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Brief History of Banking and NBP

The partition plan was announced on June 3, 1947 and August 15, 1949 was
fixed as the date on which independence was to take effect. It was decided that
the Reserve bank of India should continue to function in the dominion of Pakistan
until September 30, 1948 due to administrative and technical difficulties involved
in immediately establishing and operating a Central Bank.
At the time of partition, total number of banks in Pakistan were 38 out of these
the commercial banks in Pakistan were 2, which were Habib Bank Limited and
Australia Bank of India. The total deposits in Pakistani banks stood at Rs.880
million whereas the advances were Rs.198 million. The Governor General of
Pakistan, Muhammad Ali Jinnah issued the order for the establishment of State
Bank of Pakistan on 1st of July 1948.
In 1949, National Bank of Pakistan was established. It started with six
offices in former East Pakistan. There were 14 Pakistani scheduled commercial
banks operating in the country.
The Pakistan Banking Council prepared banks amalgamation schemes in
1974 for amalgamation of smaller banks with the five bigger banks of the country.
These five banks are as under:

• National Bank of Pakistan

• Habib Bank Limited
• United Bank Limited
• Muslim Commercial Bank Limited
• Allied Bank Limited
So, through the nationalization of Bank Act 1974, the State Bank of
Pakistan, all the commercial banks incorporated in Pakistan and carrying on
business in or outside the country were brought under the government ownership
with effect from Jan. 1, 1974. The ownership, management, and control of all

banks in Pakistan stood transferred to and vested in the Federal Government.
The Finance Minister announced plans to start Islamic Banking system in
Pakistan in the budget speech on June 26, 1980, but it could not be possible till
August, 2003.

National Bank of Pakistan maintains its position as
Pakistan's premier bank determined to set higher standards
of achievements. It is the major business partner for the
Government of Pakistan with special emphasis on fostering
Pakistan's economic growth through aggressive and
balanced lending policies, technologically oriented products
and services offered through it large network of branches
locally, internationally and representative offices. Where SBP
(State Bank of Pakistan) is not available, NBP works as its
agent. NBP follows the rules of SBP on the basis of ‘SPM’ (stands for standard
procedural manual).
Although in technology other banks are leading in technology,
NBP has the broader network of its branches in Pakistan. NBP has:
• 29 regions

• Every region has different branches

• 8 audit offices

• 12 IT Centers

• These IT centers are handling 115 online branches

• No. of deposits in NBP are more than any other bank in Pakistan.

• 24 branches of NBP are established in other countries ex Europe,

US, Korea etc.

• NBP has made joint ventures with different banks and they are
given authority to work as representative of NBP.

JOINT VENTURE: means to give authority to other bank to provide services

of another bank.


“To be recognized as a leader and a brand

synonymous with trust, highest standards of

service quality, international best practices

and social responsibility,

To enhance profitability and maximization of NBP share

through increasing leverage of existing customer base
and diversified range of products”.


NBP will aspire to the values that make

NBP truly the Nation’s Bank, by:
• Institutionalizing a merit and performance
• Creating a distinctive brand identity by
providing the highest standards of services
• Adopting the best international management
• Maximizing stakeholders value
• Discharging our responsibility as a good
corporate citizen of Pakistan and in countries where we operate


Highest standards of Integrity
• Institutionalizing team work and performance culture
• Excellence in service
• Advancement of skills for tomorrow’s challenges

• Awareness of social and community responsibility

• Value creation for all stakeholders


NBP further consolidated its position as One of the
top players in corporate and Investment banking of
the country in 2007 and has built a strong customer
relationship with the premier corporate clients.

The departments in which I worked

Operations department of the National Bank of Pakistan is responsible for the
overall operations of the bank.

Operations department has following segments.

a) Cash
b) Clearing
c) Remittance
d) Account opening
e) Accounts department

The details of those departments that are controlled under operation department
are as under.
a) Account opening
b) Cash department

c) Clearing
d) Remittances


National Bank of Pakistan accepts/collects deposit from their accountholders. An

account opening form is provided to prospective Customer. At the same time
introduction of that Customer is an integral condition so that provided information
by that Customer may be got authenticated. An existing Accountholder may
introduce the incoming Customer. The Manager takes the Account holder’s
specimen signatures on signature Card in order to avoid future problems. At the
occasion withdrawal of fund Accountant compares the signature on cheque to
the provided Specimen of Signatures

Bank deals in money and they are merely mobilizing funds within the economy.
They borrow from one person and lend to another. These deposits are liability of
the bank so from the viewpoint of bank we can refer to them as liabilities.

Account opening department

It is the most important department of bank. Following procedure is adopted for
this purpose.

Procedure of Account Opening

It is very simple and quick procedure. A person who wants to open an account
must have the introduction of bank’s staff or an already existing account holder of
bank. The customer is required to fill an account opening form. Then signatures
of the Introduce are verified from S.S. Card before opening account.
They also have to give identity letter
• Photocopy of National Identity Card of each director
• Application form
• Copy of company’s memorandum and articles of association
• List of directors

• Copy of board resolution
• Certificate of incorporation
• Their signature cards
• Certificate to commence business

Following Factors Prior To Opening of Account Should Be

1) The suitability of the perspective customers.
2) Verification of customer credentials.
3) The perspective possibility of profitability of the relationship.
The proposed relationship does not violate:
a) SBP rules and regulations
b) Applicable local laws
C)The bank’s internal policies

Deposits can be segregated on two bases, one is the duration in which these
funds are expected to be with the bank, and second is the cost of getting these
funds. So we can divide deposits into two classes according to duration:

1 ... ... Time Deposits

2 ... ... Demand Deposits
And on the basis of the cost of acquire these funds, a deposit can be classified
as any one of the following four:

a ... ... High Cost

b ... ... Medium Cost
c ... ... Low Cost
d ... ... No Cost

Bank has different kind of deposit schemes in order to induce deposits, out of
large variety of deposit schemes some are as follows:
In this type of account a certain amount is deposited for a certain period such as
six months, one year, two year or longer. A fixed deposit receipt is issued in the
name of the depositor. The receipt is signed by the officer in charge and the bank
manager. A notice is given to the depositor on a prescribed from two weeks
before the Fixed Deposit Receipt (FDR) falls due, requesting the depositor to
withdraw his money or to renew his deposits. The interest is allowed on fixed
deposit varies with the period for which the deposit is made.
This kind of deposit is for a short period as the name indicates. The depositor
may withdraw his deposit at any time by giving seven days notice to the banker.
This type of deposit facilitates the trader to withdraw his amount with interest of
the deposited period.
Call Deposits are the sorts of deposits, which are deposited with the banker
against any tender. This is with out interest deposit, this may be with interest
provided with the depositor has agreed to keep this amount with the banker for
some fixed period.

In this type of accounts, the client is allowed to deposit or withdraw money as
and when he likes, but there is requirement of maintaining the minimum balance
of Rs.5000/- other wise Rs.50/- will be deducted every month. Usually the
businessmen open this type of account and the bank pays no profit on it. These
types of deposits are also exempt from compulsory deduction of Zakat.
This type of account is for those persons who want to make small savings. This
type of account is opened with a minimum deposit if Rs.200/- If the balance in the

account falls below the minimum requirement then a flat charge of Rs.150/- is
made in the account once in a half year. Zakat and other withholding taxes are
deducted as per rules of the government.

The bank deals in other different accounts opening which are:

1. Individual Account
2. Joint Account
3. Business Account
4. Partnership Account
When the Account is opened, then the customer is given a cheque book to sign
upon and withdraw money.

Retail section

This section deals with the retail products of National bank of Pakistan. These
products are offered to the people by the National bank of Pakistan in order to
support their lives. By this the NBP aims to give them the confidence to earn
something fro themselves and fro their families, build their houses, get the
advance salaries to fulfill their urgent needs, it also supports agriculture sector of
the country in order to give confidence and courage to kisns.
Retail Products of NBP.
• President's Rozgar Scheme – NBP Karobar
• NBP Saiban
• Advance Salary
• Cash N Gold
• NBP Kisan Taqat
• Kisan Dost
• NBP Online

• NBP Premium Aamdani
• NBP Premium Saver

Clearing Department
Before discussing it is necessary to know what is “Clearing”.
“The process by which cheques exchanged between the collecting and paying
bank and the ensuing financial settlement is called “Clearing”.
Every banker acts both as a paying as well as a collecting banker. It is however
an important function of crossed cheques. A large part of this work is carried out
through the bankers clearing house. A clearing house is a place where
representatives of all the banks of a city get together and settle the receipts and
payments of cheques drawn on each other bank. As the collecting banker runs
the certain risks in receipt of their ownership, the law has provided certain
protections to the banks.
This facility is provided by the state bank of Pakistan for offsetting of cross
obligations between the different banks. Clearing is of two types:

1) Inward clearing
2) Outward clearing

Types Of Cheques Collected

Transfer Cheques
Transfer cheques are those cheques which are collected and paid by two
different branches of the same bank situated in the same city.

Clearing Cheques
Clearing Cheques are those cheques which are drawn on the branches of some
other bank of the same city or of the same area which covers a particular
clearing house.

Collection Cheques
Collection Cheques are those cheques which are drawn on the branches of
either the same bank or of another bank, but branches are not in the same city or
they are not the members of clearing house.

Remittance department
The need of remittance is commonly felt in today’s business. A major function of
any bank is to transfer of funds from one place to another place . Banks in this
regard provide the facility of transfer of money from on place to another. This
transfer of money is a source of profit for Bank.

Functions Of Remittance Department:

At National Bank of Pakistan remittance department perform the
following functions:

• To issue Demand Drafts

• To issue Govt. Drafts
• To issue Mail Transfers
• To issue Telegraphic Transfers
• To issue Payment

If you are looking for a safe, speedy and reliable way to transfer money, you can
now purchase NBP’s Demand Drafts at very reasonable rates. Any person
whether an account holder of the bank or not, can purchase a Demand Draft
from a bank branch.

NBP 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.


Move your money safely and quickly using NBP Mail Transfer service and receipt
is given to the customer. And we also offer the most
competitive rates in the market.

SCLS: A tariff containing all the information of above


Telegraphic Transfer ( TT)

It is said to be the fasted mean of transfer of funds from one place to the other.
In this method a telex massage is used to make an order of payment to the
responding branch. For issue of TT request has to be made to the manager who
gives the permission. It is a costly mean and the
charges are comparatively higher than other means.


Negotiability: Pak Rupees Traveler’s Cheques

are a negotiable instrument
Validity: There is no restriction on the period of
Availability: At 700 branches of NBP all over the country
Encashment: At all 400 branches of NBP
Limitation: No limit on purchase
Safety: NBP Traveler’s Cheques are the safest way to carry our

“The transfer of credits to a foreign country to settle debts or account between
resident of home country and those of the foreign country” or “the Foreign bills
currencies etc used to settle such accounts”.
Foreign Exchange department deals within exports imports and Money transfer.
National Bank of Pakistan acts as importer bank as well as exporter bank for
different parties who are interested in the business of export & import.

All goods and services brought into a country that were purchased from
organizations located in other countries.

All goods and services sent from one country to another country.


This certificate shows that goods are from Pakistan.


If in covering schedule, it is given that “Please remit proceed to our Karachi office
account # 574348812 with (Standard Chartered Bank) USA for onward credit to
National Bank of Pakistan.


If L/C requires some information as proof of anything from exporter then exporter
has to present beneficiary certificate for that proof.


E-form has four copies:

 One for custom officer

 One for exporter
 Triplicate copy for SBP
 Duplicate copy for bank

Bank reporting or duplicate and triplicate is done by bank. Custom officer should
clear product. (Date is given on the foot form).


It is the choice of importer to open L/C from any bank and the bank from which
L/C is opened can also refer to some other bank for payment. So bill of exchange
is sent to refer bank and other documents are sent to L/C opening bank.


It is a document issued by a NBP authorizing the bearer to receive money from

one of its foreign branches or from another bank abroad. The order is
nonnegotiable, and it specifies a maximum sum of money not to be exceeded.
Widely used by importers and exporters, the letter of credit is made available so
that they may draw foreign currency while traveling abroad. When the instrument
is directed to more than one agent, it is called a circular letter of credit. NBP is
committed to offering its business

customers the widest range of options in the area of money transfer. If you are a
commercial enterprise then our Letter of Credit service is just what you are
looking for. With competitive rates, security, and ease of transaction, NBP Letters
of Credit are the best way to do your business transactions.


The SWIFT system (Society for Worldwide Inter bank Financial
Telecommunication) has been introduced for speedy services in the area of
home remittances. The system has built-in features of computerized test keys,
which eliminates the manual application of tests that often cause delay in the
payment of home remittances. The SWIFT Center is operational at National
Bank of Pakistan with a universal access number NBP-APKKA. All NBP
overseas branches and overseas correspondents (over 450) are drawing
remittances through SWIFT.

Using the NBP network of branches, you can safely and speedily transfer money
for our business and personal needs.


Credit means belief or trust. “The quality of being credible or trustworthy”. Other
words we can use for credit as “trust in one’s integrity in money matters and ones
ability to meet payment when due”.

The function of Advances and Credit Department is to lend money in the form of
clean advances, against the promissory note, as well as secured advances
against tangible and marketable securities. The bankers prefer such securities,
which do not run the risk of general depreciation due to market fluctuations.
Common securities for the banker’s advances are as under:

(Moveable property possessed to the lender cannot be sold in case of default)
Lien is the bankers’ right to hold the property until the claim on the property is
paid. The bankers look at their lien as a protection against loss on loan or
overdraft or any other credit facility.

In ordinary lien, the borrower remains the owner if the property, but the actual or
constructive possession remains with the creditors, though he has no right to sell
When an application for an advance can offer any tangible security, the banker
may rely on personal guarantees to protect himself against loss on advances or
overdraft to the applicant.
(Immoveable property possessed to the lender can be sold in case of default)
A mortgage is the transfer of an interest in specific immoveable property for the
purpose of securing the payment of money advanced or to be advanced by way
of loan, and existing of future debt, or the performance of an engagement, which
may rise to a particular liability. The person in whose interest the property is
transfer is called mortgagee.
(Immoveable property possessed to the borrower can be sold in case of default)
When property in the shape of goods is charged as security for a loan from the
bank, the ownership and possession is with the borrower, the goods are said to
be hypothecated. The essence of hypothecation is that neither the property in
goods nor the possession of them passes to the lender, but the security is
granted by means of letter of hypothecation which usually provides for a banker’s
charge on the hypothecated goods.
(Moveable property possessed to the lender can be sold in case of default)
In a pledge, the ownership remains with pledger (borrower), but the pledgee has
the possession of property until the advance is repaid in full. While in case of
defaulter, the pledge has the right of sale after giving due notice .












IT platform with specific automation and MIS generation capabilities for the
scheme, as under:
 Product type sales i.e. GNG auto Rickshaw, Utility Store & PCO etc.
 Geographical distribution of loans
 Processing Turn Around Time
 Performance evaluation reports on Turn Around Time
 By classification of applicant
 Loan limits
 Loan tenure
 Mark-up rates wise
 Govt. mark up share collection and loss sharing reports etc.


NBP uses main frame computers as servers.

Specification: IBM computers

There are 30 IT departments of NBP, these departments handles online banking

and ATM’s

RDC in Multan supports 182 branches. Out of these 182 branches 15 branches
are online, remaining are offline. These offline branches process data in form of

Offline branches work via:

• VPN (Virtual private Network)

• E-mail
• And modem to modem configuration

Online branches work via:

• VAN Connectivity
• Cables
• Wireless
• Radioactive Waves Satellites

In remote areas where PTCL is not available:

• Frequency radio waves are used

• 2 interacting antennas are used
• Dishes are set that catch signals from satellite

Advantage of radio waves: It can be property of NBP.

Disadvantage of radio waves: Where distance is greater radio waves are

For satellites NBP use:

VSAT (Very Small Aperture Satellite)

Online Branches:

• Main branch is attached with LAN

• 1 is connected with DXX
• 1 is connected with Satellite
• 1 is connected with radioactive waves

Other branches are connected through mail or VSAT

Software named EBS (electronic batching system) is used for mainframe


On client pc’s small software is installed and connected to EBS. NBP generate
DTR (daily transaction report) on daily basis. At end of the day this data is
compiled and sent to the head office in Karachi.

EBS uses the tools of IBM

The software is designed in foxpro named BBO used in offline systems.

One of the major advantage of foxpro is that it is very safe and secure software.

For recovery purpose, at the end of each day, a backup report is made. For this
purpose a cottage tape is used.

Online Applications:

Application of different schemes for example: Saiban, Karobar Schemes. All info
about them is available on net.

NBP has its own systems department which makes softwares for NBP.

Application of classroom concepts

I observed that in the bank I observed that job specification is observed over job
rotation. Employee working on a particular position is not given the experience of
other similar ranked activities. Following type of hierarchy is followed in NBP.
Work Management Skills
In the office environment a person is known by the work he or she does, the
better one performs the more is one praised. So the work management skills that
I had gained during the BBA(IT) program helped me manage the work. I also got
the chance to improve those skills because skills become more effective with

Communication Skill
Concepts of Business communication that I observed are the different types of
communication like horizontal and vertical communication. Business
communication is the heart of the effective and efficient working of an
Financial Management
Concepts about this course are relates with Time value of money, capital
budgeting techniques and ratio analysis to evaluate bank performance.
This is important because every organization develops its own Accounting
system according to its own requirement. By utilizing these skills I performed
these important tasks: .Revise the pay scales Documentation

In this modern world, office work has shifted from manual to computer. So it is
very important to have good knowledge and sharp computer skills to work
efficiently in an office environment. Almost all of my work was done on computer
so the computer skills, which I possessed, help me a lot Different types of
application software’s and databases are used for data managent. Other type of
IT applications is used for online banking, NADRA verification, ECIB and others.


SWOT analysis is careful evaluation of an

organization’s internal strengths and weakness as
well as its environment opportunities and threats.
In SWOT analysis the best strategies accomplish
an organization’s mission by:

1. Exploiting an organizations opportunities and


2. Neutralizing it threats.

3. Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps
in formulating strategy using the organization
mission as a context, managers assess internal strengths distinctive
competencies and weakness and external opportunities and threats. The goal is
to then develop good strategies and exploit opportunities and strengths
neutralize threats and avoid weaknesses.



NBP in one of the oldest bank of Pakistan and first nationalized bank Hence its
customer base is strength from this plus point as customers have more
confidence in the bank. The additional value services as the privilege for the


The NBP performs additional services for its customers as well as the other bank
customer in the
absence of SBP.


NBP has the relative competence in having more
deposits than the other bank. This is because of
the confidence the customer have in the bank.
The bank being the privileged and oldest bank in
banking sector of Pakistan enjoys this edge over
all others, lacking it.

The employers at NBP are offered reasonable monetary benefit. Normally two
bonuses are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional
benefit and competency for the bank and a source of motivation for the

The bank has another competency i.e. it has broad-basses network of branches
throughout the country also more than one branch in high productive cities. The
customers are provided services at their nearest possible place to confirm
customer satisfied.


The employees at NBP are strict followers of rule & regulation imposed by bank.
The disciplined
environment at NBP bolsters its image and also enhances the over all out put of
the organization.

The employees at NBP here have a good hold on their

descriptions, as they are highly skilled Professionals
with back ground in business administration, banking,
economics etc. These professional competencies
enable the employees to understand and perform the
function and operation in better way.

The working condition in the NBP branch here is very
conductive and favorable for better
output. The informal environment affects the performance of the employees in a
positive way.


The bank enjoys a good plus point when it comes to the employee manager
relationship the hearing as removing of discrepancies if any, between the
employees, and between the manager and employees.



The bank does not promote its corporate image, services, etc on a competitive
way. Hence lacks far behind in marketing effort .A need for aggressive marketing
in there in the era marketing in now becoming a part of every organization.

The strong political hold of some parties and government and their dominance is
affecting the bank in a negative way. They sometime have to provide loan under
the pressure, which leads to uneven and adjusted feeling in the bank employees.
The promotions and bonuses etc in the bank are often powered by senior’s
favoritism or depends upon their wills and decision. This adds to the negative
factors, which denominate the employees thus resulting in affecting their
performance negatively.
The bank falls far behind when the innovative and new schemes are considered.
It has not been involved in the tug of war between the competitors to the
accounts and strengthens the existing customer base. This stands out to be the
major incompetence and weakness of the banks.



During the rush hours, the bank is founded out to be a total flop to handle the
mob of people
peaking from windows and doors. The bank has deficiency to operate in the
stages of rush hours
where the people find them services entangled in a situation of nowhere because
they are not
well served.

The bank lack the strength of being powered by the network of computers, which
have saved time, energy and would have lessened the mental stress, the

employees have currently. This would add to the strength if it were powered by
network of computers.

The bank lacks the modern Equipment that is note counting machine computers.
Even if there is any equipment they lack to fall in the criteria of being rearmed as
update and upgraded


The workload in NBP is not evenly distributed and the
workload tends to be more on some employees while others
abscond away from their responsibilities, which server as a
demotivation factor for employees performing above average

The world today has become a global village because of
advancement in the technologies, especially in
communication sector. More emphasis is now given to avail the modern
technologies to better the performances. NBP can utilize the electronic banking
opportunity to ensure on line banking 24 hours a day. This would give a
competitive edge over others.

Because of the need for micro financing in the
market, there are lot of opportunities in this regard.
Other banks have already initiated, now the time has
arrived when the NBP must realize it and take on step
to cater an ongoing demand.


The bank is facing threats with the emergence of new competitors especially in
terms of foreign
banks. These foreign banks are equipped with heavy financial power with
excellent and innovative ways of promoting and performing their services. The
bank has to take initiative in this regard or will find itself far back in competition.
The ongoing shift in power in political arena in the country effects the
performance of the bank has to forward loans to politically powerful persons
which create a sense of insecurity and demoralization in the customer as well as
The bank is currently acting upon the policy of downsizing which threaten the
environment of the bank Employees feel insecurity in doing their jobs and work,
hence affecting the over all performance of employees negatively.
There exists no regular and specific system of the removal of customer
complaints. Now a day a need for total customer satisfaction is emerging and in
their demanding consequences customer's complaints are ignored.

Pest analysis

• Politically
• Economically
• Social
• Technologically

• Politically

setup in Pakistan is supporting banking industry as whole, bal being a part of
this industry is also repaying benefit of the friendly policies of government
visa-a-vise the economic situation

• Economy
is currently moving forward, a bit of recovery from the stock received due to
its international sub prime crisis
Stock exchange
International donor agencies stopped to Pakistan
Major restituting by imf and world bank
New economy is in relaxing phase.
Obviously bank alfalh is getting benefit from improved economic

• Social
has now a political image of banking although Pakistan in Muslim country
still the banking industry is gaining growth. nevertheless Islamic banking is
gaining more popularity therefore the bank like bal have come up with there
Islamic banking division. nonetheless their economic social barrier
forward .banking on inters based system is not very acceptable due to the
Islamic background of our country.

• Technologically
bal is at but disadvantageous position ,since internally the banking ia very
fast paced with the use of auto machine with technology. bal is aty slack
level in auto machine and technological advancement have in phone to
international competition on banking


Liquidity Analysis

1. Current Ratio = Current Assets
Current Liabilities

2006 2007 2008 2009

= 142,279,638 = 153,810,681 = 161,976,396 =163,820608
22,309,742 17,947,965 50,677,987 55,899,307
6.37 8.57 3.19 2.93

The current ratio for this bank has been showing a very good trend in
previous years. It means bank was in good position to meet their short term
obligations. It increased from 2006-2007 because assets increased and
current liabilities decreased in 2007 as compared to 2006. But in 2008 this
ratio decreased from 8.57 to 3.19 because liabilities increased due to more
borrowings and this year the ratio also sustain its trend of decreasing due to
same reason.

2. Cash Ratio = Cash + Cash Equivalent

Current Liabilities

2006 2007 2008 2009

= 119,266,906 = 132,346,081 = 144,848,364 =144,233,432
22,309,742 17,947,965 50,677,987 55,899,307
5.34 7.37 2.86 2.58

This ratio shows the ability of the bank to meet short term obligations with
sufficient cash. This ratio increased from 2006-07 because of low current
liability and high cash. But this ratio decreased from2007-2008

upto2.86.This is because the current liability increased due to more
borrowings. And from 2008-2009 it also decreased as the current liabilities
going on increasing.

3. Net Working Capital = Current Assets _ Current Liabilities

2006 2007 2008 2009

= 142,279,638
= 153,810,681-17,947,965
= 161,976,396-50,677,987
119,969,896135,862,716 111,298,409 107,921,301

It shows ability of the bank to meet their current liability with their current
assets.Net working capital increased from 2006 to 2007 because of high
current assets. But NWC decreased in 2008 due to high current liabilities.
Current assets also increased in 2008 but the proportion of increase of
current liabilities is more than current assets.Current assets also increased in
2009 as compared to 2008 but the liabilities increased in high proportion
when compared to assets increase.

4. Net Worth = Total Assets _ Total Liabilities

2006 2007 2008 2009

= 635,132,711-553,178,593
= 762,193,593-645,855,939= 817,758,326-715,299,108=944,232,762-824,676,384
81,954,118 116,337,654 102,459,218 89,556,378

It is showing increasing trend from year 2006-07. This shows that bank’s
total assets are increasing with greater change as compared to liabilities.
So, bank’s overall business increased from 2006 to 2007.But it decreased

from 2007 to 2008 due to more liabilities. In 2009 the net worth decreased a
lot due to a very high increase in liabilities as the bank’s borrowings in this
year increased.

5. Total Asset Turnover = Mark-up earned

Total assets

2006 2007 2008 2009

= 43,788,628 = 50,569,481 = 60,942,798 = 77,947,697
635,132,711 762,193,593 81,758,326 944,232,762
0.069 0.066 0.074 0.082

It indicates the efficiency with which the bank used its assets to generate
more interest/ mark up income. It shows almost an increasing trend from
2006 to 2009 because its mark up income increased in 2009 and bank is
using its assets efficiently to generate mark up income.

Debt / Leverage Ratios

6. Debt Ratio = Total liabilities

Total assets

2006 2007 2008 2009

= 553,178,593 = 645,855,939 = 715,299,108 = 824,676,384
635,1321,711 762,193,593 817,758,326 944,232,762
87.1 84.7 87.5 87.3

This ratio shows a mixed trend. It decreased from 2006 to 2007 because

total assets were high in 2007. But it increased from 2007 to 2008 because
total liabilities increased. And in 2009 it decreased by a very minor factor but
still decreased. However there is control of the bank over its debts and its
liabilities are in proportion to assets.

7. Debt To Equity Ratio = Total Liabilities

Share Holders Equity

2006 2007 2008 2009

= 553,178,593 = 645,855,939 = 715,299,108 = 824,676,384
81,954,118 116,337,654 102,459,218 119,556,378
6.75 5.55 6.98 6.89

This ratio again shows the mixed trend. It decreased from 2006 to 2007
because SHE is more in 2007. But it increased from 2007 to 2008 because
SHE decreased from 2007 to 2008.And again this ratio is decreased in
2009. This ratio shows how much liabilities are being maintained with
respect to share holder’s equity.

Profitability Ratios

8. Gross Profit Margin = Net Interest income * 100

Mark-up earned

2006 2007 2008 2009

= 30,153,716 = 33,629,470 = 37,058,030 =38,458,048
43,788,628 50,569,481 60,942,798 77,947,697
68.8 % 66.5 % 60.8 % 49.3%

This ratio shows a decreasing trend from 2006 to 2008. Because mark up
earned increased from 2006 to 2009 and net interest income does not
increased in proportion to mark up earned.

9. Operating Profit Margin = Profit before taxation * 100

Mark-up earned

2006 2007 2008 2009

= 26,310,577 = 28,060,501 = 23,000,998 =22,300,173
43,788,628 50,569,481 60,942,798 77,947,697
60 % 55.5 % 37.7 % 28.6%

This ratio shows decreasing trend. It decreased from 2006 to 2007, 60% to
55.5% this is because that mark up earned was more in 2007 as compared
to 2006. But this ratio decreased a lot from 2007 to 2008 because profit
before tax decreased from 2006 to 2008 and the mark up earned is more in
2008.And again this trend is same as in 2009 that it decreased a lot due to
high mark up and a very low profit after taxation.

10. Net Profit Margin = Profit after taxation * 100

Mark-up earned
2006 2007 2008 2009
= 17,022,346 = 19,033,773 = 15,458,590 =18,211,846
43,788,628 50,569,481 60,942,798 77,947,697
38.8 % 37.6 % 25.3 % 23.3%


This ratio also shows a decreasing trend from 2006 to 2009. The reasons are
same as in operating profit margin.

11. Return On Total Assets = Profit after taxation

Total Assets

2006 2007 2008 2009

= 17,022,346 = 19,033,773 = 15,458,590 =18,211,846
635,132,711 762,193,593 817,758,326 944,232,762
2.6 % 2.5 % 1.9 % 1.9%

This ratio also shows a decreasing trend from 2006 to 2008.In 2009 it
remained same as in 2008. This is because that total assets increased from
2006 to 2009 but net profit after tax also decreased from 2006 to 2009.

12. Return On Equity = Profit after taxation

Share Holders Equity

2006 2007 2008 2009

= 17,022,346 = 19,033,773 = 15,458,590 =18,211,846
81,954,118 116,337,654 102,459,218 119,556,378
20.7 % 16.3 % 15.1 % 15.2%

It shows return earned on SHE. This ratio also shows a decreasing trend from
2006 to 2008, but in 2009 it shows a bit improved one as compared to
pevious year because net profit also increased in 2009.

Marketability Ratios

13. Earning Per Share = Profit after taxation
Outstanding Common Stock

2006 2007 2008

= 17,022,346 = 19,033,773 = 15,458,590 =18,211,846
709,071 815,432 896,975 1,076,370
24.01 23.34 17.23 16.91

Earning Per Share is decreasing from 2006 to 2008. It may lead towards
less confidence and less attraction for the investors. Earning Per Share
decreased because Net Profits decreased from 2006 to 2009 but number of
outstanding shares increased from 2006 to 2009.

14. Book Value Per Share = Share Holders Equity

Outstanding Common Stock

2006 2007 2008 2009

= 81,954,118 = 116,337,654 = 102,459,218 =119,556,378
709,071 815,432 896,975 1,076,370
115.6 142.6 114.2 111.0

Bank’s book value per share increased from 2006 to 2007 because stock
holders equity increased. But book value decreased from 2007 to 2008
because SHE also decreased. And book value decreased from 2008 to 2009
as the outstanding common stock increased very much .

If I was the Manager there?

While working as internee there at NBP main branch, I saw some good and bad
things happening there in the branch. Some of which are quite easily avoidable
with some proper guidance. Some of these are in the following:

• The most important step that should be taken as soon as possible is in

accordance with implementation of latest technology. National Bank of
Pakistan is not using latest system and technology. All the work is being
done through manually .It is the age of information technology but NBP is
using outdated system & procedure.

• If I was manager there I should have taken some necessary steps

regarding online banking. It is not fully introduced in all the branches due
to this it is facing difficulty in transferring the funds from one place to

• Mostly workload increase on the employees. They often remain in office till
9-7P.M. To decrease this load appropriate number of employees should
be there in each department.

• There I also saw some need of improvement in counter service. The Bank
has poor quality counter services in branch .It does not give equal importance
to all the customers.

• I also would have tried to bring some professional attitude in employee’s

behavior. As due to lack of it, they think that as they are the permanent Govt.
employees and now if they perform well or not it does not makes any
difference instead of doing this they should work diligently to increase bank’s

• Being an internee there I didn’t feel good as Customers have to wait more for
encashment of their cheques or any other transactions.

• There I felt a need of having a schedule for the internees or the rotation time
period be reduced in those department, which have less work for internees.
Because during the internship the internees come her to learn and know

about the working of the organization. They should try to tell as much to the
internees as possible. So that they can learn how they have to work in an
organization when they get the job. Even if they get job in any other
organization they know how working in the organization goes on.


• National Bank of Pakistan did good progress in Multan. But lack of

automation and implementation of Information Technology the system’s
efficiency is still slow. Only few officials have computers to enter data. So
it is recommended that to make the system faster and reliable more and
more technology should be adopted.
• I also observed that there is lack of security and surveillance system in the
bank premises. There not a single Camera which can observe the
behavior of the customers as well as the employees.
• At the Mian Branch Multan there is no parking area for customers.A
customer has to face too much problem when they come to bank. They
have to park their vehicles at their own risk. There are many cases of
Motorcycle disappearing of the customers.
• There is no Information Desk at the bank customer dealing area. Most of
the people wander around to find where they need to go. There should be
a proper information desk where young people should be present to guide
the customers according to their need.
• Those branches which are dealing with NBP Karobar and offering QINQCI
Rickshaws on installments are facing huge number of complaints from the
Scheme holders. They often report that the quality of Rickshaw is very
low. And the spare parts are very expensive. There should be a committee
which should check the quality of the products they use to offer under
such Schemes. This brings bad impact on the goodwill of the bank.
• All advances should be made by getting the maximum security and should
focus on productive work

• The Bank should develop a comprehensive recruitment policy to make
only the competent ones to be on the job
• There is a possibility of establishing a task force to ascertain the
effectiveness of the policies being implemented


 Annual Report of National Bank of Pakistan.

 Meetings
 Collected data from Regional office NBP Multan.
 Internet.
 My experience.