Ayesha Awan mcxxxxxxxxxx mcxxxxxxxxxx MBA (Finance)

National Bank of Pakistan is the largest commercial bank operating in Pakistan. National Bank of Pakistan is the largest commercial bank operating in Pakistan. It has redefined its role and has moved from a public sector organization into a modern commercial bank. It has redefined its role and has moved from a public sector organization into a modern commercial bank. National Bank of Pakistan is today a progressive, efficient, and customer focused institution. National Bank of Pakistan is today a progressive, efficient, and customer focused institution. It has developed a wide range of consumer products. It has developed a wide range of consumer products. NBP has many Awards & Achievements. NBP has many Awards & Achievements.

Premium Aamdani Premium Aamdani Premiun Saver Premiun Saver Karobar Karobar Saibaan Saibaan Advance Salary Advance Salary Cash Card Cash Card Kisan Taqat Kisan Taqat PakRemit PakRemit Kisan Dost Kisan Dost Protection Shield Protection Shield NBP Islamic banking NBP Islamic banking

MCB Bank Limited, MCB Bank Limited, United Bank Limited, United Bank Limited, Faysal Bank, Faysal Bank, Habib Bank Limited, Habib Bank Limited, Citi Bank, Citi Bank, HSBC Bank, HSBC Bank, Standard Chartered Bank, Standard Chartered Bank, Al-Barka Bank, Al-Barka Bank, Alfalah Bank Limited Alfalah Bank Limited

I joined NBP Branch at start of December I learnt different things from the Banking/ Business environment. This is really a different environment from our study life. I really enjoyed myself in this new organization. I joined NBP Branch at start of December I learnt different things from the Banking/ Business environment. This is really a different environment from our study life. I really enjoyed myself in this new organization. NBP branch has so much co-operative staff, they helped me a lot to learn different department’s work. NBP branch has so much co-operative staff, they helped me a lot to learn different department’s work. I personally believe the time span given to us is too short to see deeply in each and every department’s activities in a keen manner but with the help of staff I feel much confident to give my best in this short span of time. I personally believe the time span given to us is too short to see deeply in each and every department’s activities in a keen manner but with the help of staff I feel much confident to give my best in this short span of time.

In Accounts Opening Dept. Conduct the customer about the account opening. Conduct the customer about the account opening. Verify the forms whether they are appropriately filled. Verify the forms whether they are appropriately filled. Preparing checklist. Preparing checklist. Maintaining account opening register. Maintaining account opening register. Issuance of Cheques books. Issuance of Cheques books.

In Clearing Dept. Collect Cheques from different customers, individual Cheques & company Cheques. Collect Cheques from different customers, individual Cheques & company Cheques. Stamping all Cheques after receiving and then give receipt to the customer. Stamping all Cheques after receiving and then give receipt to the customer. Stamping includes clearing, endorsement, transfer stamp. Stamping includes clearing, endorsement, transfer stamp. Issued unclear Cheques to customers on demand. Issued unclear Cheques to customers on demand. Recording the inward Cheques to inward register. Recording the inward Cheques to inward register. Attach the memo with unclear check. Attach the memo with unclear check.

In Advances/Agriculture Dept. In Advances/Agriculture Dept. The advances department is most technical site of any banking industry, in which I spent one and half Week The advances department is most technical site of any banking industry, in which I spent one and half Week investigation criteria before issuing of the loans investigation criteria before issuing of the loans vital documentation vital documentation

In Cash Dept. In Cash Dept. Verify the cheque at the time of the payment Verify the cheque at the time of the payment Verify the customer’s signatures, amount written on the cheque Verify the customer’s signatures, amount written on the cheque Balance of the customer’s account to confirm the demanding payment Balance of the customer’s account to confirm the demanding payment After cashier pay the amount to customer and entry of the cheque serial number, amount paid and account number take place in the cash book for the record After cashier pay the amount to customer and entry of the cheque serial number, amount paid and account number take place in the cash book for the record

In Govt. Dept. This department plays an important role for their customer on the behalf of government. In this department I worked only One day. This department plays an important role for their customer on the behalf of government. In this department I worked only One day. mainly work on pensions mainly work on pensions Taxes Taxes Challan received Challan received Govt. employees salaries. Govt. employees salaries.

In Establishment Dept. In Establishment Dept. I spent three days in this department. I spent three days in this department. Bank’s employees Bank’s employees Salaries Salaries Attendances Attendances Bonuses benefits Bonuses benefits Healthy and stable environment of the bank Healthy and stable environment of the bank

In Remittance Dept. In Remittance Dept. In this department I spent one and half week. I learnt about MT, DD & TT. In this department I spent one and half week. I learnt about MT, DD & TT. To provide following information to the customers coming for the remittance: To provide following information to the customers coming for the remittance: Beneficiary Account No. Beneficiary Account No. Beneficiary Name Beneficiary Name Branch Branch

Liquidity Ratios: Current Ratio Acid Test Ratio Working Capital

Ratio Analysis National Bank of Pakistan Current Assets / Current Liabilities Year 2009 Year 2008 Year 2007 Current Ratio 856,706,861/782,364,13 2 = ,785,752/675,617,0 0= ,275,649/609,784,513 = 1.16 Current Ratio

Current Assets Notes Year 2009 (Rs) Year 2008 (Rs) Year 2007 (Rs) Cash and balance with other bank 6115,827,868106,503,75694,873,249 Balance with other bank 728,405,56438,344,60837,472,832 Leading to financial institution- net 819,587,17617,128,03221,464,600 Investments-net9217,642,822170,822,491211,146,038 Advances-net10475,243,431412,986,865340,318,930 Total856,706,861745,785,752705,275,649

Current Liabilities Note s Year 2009 (Rs) Year 2008 (Rs) Year 2007 (Rs) Bills Payable Borrowings Deposit and other accounts Total782,364,132675,617,003609,784,513

Ratio Analysis National Bank of Pakistan Current Assets – Inventories – prepaid expenses / current liabilities Year 2009 Year 2008 Year 2007 Acid Test Ratio 856,706,861– ,364,132 = ,785,752– ,617,003 = ,275,649 – ,784,513 = Acid Test Ratio

Ratio Analysis National Bank of Pakistan Current Assets - Current Liabilities Year 2009 Year 2008 Year 2007 Working Capital 856,706, ,364,132 =74,342, ,785, ,617,003 = 70,168, ,275, ,784,513 = 74,342,729 Working Capital Ratio

Leverage Ratios: Time Interest Earned Ratio Debt Ratio Debt to Equity Ratio Total Capitalization Ratio Debt to Tangible Net Worth Ratio

Ratio Analysis National Bank of Pakistan Times Interest Earned = EBIT + interest expenses / interest Year 2009 Year 2008 Year 2007 Time Interest Earned 22,300,173+23,513,897/ 23,513,897= ,000,998+19,502,080/ 19,502,080 = ,060,501+14,391,079/1 4,391,079 = 2.95 Time Interest Earned

Ratio Analysis National Bank of Pakistan Total Debt / Total Asset Year 2009 Year 2008 Year 2007 Debt Ratio 824,676,384 /944,232,762 = ,299,108 /817,758,326 = ,855,939 /762,193,593 = 0.84 Debt Ratio

Total Debt = Bills payable + Borrowings + Deposits and other accounts + Liabilities against assets subject to finance lease + other liabilities Total Debt = Bills payable + Borrowings + Deposits and other accounts + Liabilities against assets subject to finance lease + other liabilities Total Assets = Cash and balances with treasury banks + Balances with other banks + Landings to financial institutions + Investments + Advances + Operating fixed assets + Deferred tax assets + other assets Total Assets = Cash and balances with treasury banks + Balances with other banks + Landings to financial institutions + Investments + Advances + Operating fixed assets + Deferred tax assets + other assets

Ratio Analysis National Bank of Pakistan Total Debt / Total Equity Year 2009 Year 2008 Year 2007 Debt to Equity Ratio 824,676,384 /94,791,919 = ,299,108 /81,367,002 = ,855,939 /69,270,631 = Debt to Equity Ratio

Total liabilities: Bills payable + Borrowings + Deposits & other account + Liabilities against subject to the finance lease + other assets Total liabilities: Bills payable + Borrowings + Deposits & other account + Liabilities against subject to the finance lease + other assets Shareholder Equity: share capital + un-appropriated profit & other reserves Shareholder Equity: share capital + un-appropriated profit & other reserves

Ratio Analysis National Bank of Pakistan Long Term Debts /Long term debts + Owner Equity Long Term Debts /Long term debts + Owner Equity Total Capitalization Ratio Year 2009 Year 2008 Year ,312,252/ = ,682,105/ = ,071,426/ = 0.34 Total Capitalization Ratio

Long term debt = Sub-ordinate loans + Deferred tax liabilities + other liabilities Long term debt = Sub-ordinate loans + Deferred tax liabilities + other liabilities Owner’s Equity = Share Capital + Capital Reserves + Un-appropriated Profit and other reserves Owner’s Equity = Share Capital + Capital Reserves + Un-appropriated Profit and other reserves Working of Total Capitalization Ratio Particulars Long term Debts 36,071,42639,682,10542,312,252 Owner Equity 69,270,63181,367,00294,791,919 Long term debts + Owner Equity Long Term Debts Long term debts + Owner Equity 36,071, ,682, ,312, Long Term Debts Long term debts + Owner Equity

Ratio Analysis National Bank of Pakistan Debt to Tangible Net worth Ratio=Total Debt/Equity –intangible assets Debt to Tangible net worth Ratio Year 2009 Year 2008 Year = = = Debt to Tangible Net Worth Ratio

Long term debt = Sub-ordinate loans + Deferred tax liabilities + other liabilities Long term debt = Sub-ordinate loans + Deferred tax liabilities + other liabilities Owner’s Equity = Share Capital + Capital Reserves + Un- appropriated Profit and other reserves Owner’s Equity = Share Capital + Capital Reserves + Un- appropriated Profit and other reserves Intangible Assets = 2009 (17530), 2008 (5925) & 2007 (8578 ) Intangible Assets = 2009 (17530), 2008 (5925) & 2007 (8578 )

Profitability Ratios: Gross Profit Margin Net Profit Margin Operating Income Margin Return on Operating Assets Return on Assets Dupont Return on Assets Return on Total Equity

Ratio Analysis National Bank of Pakistan Gross Profit Margin = Gross profit/Sales Revenue *100 Gross profit margin Year 2009 Year 2008 Year * 100 = 49.3% 37,058,030 60,942,798 *100 = 61 % = 61 %33,629,470 50,569,481 *100 = 66 % = 66 % Gross profit margin

Ratio Analysis National Bank of Pakistan Net Profit Margin = Net profit/Sales Revenue *100 Net profit margin Year 2009 Year 2008 Year ,211,846 77,947,697 *100 = % 15,458,590 60,942,798 *100 = % = %19,033,773 50,569,481 *100 = % = % Net Profit Margin

Ratio Analysis National Bank of Pakistan Operating Income Margin=Operating Income / Sales * 100 Operating Income margin Year 2009 Year 2008 Year ,300,173 77,947,697 *100 = % 23,000,998 60,942,798 *100 = % = %28,060,501 50,569,481 *100 =55.489% =55.489% Operating Income Margin

Ratio Analysis National Bank of Pakistan Return on Operating Assets = Net income/Operating assets Return on Operating Asset Year 2009 Year 2008 Year ,211,846 /25,147,192 =72.4 % 15,458,590/24,217,65 5 =63.8 % 19,033,773/ 25,922,979 =73.4 % Return on Operating Asset

Ratio Analysis National Bank of Pakistan Return on Assets = Net Profit /Total Assets Return on Asset Year 2009 Year 2008 Year ,211,846 /944,232,762=1.93% 15,458,590/817,758,32 6 =1.89 % 19,033,773/ 762,193,593 =2.50 % Return on Asset Ratio

Ratio Analysis National Bank of Pakistan DuPont Return on Asset=(Net Profit / Sales Revenue) / (Sales / Total Assets) DuPont Return on Asset Year 2009 Year 2008 Year / 0.08 = / 0.07 = / 0.07 =5.37 Dupont Return on Asset

Ratio Analysis National Bank of Pakistan Return on Total Equity =Net Profit /Total equity Return on Total Equity Year 2009 Year 2008 Year ,211,846 / 94,791,919 =19.21 % 15,458,590 / 81,367,002 =18.99 % 19,033,773 / 69,270,631 =27.47 % Return on Total Equity

Activity Ratios: Total Asset Turnover Fixed Asset Turnover

Ratio Analysis National Bank of Pakistan Total Asset Turnover= Net Sales / Average Total Assets Total Asset Turnover Year 2009 Year 2008 Year ,947,697/ 944,232,762 =8.25 % 817,758, % 60,942,798/817,758, 326 =7.45 % 50,569,481/762,193,593 =6.63 % Total Asset Turnover

Ratio Analysis National Bank of Pakistan Fixed Asset Turnover= Net Sales / Fixed assets Fixed Asset Turnover Year 2009 Year 2008 Year ,947,697 /25,147,192 = ,942,798/24,217,655 = ,569,481 /25,922,979 =1.95 Fixed Asset Turnover Ratio

Market Ratios: Dividend per Share Earning per Share Price/Earning Ratio

Ratio Analysis National Bank of Pakistan Dividend paid / number of ordinary shares Dividend per Share Year 2009 Year 2008 Year ,820,338 / 1,076, ,820,338 / 1,076,370 =5.41 6,104,894 / 1,076, =5.67 2,831,895 / 8,96,975 2,831,895 / 8,96,975 =3.16 Dividend Per Share

Ratio Analysis National Bank of Pakistan (Net profit after tax / number of shares issued) Earning per Share Year 2009 Year 2008 Year ,211,846/1,076,370 = ,458,590/1,07,6370 = ,033,773/8,96,975 =21.22 Earning per Share

Ratio Analysis National Bank of Pakistan Market value per share / Earning per share Price/ Earning Ratio Year 2009 Year 2008 Year / / = / / = / / =6.88 Price/Earning Ratio

The bank has now completed more than 60 years The bank has now completed more than 60 years Multifarious products Multifarious products Set the trend before many other banks, both local and foreign Set the trend before many other banks, both local and foreign Good performance of Bank’s Management Good performance of Bank’s Management Excellent team spirit Excellent team spirit Today’s the biggest challenge for banking industry in Pakistan Today’s the biggest challenge for banking industry in Pakistan Capture potential customers Capture potential customers The key objective is to meet customers expectations on continuous basis The key objective is to meet customers expectations on continuous basis

On the basis of Ratio Analysis: NBP should cut off its administrative expenses & selling expenses NBP should cut off its administrative expenses & selling expenses NBP should reduce its high debt and sales overhead NBP should reduce its high debt and sales overhead Reinvestments in the bank assets Reinvestments in the bank assets On the basis of Internship: Recruitment of new staff Recruitment of new staff Effective market approach Effective market approach Training of the employees Training of the employees

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