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Samina Ameer Din

Mc090404110
MBA
Finance

National Bank of Pakistan

Brief Introduction of the


Organization

History of National Bank of


Pakistan

NBP is the largest commercial bank.


Acts as an agent of central bank.
Moved from public sector organization to commercial
bank.
Provide both public sector and commercial banking
services.
Handle treasury transactions.
A major lead player.

Business Volume of NBP


2010 (Particulars)
Total Assets

(Rs. in Million)
1,035,025

Deposits
Advances

832,152
477,507

Investments
Shareholders Equity

301,324
103,762

Pre-tax Profit
After-tax Profit

24,415
17,563

Earning Per Share (Rs.)


Number of Branches

13.05
1,289

Number of Employees

16,457

Competitors of NBP
Competitors at Public Sector
First Women Bank Limited
The Bank of Khyber
The Bank of Punjab

(FWB)
(KB)
(BOP)

Competitors at Private Sector


My Bank Limited
Allied Bank Limited
Bank Al-Falah Limited
Atlas Bank
Bank Al Habib Limited
Habib Bank Limited
Askari Bank
Saudi Pak Bank Limited
Faysal Bank Limited
Metropolitan Bank limited
Muslim Commercial Bank Limited

Organizational Hierarchy Chart


1. President

Executive
s
2. SEVP

3. EVP

4. SVP

5. VP

6. AVP

Officers

OG-II

OG-I

Cash
Dept.

Head Cashier

OG-III

Clerical
Staff

Assistant

Cashier
Non
Clerical
Staff

Peon, Guards
etc

Hierarchy of Branch
Branch
Manager

Credit Officer

Operations
Manager

All other staff

HR Officer

Training Program
1)
2)
3)

Account Opening Department


Clearing Department
Remittance Department

Description of the Tasks Assigned to


me During my Internship

PLS Saving A/C


Current A/C
Inward / Out ward Clearing
Local Clearing
Intercity Clearing
Pay Order (PO)
Demand Draft (DD)
Call Deposit at Receipts (CDR)

Ratio Analysis

Financial Statements

All the financial statements for the preparation of these PPT


slides are downloaded from the Website of NBP:
www.nbp.com.pk

Ratio
Analysis

1. Net
Profit
Margin

National Bank of Pakistan


(Net profit/ Revenue) *100
Year 2010

Year 2009

Year 2008

17,563,214/
88,472,134*100
=19.85%

17,561,846/
77,947,697*100
= 22.53%

15,458,590/
60,942,798*100
= 25.36%

Ratio
Analysis

2. Gross
Spread
Ratio

National Bank of Pakistan


(Mark-up / return / interest earned - Mark-up /
return / interest expensed) / Mark-up / return /
interest earned*100
Year 2010

Year 2009

Year 2008

43,221,658/
88,472,134*100
= 48.85%

37,458,048/
77,947,697*100
= 48.05%

37,058,030/
60,942,798*100
= 60.80%

Working of Net Interest Margin


Net Interest Margin = Mark-up / return / interest earned Mark-up / return / interest expensed
2010) Net interest margin = (88,472,134-45,250,476)
= 43,221,658
2009) Net interest margin = (77,947,697-40,489,649)
= 37,458,048
2008) Net interest margin = (60,942,798-23,884,768)
= 37,058,030

Ratio
Analysis

National Bank of Pakistan


non mark-up/interest income/ (non mark-up/interest
income +Mark-up/return/interest earned)*100
Year 2010

3. Non
Interest
Income
to Total
Income

Year 2009

Year 2008

17,632,640/
19,025,357/
16,415,862/
106,104,774*100 96,973,054*100 77,358,660*100
= 19.61%
= 21.22%
= 16.61%

Working of Total Income


Total Income = (non mark-up / interest income +Markup / return / interest earned)
2010) Total Income = (17,632,640+88,472,134)
= 106,104,774
2009) Total Income = (19,025,357+77,947,697)
= 96,973,054
2008) Total Income = (16,415,862+60,942,798)
= 77,358,660

Ratio
Analysis

National Bank of Pakistan


Interest Earned / Interest Expensed
Year 2010

4.Spread 88,472,134 /
Ratio
45,250,476
=1.95 times

Year 2009

77,947,697 /
40,489,649
= 1.92 times

Year 2008

60,942,798 /
23,884,768
= 2.55 times

Ratio
Analysis

5.Return
on
Assets

National Bank of Pakistan


(Net profit/ Total assets) *100
Year 2010

Year 2009

Year 2008

17,563,214/
17,561,846/
15,458,590/
1,035,024,680*100 944,582,762*100 817,758,326*100
= 1.69%
= 1.85%
= 1.89%

Working of Total Assets


Total Assets

Year 2010
(Rs)

Year 2009
(Rs)

Year 2008
(Rs)

Cash and balances


Balances with other
banks

115,442,360
30,389,664

115,827,868 106,503,756
28,405,564
38,344,608

Lending to financial
institution-net

23,025,156

19,587,176

Investments-net
Advances-net

301,323,804
477,506,564

Operating fixed assets


Deffered tax assets

26,888,226
6,952,666

217,642,822 170,822,491
475,243,431 412,986,865
25,147,192
24,217,655

Other assets-net
Total

53,496,240
1,035,024,680 944,582,762 817,758,326

3,062,271
59,666,438

17,128,032

3,204,572
44,550,347

Ratio
Analysis

6.
Dupont
Return
on
Assets

National Bank of Pakistan


((net income/revenues)*(revenues/assets))*100
Year 2010

Year 2009

Year 2008

((17,563,214/
88,472,134)*
(88,472,134/
1,035,024,680)*100
= 1.69%

((17,561,846/
77,947,697)*
(77,947,697/
944,582,762)*100
= 1.85%

((15,458,590/
60,942,798)*
(60,942,798/
817,758,326)*100
= 1.88%

Ratio
Analysis

7.Return
on Total
Equity

National Bank of Pakistan


Net Income/ Total equity*100
Year 2010

17,563,214/
103,762,310*100
= 16.92%

Year 2009

Year 2008

17,561,846/
15,458,590/
94,141,919*100 81,367,002*100
= 18.65%
= 18.99%

Working of Total Equity


Total Equity

Year 2010
(Rs)

Year 2009
(Rs)

Year 2008
(Rs)

Share capital
Reserves

13,454,628
24,450,244

10,763,702
22,681,707

8,969,751
19,941,047

Un appropriated profit
Total

65,857,438
103,762,310

60,696,510
94,141,919

52,456,204
170,822,491

Ratio
Analysis

8. Debt
Ratio

National Bank of Pakistan


(Total debt/ Total assets)*100
Year 2010

Year 2009

Year 2008

906,528,852/
1,035,024,680*100
=87%

825,676,384/
944,582,762*100
=87%

715,299,108/
817,758,326*100
=87%

Ratio
Analysis

National Bank of Pakistan


(total debt/ total equity)
Year 2010

Year 2009

Year 2008

9. Debt / 906,528,852/
Equity
103,762,310
Ratio
= 8.73 times

825,676,384/
94,141,919
= 8.77 times

715,299,108/
81,367,002
= 8.79 times

Ratio
Analysis

10. Time
Interest
Earned
Ratio

National Bank of Pakistan


(EBIT/ total interest)
Year 2010

69,665,595/
45,250,476
= 1.53 times

Year 2009

61,789,822/
40,489,649
= 1.52 times

Year 2008

46,885,766/
23,884,768
= 1.96 times

Working of EBIT
EBIT= Profit before Taxation+ Mark-up / return / interest
expensed
2010) EBIT = 24,415,119+45,250,476= 69,665,595
2009) EBIT = 21,300,173+40,489,649= 61,789,822
2008) EBIT = 23,000,998+23,884,768= 46,885,766

Ratio
Analysis

11.
Advances
/Deposits
Ratio

National Bank of Pakistan


Total Advances/ Total Deposits
Year 2010

477,506,564/
832,151,888
= 0.5738 times

Year 2009

475,243,431/
727,464,825
= 0.6532 times

Year 2008

412,986,865/
624,939,016
= 0.6608 times

Ratio
Analysis

12.
OCF
Ratio

National Bank of Pakistan


Net cash generated from operating activities/
Current Liabilities
Year 2010

Year 2009

Year 2008

93,163,784/
867,626,368
= 0.107 times

41,576,364/
725,293,720
= 0.057 times

2,532,681/
682,905,461
= 0.003 times

Working of Current Liabilities


Total Current
Liabilities

Year 2010
(Rs)

Year 2009
(Rs)

Year 2008
(Rs)

Bills payable (short


term)

8,006,631

10,621,169

10,219,061

Borrowings (short term)


Deposits and other
accounts (short term)

17,154,131
816,172,861

37,057,189
655,031,896

37,409,288
614,538,859

Liabilities against
assets subject to finance
lease (short term)

43,963

20,408

16,517

Other liabilities (short


term)

26,248,782

22,563,058

20,721,736

Total

867,626,368

725,293,720 682,905,461

National Bank of Pakistan


Ratio
Dividends paid to Shareholders/ Average common
Analysis
shares outstanding
Year 2010

13. Div
Per
Share

8,072,777/
1,345,462.8
= Rs.6

Year 2009

5,830,338/
1,076,370.2
= Rs.5.41

Year 2008

6,115,739/
869,975.1
= Rs.6.81

Ratio
Analysis

14.
Earning
Per
Share

National Bank of Pakistan


Net income/ outstanding number of shares
Year 2010

17,563,214/
1,345,463
= Rs. 13.05

Year 2009

17,561,846/
1,345,463
= Rs. 13.05

Year 2008

15,458,590/
1,076,370
= Rs. 14.36

Ratio
Analysis

15. Price
/Earning
Ratio

National Bank of Pakistan


Current Market Share Price/ EPS
Year 2010
Year 2009
Year 2008

76.82/13.
05
= Rs.
5.88

74.37/13.0
5
= Rs. 5.69

50.32/14.3
6
= Rs. 3.50

Conclusion
The net profit margin of NBP in all of the years is good.
Gross spread ratio is also good in all of over the years.
Spread ratio of NBP is also good because it covers its interest
expenses.
Non Interest Income to Total Income Ratio of NBP is good.
Return on assets ratio of NBP is low.
Dupont return on assets ratio is also low.
Return on total equity ratio is good in all over the years.
Debt ratio of NBP is very high in all of the year that is not
good.

Conclusion
Debt ratio of NBP is very high in all of the year that is not
good.
Debt to equity ratio is also too high of NBP that is not god.
Time Interest earned ratio of NBP is good.
Advances / Deposits ratio is very low and not good for NBP.
Operating Cash Flow ratio is also very low in all over the
year that is not good.
Dividend per share ratio of NBP is good.
Earning per share ratio is very good.
P / E ratio is also good of NBP.

Recommendations
NBP can also increase the net profit margin ratio by
decreasing its non mark-up interest expenses and taxes.
NBP can increase more its gross spread ratio by decreasing
the interest expenses.
Return on assets ratio & Dupont return on assets ratio can
also be increased by utilizing the assets in an efficient
manner.
NBP need to decrease its debts to manage the debt ratio
because a high debt is not a good sign for NBP.

Recommendations
Debt to equity ratio is also very high. NBP should decrease
its debts because the equity investors will not invest in it
due to high debts.
NBP can increase its advances / deposits ratio by giving
advances to the customers.
NBP needs to improve its liquidity by increasing assets for
operating cash flow.

Thank You