Virtual University of Pakistan

Evaluation Sheet for Internship Report

Spring 2011

FINI619: Internship Report (Finance) Credit Hours: 3

Evaluation Criteria / Result
Report writing / Pass
Presentation & Viva voce
Final Result

Name of Student:Muhammad Afaaq

Student’s ID:MC090400284

1

Finance (FINI-619)

Internship report of National Bank of Pakistan

  1. Title Page:

Name of the organization: National Bank of Pakistan

Name of the Internee: Muhammad Afaaq

Student ID: MC090400284

Session: 2009 - 2011

Submission date of the internship report:07-07-2011

Name of the University: Virtual University of Pakistan

VU logo:

  1. Letter of Undertaking
  1. Scanned copy of the internship certificate (provided by the organization)
  1. Dedication

At first dedicating this work to Almighty ALLAH, without his mercy and sympathy I was not able to accomplish this work Almighty ALLAH gave me power and confidence to done my internship and also HOLY PROPHET HAZARAT MUHAMMAD (Peace be upon him) who is a light for humanity. I also dedicate this work to my lovely parents and also dedicating this work to our honorable instructor of Fini619 who help me a lot to do my work accurately and guide me in my every difficulty.

5. Acknowledgement

1st of all I thanks to my Almighty ALLAH who gave me power and confidence to done my internship and HOLY PROPHET HAZARAT MUHAMMAD (Peace be upon him) who is a light for humanity.

In starting am little bit confuse because its my 1st experience to work in practical life but my 1st experience is vary good I many good peoples help me to do my work effectively specially my instructor of FINI 619 help me a lot when I confuse in some parts of internship I mail to instructor respected Sir were always ready to guide me during the report work, which gave me a lot of back-up.I also thanks to my bank employees of the NBP who remained supportive and cooperative throughout the report to complete it and specially branch Manager Miss Asia Aslam.

My some senior friends also guide me to make my internship report I would like to say thanks to all that peoples. Allah blesses them all and gives success all in every field of life.

6. Executive summary

I am doing my internship in famous and reputed bank of Pakistan the name of that bank is National Bank of Pakistanthe report is based on my six weeks internship program in National Bank of Pakistan. According to my observation during internship the NBP maintains an excellent position in banking sectors in Pakistan and this is based on the over all performance of National Bank of Pakistan. This report contains the detail of NBP and the departments where I worked during internship and these departments includes Account Opening Department, Bill Collection Department, Cash Department, Credit Department and Remittance Department.

It also includes the Ratio Analysis and these ratios include all ratios that my university required with complete formula, working, table, graph and interpretation.

I also mention my work experience during internship in different sectors. I also discuss in my report the executive summary of NBP and Recommendations for Improvement and the sources that I used to make this report. I have learned and informed about different aspects specially about banking sector, it’s my 1st working experience so it will help me while I will be professional.

NBP has 1254 nationwide and almost 25 branches operating in other foreign countries including USA, China, France, Hong Kong, Azerbaijan, Bangladesh, and Hong Kong.

The objective of this Internship was to explore the issues relating to Finance and to find out problems regarding the theoretical concepts with practical experience working in an organization during the internship and study the system of National Bank of Pakistan. According to my knowledge there is much possible perfections, which we can make positive changes in the system of NBP in coming years.

In this my NBP report I also talk about the way of investment, rates of investment, all types of financing and loans services the National Bank of Pakistan provides. The problems of branch where I am doing internship F-10 markaz branch are also discussed.

7. Table of content

Lesson No. / Title / Topic / Page No.
1. / Title page / 1
a. / Name of the organization / 1
b. / Name of the Internee, Student ID and session / 1
c. / Submission date of the internship report / 1
d. / Name of the University / 1
e. / VU logo / 1
2. / Letter of Undertaking / 2
3. / Scanned copy of the internship / 3
4. / Dedication / 4
5. / Acknowledgement / 5
6 / Executive summary / 6
7. / Table of contents
8. / Brief introduction of the organization’s business sector / 9-10
9. / Overview of the organization / 11-21
a. / Brief history / 11-13
b. / Organizational Hierarchy chart / 14-15
c. / Business volume (Total number of stock, shares, bonds/ commodities, future contracts planned for a particular period etc). / 16
d. / Product lines (List complete range of products/ services of the organization) / 17
e. / Competitors / 18
f. / Brief Introduction of all the departments / 19-20
g. / Comments on the organizational structure / 21
10. / Plan of your internship program / 22
a. / A brief introduction of the branch where you did your internship / 17
b. / Starting and ending dates of your internship / 17
c. / Names of the departments in which you got training and the duration of your
training / 17
11. / Training program / 23
1st / Account Opening Department / 23
2nd / Bill Collection Department / 25
3rd / Cash Department / 26
4th / Credit Department / 27
5th / Remittance Department / 28
12. / Ratio Analysis / 29
a) / Liquidity Ratios
Liquidity ratios measure a firm’s ability to meet its current obligations. / 29
• / Current Ratio / 29
• / Acid Test Ratio / 31
• / Working capital / 33
b) / Leverage Ratios
Leverage ratios measure the degree of protection of suppliers of long term funds. / 35
• / Times Interest Earned / 35
• / Debt Ratio / 37
• / Debt / Equity Ratio / 38
Debt to Tangible Net worth Ratio / 40
• / Total Capitalization Ratio / 41
c) / Profitability Ratios
Profitability ratios measure the earning ability of a firm. / 43
• / Net Profit Margin / 43
• / Return on Assets / 45
• / DuPont Return on Assets / 47
• / Operating Income Margin / 49
• / Return on Operating Assets / 50
• / Return on Total Equity / 52
• / Gross Profit Margin / 54
d) / Activity Ratios
Activity ratios measure a firm's ability to convert different accounts within their balance sheets into cash or sales. / 55
• / Total Assets Turnover / 56
• / Fixed Assets Turnover / 57
e) / Market Ratios
Market ratios are commonly used by the investors to assess the performance of a business as an investment and also the cost of issuing stock. / 59
• / Dividend per share / 59
• / Earning per Share / 61
• / Price/Earning Ratio / 63
13. / Future Prospects of the Organization / 65
14. / Conclusion / 66-67
15. / Recommendations for Improvement / 68-70
16. / Reference & Sources used / 71
17. / Annexes / 71

8.Brief introduction of the organization’s business sector

Am doing my internship in NBP f-10 branch markaz Islamabad now I will discuss the brief introduction of national Bank of Pakistan in business sector

The national bank of Pakistan was established in 9th November 1949 under the ordinance XIX. The NBP commenced its operations from 20th November 1949. The Bank was incorporated under the National Bank of Pakistan Ordinance 1949 and is listed there Pakistani stock exchanges. The bank controls treasury dealings for the Government of Pakistan as a representative to the State Bank of Pakistan. NBP offers a commercial banking and interrelated services in Pakistan as well as out side of Pakistan. The business sector of NBP is banking sector and the banks plays a vital role in an economy of country NBP also played an important role NBP also provide banking or financial services in Pakistan bank plays a major part in economy now a days the current economics crisis in united stares and Europe as well as Pakistan as we see day by day down sizing and is because the ongoing weakness of major bank and the result of all this is credit and capital crush so we can say its prove from history that the banking sector is plays a vary important role in national and global economy.

National bank of Pakistan provides to its customers the following benefits saving accounts, home financing, personal loans, ATM and debit cards, financing facility for stock investors, Internet based home remittance service, cash against gold, and personal accident insurance these benefits is vary useful for customers.

In between 2002 to 2007 the accelerated economy growth of Pakistan was underpinned by a strong banking sector the banking industry assets is above $60 its profit remain high and its NPLS are low. Pakistan is Islamic country and the national bank of Pakistan offers is Islamic banking services these services include deposit schemes, like current deposit scheme and profit and loss sharing deposit scheme and also financing facilities and also provided letters of credit facility, issuance of bank drafts and pay orders, handling of remittances, government collections, collection of export bills and local bills, and utility bills collection services. It also provided international banking trade that provide services comprise letters of credit, trade financing, international payments and collection services, structured trade finance, document presentation and payment services, pre– and post–shipment financing, bank–to–bank reimbursements, documentary credits, import finance, shipping guarantees, and cash management solutions. NBP is government bank so peoples trust to NBP is high as compare other banks and NBP provides trustee services to national investment trust, long-term credit fund, and endowment fund for student loans scheme.

9. Overview of the organization

a. Brief history

History:NBP was established under the National Bank of Pakistan Ordinance in November 8 1949 in Pakistan and was 100% government owned. The needfor the establishment came dueto the reason of newly country with economics crisis. In July 1948 to carry on the responsibilities of issuing the currency and most importantly controlling the flow of money in side thecountry.

Role: The Special Role of National Bank of Pakistan is occupies a unique position in the financial sector of Pakistan. It also acts as an agent of the Central Bank wherever the State Bank does not have its own Branch. It also undertakes Government Treasury operations.

Ownership:NBP is 100% owned by the Government of Pakistan.
Branch Network:NBP has an extensive domestic branch network of over 1500 branches located all over Pakistan. The Bank also has a presence in 24 international locations including the USA, United Kingdom, Europe and the Far East.

Deposits of National bank of Pakistan:NBP holds 24.6% share of time and demand deposits in the country. Local currency deposits comprise 67% of bank's total deposits while foreign currency deposits account for the rest.

Head office and Branches: Head office of national bank is in Karachi with their 1431 branches local and 24 branches internationally.

Provincial Headquarters: Sindh 06, Baluchistan 02, Punjab 14, NWFP 05, Azad Kashmir 02, total 29.

Awarded: National bank of Pakistan was given awarded of best bank of the year in 2001, 2002, and 2004 by the banker a publication of financial times London. In 2005 the national bank of Pakistan is also given best bank of the year by the bankers by global finance magazine. National Bank has earned recognition and numerous awards internationally. It has been the recipient of The Bank of the Year 2001, 2002, 2004 and 2005 Award by The Banker Magazine, the Best Foreign Exchange Bank –– Pakistan for 2004, 2005, 2006 and 2007, Global Finance, Best Emerging Market Bank from Pakistan for the year 2005, Global Finance, Kisan Time Awards – 2005 for NBP's services in the agriculture field. It is listed amongst the Region's largest banks and also amongst the largest banks in South Asia 2005, The Asian Banker. It has also been presented a Recognition Award –– 2004 for having a Gender Sensitive Management by WEBCOP AASHA besides other awards.

Precise Summary of National Bank of Pakistan year by year

The precise summary of National Bank of Pakistan regarding its countrywide and overseas operations is as fallows:

In the year 1949 National Bank of Pakistan was established under the National Bank of Pakistan Ordinance 1949 and was 100% govt.-owned.

In the year 1950 NBP established a branch in Jeddah, Saudi Arabia.

The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4,

In the year 1947 by the former BahawalpurState

In the year 1955 By this time NBP had branches in London and Calcutta.

In the year 1957 NBP established a branch in Baghdad, Iraq.

In the year 1962 NBP established a branch in Dar-es-Salaam, Tanganyika.

In the year 1964 The Iraqi government nationalized NBP's Baghdad branch.

In the year 1965 The Indian government seized the Calcutta branch on the outbreak of hostilities between India and Pakistan.

In the year 1967 The Tanzanian government nationalized the Dar-Es-Salaam branch.

In the year 1971 NBP acquired Bank of China's two branches, one in Karachi and one at Chittagong. At separation of East Pakistan NBP lost its branches there. NBP merged with Eastern Mercantile Bank and with Eastern Bank Corporation.

In the year 1974 the government of Pakistan nationalized NBP. As part of the concomitant consolidation of the banking sector, NBP acquired Bank of Bahawalpur (est. 1947).

In the year 1977 NBP opened an offshore brain Cairo.

In the year 1994 NBP amalgamated Mehran Bank (est. 1991).

In the year 1997 NBP's branch in Ashgabat, Turkmenistan commenced operations.

In the year 2000 NBP opened a representative office in Almaty, Kazakhstan.

In the year 2001 State Bank of Pakistan and Bank of England agree to allow only 2 Pakistani banks to operate in the UK. NBP and United Bank agreed to merge their operations to form Pakistan International Bank, of which NBP would own 45% and United Bank 55%.

In the year 2003 NBP received permission to open a branch in Afghanistan.

In the year 2005 NBP closed its offshore branch in Cairo which opened in 1977.

b. Organizational Hierarchy chart

Syed Ali Raza Chairman NBP Board of Directors

Qamar Hussain President NBP

MR. Tariq Kirmni Director

Mrs. Haniya Shahid Naseem Director

Ms Nazrat Bsahir Director

Mr. Ekhlaq Ahmed Secretary Board of Directors

Organizational Hierarchy Chart at NBP Head Office Karachi

Organization Chart of NBP

c. Business volume

In Millions

Description / 2006 / 2007 / 2008 / 2009 / 2010
Profit before tax / 26,311 / 28,061 / 23,001 / 21,300 / 2,4,415
Profit after tax / 17,022 / 19,034 / 15,459 / 17,562 / 17,563
Shareholder’s equity / 353,045 / 69,271 / 81,367 / 94,142 / 103,762
Advances – net / 316,110 / 340,319 / 412,987 / 475,243 / 477,507
Total Assets / 635,133 / 762,194 / 817,758 / 944,583 / 1,035,025
Deposits / 501,672 / 591,907 / 624,939 / 727,465 / 832,152
Investments / 139,947 / 211,146 / 170,822 / 217,643 / 301,324
Earnings per share / 12.65 / 14.15 / 11.49 / 13.05 / 13.05

d. Product lines

The product lines is given below

  • PREMIUM AMDANI
  • PREMIUM SAVER
  • SAIBAAN
  • ADVANCE SALARY
  • CASH CARD
  • INVESTOR ADVANTAGE
  • CASH AND GOLD
  • KISAN TAQAT
  • KISAN DOST
  • PAK REMIT
  • PROTECTION SHIELD

Services

  • Islamic Banking
  • Student Loan Scheme
  • Demand Drafts(DD)
  • Equity Investment
  • Commercial Finance
  • Trade Finance
  • International Finance
  • Home Finance
  • Foreign Currency Account
  • Short Term Investment
  • NIDA( National Income Daily Account)
  • Foreign remittance
  • Travelers Cheques
  • Swift System
  • Letter of Credit
  • Pay Order (PO)
  • Mail Transfer (MT)

e. Competitors

Now a day in this world of competition the NBP is facing much competition.The competitors list of NBP is very large as there are many private and commercial banks operating in the country. Competitors of the NBP which are given below

  • MCB Bank Limited
  • Habib Bank Limited
  • Habib Metropolitan Bank Limited
  • Saudi Pak Bank Limited
  • Atlas Bank Limited
  • SILKBANK Limited
  • United Bank Limited
  • Allied Bank Limited
  • Askari Commercial Bank Limited
  • Bank Al-Habib Limited
  • Bank Al-Falah Limited.
  • Standard Chartered Bank Limited
  • First Women Bank
  • The Bank of Khyber
  • Bank of Punjab
  • Faysal Bank Limited
  • Atlas Bank Limited
  • Bank Alfalah Limited
  • Soneri Bank Limited
  • Askari Bank Limited

f. Brief Introduction of all the departments

There are many departments of National Bank of Pakistan I will write the following main departments of National Bank of Pakistan F-10 Markaz branch and where I got training as internee are given below:

1st Account Opening Department

2nd Bill Collection Department

3rd Cash Department

4th Credit Department

5th Remittance Department

I already describe in detail of these entire department in my internship report One by one I will summarize or over view all these again.

1st Account Opening Department:

In my 1st 2 weeks of internship I work as an internee in account opening department in NBP. It’s a major department of NBP the basic purpose of Account Opening Departmentthe relationship between banker-customer. Account opening department performs the duty of opening accounts and issues checkbooks to clients. A person who requests to open an account with the bank has to fill an account opening form obtained from any branch of National Bank of Pakistan.

Types of accounts that are opened

I learned in my training in account opening department the following account is opened.

1. PLS Account or PLS Saving Account

2. Current Account

3. Fixed Deposit Account

2nd Bill Collection Department:

I also work in the bill collection department in NBP during my internship. The basic purpose of bill collection department is collected utility bills from customers that he pays at end of every month

These bills include

Water bills

Gas bills

Electricity bills

Telephone bills

3rd Cash Department:

I also work in cash departments during internship in NBP. Cash depart in vary sensitive department o every bank as well as National Bank of Pakistan No body is allowed freely like other department this department all depend on cash a security guard is also standing for safe from theft and also sensitive department some times customer pays frauds are made in this department so extra care needed in this department.

4th Credit Department:

In my internship program in NBP I also work in credit department. The basic purpose of this department id to collect spare, extra or surplus money or currency from peoples or customers at vary low rate and gives or provided lend this money at high rates to get more and more profit.Now a days NBP gives a vary low amount to customer because in Pakistan there is instability and day by day the investor go out from Pakistan because of in security financial crises is also big cause of it so the loan ratio is vary low down day by day with the passage of time.