Chapter-1 Introduction To Report: Internship Report On NBP, Karak Branch

INTERNSHIP REPORT ON NBP, KARAK BRANCH
CHAPTER-1
INTRODUCTION TO REPORT
1.1 BACKGROUND OF THE STUDY.
This report is about National Bank of Pakistan. The National Bank of Pakistan
(NBP) is incorporated under the National Bank of Pakistan Act, 1956, which gives the
Bank the authority to function as the central bank of the country. The NBP Act
mandates the Bank to regulate the monetary and credit system of Pakistan and to foster
its growth in the best national interest with a view to securing monetary stability and
fuller utilization of the country’s productive resources.
Established under the NBP Ordinance 2001, NBP supports NBP in performing
functions such as handling of currency and credit management, facilitating the inter-
bank settlement system, and sale/purchase of savings instruments of the Government
on behalf of Central Directorate of National Savings. NBP also collects revenue and
makes payments for and on behalf of the Government. It also carries out operational
work relating to development finance, management of public debt, foreign exchange
operations and export refinance. The Board of Directors of NBP, chaired by the
Governor NBP, comprises of all members of the Central Board of NBP and the
Managing Director of NBP.
1.2 PURPOSE OF THE STUDY
To observe, analyze and interpret the relevant data competently and in a useful manner.
1) To work practically in an organization
2) To find out that how the banks are operating.
3) To implement your practical knowledge gained before.
4) To develop interpersonal communication.
INSTITUTE OF BUSINEES STUDIES (IBS), KUST

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1.3 MEHTODOLGY OF REPORT
The methodology reported for collection of data is primary as well as secondary

data. The biggest source of information is my personal observation while working with
staff and having discussion with them. Formally arranged interviews and discussions
also helped me in this regards.
1.3.1 Primary data
Personal Knowledge
Personal observation
Discussion with staff of NBP
1.3.2 Secondary data
Economic Bulletin NBP
Magazine
Annual reports
Internet

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1.4 SCHEME OF THE REPORT
Chapter 1: Introduction of the Report
The introduction part includes Background of study, purpose of study, methodology of

report and scheme of internship report.
Chapter 2: Industry Analysis
Industry analysis includes key success factors, market size, market growth rate, market
profitability and market trends,
Chapter 3: Company Analysis
Company analysis includes company introduction, company analysis (in the area of
specialization) and SWOT analysis of company based on financial analysis.
Chapter 4: Recommendations
Recommendations chapter include Conclusion and References of the internship report.

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CHAPTER-2
INDUSTRY ANALYSIS
2.1 KEY SUCCESS FACTORS

The Following are the key success factors of National Bank of Pakistan
1. Unique resources
2. Effective compliance system
3. Large no of branches
4. Management competency
5. Large market share
6. Provide various services
2.2 MARKET SIZE

National Bank of Pakistan has planned to expand its Overseas Network to other
Asian Countries like Sri Lanka, Russia and Tajikistan. NBP is presently running its
Overseas Network in 18Countries, 22 branches and 10 regional offices. Domestic
Network NBP has the largest domestic branch network with over 250 branches and is
present in 18Countries.Departments of NBP are Deposits Department, Remittances
Department, Advance Department, Cash Department, Govt.Collection Department,
Foreign exchange department, Clearance department.
2.3 MARKET GROWTH RATE
Year 2011 was an exceptionally profitable year for commercial banks in Pakistan. All
banks together posted stellar earnings growth of 51 percent in 2011.Similar growth rate
was also observed in the year 2012.
2.4 MARKET PROFITABILITY
Market profitability can be analyzed through Porter’s Model. The five steps of Porter
model are: Rivalry among Competitive Firms: The Competitive Strategies acquired by

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Sind Bank included offering very low charges on Demand Draft, Telegraphy Transfer,
and Potential Entry of New Competitors: Whenever new firms enter a particular
industry, the competition increases. However, different restrictions are imposed to limit
the entry of new firms into the market.
MICHEAL PORTER’S FIVE FORCES MODEL
Power of
Buyers
Threat of Competitiv
Power of
new Entrants e
Suppliers
Rivalry
Threat of
Substitutes

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MICHEAL PORTER’S FIVE FORCES MODEL
For further analysis of National Bank environment, Porters Five Forces Analysis is also
applied on the bank. This analysis takes into consideration the following factors,
Availability of Substitutes
Substitution of one product with another one increases the rivalry within an
industry. Although perfect substitute of banks are not available in the market but people
still have choices of saving or investing their money. They can either save their money
in the National Saving Centers (Banking Intermediaries) which give protection to their
assets. Aside from saving one can invest money in stock market in form of shares /
bonds or in real estate. These kinds of substitutes increase the rivalry in the
banking sector
Rivalry among existing firms
There is tough competition among various banks. As variety of public and

privatebanks are already existingin the market, offeringproducts on competitiveprices.
If we look at Islamic Banking products then, Meezan Bank, Habib Bank and many
others are offering wide range of products in this sector. The tough competition among
these banks gives rise to the challenges which the competitor banks have to face. The
competition among various banks increases the switching of the customers form one
bank’s product to the other bank. The tables on the following pages show the total
number of branches of some of the banks working in Pakistan and the various products
being offered by these Islamic banking branches as compared to the National Bank.
Threat of new entrants

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The banking sector of any country has always chances of growth and competition
so many new banks enter and leave the market. Mostly foreign banks step in the
developing countries for expanding their branches, not only this mergers between
foreign and local banks take place at large scale but Pakistan’s present economic
condition and government instability has arose the feelings of awe and terror among
most of the foreign banks to enter in the market. In future due to uncertainty
and security problems in Pakistan investors will not be willing to invest here. Due to
overall financial problems in the whole world new banks will not be entering in to the
banking industry.
Bargaining Power of Buyers

Bargaining power of buyer is low where the products substitutes are not available
and customers are large in number. In case of banks there are lots of other banks and
banking intermediaries, having wide range of products, so power of buyer in banking
sector is high. The bank cannot force any customer to buy the desired product because
this directly affects its reputation, but can convince its customers by giving them
special discount or rewards. If we look at National Bank, we will find that the
competitors are also offering products due to which customer feel in power by saying
that they can go to some other bank in case of dissatisfaction.
Bargaining power of Suppliers

As in banking sector suppliers does not exist so there is no bargaining power of
supplier

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CHAPTER-3
COMPANY ANALYSIS
3.1 INTRODUCTION TO NATIONAL BANK OF PAKISTAN
I did my internship at National Bank of Pakistan Karak branch having Branch code
0451. This is an online branch of National Bank Domestic and international branch
network. Mr. Inam Ullah Khattak working there as a Branch Manager. Operational
manager is Mr. Bahar Khattak he is also my supervisor. It has 9 employees working in
different unit of the bank. This branch also takes deposits on behalf of NADRA and
Passport Department. The Branch also provides facility of Western Union Money
Transfer to domestic cities as well as international countries
3.1.1 VISION
Our vision is to be a leading bank which will play a positive role to generate economic
activities for empowering the people by meeting their financial needs for running a
successful business and create employment opportunities.
3.1.2 MISSION
To develop as a leading Commercial Bank in the country by meeting its stated

objectives of promoting economic development of the country in general in the
Province of State in particular.
3.1.3 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.
A national presence with a history of contribution to our communities.

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We shall work to…
Meet expectations through Market-based solutions and products.
Reward entrepreneurial efforts.
Create value for all stakeholders.
We aim to be peopling 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.
We have confidence that tomorrow we will be…
Leaders in our industry.
An organization maintaining the trust of stakeholders.
An innovative, creative and dynamic institution responding to the changing needs of the
internal and external environment
3.1.4 GOALS
To enhance profitability and maximization of National Bank of Pakistan share through

increasing leverage of existing customer base and diversified range of products.
3.2 HISTORY OF NATIONAL BANK OF PAKISTAN

National Bank of Pakistan was established on December 27, Headquartered in Karachi.
It has over 250 branches in 125 cities. It was set up as a state-owned bank,
offering microfinance loans and other banking services.
As a result of the exchange rate controversy, regular trade and payments

between the two countries came to standstill. India froze the surplus earned by Pakistan
from a favorable balance of trade, and one more financial dispute, which is still alive,
was added to the unsettled list. One of the immediate consequences of this situation

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was the withdrawal of Marwari Merchants of the Indian finance, which used to be
employed annually for the movement of Pakistan’s jute crop. A crisis of the first
magnitude threatened because the jute crop was already in the markets and, as there
was no money to move so prices began to fall precipitously. At that time, there was no
jute industry in Pakistan, not a single jute loom or a spindle and no possibility,
therefore, of utilizing any of the crops with in the country. As jute prices collapsed,
foreign merchants and foreign banks stood aside to watch the process and the
seriousness of the situation threatened to promote agrarian unrest. It was now very
evident that the government of Pakistan could not afford to continue that the special
mission to Delhi had failed.
Government of Pakistan moved quickly. Two ordinances were passed

immediately, one setting up the Jute Board and other National Bank of Pakistan. The
objective of the Jute Board was to re-organize and rehabilitate the jute trade by helping
parties to handle it and to stabilize the market. National Bank of Pakistan was
established to provide finance to suitable parties. Thus it came about that National Bank
of Pakistan stood behind the jute trade and National Bank of Pakistan behind the
National Bank, and government stood behind the National Bank. It was all organized so
rapidly (six branches came into being at once) that any doubt that might have lurked in
the minds of outsiders about Pakistan’s ability to tackle the situation were dispelled
once and or all. Until June 1950, the Bank was engaged exclusively on jute operation.
Thereafter, it was felt that it could expand its business to include other commodities as
well. Bank took a big stride in 1952, when it replaced the Imperial Bank of India, as an
agent of National Bank of Pakistan. Presently, there are 24 overseas branches, and 11
regional offices, 1250 Domestic branches of the National Bank of Pakistan. National
Bank of Pakistan (the bank) was incorporated in Pakistan under Pakistan Law and is
listed on all the stock exchanges in Pakistan. It's registered and head office is situated at
3rd Floor, Federation House Abdullah Shah Ghazi Road, Clifton, Karachi. The bank
operates 250 branches in Pakistan and 22 overseas branches (including the Export
Processing Zone branch, Karachi).

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3.3 PRODUCT LINE OF NATIONAL BANK OF PAKISTAN
3.3.1 PAY ORDER
National Bank provides another reason to transfer your money using our
facilities. Our pay orders are a secure and easy way to move your money from one
place to another. And, as usual, our charges for this service are extremely competitive.
3.3.2 TRAVELER'S CHEQUES
Negotiability: Pak Rupees Traveler’s Cheques are a negotiable instrument

Validity: There is no restriction on the period of validity Availability: At 175 branches
of National Bank all over the country Encashment: At all 50 branches of National Bank
Limitation: No limit on purchase Safety: National Bank Traveler’s Cheques are the
safest way to carry our money.
3.3.3 LETTER OF CREDIT
National Bank 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, National Bank Letters of Credit are the best way to do your business
transactions.
3.3.4 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 National Bank’s products and services work for them.
3.3.5 FOREIGN REMITTANCES
To facilitate its customers in the area of Home Remittances, National Bank of Pakistan
has taken a number of measures to Increase home remittances through the banking system.
Meet the National Bank of Pakistan directives/instructions for timely and prompt delivery
of remittances to the beneficiaries PakRemi Remit funds from USA to Pakistan.

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3.3.6 SWIFT SYSTEM
The SWIFT system (Society for Worldwide Interbank 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.
3.3.7 SHORT TERM INVESTMENTS
National Bank 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,
National Bank’s rates of profit are extremely attractive, along with the security and
service only National Bank can provide.
3.3.8 EQUITY INVESTMENTS
National Bank has accelerated its activities in the stock market to improve its
economic baseband restore investor confidence. The bank is now regarded as the most
active and dominant player in the development of the stock market. National Bank is
involved in the following: • Investment into the capital market• Introduction of capital
market accounts (under process) National Bank’s involvement in capital markets is
expected to increase its earnings, which would result in better returns offered to account
holders.
3.3.9 CORPORATE FINANCE
Working Capital and Short Term Loans: BP 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: BP provides financing for its clients’ capital expenditure and other
long-term investment needs. By sharing the risk associated with such long-term investments,
BP expedites clients’ attempt to upgrade and expand their operation thereby making

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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.
3.4 FUNCTIONS OF NATIONAL BANK OF PAKISTAN
Since National Bank is a commercial bank, it performs a variety of functions. Like

other commercial banks. Its other major functions include receiving deposits,
advancing loans and discounting of exchange. The functions performed by National
Bank are:
3.4.1 Accepting Deposits
This function is important because banks largely depend on the funds deposited
with them by its customers. Deposits are of many types:
3.4.2 Current deposits
Current deposits are also called demand liability on current deposits. National Bank
pays practically no interest on current deposits. Businessmen usually open current
accounts. In National Bank current account can be opened with a minimum amount of
Rs.500/-.
3.4.3 PLS saving deposit
Profit and loss sharing deposits (PLS) are also called checking accounts. One can
deposit and draw money easily. Profit on PLS is calculated every month but paid after
six months. PLS account can be opened with a minimum amount of Rs.500/-
3.4.4 PLS term deposits
Fixed term deposits are deposits with the bank for certain fixed period before
the expiry of which they cannot be withdrawn unless giving due notice. In this case the
rates of profit will be different depending upon the time period.

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3.4.5 Discounting bills of exchange
Discounting of bill is practically speaking lending for exchange at their market

rate i.e. it pays to holder of the bill an amount equal to the face value after deducting
interest at the current market rate for the period. This bill has to be mature. This is the
common way used for keeping a part of assets of the bank in a liquid form.
3.5 ORGANIZATIONAL HIERARCHY OF NATIONAL BANK OF

PAKISTAN

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Table 3.1 NUMBERS OF EMPLOYEES:
Permanent Employees 3237

Temporary or Contractual basis 870
Bank own staff at the end of the Year June 2016 1079
Outsourced 1050
Total Staff Strength 6236
Source (National Bank annual report 2017)

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3.5.1 HEAD OFFICE NATIONAL BANK OF PAKISTAN

The head office of National Bank of Pakistan is situated at 3 rd Floor, Federation
House Abdullah Shah Ghazi Road. Clifton, Karachi. It is the first building in Pakistan
with roof top parking. Its Branch code is 0008. It is an online head office of National
Bank of Pakistan with the offices of CEO and Board of Directors and Executive
committee members are also situated here. It has linkage with all the domestic and
international branches of National Bank of Pakistan. The head office is responsible for
making all the policies and rules for the entire National Bank network.
3.6 FINANCIAL ANALYSIS OF NATIONAL BANK OF PAKISTAN:
Table 3.1 Balance sheet of National Bank of Pakistan (NBP)
Assets 2015 2016 2017

Cash and balances 158,230,033 98,246,783 151,190,845
with treasury banks
Balances with other 18,388,738 12,543,964 20,639,421
banks
Lending’s to financial 51,941,866 111,794,127 10,638,524
institutions
Investments 396,411,825 561,767,518 826,246,755
Advances 620,216,609 630,229,649 580,093,986
Operating fixed 34,568,864 33,353,526 33,300,674
assets
Deferred tax assets 10,968,824 9,884,256 9,672,251
Other assets 80,991,187 91,839,258 80,091,712
Total assets 1,371,717,946 1,549,659,081 1,711,874,168
Liability +o .E 2015 2016 2017

Bills payable 13,894,667 11,011,827 9,171,616
Borrowings 23,014,353 38,208,413 22,384,853
Deposits and other 1,101,845,283 1,234,405,050 1,431,535,397
accounts
Sub-ordinate loans ------------------ -------------- --------------------
Liabilities against 57,215 1,691 91,188
assets subject to
finance lease
Deferred tax liabilities ----------------------- ------------- --------------------
Other liabilities 72,242,898 83,439,108 77,036,022
Share capital 21,275,131 21,275,131 21,275,131
Reserves 33,536,713 32,996,496 45,202,342

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Unappropriated profit 49,734,161 59,751,578 52,724,525

Non-controlling 820,663 717,017 721,816
interest
Surplus on revaluation 55,296,862 67,852,770 51,731,278
of assets – net
Total liability + 1,371,717,946 1,549,659,081 1,711,874,168
Owner equity
(Nationalbank.com. 2015,2016,2017)
Table 3.2 Income Statement of National Bank of Pakistan (NBP)
Items 2015 2016 2017

Mark-up / return / interest earned 100,192,320 115,251,748 114,386,364
Mark-up / return / interest expensed (60,894,358) (70,099,505) ( 59,999,374)
Net mark-up / interest income 39,297,962 45,152,243 54,386,990
Provision against non-performing 17,459,330 11083973 10,863,528
advances – net
Provision for diminution in the 1,397,122 (1,441,758) (796,300)
value of investments – net
Bad debts written off directly 3,020 --------------- ----------
Provision against off balance sheet 708,230 (339,200) (122,686)
obligations
19,567,702 9,303,015 9,944,542
Net mark-up / interest income 19,730,260 35,849,228 44,442,448
after provisions
NON MARK-UP / INTEREST INCOME
Fee, commission and brokerage 12,346,947 12931130 13,460,415
income
Dividend income 2,661,077 2,076,669 2,706,794
Income from dealing in foreign 3,926,204 4,735,988 4,794,070
currencies
Gain on sale and redemption of 3,887,164 8,660,224 12,282,801
securities – net
Unrealized (loss)/gain on (139) 145,454 5,924
revaluation of investments
classified as held-for-trading
Share of profit from joint venture 438,250 301,989 560,031
Share of (loss) / profit from (592,322) (1,060,287) (922,747)
associates - net of tax
Other income 3,284,497 3,608,540 2,111,119

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Total non-mark-up / interest 25,951,678 31,399,707 34,998,407

income
45,681,938 67248935 79,440,855
NON MARK-UP / INTEREST EXPENSES

Administrative expenses 37,677,868 40,975,977 43,720,204
Other provisions / write offs 952,132 1,400,434 1,474,345
Other charges 23,395 1,736,674 73,749
Total non-mark-up / interest 38,653,395 44,113,085 45,268,298
expenses
7,028,543 23135850 34,172,557
Extra ordinary / unusual items
PROFIT BEFORE TAXATION 7,028,543 23135850 34,172,557
Taxation – Current 6,230,222 9,569,928 14,672,221
- Prior year(s) 130,079 (4204) 2,298,465
- Deferred (4,638,541) (2501058) (2,874,712)
1,721,760 7064666 14,095,974
PROFIT AFTER TAXATION 5,306,783 16,071,184 20,076,583
3.7 FINANCIAL RATIOS ANALYSIS
3.7.1 Working Capital Ratio

Table 3.3 Working capital ratio = Current Assets – current liability
Years Current Assets Current Liabilities Working Capital

Ratio
2015 1,245,189,071 1,138,754,303 106,434,768
2016 1,414,582,041 1,283,625,290 130,956,751
2017 1,588,809,531 1,463,091,866 125,717,665
Source (National Bank annual reports 2015, 2016, 2017)
Interpretation:
There are two concepts of working capital. The first define the working capital
as the investment in current assets. Current assets mean which can be converted into
cash with in an according period and include cash, short-term securities, debtors, bill
receivable, stock etc. As we can see from the above table that the working capital of

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National Bank Pakistan is increasing from 2015 to 2016 but in 2017 it decreases due to
its rapid increase and decrease in profit and liquid cash in hand.
3.7.2 Current Ratio

Table 3.4 Current ratio = Current Assets / Current liabilities
Years Current Assets Current Liabilities Current ratios
2015 1,245,189,071 1,138,754,303 1.09
2016 1,414,582,041 1,283,625,290 1.10
2017 1,588,809,531 1,463,091,866 1.08
Source (National Bank annual report 2015, 2016, 2017)
Interpretation
Current assets are those assets which can quickly convertible to cash are very near
to cash such as account receivable, inventory, investment, and advances etc. When the
current assets are divided by current liability of the same year we find the current ratio.
The ratio of asset to liabilities is increasing from 2015 to 2016 but in 2017 it decrease..
3.7.3 Cash Ratio

Table 3.5 Cash ratio = Cash / Current liabilities * 100
Years Cash Current liabilities Cash ratio
2015 158,230,033 1,138,754,303 13.8%
2016 98,246,783 1,283,625,290 7.6%
2017 151,190,845 1,463,091,866 10.3%

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Interpretation:
The cash to liability ratio of National Bank Pakistan shows an up and down
result due to liquid cash availability for national bank in 2016 is decreased, but it was
very much healthy in 2015 and in 2017 it slowly increasing.
3.7.4 Investment Deposit Ratio

Table 3.6 Investment deposit ratio = Investment / Deposit * 100
Years Investment Deposit Investment deposit

ratio
2015 396,411,825 1,101,845,283 35.9%
2016 561,767,518 1,234,405,050 45.5%
2017 826,246,755 1,431,535,397 57.7%
Interpretation
This ratio shows the comparison of investment and deposits. This is calculated
as total investment divided by total deposits. The investment deposit ratio of National
Bank Pakistan is increasing yearly because of their good planning for investment and
the people trust on National Bank Pakistan to deposit their finance in the bank. This
ratio is continuously increasing.
3.7.5 Advance Deposit Ratio

Table 3.7 Advance deposit ratio = Advance / Deposit * 100
Years Advance Deposit Advance deposit

ratio
2015 620,216,609 1,101,845,283 56.2%
2016 630,229,649 1,234,405,050 51.0%
2017 580,093,986 1,431,535,397 40.5%

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Interpretation
This ratio show that how much efficiently the banks advances the deposits of their
customer to borrower. The decrease in the advance to deposit ratio is due to the fact that
National Bank Pakistan has given fewer loans but has been provided more deposits by
their customer due to their trust on National Bank Pakistan and the bank policies
towards their customers. The advance to deposit ratio is frequently decreasing.
3.7.6 Debt to Asset Ratios

Table 3.8 Debt to Asset Ratio= Total debts/total assets *100
Years Total debts. Total assets Debt to assets ratio
2015 1,211,054,416 1,371,717,946 88.2%
2016 1,367,066,089 1,549,659,081 88.2%
2017 1,540,219,076 1,711,874,168 89.9%
Interpretation:
The debt to total assets ratio measures the percentage of the firm’s assets that
are financed with different departments of the organization. 2017 is the most
prosperous year for National Bank Pakistan with respect to debt to equity ratio because
of more deposits in the bank. However this trend went downward in 2016 and 2015.
3.7.7 Net Profit Margin Ratio

Table 3.9 Net profit margin ratio = Profit after tax / Total Interest Earned * 100
Years Profit after tax Total interest Net profit margin

earned ratio

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2015 5,306,783 25,951,678 20.4%
2016 16071184 31,399,707 51.1%
2017 20,076,583 34,998,407 57.3%
Interpretation:
The net profit margin measures how much profit out of each sales dollar is left
after all expenses are subtracted by dividing profit after tax by sales revenue. The net
profit margin ratio of National Bank Pakistan is increasing yearly in the three years.
3.7.8 Return on Assets

Table 3.10 Return on Assets = Profit after tax / Total assets * 100
Years Profit after tax Total assets Return on assets
2015 5,306,783 1,371,717,946 0.3%
2016 16071184 1,549,659,081 1.0%
2017 20,076,583 1,711,874,168 1.1%
Interpretation:
The return on assets ratio indicates how much income each dollar of assets
produces on average, it show whether the business is investing in its assets effectively,
the return on assets is calculated by dividing profit after tax by the total assets of the
firm .ROA is very slowly increasing from 2015 to 2017.

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3.7.9 Return on Equity:

Table 3.11 Return on equity = Profit after tax / Total equity * 100
Years Profit after tax Total equity Return on equity
2015 5,306,783 160,663,530 3.3%
2016 16071184 182,592,992 8.8%
2017 20,076,583 171,655,092 11.6%
Interpretation:
The return on equity ratio measure the average return on the firm capital
contribution from its owners. It indicates how many dollars of income were produced
for each dollar invested by the common stockholders. It is calculated by dividing net
income by stockholder equity. ROE is gradually increased in 2017.
Table 3.12 Common size analysis of balance sheet of National Bank Pakistan
Assets 2015 2016 2017 2015 2016 2017

Cash and
balances with 158,230,033 98,246,783 151,190,845 11.5 6.3 8.8
treasury banks
Balances with
18,388,738 12,543,964 20,639,421 1.3 0.8 1.2
other banks
Lending’s to
51,941,866 111,794,127 10,638,524 3.7 7.2 0.6
financial
institutions
Investments 396,411,825 561,767,518 826,246,755 28.8 36.2 48.2
Advances 620,216,609 630,229,649 580,093,986 45.2 40.6 33.8
Operating fixed
34,568,864 33,353,526 33,300,674 2.5 2.1 1.9
assets
Deferred tax
10,968,824 9,884,256 9,672,251 0.7 0.6 0.5
assets
Other assets 80,991,187 91,839,258 80,091,712 5.9 5.9 4.6
Total assets 1,371,717,946 1,549,659,081 1,711,874,168 100.0 100.0 100.0

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Liabilities 2015 2016 2017

2015 2016 2017
+O.E
Bills payable 13,894,667 11,011,827 9,171,616 1.0 0.7 0.5
Borrowings 23,014,353 38,208,413 22,384,853 1.6 2.4 1.3
Deposits and 1,101,845,28 1,234,405,050 1,431,535,397
other accounts 3 80.3 79.6 83.6
Sub-ordinated ----------------- -------------- -------------------- -----------
loans - --------- --------- -
Liabilities 57,215 1,691 91,188
against assets
subject to
finance lease 0.0 0.0 0.0
Deferred tax ----------------- ------------- -------------------- -----------
liabilities ------ ------- ---------- -
Other liabilities 72,242,898 83,439,108 77,036,022 5.2 5.3 4.5
Share capital 21,275,131 21,275,131 21,275,131 1.5 1.3 1.2
Reserves 33,536,713 32,996,496 45,202,342 2.4 2.1 2.6
Unappropriated 49,734,161 59,751,578 52,724,525
profit 3.6 3.8 3.0
Non-controlling 820,663 717,017 721,816
interest 0.0 0.0 0.0
Surplus on 55,296,862 67,852,770 51,731,278 4.0 4.3 3.0

24
revaluation of
assets – net
Total liability
+ Owner 1,371,717,946 1,549,659,081 1,711,874,168 100.0 100.0 100.0
Equity
Table 3.13 Common size analysis of income statement of National Bank

Pakistan
Items 2015 2016 2017 2015 2016 2017

Mark-up / return /
100,192,320 115,251,748 114,386,364 100.0 100.0 100.0
interest earned
Mark-up / return /
(60,894,358) (70,099,505) ( 59,999,374) -60.7 -60.8 -52.4
interest expensed
Net mark-up /
39,297,962 45,152,243 54,386,990 39.2 39.1 47.5
interest income
Provision against
non-performing 17,459,330 11083973 10,863,528 17.4 9.6 9.4
advances – net
Provision for
diminution in the
1,397,122 (1,441,758) (796,300) 1.39 -1.2 -0.6
value of
investments – net
Bad debts written
3,020 --------------- ---------- 0.0 ------- -------
off directly
Provision against
off balance sheet 708,230 (339,200) (122,686) 0.7 -0.2 -0.1
obligations
19,567,702 9,303,015 9,944,542 19.5 8.0 8.6
Net mark-up /
interest income 19,730,260 35,849,228 4,442,448 19.6 31.1 38.8
after provisions
Fee, commission 12,346,947 12931130 13,460,415 12.3 11.2 11.7
and brokerage

25
income
Dividend income 2,661,077 2,076,669 2,706,794 2.6 1.8 2.3
Income from
dealing in foreign 3,926,204 4,735,988 4,794,070 3.9 4.1 4.1
currencies
Gain on sale and
redemption of 3,887,164 8,660,224 12,282,801 3.8 7.5 10.7
securities – net
Unrealized (loss) /
gain on
revaluation of
(139) 145,454 5,924 -0.0 0.1 0.0
investments
classified as held-
for-trading
Share of profit
438,250 301,989 560,031 0.4 0.2 0.4
from joint venture
Share of (loss) /
profit from
(592,322) (1,060,287) (922,747) -0.5 -0.9 -0.8
associates - net of
tax
Other income 3,284,497 3,608,540 2,111,119 3.2 3.1 1.8
Total non-mark-
up / interest 25,951,678 31,399,707 34,998,407 25.9 27.2 30.5
income
45,681,938 67248935 79,440,855 45.5 58.3 69.4
Non mark-up /
interest expenses
Administrative
37,677,868 40,975,977 43,720,204 37.6 35.5 38.2
expenses
Other provisions /
952,132 1,400,434 1,474,345 0.9 1.2 1.2
write offs
Other charges 23,395 1,736,674 73,749 0.0 1.5 0.0
Total non-mark-
up / interest 38,653,395 44,113,085 45,268,298 38.5 38.2 39.5
expenses
7,028,543 23135850 4,172,557 7.0 20.0 29.8
Extra ordinary /
------------- ---------------- ------------------- -------- -------- --------
unusual items
Profit Before
7,028,543 23135850 34,172,557 7.0 20.0 29.8
Taxation
Taxation - Current 6,230,222 9,569,928 14,672,221 6.2 8.3 12.8
- Prior year(s) 130,079 (4204) 2,298,465 0.1 -0.0 2.0
- Deferred (4,638,541) (2501058) (2,874,712) -4.6 -2.1 -2.5
1,721,760 7064666 14,095,974 1.7 6.1 12.3

26
Profit After
5,306,783 16071184 20,076,583 5.2 13.9 17.5
Taxation
Table 3.14 Index analysis of balance sheet of National Bank Pakistan
Assets 2015 2016 2017 2015 2016 2017

Cash and balances 158,230,033 98,246,783 151,190,845 100 62.0 95.5
with treasury
banks
Balances with 18,388,738 12,543,964 20,639,421 100 68.2 112.2
other banks
Lending’s to 51,941,866 111,794,127 10,638,524 100 215.2 20.4
financial
institutions
Investments 396,411,825 561,767,518 826,246,755 100 141.7 208.4
Advances 620,216,609 630,229,649 580,093,986 100 101.6 93.5
Operating fixed 34,568,864 33,353,526 33,300,674 100 96.4 96.3
assets
Deferred tax assets 10,968,824 9,884,256 9,672,251 100 90.1 88.1
Other assets 80,991,187 91,839,258 80,091,712 100 113.3 98.8
Total assets 1,371,717,946 1,549,659,081 1,711,874,168 100 112.9 124.7
Liabilities +O.E 2015 2016 2017 2015 2016 2017

Bills payable 13,894,667 11,011,827 9,171,616 100 79.2 66.0
Borrowings 23,014,353 38,208,413 22,384,853 100 166.0 97.2
Deposits and other 1,101,845,283 1,234,405,050 1,431,535,397 100 112.0 129.9
accounts
Sub-ordinated ------------------ -------------- -------------------- ------ ------- --------
loans
Liabilities against 57,215 1,691 91,188 100 2.9 159.3
assets subject to
finance lease
Deferred tax ------------------ ------------- -------------------- ------ -------- -------
liabilities -----
Other liabilities 72,242,898 83,439,108 77,036,022 100 115.4 106.6
Share capital 21,275,131 21,275,131 21,275,131 100 100.0 100.0
Reserves 33,536,713 32,996,496 45,202,342 100 98.3 134.7
Unappropriated 49,734,161 59,751,578 52,724,525 100 120.1 106.0
profit
Non-controlling 820,663 717,017 721,816 100 87.3 87.9
interest
Surplus on 55,296,862 67,852,770 51,731,278 100 122.7 93.5
revaluation of
assets – net

27
Total liability + o .E 1,371,717,946 1,549,659,081 1,711,874,168 100 112.9 124.7

Table 3.15 Index analysis of Income Statement of National Bank of Pakistan
Items 2015 2016 2017 2015 2016 2017

Mark-up / return /
100,192,320 115,251,748 114,386,364 100 115.0 114.1
interest earned
Mark-up / return /
-60,894,358 -70,099,505 -59,999,374 100 115.1 98.5
interest expensed
Net mark-up /
39,297,962 45,152,243 54,386,990 100 114.8 138.3
interest income
Provision against
non-performing 17,459,330 11083973 10,863,528 100 63.4 62.2
advances – net
Provision for
diminution in the
1,397,122 -1,441,758 -796,300 100 -103.1 -56.9
value of
investments - net
Bad debts written
3,020 --------------- ----------
off directly
Provision against
off balance sheet 708,230 -339,200 -122,686 100 -47.8 -17.3
obligations
19,567,702 9,303,015 9,944,542 100 47.5 50.8
Net mark-up /
interest income 19,730,260 35,849,228 44,442,448 100 181.6 225.2
after provisions
Fee, commission
and brokerage 12,346,947 12931130 13,460,415 100 104.7 109.0
income
Dividend income 2,661,077 2,076,669 2,706,794 100 78.0 101.7
Income from
dealing in foreign 3,926,204 4,735,988 4,794,070 100 120.6 122.1
currencies
Gain on sale and
redemption of 3,887,164 8,660,224 12,282,801 100 222.7 315.9
securities – net
Unrealized (loss) / -139 145,454 5,924 100 -104643.1 -4261.8
gain on revaluation
of investments
classified as held-

28
for-trading
Share of profit
438,250 301,989 560,031 100 68.9 127.7
from joint venture
Share of (loss) /
profit from
-592,322 -1,060,287 -922,747 100 179.0 155.7
associates - net of
tax
Other income 3,284,497 3,608,540 2,111,119 100 109.8 64.2
Total non-mark-
up / interest 25,951,678 31,399,707 34,998,407 100 120.9 134.8
income
45,681,938 67248935 79,440,855 100 147.2 173.8

29
NON MARK-UP / Interest Expenses

Administrative
37,677,868 40,975,977 43,720,204 100 108.7 116.0
expenses
Other provisions /
952,132 1,400,434 1,474,345 100 147.0 154.8
write offs
Other charges 23,395 1,736,674 73,749 100 7423.2 315.2
Total non-mark-
up / interest 38,653,395 44,113,085 45,268,298 100 114.1 117.1
expenses
7,028,543 23135850 34,172,557 100 329.1 486.1
Extra ordinary /
---------------------- ------------- -------------- ------ ------ ---------
unusual items
Profit Before
7,028,543 23135850 34,172,557 100 329.1 486.1
Taxation
Taxation - Current 6,230,222 9,569,928 14,672,221 100 153.6 235.5
- Prior year(s) 130,079 -4204 2,298,465 100 -3.2 1766.9
- Deferred -4,638,541 -2501058 -2,874,712 100 53.9 61.9
1,721,760 7064666 14,095,974 100 410.3 818.6

Profit After
5,306,783 16071184 20,076,583 100 302.8 378.3
Taxation
3.8 SWOT ANALYSIS BASED ON FINANCIAL ANALYSIS:
SWOT Analysis is the most important part of the report. As SWOT analysis
merely depends on personal observation and study, therefore careful and continuous
analysis is must for effective recommendations regarding the existing situation. During
my Internship in National Bank kohat branch, I observed many things and personally
analyzed them. Here I have tried to elaborate my analysis to the best of my effort and
knowledge.

30
3.8.1 STRENGTHS
1. Experienced Employees
The staff members of National Bank kohat branch are well qualified and have
enough experience to carry on the work of bank more effectively and efficiently.
2. Trust of the People
The main advantage of Sind Bank over the other commercial banks is the trust
of the people upon them. National Bank kohat branch has more banks accounts than
any other bank accounts in the area.
3. Trust of the Government
As Sind Bank serve as a representative of National Bank of Pakistan and also it

is a semi-government bank, therefore GOP has a deep trust upon it.
4. Disciplined Environment
The National Bank has a very disciplined and orderly environment. This
excellent working environment makes National Bank’s position, the most dominant and
prominent in all the banking sector of Pakistan.
5. Agent for National Bank of Pakistan
National Bank of Pakistan serves as an individual agent for the National Bank
of Pakistan. It performs all the operation of the National Bank where NBP is not
available.

31
3.8.2 WEAKNESSES
Following are the weaknesses of National Bank of Pakistan
1. Seniority based Promotions
Promotion in National Bank is purely on seniority basis rather than on

performance. This really demotivates the employees because they know that it
doesn’t matter whether they perform well or bad.
2. Excessive Paper Works
There is excessive paper work in National Bank which takes more time and
reduces the effective banking performance. The use of computer is very less.
3. 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.
4. Low Rate of Return
Due to low rate of return, the depositors are drawing their money from the bank
and depositing in the saving centers, which are offering a good rate of return as
compared to the banks.
5. Limited Application of Technology
National Bank of Pakistan is not fully computerized; which is very important to

provide quick and quality services. National Bank is far behind in offering modern
banking facility like automated teller machines then other commercial bank in Pakistan
as only eighteen branches in all over country have this facility.
6. No 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 cannot perform his

32
work, in this way bank not only losses the business but also results in dissatisfaction of
the customer.
3.8.3 OPPORTUNITIES
1. Modernization
National Bank of Pakistan is not fully computerized; which is the main obstacle
in its way of improvement. Today’s customers want quality service within a short
period, which is not possible without advanced computerized system. Therefore, there
is an opportunity for National Bank to adopt latest technology so that it can perform
well in future.
2. ATM Facility:
National Bank has poor ATM facility and the customer has to go to nearby
others commercial banks for their financial need. By providing good ATM facility
National Bank can gain much of its customer back that are gone to other banks due to
the lack of this facility.
3. Selecting more Skillful and Qualified Staff:
By selecting more qualified staff, National Bank can make their market share
more than other commercial banks of Pakistan. In modern banking good and skillful
staff represents sound banking structure.
4. Good relations with public
As NBP serve as a Commercial Bank of Pakistan, therefore people have great

trust on its operations. So as to gain maximum customers in the market National Bank
has to make good customer relations.
3.8.4 THREATS
1. Competitors
The biggest threat to the operational success of the National Bank is the better
competitor’s services. Many banks sector are offering higher rates of return to

33
customers than National Bank of Pakistan. Other commercial banks also provide ATM
services while National Bank’s only some branches have this facility
available.
2. Dissatisfied Customers
Another emerging threat to National Bank of Pakistan is the increasing number

of dissatisfied customers. Most of these customers have been observed to be
dissatisfied with the delays in serving them. Today’s banks are using technology which
covers the distance no matter how far away any one, through a satellite based, on-line
real-time banking system and by offering telephone.
3. Poor service for Pensioners
National Bank of Pakistan has a very poor system for the payment of pension to the
Pensioners. Old age people have to wait for hours for their payments due to which
some of them lose their temper which results in the indiscipline at the bank.
4. Online System
As compared to other commercial and private banks, National Bank has a weak
online banking system which makes it a little bit harder to compete in modern day
banking system of the world.

34
CHAPTER-4 RECOMMENDATIONS
4.1 RECOMMENDATIONS
Determine the customer satisfaction and improve perceived levels of service.
1) A customer’s view of your business will help to increase bank’s profit.

2) Report competitive strengths and weaknesses to higher management.
3) Confirm the integrity of employees, company procedures and control.
4) Support an incentive program that will boost employee’s productivity and loyalty.
5) Identify problems whether large or small.
6) Minimizing turnover and eliminate wasted time by employees through sound job
design
7) Encouraging employees, who probably know more about their jobs than anyone
else.
8) Practicing sound human relations and creating a work atmosphere that promotes job
satisfaction.
9) Hire new computer literate staff and increase work space.
4.2 CONCLUSION
The main objective of going through an internship process is to relate the

theoretical knowledge, which a student is being taught in the University with the
practical application, which he/she student is supposed to do in his professional life
after completing degree program. In Business administration, other objectives of the
assignment are to provide the student with an opportunity of exposure to the practical
and professional responsibilities in the job market to interact with various people in the
field and learn how to deal with different stake holders of an organization. Through this

35
two-month long internship, I have learnt a lot about banking and public dealing with in
an organization.
In short, this internship contributes very much to polish my skills by providing

me with the opportunity to apply my skills and theoretical knowledge into the practical
application. It will not be wrong to say that this two months period was much more
than the sixteen years of theoretical knowledge.
REFERENCES
1) (National Bank annual report)
2) Magazines
3) Internet
4) Discussion with employees at National Bank Karak branch

36

Chapter-1 Introduction To Report: Internship Report On NBP, Karak Branch

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INTERNSHIP REPORT ON NBP, KARAK BRANCH

1.1 BACKGROUND OF THE STUDY.

1.2 PURPOSE OF THE STUDY

1) To work practically in an organization

2) To find out that how the banks are operating.

3) To implement your practical knowledge gained before.

4) To develop interpersonal communication.

INSTITUTE OF BUSINEES STUDIES (IBS), KUST

1.3 MEHTODOLGY OF REPORT

The methodology reported for collection of data is primary as well as secondary

1.3.1 Primary data

Discussion with staff of NBP

1.3.2 Secondary data

Economic Bulletin NBP

INSTITUTE OF BUSINEES STUDIES (IBS), KUST

1.4 SCHEME OF THE REPORT

Chapter 1: Introduction of the Report

The introduction part includes Background of study, purpose of study, methodology of

Chapter 2: Industry Analysis

Chapter 3: Company Analysis

Recommendations chapter include Conclusion and References of the internship report.

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2.1 KEY SUCCESS FACTORS

2.2 MARKET SIZE

2.3 MARKET GROWTH RATE

2.4 MARKET PROFITABILITY

INSTITUTE OF BUSINEES STUDIES (IBS), KUST

MICHEAL PORTER’S FIVE FORCES MODEL

INSTITUTE OF BUSINEES STUDIES (IBS), KUST

MICHEAL PORTER’S FIVE FORCES MODEL

Rivalry among existing firms

There is tough competition among various banks. As variety of public and

Threat of new entrants

INSTITUTE OF BUSINEES STUDIES (IBS), KUST

Bargaining Power of Buyers

Bargaining power of Suppliers

INSTITUTE OF BUSINEES STUDIES (IBS), KUST

3.1 INTRODUCTION TO NATIONAL BANK OF PAKISTAN

To develop as a leading Commercial Bank in the country by meeting its stated

3.1.3 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.

A national presence with a history of contribution to our communities.

INSTITUTE OF BUSINEES STUDIES (IBS), KUST

We shall work to…

Meet expectations through Market-based solutions and products.

Reward entrepreneurial efforts.

Create value for all stakeholders.

We aim to be peopling who…

Care about relationships.

Lead through the strength of our commitment and willingness to excel.

We have confidence that tomorrow we will be…

Leaders in our industry.

An organization maintaining the trust of stakeholders.

To enhance profitability and maximization of National Bank of Pakistan share through

3.2 HISTORY OF NATIONAL BANK OF PAKISTAN

As a result of the exchange rate controversy, regular trade and payments

INSTITUTE OF BUSINEES STUDIES (IBS), KUST

Government of Pakistan moved quickly. Two ordinances were passed

INSTITUTE OF BUSINEES STUDIES (IBS), KUST

3.3 PRODUCT LINE OF NATIONAL BANK OF PAKISTAN

3.3.1 PAY ORDER