • Poor relationship with customers.• Poor marketing strategy • Delay in investment decisions due to government bank.• More load of work due to shortage of employees.• These are only few weaknesses mansion. If National Bank of

Pakistan will over come all it. NBP can become the leader of market.


Opportunity

NBP has open many opportunities for its growth. NBP current management has boarder vision. They have taken steps to improve customer services to achieve objectives.

NBP has opportunity to Expand the Islamic banking. NBP has a Opportunities to open new branches in the

foreign countries Opportunity can raise the finance through the issuance of the

bounds These actions taken by current management provide a great

opportunity for NBP for making it future prosper and can make NBP not less than any modern commercialize bank in Pakistan.


Threats

Attentive competition in the banking sector Law and order situation in the country. Thereat from Govt regularity body and policy. In NBP facing the market risk due to the

political and economical situation in the country. Threats from NBP employ union and

association.


Conclusion

I have reached conclusion on the basis of SWOT and critical analysis.

NBP is a public leading bank. it provides all types of product and services to all class of the society. Bank has some strength liquidity poison, large portfolio of deposits etc which differentiate the NBP from other competitors

The bank is not well managing the counter rush and take late financial decisions. It is damaging the market value of NBP. If high management of NBP curtails all type of weakness and overcomes challenges. It will become again leader in the banking industry.


Recommendations• I have suggests the few advises to high management of NBP

on the basis of critical and SWOT analysis• NBP high management should introduce policy. In which loans

not given to the political persons.• High Management should make decision to open the new

branches in the foreign countries which will enhances the source of fund and profit of the bank

• High management should review credit policy it should be flexible to the needy person.

• High management should be introduced more innovative schemes which will enhance the more market value of NBP.

• The NBP high management should investment funds in the power supply projects.

• NBP high management should rapidly introduce E-banking system in NBP.


Thank You


Vertical analysis for 3 years Balance Sheet

Items Change% 2009 Change% 2008 Change% 2008

Assets

Cash and balances with treasury banks

12.266 115,827,868

13.023 106,503,756

12.447 94,873,249

Balances with other banks

3.008 28,405,564 4.688 38,344,608 4.916 37,472,832

Lending to financial institutions

2.074 19,587,176

2.094 17,128,032

2.816 21,464,600

Investments - net 23.049 217,642,822 20.889 170,822,491 27.702 211,146,038

Advances - net 50.331 475,243,431 50.502 412,986,865 44.649 340,318,930

Operating fixed assets 3.663 25,147,192 2.961 24,217,655 3.401 25,922,979

Deferred tax assets 0.324 3,062,271 0.391 3,204,572 4.066 30,994,965

Others assets - net 6.281 59,316,438 5.447 44,550,347 4.066 30,994,965

Total Assets 100% 944,232,762 100% 817,758,326 100% 762,193,593



items Change% 2009 Change% 2008 Change% 2008

Libilities

Bills payable 1.124 10,621,169 1.249 10,219,061 0.926 7,061,902

Borrowings 4.795 45,278,138 4.947 40,458,926 1.418 10,815,176

Deposits and other accounts

76.937 726,464,825 76.420 624,939,016 77.658 591,907,435

Sub ordinated loan

Liabilities against assets subject to finance lease

4.514 42,629 1 3.090 25,274 4.402 33,554

Deferred tax liabilities - net

0.668 5,097,831

Other liabilities 4.476 42,269,623 4.849 39656,831 4.059 30,940,041

T. Liabilities 87.338 824,676,384 87.470 715,299,108

84.736 645,855,939

Total Assets 119,556,378

102,459,218

116,337,654



Share capital 1.139 10,763,702 1.096 8,969,751 1.069 8,154,319

Reserves 2.402 22,681,707 2.438 19,941,047 2.069 15,772,124

Unappropriated profit 6.496 61,346,510 6.414 52,456,204 5.949 45,344,188

Total Equity 10.039 94,791,919 9.950 81,367,002 9.088 69,270,631

Surplus on revaluation of assets - net of tax

2.622 24,764,459 2.579 21,092,216 6.175 47,067,023

Total Liabilities & Equity 100 % 944,232,762 100% 817,758,326

100% 762,193,593


items Change%

2009 Change%

2008 Change%

2007

Mark-up /return / interest earned 100% 77,947,697

100% 60,942,798

100% 50,569,481

Mark-up /return / interest expensed

50.661 39,489,649

39.192 23,884,768

33.498 16,940,011

- Net mark-up/Interest income 49.338 38,458,048

60.807 37,058,030

66.501 33,629,470

Provision against non-performing advances

14.167 11,043,469

17.382 10,593,565

9.339 4,723,084

provision for diminution in the value of investments

0.776 605,629

0.612 373,249

(.0795)

(40,248)

Inappropriate profit B/F 67.296 52,456,204

74.404 45,344,188

63.426 32,074,677

Transfer from surplus on revolution of fixed assets on account of incremental depreciation

0.158 123,934 0.214 130,456 0.077 39,007

Profit available for appropriation 90.819 70,791,984

99.984 60,933,234

101.14 51,147,457


Vertical AnalysisNBP Income Statement(1/3)Vertical Analysis for 3 years

items Change% 2009 Change% 2008 Change% 2008

Non Mark-up/Interest Income

Fee, commission and brokerage income

11.456 8,930,391 13.004 7,925,370 13.410 6,781,683

Dividend income 2.463 1,920,336 4.723 2,878,932 6.452 3,263,246

Income from dealing in foreign currencies

3.884 3,028,165 6.512 3,969,057 2.062 1,042,827

Gain on sale of securities - net

5.890 4,591,894 0.648 395,427 4.630 2,341,690

Unrealized loss on revaluation of investment classified as held for trading

3.021 2,355 2.800 1,707 0.063 31,964)

Other income - net directly

0.708 552,216 2.043 1,245,369 0.291 147,363

Total non mark up / interest income

24.407 19,025,357 2.694 16,41,862 26.784 13,544,845

58.775 67 45,814,070 69.742 42,503,078 83.947 42,451,580


NBP Income Statement(2/3)Vertical Analysis for 3 years

items Change%

2009 Change% 2008 Change%

2007

Non Mark-up/Interest

Expenses Administrative expenses 28.957 22,571,470 29.816 18,171,1

98 28.091 14,205,9

11

other provision/write offs 0.796 620,780 1.226 747,521 0.332 168,027

Other charges 0.412 321,647 0.957 583,361 0.033 17,141

Total non mark up / interest expenses

30.166 23,513,897 32.000 19,502,080

28.458 14,205,911

Profit before taxation 28.609 22,300,173 37.741 23,000,998

55.489 28,060,501


NBP Income Statement(3/3)Vertical Analysis for 3 years

items Change%

2009 Change%

2008 Change%

2007

Taxation - Current 11.83 9,221,513 19.301 11,762,650

16.435 8,311,500

Prior years -5.302 (4,133,282)

0.774 391,497

- Deferred 1.282 (999,904) -6.92 (4,220,242)

0.640 323,731

5.244 4,088,327 123.95 75,542,408

Profit after Taxation 23.364 18,211,846

25.365 15,458,590

37.638 19,033,773

Inappropriate profit B/F 67.296 52,456,204

74.404 45,344,188

63.426 32,074,677

Transfer from surplus on revolution of fixed assets on account of incremental depreciation

0.158 123,934 0.214 130,456 0.077 39,007

Profit available for appropriation

90.819 70,791,984

99.984 60,933,234

101.14 51,147,457

www.vustudents.ning.com mba (finance). internship report national bank of pakistan

Documents

remittance department

clearing department

mba finance slide

mixed trend slide

ratio analysis current

president sevp rm bm

equity nbp

current account