mc070400910

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Muhammad Asif Imran

MC070400910MBAFinance

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Report on

National Bank of PakistanShahpur Kanjran Branch (1655)

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IntroductionOverview

NBP was established on November 9, 1949NBP is a major business partner of Government ofPakistanNBP listed on the Karachi, Lahore, and Islamabad stockexchange A large network with 1284 Branches

NBP has 98 ATM’s with 101 ATM Machines 221 Online Branches, 06 Customer Facilitation Centers12 Swift Branches, 24 Overseas Branches

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Total number of shares 876975Total assets 817,758,326,000 (2008)Profit after Taxation 15,458,590,000 (2008)

IntroductionBusiness Volume

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IntroductionCompetitors

There are several bank acting as competitors of NationalBank of Pakistan, some of those areHabib Bank Ltd.Allied Bank Ltd.Bank AlflahMuslim Commercial Bank

United Bank LimitedStandard Charted BankBank Al-Habib

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President

Board of Directors

Senior Management

Regional Chief

Zonal Chief

Branch Manager

Organizational Hierarchy

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Training ProgramDuring the internship period of 6 weeks I got training invarious departments in the branch. A brief introductionof these departments is as under:

Deposit of Current and PLS Saving Accounts &Account OpeningRemittances and Bills

Govt. Payments and ReceiptsCredit

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Deposit of Current and PLS Saving

Accounts & Account OpeningA/C opening.Issuance of cheque book.Current a/cSaving a/cCheque cancellationCash

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Remittances and Bills

Preparation of Demand DraftPay OrdersMail TransferTelegraphic TransferWestern union money transferCheque CollectionPayments

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Government receipt and Payment Net collection of Utility Bills

Payment of utility bills through chequeTax Collection,

redit & LoanIssuance of short term and long term LoanFinancing small investors through various financingschemes.Loan against GoldAgricultural Advance to farmers

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Functions of Finance Department

Accounting system of the organizationNBP Uses BBO (Branch Bank Office) for thecomputerized recording of TransactionMostly Used Thing in the Program is IndividualLedger where In first Column Deposits and otherDebit entries are recordedSecond Column is used for Withdraws and CreditEntriesThird Column Shows the balance after everytransactionEnd of the day report is generated

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Use of Electronic Data in Decision Making

Information System is very helpful in decision makingprocess. Various applications are used for thepurpose like MIS, ERP, BBO and Office Suit etc.Critical Analysis help in finding out where thenecessary step should taken

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Sources of Funds

NBP raise it fund through following sourcesShare CapitalReservesBorrowingsDepositsOther Liabilities

Mark Up/Return/Interest

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Allocation of Funds

NBP allocate it’s fund to following sources Lending to Financial InstitutionsInvestmentsAdvancesOperating Fixed AssetsOther Assets

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Current Ratio =Current Asset / Current Liabilities

Ratio Analysis

Current Ratio

2008 2007

2.86 7.40

Current Assets = Cash and Balance with Treasury Bank + Balance with other BanksCurrent Liabilities = Bills Payable + BorrowingsCurrent ratio decrease due to Increase in borrowing in year 2008

Net Working Capital Ratio 2008 2007

0.15 0.15

Net Working Capital Ratio = Current Asset - Current Liabilities/ Total Assets

Time Interest Earned 2008 2007

1.18 1.95

Time Interest Earned = EBIT / Interest Charges

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Fixed Charges Coverage 2008 2007 0.98 1.36

Fixed Charges Converge Ratio = EBIT+ Fixed Charges / Fixed Charges + Interest

Debt Ratio 2008 2007

0.87 0.85

Debt Ratio = Total Debt / Total Assets

Debt to Equity Ratio 2008 2007

8.79 9.32

Debt to Equity Ratio = Total Debt / Total Equity

Debt to Tangible Net WorthRatio

2008 2007

5.66 5.64

Debt to Tangible Worth Ratio = Total Debt / Tangible Net Worth

Total Capitalization Ratio 2008 2007

0.33 0.14

Total Capitalization Ratio = Long Term Debt / Long Term Debt + Equity

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Net Profit Margin 2008 2007 25% 38%

Net Profit Margin = Net Income / Revenue

Return on Asset 2008 2007

1.9% 2.5%

Return on Asset = Net Income / Average Total Assets

Operating Margin 2008 2007

69.74% 83.95%

Operating Margin = Gross Profit / Revenue

Operating Assets Turnover

2008 2007

0.10 0.09

Operating Assets Turnover Ratio = Revenue / Operating Assets

Operating Assets Ratio 2008 2007

0.02 0.03

Operating Assets Ratio = Net Income / Operating Assets

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Revenue to Fixed Assets 2008 2007 2.52 1.95

Revenue to Fixed Assets = Total Revenue / Fixed Assets

Return on Total Equity 2008 2007

0.19 0.27

Return on Total Equity = Net Income / Total Equity

Gross Profit Margin 2008 2007

0.61 0.67

Gross Profit Margin = Revenue – Cost of Sale / Revenue

Earning Per Share 2008 2007

17.23 23.34

Earning Per Share = Net Income / Number of Common Shares

Price Earning Ratio 2008 2007

0.58 0.43

Price Earning Ratio = Market Value Per Share / Earning Per Share

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Horizontal Analysis: Each amount is divided by previous year amountto get its change in percentage.

Balance Sheet 2008-2007 2007-2006

Base year 2007 Base year 2006

ASSETS % %

Cash and balances with treasury banks 12.26 20.67

Balances with other banks 2.33 (7.80)

Investments - net (19.10) 50.88

Lending's to financial institutions (20.20) (6.73)

Advances - net 21.35 7.66Operating fixed assets (6.58) 167.74

Deferred tax assets - net

Other assets - net 43.73 14.31

Total Assets 7.29 20.01

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LIABILITIES

Bills payable 44.71 (33.41) Borrowings 274.09 (7.59)

Deposits and other accounts 5.58 17.94

Liabilities against assets (24.68) 153.52

Deferred tax liabilities - net 113.56

Other liabilities 28.17 16.33

Total Liabilities 10.75 16.75

Net assets (11.93) 41.95

Represented by:

Share capital 10.00 15.00Reserves 26.43 13.64

Inappropriate profit 15.68 41.37

Surplus on revaluation of assets - net of tax (55.19) 62.81

Total Liabilities & Equity (0.12) 0.42

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Profit and Loss Statement 2008-2007 2007-2006

base year 2007 base year 2006

% %

Mark-up / return / interest earned 20.51 14.67

Mark-up / return / interest expensed 41.00 21.46

Net mark-up / interest income 10.20 11.53

Provision Against Non performing Advances 124.29 53.56

Provision for diminution in the value of investments (1027.37) (94.33)

Provision Against Balance Sheet Obligations

Bad debts written off directly (100.00) 655.09

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Net mark-up / interest income after provisions 132.30 99.14

Non-mark-up / interest income (9.75) 4.05Fee, commission and brokerage income 16.86 10.37

Dividend income (11.78) 12.85

Income from dealing in foreign currencies 280.61 (21.82)

Gain on sale of securities - net (83.11) 100.23

Unrealized loss on revaluation of investments (105.34) 616.04

Other income - net 745.10 (76.52)

Total non-mark-up / interest income 21.20 11.36

0.12 6.27

Administrative expenses 27.91 5.67(Reversal) / Write off / other provision - net 344.88 (1072.21)

Other charges 3303.31 (91.77)

Total non-mark-up / interest expenses 35.52 5.55

Profit before taxation (18.03) 6.65

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Taxation - Current year 41.52 (4.42)

*Prior years (100.00) (26.22)

*Deferred (1403.63) 422.31

(16.44) (2.82)

Profit after taxation (18.78) 11.82

Unappropriated profit brought forward 41.37 65.57

Transfer from surplus on revaluation of fixedassets 234.44 (5.00)

Profit available for appropriation 19.13 40.38

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Vertical Analysis: Each amount is divided by Total Assets (Liabilities)to get its percentage in Balance Sheet and by Sales on P/L Statement.

Balance Sheet 2008 2007

ASSETS % %

Cash and balances with treasury banks 13.02% 12.45%

Balances with other banks 4.69% 4.92% Investments - net 20.89% 27.70%

Lendings to financial institutions 2.09% 2.82%

Advances - net 50.50% 44.65%

Operating fixed assets 2.96% 3.40%

Deferred tax assets - net 0.39%

Other assets - net 5.45% 4.07%

Total Assets 100.00% 100.00%

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LIABILITIES

Bills payable 1.25% 0.93%

Borrowings 4.95% 1.42%

Deposits and other accounts 76.42% 77.66%

Liabilities against assets 0.00% 0.00%

Deferred tax liabilities - net - 0.67%

Other liabilities 4.85% 4.06% Total Liabilities 87.47% 84.74%

Represented by:

Share capital 1.10% 1.07%

Reserves 2.44% 2.07% Inappropriate profit 6.41% 5.95%

Surplus on revaluation of assets - net of tax 2.58% 6.18%

12.53% 15.26%

Total Liabilities & Equity 100% 100%

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Profit and Loss Statement 2008 2007

% % Mark-up / return / interest earned 100.00% 100.00%

Mark-up / return / interest expensed 39.19% 33.50%

Net mark-up / interest income 60.81% 66.50%

Provision Against Non performing Advances 17.38% 9.34% Provision for diminution in the value of

investments 0.61% -0.08%

Provision Against Balance Sheet Obligations 0.01% 0.00%

Bad debts written off directly 0.00% 0.08%

Net mark-up / interest income after provisions 18.00% 9.34%

Non-mark-up / interest income 42.81% 57.16%

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Fee, commission and brokerage income 13.00% 13.41%

Dividend income 4.72% 6.45% Income from dealing in foreign currencies 6.51% 2.06%

Gain on sale of securities - net 0.65% 4.63%

Unrealized loss on revaluation of investments 0.00% -0.06%

Other income - net 2.04% 0.29% Total non-mark-up / interest income

Administrative expenses 29.82% 28.09%

(Reversal) / Write off / other provision - net 1.23% 0.33%

Other charges 0.96% 0.03%

Total non-mark-up / interest expenses

Profit before taxation

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Taxation - Current year 19.30% 16.44%

*Prior years 0.00% 0.77%

*Deferred -6.92% 0.64%

Profit after taxation 25.37% 37.64%

Inappropriate profit brought forward 74.40% 63.43%

Transfer from surplus on revaluation of fixed

assets 0.21% 0.08%

Profit available for appropriation 99.98% 101.14%

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Trend Analysis =BALANCE SHEET

For the year ended Dec 31, 20… Base year 2006

2008 2007

ASSETS % %

Cash and balances with treasury banks 35.46% 20.67%

Balances with other banks -5.65% -7.80%

Investments - net 22.06% 50.88%

Lendings to financial institutions -25.57% -6.73%

Advances - net 30.65% 7.66%

Operating fixed assets 150.13% 167.74%

Deferred tax assets - net

Other assets - net 64.31% 14.31%

Total Assets 28.75% 20.01%

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LIABILITIES

Bills payable -3.65% -33.41%

Borrowings 245.68% -7.59%

Deposits and other accounts 24.52% 17.94%

Liabilities against assets 90.96% 153.52%

Deferred tax liabilities - net 113.56%

Other liabilities 49.11% 16.33% Total Liabilities 29.31% 16.75%

Net assets 25.02% 41.95%

Represented by:

Share capital 26.50% 15.00% Reserves 43.68% 13.64%

Unappropriated profit 63.54% 41.37%

Surplus on revaluation of assets - net of tax -27.04% 62.81%

Total Liabilities & Equity 25.02% 41.95%

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Profit and Loss StatementFor the year ended Dec 31, 20… Base Year 2006

2008 2007

Mark-up / return / interest earned 38.19% 14.67%

Mark-up / return / interest expensed 71.25% 21.46%

Net mark-up / interest income 22.90% 11.53%

Provision Against Non performing Advances 244.43% 53.56%

Provision for diminution in the value of investments -152.61% -94.33%

Provision Against Balance Sheet Obligations

Bad debts written off directly -100.00% 655.09%

Net mark-up / interest income after provisions 362.60% 99.14%

Non-mark-up / interest income -6.10% 4.05%

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Fee, commission and brokerage income 28.98% 10.37%

Dividend income -0.44% 12.85% Income from dealing in foreign currencies 197.57% -21.82%

Gain on sale of securities - net -66.19% 100.23%

Unrealized loss on revaluation of investments -138.24% 616.04%

Other income - net 98.43% -76.52% Total non-mark-up / interest income 34.97% 11.36%

6.40% 6.27%

Administrative expenses 35.17% 5.67%

(Reversal) / Write off / other provision - net -4425.18% -1072.21%

Other charges 180.02% -91.77%

Total non-mark-up / interest expenses 43.03% 5.55%

Profit before taxation -12.58% 6.65%

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Taxation - Current year 35.27% -4.42%

*Prior years -100.00% -26.22%

*Deferred -6908.93% 422.31%

-18.80% -2.82%

Profit after taxation -9.19% 11.82%

Inappropriate profit brought forward 134.06% 65.57%

Transfer from surplus on revaluation of fixed

assets 217.72% -5.00%

Profit available for appropriation 67.23% 40.38%

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Industry Analysis (2007)

Descriptions/Banks NBP MCB UBL Bank Alfalah ABL

Total Assets 762,194 374,072 383,472 317,711 307,034

Deposits 591,907 281,349 335,077 279,917 251,711

Advances 340,677 243,392 254,272 197,277 114,971

Capital 69,271 43,259 16,807 14,499 13,053

Profit after Tax 19,034 12,444 12,056 10,555 9,097

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Future Prospects

Leader in Banking IndustryAn Organization Maintain the trust of StakeholderA Fast Peace, Modern and Competitive Bank

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SWOT ANALYSIS

StrengthsHighest Profitability among commercial banksOne of the Oldest Bank of the PakistanAlternative in absence of SBPFunctioning as an agent of SBP

amount in shape of Deposit Stable and Sound Financial StrengthEmployees Loyalty, Very Low turnover rate in NBP

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SWOT ANALYSIS

WeaknessNo proper advertisement for newly introduces servicesand no attraction towards customer retainingPoor resource utilizationPolitical pressure for financing to politiciansLack of good delegations

Decreasing income over last 03 yearsPoor Record management and record filing

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SWOT ANALYSIS

OpportunitiesAttraction of the foreign investorsIntroducing latest computerized Technology to improveoperationsIntroducing E-banking productsNew deposit schemes

Being a nationalized bank strong potential to growRole playing in economical developmentMicro financing for SME.

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SWOT ANALYSIS Threats

High interest rate on deposit by competitorsIntroducing latest computerized Technology to improveoperationEmerging new entrant in the sector every year makinghigh competitionGeneral economic crises in the country

Challenging operating environmentPayments and FBR collection create burden onoperational staff

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Conclusion

ROA, ROE, Profit Margin, Earning per share isdecreasing over the year. National Bank is losing its strength day by day.Most of procedure for function and operating aredesigned at head office.

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Recommendation for Improvement

Modern Banking technology should adopt, and a strongMIS system should be launched.

Profit rate should be increased. Separate Counter for utility bills receiving can help inSpeed of services.NBP should Launch Credit Card as these are attractive

to customers. Credit procedure should be short to enhance theorganization profitability.

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Thank You

mc070400910

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