Samina Ameer Din Mc 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) (Rs. in Million) Total Assets 1,035,025 Deposits 832,152 Advances 477,507 Investments 301,324 Shareholder’s Equity 103,762 Pre-tax Profit 24,415 After-tax Profit 17,563 Earning Per Share (Rs.) Number of Branches 1,289 Number of Employees 16,457

Competitors of NBP Competitors at Public Sector First Women Bank Limited (FWB) The Bank of Khyber (KB) The Bank of Punjab (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 4. SVP 5. VP3. EVP2. SEVP OG-I Executive s Officers OG-II OG-III Clerical Staff Head Cashier Cashier Non Clerical Staff Peon, Guards etc Assistant 1. President 6. AVP Cash Dept.

Hierarchy of Branch Branch Manager Credit Officer Operations ManagerHR Officer All other staff

Training Program 1) Account Opening Department 2) Clearing Department 3) 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:

Ratio Analysis National Bank of Pakistan (Net profit/ Revenue) *100 Year 2010 Year 2009 Year Net Profit Margin 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 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 Gross Spread Ratio 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 = 43,221, ) Net interest margin = (77,947,697-40,489,649) = 37,458,048 = 37,458, ) Net interest margin = (60,942,798-23,884,768) = 37,058,030 = 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 Year 2009 Year Non Interest Income to Total Income 17,632,640/106,104,774*100 = 16.61% 19,025,357/96,973,054*100 = 19.61% 16,415,862/77,358,660*100 = 21.22%

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

Ratio Analysis National Bank of Pakistan Interest Earned / Interest Expensed Year 2010 Year 2009 Year Spread Ratio 88,472,134 / 45,250,476 =1.95 times 77,947,697 / 40,489,649 = 1.92 times 60,942,798 / 23,884,768 = 2.55 times

Ratio Analysis National Bank of Pakistan (Net profit/ Total assets) *100 Year 2010 Year 2009 Year Return on Assets 17,563,214/1,035,024,680*100 = 1.69% 17,561,846/ 944,582,762*100 = 1.85% 15,458,590/817,758,326*100 = 1.89%

Working of Total Assets Total Assets Year 2010 (Rs) Year 2009 (Rs) Year 2008 (Rs) Cash and balances 115,442,360115,827,868106,503,756 Balances with other banks 30,389,66428,405,56438,344,608 Lending to financial institution-net 23,025,15619,587,17617,128,032 Investments-net301,323,804217,642,822170,822,491 Advances-net477,506,564475,243,431412,986,865 Operating fixed assets 26,888,22625,147,19224,217,655 Deffered tax assets 6,952,6663,062,2713,204,572 Other assets-net 53,496,24059,666,43844,550,347 Total1,035,024,680944,582,762817,758,326

Ratio Analysis National Bank of Pakistan ((net income/revenues)*(revenues/assets))*100 Year 2010 Year 2009 Year Dupont Return on Assets ((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 National Bank of Pakistan Net Income/ Total equity*100 Year 2010 Year 2009 Year Return on Total Equity 17,563,214/103,762,310*100 = 16.92% 17,561,846/94,141,919*100 = 18.65% 15,458,590/81,367,002*100 = 18.99%

Working of Total Equity Total Equity Year 2010 (Rs) Year 2009 (Rs) Year 2008 (Rs) Share capital 13,454,62810,763,7028,969,751 Reserves24,450,24422,681,70719,941,047 Un appropriated profit 65,857,43860,696,51052,456,204 Total103,762,31094,141,919170,822,491

Ratio Analysis National Bank of Pakistan (Total debt/ Total assets)*100 Year 2010 Year 2009 Year Debt Ratio 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 Debt / Equity Ratio 906,528,852/ 103,762,310 = 8.73 times 825,676,384/ 94,141,919 = 8.77 times 715,299,108/ 81,367,002 = 8.79 times

Ratio Analysis National Bank of Pakistan (EBIT/ total interest) Year 2010 Year 2009 Year Time Interest Earned Ratio 69,665,595/45,250,476 = 1.53 times 61,789,822/40,489,649 = 1.52 times 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, ) EBIT = 21,300,173+40,489,649= 61,789, ) EBIT = 23,000,998+23,884,768= 46,885,766

Ratio Analysis National Bank of Pakistan Total Advances/ Total Deposits Year 2010 Year 2009 Year Advances /Deposits Ratio 477,506,564/832,151,888 = times 475,243,431/727,464,825 = times 412,986,865/624,939,016 = times

Ratio Analysis National Bank of Pakistan Net cash generated from operating activities/ Current Liabilities Year 2010 Year 2009 Year OCF Ratio 93,163,784/867,626,368 = times 41,576,364/725,293,720 = times 2,532,681/682,905,461 = times

Working of Current Liabilities Total Current Liabilities Year 2010 (Rs) Year 2009 (Rs) Year 2008 (Rs) Bills payable (short term) 8,006,63110,621,16910,219,061 Borrowings (short term) 17,154,13137,057,18937,409,288 Deposits and other accounts (short term) 816,172,861655,031,896614,538,859 Liabilities against assets subject to finance lease (short term) 43,96320,40816,517 Other liabilities (short term) 26,248,78222,563,05820,721,736 Total867,626,368725,293,720682,905,461

Ratio Analysis National Bank of Pakistan Dividends paid to Shareholders/ Average common shares outstanding Year 2010 Year 2009 Year Div Per Share 8,072,777/1,345,462.8 = Rs.6 5,830,338/1,076,370.2 = Rs ,115,739/869,975.1 = Rs.6.81

Ratio Analysis National Bank of Pakistan Net income/ outstanding number of shares Year 2010 Year 2009 Year Earning Per Share 17,563,214/1,345,463 = Rs ,561,846/1,345,463 15,458,590/1,076,370 = Rs

Ratio Analysis National Bank of Pakistan Current Market Share Price/ EPS Year 2010 Year 2009 Year Price /Earning Ratio76.82/13.05 = Rs /13.05 = Rs /14.36 = 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 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