Internship Report On National Bank of

Pakistan (Main Branch Palandri)

By

Shoaib Bashir

An internship report submitted to the Department of Management

Sciences,
The University of Azad Jammu & Kashmir Muzaffarabad
In partial fulfillment of the requirements for the degree of

MASTER OF COMMERCE
(FINANCE)

DEPARTMENT OF MANAGEMENT SCIENCES

THE UNIVERSITY OF AZAD JAMMU &
KASHMIR MUZAFFARABAD

2019

I
 Internship Report On National Bank of
Pakistan (Main Branch Palandri)

By
Shoaib Bashir
(18)

__________________________
Mr. Muhammad Altaf
(Internship In-charge)

__________________________
Name -----
(External Examiner)

__________________________
Dr. Bilal Abbasi
(Head, Department of Management Sciences)

DEPARTMENT OF MANAGEMENT SCIENCES

THE UNIVERSITY OF AZAD JAMMU &
KASHMIR MUZAFFARABAD
2019

II
Copyright© 2018 by Mr. Shoaib Bashir
All rights reserved. No part of this thesis may be reproduced, distributed, or
transmitted in any form or by any means, including photocopying, recording, or other
electronic or mechanical methods, by any information storage and retrieval system
without the prior written permission of the author.

III
 THE UNIVERSITY OF AZAD JAMMU &
KASHMIR MUZAFFARABAD

CERTIFICATE OF APPROVAL
This is to certify that internship report, entitled “Internship Report On National
Bank of Pakistan (Main Branch Palandri)” is submitted by Mr. Shoaib Bashir.
No part of this report has been submitted anywhere else for any other degree.
This report is submitted to the Department of Management Sciences, The
University of Azad Jammu & Kashmir Muzaffarabad in partial fulfillment of
the requirements for the degree of Master in Commerce.

The Examination Committee unanimously agrees to award Master in Commerce

degree to Mr. Arshad Hassan in the field of Management Sciences.

Examination Committee:
(a) External Examiner1: ------------------------------------------------

(b) Internal Examiner 1: ------------------------------------------------

-
(c) Internal Examiner 2: ------------------------------------------------
-

Supervisor Name

Name of HOD ------------------------------------------------

-

IV
 THE UNIVERSITY OF AZAD JAMMU &
KASHMIR MUZAFFARABAD

AUTHOR’S DECLARATION

I, Mr. Shoaib Bashir (Roll No: 24), hereby state that my internship reports
titled, ‘Internship Report On National Bank of Pakistan (Main Branch
Palandri)’ is my own work and has not been submitted previously by me for taking
any degree from The University of Azad Jammu & Kashmir, Muzaffarabad or
anywhere else in the country/ world.

At any time, if my statement is found to be incorrect even after my graduation,

the University has the right to withdraw my Master Degree.

(Mr. Shoaib Bashir)

Dated: Roll No: 18

V
 EXECUTIVE SUMMARY

This report is based on the activities performed during the internship at National Bank
of Pakistan (Main Branch Palandri). Internship duration was eight weeks and it
provided practical knowledge of working in professional environment. This
learning experience is described in detail in the various section of this report.

The first, second and third chapter, there is some detail about the organization.
The history and present status of the organization is explained. The organization
structure and the details of its management along with its location are also
discussed. The vision, mission, values and the important departments of the company
are discussed in it. Next chapter is concerned with product and services the
organization. The fifth chapter provides information about the various
departments of the organization.

The sixth chapter is about internship program. The seventh chapters show
the financial conditions, Ratio analysis of the organization. The end of this
report provides the SWOT of the organization and also includes the Bibliography.

TABLE OF CONTENTS
CERTIFICATE OF APPROVAL............................................................................................iv

VI
AUTHOR’S DECLARATION.................................................................................................v

EXECUTIVE SUMMARY.....................................................................................................vi

Chapter no. 01..........................................................................................................................1

Introduction..............................................................................................................................1

1.1 BACKGROUND OF STUDY..................................................................................2

1.2 MOTIVE OF STUDY...............................................................................................2

1.3 METHODOLOGY OF REPORT............................................................................3

Chapter – 2...............................................................................................................................4

INTRODUCTION OF NATIONAL.........................................................................................4

BANK OF PAKISTAN............................................................................................................4

2.1 BRANCH NETWORK OF NBP..............................................................................5

2. 2 VISION.....................................................................................................................6

2.3 MISSION.................................................................................................................6

2.4 GOALS AND OBJECTIVES OF NBP.....................................................................7

2.5 CORE VALUES.......................................................................................................7

2.6 Management.............................................................................................................7

Chapter – 3.............................................................................................................................10

Organizational Structure.........................................................................................................10

3.1 Hierarchical Structure of NBP Office.....................................................................11

3.2 Organizational Chart of National Bank of Pakistan................................................12

Chapter – 4.............................................................................................................................14

NBP OFFERINGS PRODUCTS &........................................................................................14

SERVICES.............................................................................................................................14

4.1 DEPOSIT ACCOUNTS..........................................................................................15

4.2 MONEY TRANSFER SERVICES.........................................................................15

4.3 COLLECTIONS.....................................................................................................15

4.4 DEALING IN FOREIGN EXCHANGE.................................................................15

4.4 TRUSTEE-SHIP SERVICES.................................................................................16

VII
 4.5 SAFE CUSTODY & SAFE DEPOSIT SERVICES................................................16

4.6 PURCHASE AND SALE OF SECURITIES.........................................................16

4.7 UTILITY SERVICES.............................................................................................16

4.8 HAJJ SERVICES...................................................................................................16

4.9 NBP SAIBAAN.....................................................................................................16

4.10 NBP ADVANCE SALARY................................................................................16

4.11 NBP CASH ON GOLD......................................................................................17

4.12 ACCOUNTS OFFERED IN NBP.......................................................................17

4.12.1 CURRENT ACCOUNT.................................................................................17

4.12.2 CURRENT ACCOUNT OR OPERATION ACCOUNT...............................17

4.12.3 CALL DEPOSITS.........................................................................................17

4.12.4 MARGIN ACCOUNT:..................................................................................17

4.12.5 INVESTMENT ACCOUNT..........................................................................18

4.12.6 LONG TERM................................................................................................18

4.12.7 SHORT TERM:.............................................................................................18

4.12.8 PLS Saving Account:.....................................................................................18

Chapter – 5.............................................................................................................................19

DEPARTMENTATION.........................................................................................................19

5.1 DEPARTMENTS...................................................................................................20

5.2 CASH SECTION....................................................................................................20

5.3 REMITTANCE SECTION.....................................................................................20

5.3.1 DEMAND DRAFT (DD)....................................................................................21

5.3.2 TELEGRAPHIC TRANSFER............................................................................21

5.3.3 MAIL TRANSFER.............................................................................................21

5.4 ACCOUNTING SECTION.....................................................................................21

5.5 CLEARING SECTION...........................................................................................22

5.6 ADVANCE SECTION...........................................................................................22

5.7 DIFFERENT TYPES OF ADVANCES..................................................................22

VIII
 5.8 FOREIGN EXCHANGE DEPARTMENT.............................................................22

Chapter – 6.............................................................................................................................23

MY INTERNSHIP PROGRAM.............................................................................................23

6.1 BRIEF INTRODUCTION OF THE BRANCH......................................................24

6.2 STARTING AND ENDING DATES OF MY INTERNSHIP...............................24

6.3 DEPARTMENTS IN WHICH I GOT TRAINING.................................................24

6.4 DEPOSIT ACCOUNTS..........................................................................................25

6.5 REMITTANCE DEPARTMENT...........................................................................25

6.6 GOVERNMENT RECEIPTS / PAYMENTS.........................................................25

Chapter – 07...........................................................................................................................27

Financial statements analysis..................................................................................................27

7.1 HORIZONTAL ANALYSIS..................................................................................28

7.2 VERTICAL ANALYSIS........................................................................................33

Chapter – 08...........................................................................................................................39

SWOT ANALYSIS................................................................................................................39

8.1 STRENGTH............................................................................................................40

8.1.1 Credit Rating...................................................................................................40

8.1.2 Rapidly Increasing Branches...........................................................................40

8.1.3 Low Minimum Balance Requirement and Low Service Charges....................40

8.1.4 Consistent Share Price Movement with Stock Exchange................................40

8.1.5 Deposits Increased..........................................................................................40

8.1.6 Consistent Dividend Policy.............................................................................40

8.1.7 Social Responsibilities....................................................................................41

8.1.8 Banks are regulated.........................................................................................41

8.2 WEAKNESSES......................................................................................................41

8.2.1 Turnover Rate is high......................................................................................41

8.2.2 Incompatible Salary Package..........................................................................41

8.2.3 Centralization..................................................................................................41

IX
 8.2.4 Obsolete Software...........................................................................................41

8.2.5 Hassle of Paper Work......................................................................................42

8.2.6 No Paper Training...........................................................................................42

8.2.7 Head Office Handle Policy Formulation.........................................................42

8.2.8 Equipment Ordering is Time Consuming........................................................42

8.3 OPPORTUNITIES..................................................................................................42

8.3.1 Growth in Real GDP.......................................................................................42

8.3.2 Increase in Per Capita Income.........................................................................43

8.3.3 Increasing Branch Network.............................................................................43

8.3.4 Internet Banking..............................................................................................43

8.3.5 Global Expansion............................................................................................43

8.3.6 Increasing in Foreign Remittance....................................................................43

8.3.7 Reduction in Corporate Tax Rates...................................................................43

8.3.8 SBP Reforms...................................................................................................43

8.3.9 Relationship with the Government..................................................................44

8.3.10 Growth in Banking Industry............................................................................44

8.4 THREATS..............................................................................................................44

8.4.1 Competitors have Larger Branch Network......................................................44

8.4.2 Variety of Products.........................................................................................44

8.4.3 Default by Borrowers......................................................................................44

BIBLIOGRAPHY...............................................................................................................45

X
 Chapter no. 01
INTRODUCTION

1
1.1 BACKGROUND OF STUDY
An essential academic requirement of M.com Degree is to complete eight weeks
internship with an organization of National/ International repute. The main objective
is to enhance the skills of student & to familiarize them with the actual and practical
knowledge of an organization production system, their finance accounts and
marketing system. Through this program student should analyze that whether
organization & his personal goals match or not. Or whether work is according to
his desires or not, & it helps us to forecast that whether in future it’s fruitful for
us to join it or not by forecasting its career development scope. Internee having
stupefaction knowledge can get through and be selected by management.
Thus, a lot of organization resources in term of time and money must be spent on
them for their proper training. It is directed towards an effort to enable the
students to use the management techniques acquired during their courses and
find out the possible solution of management problems faced by the organization.

I have completed my internship with National Bank of Pakistan Main Branch

Palandri AJK.

1.2 MOTIVE OF STUDY

Prime objective of the study is to accelerate knowledge, developing, technical
skill, producing professional attitude modifying behavior as well as to enhance
practical experience of the bank. The purpose of this study is to analyze the
theoretical application of different fields of studies i.e. Management, Finance etc. in
practical field of banking with reference to National bank of Pakistan. I have
studied the overall National Bank of Pakistan and the NBP Main Branch Palandri
AJK. I studied that branch generally. I have tried my best to cover each and every
aspect of the branch. For this reason, I practically worked in the departments of
the branch and gathered information about the branch.

I was intended to reduce practical & theoretical gap of the study & I focus myself to
understand technical concepts involved in the banking practice. However, it is
difficult to ensure complete command & excess over the bank field as it is
changing speedily with the passage of time.

2
1.3 METHODOLOGY OF REPORT
Methodology of Study

For the purpose of writing this report, the following methods of collecting
information have been used:

Primary Data

The information, which is collected for the first time and exists in raw form, is
known as Primary Data. It contains the following:

a) Personal observations

b) Discussion with staff of the Branch

Secondary Data

The secondary data is collected from the following sources:

1. Review of annual report 2016

2. Internet

3. Brochure

3
 Chapter – 2
INTRODUCTION OF NATIONAL
BANK OF PAKISTAN

History of banking in Pakistan stands with partition. At the time of independence, the
areas which now constitute Pakistan were producing food grains & agricultural raw

4
material for Indo-Pak subcontinent. There were practically no industries & whatever
raw material produced was exported from Pakistan. However Commercial banking
facilities were provided here. There were 487 offices of schedule banks in the
territories now constituting Pakistan, after the announcement of the independence
plan. The banning services in Pakistan were seriously suffered, there was a serious
usually rush on banks for transferring funds and accounts. The banks transferred their
registered offices from Pakistan to India. So, by 30th June 1948, the number of the
offices of the schedule banks in Pakistan declined from 487to only 195.

In 1946, the year before independence, 14 scheduled banks had their head offices in
Pakistan areas. Ten of the banks were incorporated in West Pakistan and had a total of
472 branches. The remaining four banks were incorporated in East Pakistan and had a
total of 137 branches. There were two Muslim banks in Pakistan, two days before
independence, that were to stay there, while 13 Hindu banks all the 14 locally
incorporated banks except the Australasian bank were destined to.

More out or where already except the Australasian bank were destined to move out or
where already moving. In order to create a national banking system in Pakistan state
bank of Pakistan recommended establishing National Bank of Pakistan in
1949. December 1973 total scheduled commercial banks operating in the
country were stood fourteen. Due to the continuous to flourish and now it
coves a very large segment of national economy. The network of banking
branches now covers a very large segment of national economy. In June 1948,
West Pakistan had only 81 offices of scheduled banks. But by June 1993 their number
had increased to 7100 in every corner of Pakistan. Now total number of branches of
NBP is 1495 till December 2017.

2.1 BRANCH NETWORK OF NBP

With the geographical development of its branches, the Bank has been able to extend
its services to a much larger number of Pakistanis all over the country. Today it has
more than 8.5 million accounts. Bank maintains its presence in all the major financial
centers of the world through its 15 overseas branches and 5 representative offices. Of
these, three representative offices have recently been set up at Tashkent (Uzbekistan),
Baku (Azerbaijan) and Almay (Kazakhstan) to take advantage of the emerging
opportunities in CIS countries. Bank’s role globally is well assisted by its network of

5
correspondent banks located strategically in Asia, America, Europe and Africa.

It has acquired leased telephone lines for on-line banking. The Bank has 12
Regional Computer Centers to cover various on-line and batch system
requirements of branches and controlling. 2.1 Branches of National Bank of Pakistan

Total branches 1495

Representative offices 29

Subsidiary 04
The Bank had a
network of 1495 branches in the county and 21 branches in foreign countries.
These countries are as follows: United States of America, United Kingdom,
France, Germany, Bahrain, Japan, Republic of Korea, Bangladesh and
Peoples Republic of China, Canada, Egypt, Azer Baijan, Turkmenistan and
Kazakhstan.

Overseas Branches

21
Total branches
Representative offices 04
Subsidiary 01

2.2 VISION Joint venture 01

“To be Leading Bank for Partnering in Financial Growth through Innovation and
Service”

2.3 MISSION
“To Be a Catalyst for Economic Growth, Serving the Nation Through Diversified
Product Offering, Innovation, Superior Service Quality, Universal Banking
Capabilities, Multiple Delivery Channels, Investment in People and Processes and
Work Towards Sustainable Higher Returns for Stake Holders”

6
2.4 GOALS AND OBJECTIVES OF NBP
“To be the pre-eminent financial institution in Pakistan and achieve
market recognition both in the quality and delivery of service as well as the range of
product offerings.”

2.5 CORE VALUES

 People - We will continue to value our people and well reward performance

 Service - Our focus will be on providing superior service quality through

diversification and development

 Integrity - We will not compromise on integrity - zero tolerance for

corruption and believe in doing the right thing

 Respect - We respect our customers’ needs, beliefs and values, working

towards their benefit

 Excellence - We will continue to strive for excellence in all that we do

2.6 Management
An Executive Board composed of six Senior Executives of the Bank and the President
who is also the Chief Executive supervises the affairs and business of the Bank.

Board of Directors
Chairman & President

Mr. Syed Ali Raza

Directors

Mr. Mian Kausar Hameed

Mr. Ibrar A. Mumtaz

Mr. Tariq Kirmani

Mr. Sikandar Hayat Jamali

Senior Management:

7
Masood Karim Shaikh SEVP & Group Chief, Corporate & Investment

Banking Group

Shahid Anwar Khan SEVP & Group Chief, Commercial & Retail Banking
Group
Dr. Asif A. Brohi SEVP & Group Chief, Operations Group
Ekhlaq Ahmed SEVP & Secretary Board of Directors
Imam Bakhsh Baloch SEVP & audit & Inspection Group
Ziaullah Khan SEVP & Group Chief, Special Projects
Khalid Bin Shaheen SEVP & Group Chief, Remittances
Amer Siddiqui SEVP & Group Chief, Commercial & Retail Banking
Group

N. B. Soomro SEVP , Special Projects

Muhammad Nusrat Vohra EVP & Group Chief, Treasury Management Group

Nadeem A. Ilyas EVP & Group Chief, Information Technology Group

Dr. Mirza Abrar Baig EVP & Group Chief, Human Resources Management &

Administration Group

Agha Fidaullah EVP/Group Chief, Special Assets Management Group

Aamir Sattar SVP, Divisional Head, Financial Control Divisio

Registered & Head Office

NBP Building
I.I Cundrigar Road
Karachi Pakistan
Legal Advisors
Mandivwalla & Zafar
Advicates & Legal Consultants
Registrar & Share
Registration Office
Central Depository Co. Of Pakistan (CDC)
CDC House, 99-B, Block-B S.M.C.H.S,
8
Main Shara-e-Faisal,Karachi,Pakistan

9
 Chapter – 3
ORGANIZATIONAL STRUCTURE

3.1 Hierarchical Structure of NBP Office

Chief Manager

Operational Manager

Compliance Administration
10

Advances Remittance
Officers
Clerical
Foreign Ex.Dealing
Staff Pension Officers
AccountsClericalDealing
Staff Officers
Postage Dealing
Officer
Clearing
Deptt. Deptt.
3.2 Organizational Chart of National Bank of Pakistan

PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

GRADE I OFFICER

GRADE II OFFICER

GRADE III OFFICER

11
Regional Management Committee:

1. Regional Business Chief. Member

2. Regional Operations Chief. Member
3. Regional Risk Management Chief. Member
4. Regional Audit Chief. Member

In case of a split decision in the Committee, majority may decide the matter . In
Case of a split decision with equal number of votes, the matter should be
Referred to respective Group Chiefs.

12
 Chapter – 4
NBP OFFERINGS PRODUCTS &
SERVICES

13
4.1 DEPOSIT ACCOUNTS
Ø Current Accounts

Ø PLS Saving Accounts

Ø Term Deposits

Ø Short Term Deposits

Ø Special Notice Deposits

Ø Call Deposit Receipts

4.2 MONEY TRANSFER SERVICES

Demand Drafts (DD)

Mail Transfers (MT)

Ø Telegraphic Transfers (TT)

Ø Western Union Money Transfers

Ø Letter of Authority to En-cash Cheques

Ø Foreign Remittance

Ø NBP PAK Rupee Travelers Cheque

4.3 COLLECTIONS
Ø Cheques

Ø Bills

Ø Drafts / Pay Orders and Other Instruments

4.4 DEALING IN FOREIGN EXCHANGE

Ø Foreign Currency Accounts

Ø Foreign Remittances

Ø Trade Finance

Ø Guarantees

Ø Sale & Purchase of FC Notes / TCs.

14
Ø Foreign Currency Loans

4.4 TRUSTEE-SHIP SERVICES

Ø NIT

4.5 SAFE CUSTODY & SAFE DEPOSIT SERVICES

Ø Safe Custody And Safe Deposits of Securities & Valuables

Ø Safe Deposit Lockers

4.6 PURCHASE AND SALE OF SECURITIES

Ø Share and Stocks

Ø Government Securities

4.7 UTILITY SERVICES

Ø Collection of Utility Bills

4.8 HAJJ SERVICES

Ø Hajj Applications

4.9 NBP SAIBAAN

Ø Finance available for home purchase, home Construction.

Ø Period of repayment ranges between 3-20 years.

Ø Loans available up to a maximum of Rs.30 million.

Ø Mark-up choices available rate range between 8.25% - 10.25%.

Ø Minimum approval and disbursement timing.

Ø Limited to areas where there are no documentation, fee, resale and foreclosure.

4.10 NBP ADVANCE SALARY

Ø 20 month salaries in advance (certain conditions apply).

Ø Minimum documentation.

Ø Repayable in 5 years easy installments of up to 60 months.

Ø 2% processing charges, no collaterals, no guarantees, no insurance.

15
Ø Mark-up charged at 19% per annum on reducing balance method.

Ø Avail financing up to Rs. 2 million against your salary.

4.11 NBP CASH ON GOLD

Ø Facility of Rs.32000 against each 10gms of net contents of gold.

Ø Mark-up 13.50% per annum.

Ø No maximum limit of cash.

Ø Repayable within one year.

Ø One year roll over tenure.

Ø No penalty for early repayment.

Ø Weight and quality of gold to be determined by NBP's appointed jeweler.

4.12 ACCOUNTS OFFERED IN NBP

4.12.1 CURRENT ACCOUNT

Current account is called demand liability in banking terminology. No profit is paid

on these accounts, in NBP demand liability are following type:

4.12.2 CURRENT ACCOUNT OR OPERATION ACCOUNT

In this account Cheque book is issued and transactions are carried. One can drew and

can deposit it. Current account can opened with a minimum amount of Rs.500.

4.12.3 CALL DEPOSITS

It is also called earnest money it is required by government. It is a type of security.

Call deposit issued in the name of concerned government department and the
contractor. It usually opened for tenders.

4.12.4 MARGIN ACCOUNT:

These are specifically opened for bank guarantees and LCs. When one opens a LC
a

certain amount is required as margin according to regulations of SBP.

16
4.12.5 INVESTMENT ACCOUNT
These are called time liability. There are two types of such accounts.

4.12.6 LONG TERM

It is fixed deposit for 5 years. Profit (interest) is paid on monthly basis,
minimum

amount is 10,000 and maximum amount is 1 million. If money is drawn before fixed
time; profit rate is reduced to that of saving rate.

4.12.7 SHORT TERM:

These accounts are offered by national bank of Pakistan to the people of the state of

Azad Jammu and Kashmir and overall in Pakistan the time period of these accounts is
one year or less than one year.

4.12.8 PLS Saving Account:

Profit and loss account can be opened with a Minimum initial amount of Rs.1000 and

there is no limit on maximum amount, also there is any restriction of withdrawal.

Profit is computed every month but is, paid to account holders after six months. Zakat
is charged on saving deposit accounts.

17
 Chapter – 5
DEPARTMENTATION

18
5.1 DEPARTMENTS
Every organization in banking sector is divided into a number of departments .NBP is

divided into various departments. These are:

1. Cash Section.

2. Remittance Section

3. Accounting Section.

4. Clearing Section.

5. Advance Section

6. Foreign Exchange Section.

7. Computer Section.

5.2 CASH SECTION

This section performs the following functions:

i. Receipt

ii. Payment

(a)This department is responsible for deposits and disbursement of cash through

Cheques. For disbursement of cash this department accepts Cheques.

(b) This department deals with the cash inflows & outflow& records cash receipt &

payment.

(c) It also deals with the sale & purchase of treasury securities.

5.3 REMITTANCE SECTION

The meaning of remittance of the word remittance is “sending out money”. These

remittances are credited or debited to the account of customer after verifying the

branch code and the receipt of advice. This has very important for the business either

in the country, anywhere or in abroad.

Remittance is the department in the bank through which the customers are sent
their
19
money from one branch to any other branch or from one bank to any other bank in
the

country and with the foreign country banks.

The NBP remittances are taken place in the following ways:

a. Demand Draft (DD)

b. Telegraphic transfer (TT)

c. Mail Transfer (MT)

5.3.1 DEMAND DRAFT (DD)

The reliable & safest mode of money transfer is on demand draft. It is of two kinds

5.3.2 TELEGRAPHIC TRANSFER

It is the fastest transfer of money. All the procedure for filling the application form

deposit cash counter records in register is the same as for DD.TT holder receives

receipts as a memorandum from bank, which he has deposited at the TT amount.

In

TT two number are mentioned i.e. TT No & Remittances No.

5.3.3 MAIL TRANSFER

It is fastest & safest mode of money transfer Procedure for filling of application

register is same as for DD, TT and MT is sent by post through TCS, which is reach to

the responding branch within 24 hours. After receiving of advice, the branch will

make payment or will give credit to the account of beneficiary. No excise duty is

harges on MT, while text information is must in MT.

5.4 ACCOUNTING SECTION

This section helps in transfer of cheques and preparation staff salary. The

reconciliation statement of each department is also prepared here.

Staff Salary

The staff salary is prepared on monthly basis by head office HR department .after
20
deduction of all necessary dues (income tax, provident fund etc.).

5.5 CLEARING SECTION

The clearing process is performed in the state bank of Pakistan. This department helps

in clearing all those cheques on which they have made payment on the behalf of
other

banks. The clearing is done twice in each day. All the cheques related to NBP are

brought in the morning. When the cheques are verified because of accountholder the

same is returned in the afternoon session.

5.6 ADVANCE SECTION

The most important and sensitive department is the advance section of the bank. The

NBP makes profit by advancing loans. Advances are provided for productive

activities to individuals and business ties. Consideration the law & order situation and

the need of product for which the loan is required.

5.7 DIFFERENT TYPES OF ADVANCES

Financial accommodation provided by the bank fall into two broad categories namely:

i. Fund Base Financing

ii. Non Fund Base Financing

5.8 FOREIGN EXCHANGE DEPARTMENT

Foreign exchange business arises primarily from trading and trade related

transactions, although investment monies, dividends and royalty payments as well as

gifts, legacies, loans and interest payments, gives rise to very substantial how of funds

moving from one currency to another.

NBP branches deals in foreign exchange. The bank opens letter of credit for importers

and exporter. Letter of credit is a conditional undertaking by the bank that it will
pay

on behalf of the customer to the exporter.

21
 Chapter – 6

MY INTERNSHIP PROGRAM

22
6.1 BRIEF INTRODUCTION OF THE BRANCH
I have performed my internship in National Bank of Pakistan at:

Branch Name NBP Center Plate Branch Muzaffarabad

Branch Code 0961

Address forward Kahuta

Phone 05823-921780

Fax -----

Tehsil Haveli

District Haveli

Province Azad Kashmir

SWIFT CODE ------

Status Online

Islamic Banking No

Branch Category I

NBP Region Muzaffarabad

Number of ATMs 1

Number of employees 22

6.2 STARTING AND ENDING DATES OF MY INTERNSHIP

Time duration of my internship at National Bank of Pakistan was 06 weeks. Starting

date is 07,09, 2017, and ending date is 22 ,10, 2017.

6.3 DEPARTMENTS IN WHICH I GOT TRAINING

During my internship period at NBP, I got training in various departments of the

branch.

A brief introduction of these departments is as under;

1. Deposits of current and PLS Saving Accounts.

23
2. Accounts Opening.

3. Remittances and Bills.

5. Govt. Payments and Receipts.

6. Credit Department

6.4 DEPOSIT ACCOUNTS

Ø Current Accounts

Ø PLS Saving Accounts

Ø Term Deposits

Ø Short Term Deposits

Ø Special Notice Deposits

Ø Call Deposit Receipts.

6.5 REMITTANCE DEPARTMENT

Remittance means a sum of money sent in payment for something. This department

deals with either the transfer of money from one bank to other bank or from one

branch to another branch for their customers. NBP offers the following forms of

remittances.

a) Demand Draft

b) Telegraphic Transfer

c) Pay Order

d) Mail Transfer

6.6 GOVERNMENT RECEIPTS / PAYMENTS

1. Tax Collection

2. Pension Payment

Account opening

The opening of an account is the establishment of banker customer relationship.

24
Before a banker opens a new account, the banker should determine the prospective
customer’s integrity, respectability, occupation and the nature of business by the
introductory references given at the time of account opening. Preliminary
investigation is necessary because of the following reasons.

i) Avoiding frauds

ii) Safe guard against unintended over draft.

iii) Negligence.

iv) Inquiries about clients.

There are certain formalities, which are to be observed for opening an

account with a bank.
• Formal Application

• Introduction

• Specimen Signature

• Minimum Initial Deposit

• Operating the Account

• Copies of CNIC

• Copies of CNIC of NOK

25
 Chapter – 07
FINANCIAL STATEMENTS ANALYSIS

7.1 HORIZONTAL ANALYSIS

This technique is also known as comparative analysis. It is conducted by setting
consecutive balance sheet, income statement or statement of cash flow side-by-side
and reviewing changes in individual categories on a year-to-year or multiyear basis.
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The most important item revealed by comparative financial statement analysis is
trend. A comparison of statements over several years reveals direction, speed and
extent of a trend(s). The horizontal financial statements analysis is done by restating
amount of each item or group of items as a percentage. Such percentages are
calculated by selecting a base year and assign a weight of 100 to the amount of each
item in the base year statement. Thereafter, the amounts of similar items or groups of
items in prior or subsequent financial statements are expressed as a percentage of the
base year amount. The resulting figures are called index numbers or trend ratios.

Formula

Trend ratios=Current Year amount / Base Year amount * 100.

Horizontal analysis of Statement of Financial Position

Rupees in '000’

Assets 2015 %age 2016 %age 2017 %age

Cash and balances with treasury 100% 99% 114%
banks

Balances with other banks 100% 107% 97%

Lendings to financial institutions 100% 117% 225%

Investments-net 100% 138% 146%

Advances-net 100% 100% 110%

Operating fixed assets 100% 109% 111%

Deferred tax assets-net 100% 226% 260%

Other assets-net 100% 90% 110%

Total 100% 109% 111%

Liabilities %age %age %age
Bills payable 100% 75% 85%

Borrowings 100% 44% 58%

Deposits and other accounts 100% 114% 127%

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 Sub-ordinate loan

Liabilities against assets 100% 289% 217%

Deferred tax liabilities-net - - -

Other liabilities 100% 110% 128%

Total 100% 109% 123%

Presented By 2015 %age 2016 %age 2017 %age
Share capital 100% 125% 156%

Reserves 100% 107% 112%

Inappropriate profit 100% 109% 112%

Surplus on revaluation of assets 100% 101% 90%

Non-controlling 100% 449% 446%

100% 108% 112%

Interpretation
Assets sides.

The horizontal analysis of the balance sheet of the bank overall give the positive
trend. The result of the balance sheet depict that there is a constant increasing trend in
cash about 14% in 2017 as compared to last year. Lendings to financial and advance
increases very huge amounts such as 125% (ending to financial) and 10% (advances)
total assets investments increases in 2017 by 46 %. Fixed assets & others assets also
increase as 10% and 11%.

Liabilities & equity

Bills payable decreased in 2016 by 25% and in 2017 by 15%. Borrowing decreases in
2016 as 56% and 42% in 2017. Deposits increases in 2010 as 14 % and 27 % in
2017.Others liabilities increases 10 %in 2016 and 28 % in 2017. Shares capital of
NBP increases in 2016 as 25 % and 56% in 2017. Reserves increases in 7 %in 2016,
12% in 2017. Inappropriate profit increases 7% in 2016, 12%in 2017.

Horizontal analysis

Profit & Loss A/C

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 Particulars 2015 %age 2016 %age 2017 %age

Mark-up/ return/ 100% 113% 122%

interest earned

Mark-up/ return/ 100% 111% 119%

interest expensed

Net mark- 100% 15% 8%

up/interest income

Provision against 100% 62% 55%

non-performing
advances –net

Provision for 100% 446% 481%

diminution in the
value of
investments-net

Impairment of
goodwill

Provision against off 100% 19%

balance sheet
obligations

100% 85% 79%

Net mark-up/ 100% 129% 146%

interest income after
provisions
Non-mark-up/ interest income

Fee, commission 100% 109% 110%

and brokerage
income

Dividend income 100% 56% 84%

Income from deaing 100% 73% 102%

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in foreign currencies

Gain on sale of 100% 45% 4%

securities-net

Unrealized gain on 100% 185% 420%

revaluation of
investments

Share of loss from 100% 159% 101%

joint ventures

Share of profits 100% 177% 24%

Gain on revaluation
of previously held
equity interest

Other income 100% 5% 8%

Total non-mark- 100% 114% 128%

up/ interest income

Non-mark-up/ interest expenses

Administrative 100% %117% 122%

expenses

Other provision-net 100% 28% 88%

Other charges 100% 38% 42%

Total non-mark-up/ 100% 113% 133%

interest expenses

Profit before 100% 117% 123%

transaction

Taxation current 100% 111% 103%

year

-Prior years 100% 22% 6%

-deferred 100% 204% 107%

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 100% 183% 224%

Profit after 100% 102% 101%

taxation

Interpretation
The interest earned by National Bank of Pakistan fluctuates and shows an increasing
trend during all years. It shows an increasing trend that is 13% in 2016, 22%in 2017.
The interest expense of National Bank of Pakistan shows an increasing trend during
all years. It increases in 2016 as 11%, 19% in 2017. The net markup/ interest income
of National Bank of Pakistan fluctuates and shows a mixed trend during all years.
Provision against non-performing advances decreases in 2016 by 32 % & in 2017
as 45%. Net markup increases as 26% in 2016 and 46 % in 2017. The Fee,
Commission & brokerage income of National Bank of Pakistan fluctuate and
show increases as 9% in 2016 and 10% in 2017. The dividend income of
National Bank of Pakistan is showing a mixed trend during all years.it
decreases in 2016 by 44% and 16%in 2017. The administrative and operating
expenses of National Bank of Pakistan increase 22% in 2017 and 17 % in 2016
and profit before tax increases as compared to last years. Profit after tax stable
in 2017.

7.2 VERTICAL ANALYSIS

Vertical analysis is a technique for identifying relationship between items in the same
financial statement by expressing all amounts as the percentage of the total amount
taken as 100. In a balance sheet, for example, cash and other assets are shown as a
percentage of the total assets and, in an income statement, each expense is shown as a
percentage of the sales revenue. In Vertical analysis, various components of the
financial statements are standardized by expressing them as a percentage of some
bases. Examples of common-sized statements include:

• Components of the balance sheet expressed as a percentage of total assets

• Components of the income statement expressed as a percentage of sales or

Interest earned
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 Vertical analysis of Statement of Financial Position
Rupees in '000 ‘

Assets 2015 2016 %age 2017 %age

%age
Cash and balances with treasury 13% 11% 12%
banks
Balances with other banks 2% 3% 2%
Lendings to financial institutions 2% 2% 2.7%
Investments-net 22% 28% 26.5%
Advances 50% 46.% 44.3%
Operating fixed assets 2% 3% 2%
Deferred tax assets-net 3% 5% 6%
Other assets-net 6% 4% 5%
100% 100% 100%0
Liabilities
Bills payable 1% 0.008% 0.008%
Borrowings 5% 1% 2%
Deposits and other accounts 79% 81% 83%
Sub-ordinate loan
Liabilities against assets 0.0042% 0.0012% 0.0011%
Deferred tax liabilities - - -
Other liabilities 3% 3% 4%
Total liabilities 88% 86% 89%

Net Assets 12% 14% 11%

Share capital 1.5% 2% 1%
Reserves 2.5% 2.4% 2.6%
Inappropriate profit 5.9% 6% 5.2%
Surplus on revaluation of assets 2% 2.2% 2%
0.1% 0.4% 0.2%
12% 14% 11%

Interpretation
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Assets analysis

In balance sheet of bank the most important item is earning assets. There are four
earning assets. Bank has strong earning assets like advances investments and lending
to financial institutions has major percentage in of assets of bank. There was a slight
increase in the year 2017 as compare to the years 2015& 2016, of 12%. %. In cash
and Lendings increasing trend and investment increases in 2016 28 % and decline in
2017 2% as compared to last years. Advances decreases in 2016 and 2017.In liability
deposits of the bank increases as compared to last year's 2%. The operating fixed
assets of National Bank of Pakistan shows a percentage of 2% in the year 2011. There
was a slight decrease of 1% in 2017.The other assets of National Bank of Pakistan
fluctuate during all years. The percentage of other assets is decreased to 6% in the
year 2017.

Liabilities & Equity analysis

The bills payable by National Bank of Pakistan indicates a stable percentage. The
borrowings are increased in 2017 shows a percentage of 3%. The deposits and other
liabilities of National Bank of Pakistan increased during all years. The share capital of
National Bank of Pakistan shows a mixed trend in all years. It was 10% in 2016 and
shows an increasing trend of 13% in 2017. The unappropriate profit & Reserves of
National Bank of Pakistan is increased during all years.

Vertical analysis of Profit & loss account

Rupees in '000

Particulars 2015 %age 2016 %age 2017 %age

Mark-up/ return/ interest earnd 100% 100% 100%
Mark-up/ return/ interest expensed 495% 52% 51%
Net mark-up/ interest income 47% 49% 49%
Provision against non-performing 14% 8% 6%
advances-net
Provision for diminution in the 0.9% 3% 4%
33
 vale investments-net
Impairment of goodwill 0.1%
Provision against off balance sheet 0.1% -0.002%
obligations
15% 11% 10%
Net mark-up/ interest income 33% 40% 39%
after provisions
Non-mark-up/ interest income

Fee, commission and brokerage 11% 13% 11%

income

Dividend income 3% 1% 2%

Income from dealing in foreign 4% 2% 3%

currencies

Gain on sale of securities-net 6% 3% 2%

Unrealized gain on evaluation of 0.01% 0.1% 0.1%

investments

Share of loss from joint ventures 0.1% 0.009% 0.1%

Share of profits from associates 0.02% 0.1% 0.1%

Gain on revaluation of previously 0.2%

equity interest

Other income 0.7% 2% 3%

Total non-mark-up/ interest 24.5% 20% 21%

income

57% 58% 60%

Administrative expenses 29% 31% 32%

Other provisions-net 0.8% 0.2% 0.6%

Othe rcharges 0.7% 0.1% 0.2%

Total non-mark-up/ interest 31% 30% 33%

expenses

Extra ordinary/ unusual item 27% 28% 28%

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 Profit before taxation 11% 11% 10%

Taxation-current year 5% 1% 0.3%

-prior year 1% 3% 9%

-deferred 4% 7% 9%

Profit after taxation 23% 20% 19%

Interpretation
The interest earned by National Bank of Pakistan fluctuates and shows an increasing
trend during all years. The interest expense of National Bank of Pakistan shows an
decreasing trend during all years. In the year 2017, the interest expensed is 51%. The
Fee, Commission & brokerage income of National Bank of Pakistan fluctuate and
show a decreasing flow. The dividend income of National Bank of Pakistan is show
growing. Gain on sale of securities decreases in 2017. The Total non-mark-up/
Interest income of National Bank of Pakistan fluctuates and indicates a mixed trend
during all years. The administrative and operating expenses of National Bank of
Pakistan are 32% in 2017, representing second highest percentage among all years
The total non-mark-up/ Interest expenses of National Bank of Pakistan are 30% in
2016 and increases 33% in 2017.current tax and profit decreases in 2017 as compared
to 2016.

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 Chapter – 08

SWOT ANALYSIS

36
 SWOT ANALYSIS

8.1 STRENGTH

8.1.1 Credit Rating

NBP JCR VIS rating was AA for long term and A for short term. The rating shows
that bank is doing good business in the country.

8.1.2 Rapidly Increasing Branches

NBP branches number increased every year. Increasing branch network means that
there will be more convenience for the customers and thus it is great strength of NBP.

8.1.3 Low Minimum Balance Requirement and Low Service Charges

The minimum balance requirements of the bank are low and its service charges are
also not very high as compared to its competitors. This implies that those customers
who are not satisfied with other banks may come on NBP for depositing their money
or doing some other business with the bank.

8.1.4 Consistent Share Price Movement with Stock Exchange

The share price movement of NBP has remained consistent with that of stock
exchange from 1900-2008. This means that the bank’s business has remained stable
over the year. Also its share these days is higher than one of its arch rivals HBL.

8.1.5 Deposits Increased

The deposits and financing of the bank have increased over the year, which means
that the bank is growing with the passage of time.

8.1.6 Consistent Dividend Policy

NBP has had consistent dividend policy since the last two years, which means that the
bank has been successful in satisfying its shareholders. And satisfying the
shareholders is the most important objective of any organization.

37
8.1.7 Social Responsibilities
On the social front the bank collects donation for Shoukat Khanum Memorial
Hospital, Taleem for All Trust and Sponsors of the social events to make good images
in the eyes of its customers and prospects.

8.1.8 Banks are regulated

The banks are regulated and monitored by the State Bank of Pakistan. The service as a
strength for banks because if the banks are facing severe liquidity problems then the
state bank will come as a lender of the last resort.

8.2 WEAKNESSES

8.2.1 Turnover Rate is high

Although the bank’s turnover rate has decreased from previous years but it is still
high. Thus NBP should carefully look into this matter if wants to complete the
banking industry.

8.2.2 Incompatible Salary Package

The basic salary pad to the bank’s employees is compatible with other banks but the
fringe benefits offered are not compatible. This leads to employee dissatisfaction and
high turnover.

8.2.3 Centralization
NBP has centralized it department to decrease its cost and to generate more and more
business from present customers as attracting new customers is more costly than
retaining present ones. Centralization creates problems for the customers, as they do
not find all the departments at every branch of the bank.

8.2.4 Obsolete Software

NBP at present is using very obsolete software technology. Regarding technology
NBP is far behind its competitors. This internal weakness increases the work burden
for the employees and leads to their dissatisfaction and fatigue.

8.2.5 Hassle of Paper Work

In spite of having a computerized system the bank has to handle a lot of paperwork,
which is very unproductive, increases the paper cost of the bank and leads to
employee difficulty.
38
8.2.6 No Paper Training
The bank does not provide paper training to its new recruits, as it does not have any
such policy in place for its. Thus the new people who join the bank may get
disillusioned in the beginning of their career and may not understand how to perform
functions in the best way they desired to be performed.

8.2.7 Head Office Handle Policy Formulation

It is the responsibility of the Head Office to handle policy formulation and then after
decisions have been reached policies and communicated to branches. Decision
making thus centralized. The branches therefore have authority for changing any
policy allegation of power is thus only made for performing the functions outlined by
the head office.

8.2.8 Equipment Ordering is Time Consuming

The equipment’s that the branches require such as computer or generators have to be
rendered from the Head Office. The head office then arranges for the equipment and
transfers it to the destination branches. NBP head office consumes a lot of time in
making the required equipment available at the branches and this leads to inefficiency
of operations.

8.3 OPPORTUNITIES

8.3.1 Growth in Real GDP

The GDP of Pakistan has increase and this indicates that the economy of
Pakistan is growing so its opportunity not only for NBP but also for the entire banking
industry. If economy increases at progressive rate then this will help grow the
business of the banks.

8.3.2 Increase in Per Capita Income

The per capita income of Pakistan has increased which is a good economic indicator
as when per capita income increases the disposable income of the people will be more
and thus they can do more business with the bank.

39
8.3.3 Increasing Branch Network
The bank’s competitors have large branch network and more branch network means
accessibility of the customer is increased and thus prospects can also be attached
which will increase tax base of the bank.

8.3.4 Internet Banking

Internet banking includes giving account status and mini statements to customer
through online. NBP do not provide this facility to its customer, through introducing
the features of internet banking to its customer on its website bank can increase its
revenue.

8.3.5 Global Expansion

The bank can opt for global expansion, as today a world of global economy
exists. It can acquire smaller banks in neighboring country of Pakistan or it can itself
move outside the Pakistan if it has capital to do so.

8.3.6 Increasing in Foreign Remittance

The foreign remittances of workers have increased. This can provide good business to
the bank through its remittance department.

8.3.7 Reduction in Corporate Tax Rates

The Government has reduced the tax rates of bank. This opportunity will allow banks
to earn more and increase earnings of their shareholders.

8.3.8 SBP Reforms

SBP has been active in introducing reforms towards compliance of international
standards and cods in the banking sector this leads to standardization in the working
of the bank and foreign banks may thus be inclined to do business with Pakistanis
bank including NBP.

8.3.9 Relationship with the Government

If NBP improves its relationship with bank by being a socially responsible firm then
Government encourages the bank which can lead to its growth and prosperity in
future.

40
8.3.10 Growth in Banking Industry
As various reforms and steps have been taken to attract investors and banking
industry taking advantage of this NBP can also be part of this growth and expand their
operations.

8.4 THREATS

8.4.1 Competitors have Larger Branch Network

The competitors of NBP like Askari Bank, HBL and Allied Bank etc. have larger
branch network as compared to NBP and this serves as a threat to the bank.

8.4.2 Variety of Products

NBP does not have such a great variety of products as its competitors and thus it is
not satisfying its customer to the extent that NBP does not offer credit card and the
customers wanting these products may switch to any other bank forgetting those
products.

8.4.3 Default by Borrowers

If the bank’s borrowers default then bank will have to liquidate the security of
borrowers and may in some cases seek to help of the court but it is not easy for the
profitability of the bank.

BIBLIOGRAPHY
1. NBP Bank. Information Memorandum. “Dec (2017)”.

2. Asrar H. Siddiqui. Practice & Law of Banking in Pakistan. Karachi; Decent

Print Enterprises “January, 2017”.

41
3. Gibson, Charles H. “Financial Statement Analysis”. 7th Edition.

4. NBP Bank. Information Memorandum. “March (20116)”.

5. Rose Peters. Commercial Bank Management. Boston: Donnelley & son

Company “January, 2016”.

6. NBPP Bank. Annual Report “Dec, 2016”.

7. www.nbp.com.pk 01-01-2017

8. F. Wayne. Cascio. Managing Human Resources. California: R.R. Donnelley &

son Company “February, 2016”.

9. NBP Manual of the Personnel & Traiing Department.

10. www.nbp.com.pk 10-11-2017.

11. Khalid Cheema. Business Law. Lahore: West Pak Publishing Co, “Dec,
2017”.

12. NBP Manual of the Personal Department “12-01-2016”.

13. Van Horne, James C. Financial Management. New Jersey: Prentice Hall
International Edition “February, 2017”.

14. www.financialstatementsofnbp.com.pk 05-01-2017.

15. www.google.coms

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