Internship Report on (Organization Name)

Internship Report on

National bank of Pakistan

Submitted by: FAISAL SHEHZAD

Registration #: FA06-BBA-028

Supervised by: Zaheer Ahmed Swati

Department of Management Sciences

COMSATS Institute of Information Technology

Abbottabad

July 2010

Internship report on National bank of Pakistan

Submitted by: Faisal Shehzad

Registration #: FA06-BBA-028

Supervised by: Zaheer Ahmed Swati

This internship report is submitted in partial fulfillment of the requirements for the degree of bachelors of Business Administration awarded by the COMSATS

Institute of Information Technology, Abbottabad.

Department of Management Sciences

COMSATS Institute of Information Technology

Abbottabad

July 2010

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Department of Management SciencesCOMSATS Institute of Information Technology

Abbottabad

Approval Sheet

Approval Committee

External Examiner

Mr. _________________________________________Signature_______________

Supervisor

Mr. _________________________________________Signature_______________

Head of Department

Mr. ________________________________________Signature ________________

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Dedication

I would like to thank my lovely parents for giving me

this opportunity to attend this degree and supporting me in all my

student life. They acted as a backbone and a major reason behind my

accomplishment of this degree. I dedicated this project to my ever-loving parents and

my dearest friend Hassan Khalid.

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Abstract

For the economic growth and sustainability of country financial institutions play a very

important and vital role. The bank circulates and deals in money. Such institution are also

required to fulfill other financial needs such as provision of place to deposit money,

serving for the utilities and also advancing money in order to facilitate the needs of house

holders and the businesses. Banking has always been the main field of interest for most of

the business. In this report the financial position of NBP and its City branch Mansehra

has been thoroughly studied and analyzed.

The methodology that was used was available resources by the organization, like website,

annual reports, publicly available data, etc. Also, interviews with some employees and

observation methods were used. The data collection was an exhaustive process and all

secondary resources were used like, Internet, Books, Reports, Articles etc were used. In

the first chapter introduction to the report, background of study, scope of the study,

merits, limitation and scheme of the study are given.

The report covers the history of NBP bank, introduction to the organization, its

background, role and functions of organization, its core values, and miscellaneous topics

related to Finance department of NBP Bank. Finally it is concluded that the bank is

functioning in a proper & systematic manner, but need more competitive strategies, long

term debts, & outside creditors, creditors should provide the funds to meet the SBP

policies to have the maximum branches.

The report covers general information on the areas in which NBP is working. This report

also covers the analysis portion with the help of which we come to know that where the

NBP is strong and where it need s to be strong. NBP offers new products and services

day by day for improving its performance, but there are lots of hurdles in the way of

success of NBP, all the recommendations are given in the report and there solutions as

well that can be helpful in the success of NBP in future.

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Table of Contents

Acknowledgements xiv

Abbreviation

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Executive Summary xvi

CHAPTER 1 Page #

INTERDUCTION TO REPORT

1.1 Background of Study 01

1.2 Objective of study 01

1.3 Scope of Study 02

1.4 Other area of NBP’s operation 03

1.5 Limitation of the study 03

1.6 Merits of the study 03

1.7 Research Methodology 04

1.7.1 Primary data 04

1.7.2 Secondary data 04

1.8 Scheme of Report 04

CHAPTER 2

INTRODUCTIOION TO ORGANIZATION (NBP)

2.1 Evaluation of Banking / Industry in World 05

2.1.1 Evaluation of Banking / Industry in Pakistan 05

2.2 Historical introduction of organization (National Bank of Pakistan) 06

2.2.1 History 09

2.2.2 Present Status 09

2.2.3 Credit Ratings 10

2.2.4 Auditors 10

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2.3 Organizational Structure 11

2.4 Mission statement 12

2.5 Vision statement 13

2.6 Objectives 13

2.7 Core Values 13

2.8 Corporate Profile 14

2.9 Executive Committee 15

2.10 Organizational Structure of City Branch Mansehra 16

2.10.1 Location 16

2.10.2 Number of Employees 16

CHAPTER 3

PRODUCT AND SERVICES OFFERED BY NBP 17

3.1 Business overview 17

3.1.1 Corporate and investment Banking 17

3.1.1.1 Operations 17

3.1.1.2 Working capital and short term loans 17

3.1.1.3 Medium term loans and capital expenditures financing 17

3.1.1.4 Retail banking 18

3.1.1.5 Treasury / international Banking 18

3.1.2 Commercial banking 19

3.1.3 SME finance 19

3.1.4 House finance 19

3.2 Department in national bank of Pakistan 20

3.2.1 Deposits department 20

3.2.1.1 Payment of cheque at counter 3.2.1.1 Payment of cheque at counter 2020

3.2.2 Remittances department 21

3.2.3 Clearing department 21

3.2.3.1 Procedure for Clearing the Cheque 21

3.2.3.1.1 Pay-in slip 21

3.2.3.1.1 Stamping and scrutinizing 21

3.2.4 Advances department 22

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3.2.5 Foreign exchange department 22

3.3 Products offered by NBP 22

3.4 Services offered by NBP 22

3.4.1 Demand drafts 22

3.4.2 Swift system 22

3.4.3 Letters of credit 23

3.4.4 Traveler's cheque 23

3.4.5 Pay order 23

3.4.6 Mail transfers 23

3.4.7 Foreign Remittances 24

3.4.7.1 New features 24

3.4.8 Short term investments 24

3.5 NBP is involved in the following 24 

3.5.1 Commercial finance 25

3.5.2 Trade finance other business loans 25

3.5.2.1 Agricultural finance 25

3.5.2.1.1 Agricultural Finance Services 25

3.5.2.1.2 Agricultural credit 25

3.5.2.1.3 Agricultural credit (medium term)  25

3.5.2.1.4 Firm credit: 26

3.5.2.1.5 Production loans 26

3.5.2.2 Corporate finance 26

3.5.2.2.1 Working capital and short term loans 26

3.5.2.2.2 Medium term loans and capital expenditure financing 26

3.5.2.2.3 Loan structuring and syndication 27

3.5.2.2.4 Cash management services 27

3.6 International banking 27

3.7 Financial Position of City Branch Mansehra 28

CHAPTER 4

FINANCIAL ANALYSIS 29

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4.1 Financial statement analysis 29

4.2 The financial data of NBP is analyzed in the following two ways 29

4.2.1 Common size analysis 30

4.2.1.1 Horizontal analysis: 30

4.2.1.1.1 Trend Analysis of Income statement 32

4.2.1.2 Common size (Vertical) analyses of income statement 33

4.2.1.2.1 Vertical analysis of balance sheet 34

4.2.1.2.2 Vertical analysis of income statement 36

4.2.2 Financial ratio analysis 37

4.2.2.1 Earning assets to total assets 38

4.2.2.2 Return on earning assets 38

4.2.2.3 Interest margin to average earning assets 39

4.2.2.4 Loan loss coverage ratio 40

4.2.2.5 Equity capital to total assets 40

4.2.2.6 Deposit times capital 41

4.2.2.7 Loan to deposit 41

4.2.2.8 Operating cost to income ratio 42

4.2.2.9 Interest income per employee 42

4.2.2.10 Profit per employee 43

4.2.2.11 Business per employee 43

4.2.2.12 Business per branch 44

4.2.2.13 Employees per branch 45

4.3 Branch Analysis 45

4.3.1 Business per branch 45

4.3.2 Branch Deposit to total Deposit 46

4.3.3 Branch advance to total Advance 46

4.3.4 Advance to Deposit Ratio of Branch 46

4.3.5 Business of branch per Employee 46

4.4 SWOT analysis 47

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4.4.1 Strengths 47

4.4.1.1 Oldest institution 47

4.4.1.2 Alternate duties in SBP absence 48

4.4.1.3 More deposits than other bank 48

4.4.1.4 Employee benefits 48

4.4.1.5 Broad network 48

4.4.1.6 Strictly followed rules &regulation 48

4.4.1.7 Professional competence 48

4.4.1.8 Healthy environment 49

4.4.1.9 Relation between staff and other employees 49

4.4.2 Weaknesses 49

4.4.2.1 Lack of marketing effort 49

4.4.2.2 NBP under political pressure 49

4.4.2.3 Favoritism and nepotism 49

4.4.2.4 Lack of financial product 49

4.4.2.5 Inefficient counter services in the rush hours 50

4.4.2.6 Lack of computerized network 50

4.3.2.7 Lack of modern equipment 50

4.4.2.8 Uneven work distribution 50

4.4.3 Opportunities 50

4.4.3.1 Electronic banking 50

4.4.3.2 Micro financing 51

4.4.4 Threats 51

4.4.4.1 Emergence of new competitors 51

4.4.4.2 Political pressure by elected government 51

4.4.4.3 Downsizing 51

4.4.4.4 Customers complaints 51

4.5 Competitive analysis 52

4.5.1 Porter’s five forces model 52

4.5.1.1 Rivalry among competitive firms 52

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4.5.1.2 Potential entry of new competitors 52

4.5.1.3 Potential Development of substitute products 52

4.5.1.4 Bargaining Power of Suppliers 53

4.5.1.5 Bargaining Power of Consumers 53

CHAPTER NO 5

CONCLUSIONS AND RECOMMENDATION 54

5.1 Financial Sector Problem and Recommendation 55

5.1.1 Earning assets to total assets 55

5.1.2 Loan loss coverage ratio 55

5.1.3 Equity capital to total assets 56

5.1.4 Deposit times capital 56

5.1.5 Loan to deposit 56

5.1.6 Business per employee 57

5.1.7 Business per branch 57

5.2 Over all recommendations and suggestions 58

5.2.1 Performance of general banking departments 58

5.2.2 Lack of proper training 58

5.2.3 Interference of union 58

5.2.4 Delegation of authority 59

5.2.5 Distribution of work 59

5.2.6 In adequacy of staff 59

5.2.7 Inadequate building 59

5.2.8 Non-installation of computer 59

5.2.9 Lack of library 60

References 61

Annexure

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List of Figure

Figure 2.1 Organization Structure 11

Figure 2.2 Operations group 12

Figure 2.3 Audit and Inspection Group 12

Figure 2.4 Department Hierarchy of NBP, City Branch, Mansehra 16

List of Table

Table 2.1 Board of Director 16

Table 3.1 Financial position of NBP City branch of Mansehra 28

Table 4.1 Common size (Horizontal) analysis of balance sheet 30

Table 4.2 Trend Analysis of Income Statement 32

Table 4.3 Common size (vertical) analysis of balance sheet 33

Table 4.4 Common size (vertical) analysis of income statement 35

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Acknowledgements

Allah Almighty is worthy of all acknowledgments, whose grace has no limits and who

gave me the strength and will to complete this report.

I have no words to express my heartiest sense of gratitude to my supervisor,

Mr. Zaheer Ahmed Swati, for his supervision, contribution, intellectual guidance,

constructive suggestion, valuable time, patience and wise comments to make this report

possible.

I highly appreciate the help and cooperation of the Mr Raqeeb Khan Operations manager

of NBP Bank city branch Mansehra for their support and collaboration.

I also acknowledge the help of all government departments and public in collecting

information / documents / data for this report.

I wish to express my deepest and sincere appreciation to all my teachers including Miss

Faiza Sajjad, M.Imran Qureshi, Miss Robina Kazmi, and M.Adil Farid Khan for their

help, cooperation, and moral support.

The last but not least, I would feel incomplete without thanking to my parents who

always pray for my brilliant success and bright future.

Faisal Shehzad.

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List of abbreviations

AVP Assistant Vice President

BBA Bachelors of Business Administration

BOD Board of Directors

D.D Demand Draft

EBIT Earning Before Income Tax

EPS Earning per share

EVP Executive vice president

I.T Information technology

L/C letter of credit

M/T Mail Transfer

MIS Management Information system

PLS Profit and loss saving

SBP State bank of Pakistan

SEVP Senior executive vice president

SVP Senior vice president

SWIFT society for worldwide interbank financial telecommunication

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SWOT Strength Weaknesses Opportunities Threat

SS Specimen signature

VP Vice president

Executive Summary

National bank of Pakistan was incorporated in Pakistan and is engaged in commercial

banking and related services. It is serving the nation as one of the leading Banks in

Pakistan. The bank is listed on all the stock exchanges in Pakistan, in accordance with the

directives of the federal government regarding the shifting of the banking system to

Islamic modes; the State Bank of Pakistan has issued various circulars from time to time.

The national bank of Pakistan provides quality financial services in the country with

profitability and responsibility and to be the best place to work. With a network of around

1254 branches and a team of dedicated professionals, the NBP is the largest public sector

bank.

I was honored to work in NBP City branch Mansehra, where I found the staff very

cooperative in many respects. I did my internship in a few departments of the branch. I

worked in the Account Opening Section in First week, under the supervision of

Mr.Sohail, where I learned the methodology of opening of accounts which is said to be as

a contractual relationship between bank and customer, and about precautionary measures

that are relevant to opening of an account. Moreover I got the idea that how these

accounts are maintained. What should be prerequisites of opening of account etc.

Then for the next two weeks I worked in the remittances department under the guidance

of Mr.Asif, where I got the opportunity to get familiar with different kinds of remittances,

the bank deal in which are the Demand draft, Telegraph Transfer, Mail Transfer, Issuance

of Rupees Travelers Cheque, Posting of vouchers. I was given certain projects which I

accomplished successfully.

Then I went to the Clearing Department where I worked for one week under the direction

of Mr. Jamil, and learned about the clearing and collection functions of the banking

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sector. That how Cheque of other banks are sent for clearing, which perform this function

etc.

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