Muhammad Afaaq
MC090400284
MBA
(Finance)
Finance (FINI-619)
Internship report on
National Bank of Pakistan
Brief Introduction of the Organization
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Established in November 9th 1949 in Pakistan
100% owned by the Government of Pakistan
Largest commercial bank operating in Pakistan
1500 branches located all over Pakistan
Acts as an agent of the State Bank of Pakistan
The Bank also has a presence in 24 international locations
including the USA, United Kingdom, Europe and the Far
East.
Main head Office located in Karachi
NBP Best bank of the world as well as Asia because its
rank on number 1 positions among the 1000 banks of the
world
Awarded given best bank in 2001, 2002, 2004, 2005 & most
recently in last year 2010
Business volume
In Millions
Description
2006
2007
2008
2009
2010
Profit before
tax
26,311
28,061
23,001
21,300
24,415
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
Competitors
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MCB Bank Limited
Habib Bank Limited
United Bank Limited
Allied Bank Limited
Bank Alfalah Limited
Soneri Bank Limited
Askari Bank Limited
Bank of Punjab
First Women Bank
Organizational Hierarchy Chart
Training Program
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Task assign to me in Account Opening
Department
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Account Opening Forms filling
Customer Guidance
Opened Different types of Accounts
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Task assign to me in Bill Collection Department
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Collecting utilities bills
Observing due date and what’s the amount collect in due date
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Training Program
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Task assign to me in Cash Department
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Observing the function of bank payment and receipt
Observing government receipt and payment.
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Task assign to me in Credit Department
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Observing requirements to get loan
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Observing bank charges interest against loan
Training Program
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Task assign to me in Remittance
Department
•
Learn about the categories of remittance department
Fill demand draft
Pay order
LC
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Ratio Analysis
1. Liquidity ratio
Firm ability to meet its current obligations
It includes current ratio, Acid test ratio, Working capital ratio
Current Ratio
National bank of Pakistan
Ratio
Analysis
Current
Ratio
Current Ratio= Current Assets/ Current liabilities
Year 2008
Year 2009
Year 2010
584,977,140 / 682,905,461
=0.86 Times
645,064,165 / 725,293,720
= 0.89 Times
693,463,983 / 867,626,367
= 0.80 Times
Current Ratio
2010
0.8
2009
0.89
2008
0.75
0.86
0.8
0.85
0.9
Acid Test Ratio/Quick ratio/liquidity ratio
National bank of Pakistan
Ratio
Analysis
Acid Test
Ratio
Acid Test Ratio =Current Assets – (Prepaid items + Inventory)/ Current
Liabilities
Year 2008
Year 2009
Year 2010
582,255,871 / 682,905,461
=0.85 times
630,040,628 / 725,293,720
= 0.87 times
691,160,473 / 867,626,367
= 0.80 times
2010
0.8
Acid Test Ratio
2009
0.87
2008
0.76
0.85
0.78
0.8
0.82
0.84
0.86
0.88
Working Capital Ratio
National bank of Pakistan
Ratio
Analysis
Net Working
Capital
Net Working Capital = Current Assets - Current Liabilities
Year 2008
Year 2009
Year 2010
584,977,140 -682,905,461
= -97,928,321
645,064,165 -725,293,720
= -80,229,555
693,463,983 -867,626,367
= -174,162,384
Ratio
-174,162,384
2010
-80,229,555
-97,928,321
Working Capital
ratio
2009
2008
-200,00 -150,00 -100,00 -50,000,
0,000
0,000
0,000
000
0
Working Of Current Assets
Current Assets
Year 2008
Year 2009
Year 2010
Short term- Cash and balances with
treasury banks
106,503,756
115,827,868
115,442,360
Short term- Balances with other banks
38,344,608
28,403,964
30,389,664
Short term- Landings to financial
institutions
17,128,032
19,587,176
23,025,156
Short term Investments
107,571,177
146,662,386
198,003,007
Short term- Advances
289,717,810
310,524,676
295,221,811
Short term- Other Assets
25,711,757
24,058,095
31,381,982
Total
584,977,140
645,064,165
693,463,980
Working Of Current Liabilities
Current Liabilities
Year 2008
Year 2009
Year 2010
Short Term- Bill Payable
10,219,061
10,621,169
8,006,631
Short Term- Borrowings
37,409,288
37,057,189
17,154,131
Short Term- Deposits and other accounts
614,538,859
655,031,896
816,172,861
16517
20,408
43,963
20,721,736
22,563,058
26,248,782
682,905,461
725,293,720
867,626,368
Short Term- Liabilities against assets subject to
finance lease
Short Term- Other liabilities
Total
Leverage Ratios
Leverage ratios measure the degree of protection of suppliers
of long term funds
Times Interest Earned
Measure firm ability to meet interest payment on debt
National bank of Pakistan
Ratio
Analysis
Time Interest earned ratio = Earning before interest & tax (EBIT)
Interest expenses
Year 2008
Time Interest 46,885,766 / 23,884,768
= 1.96 times
earned ratio
2010
Year 2009
Year 2010
61,789,822 / 40,489,649
= 1.53 times
69,665,595 / 45,250,476
= 1.54 times
1.53
Times Interest Earned
2009
1.52
2008
1.96
0
0.5
1
1.5
2
2.5
Working Of EBIT
EBIT
Year 2008
Year 2009
Year 2010
Profit Before Tax
23,000,998
21,300,173
24,415,119
Add: Interest/ mark-up expenses
23,884,768
40,489,649
45,250,476
Total
46,885,766
61,789,822
69,665,595
Debt Ratio
How much company assets finance with debt
National bank of Pakistan
Ratio
Analysis
Debt Ratio = Total liabilities / Total Assets
Debt Ratio
Year 2008
Year 2009
Year 2010
715,299,108 / 817,758,326
= 0.875 times
825,676,384 / 944,582,762
= 0.874 times
906,528,852 / 1035,024,680
= 0.876 times
3rd Qtr
0.876
Debt Ratio
0.874
2nd Qtr
0.875
1st Qtr
0.873
0.8735
0.874
0.8745
0.875
0.8755
0.876
0.8765
Working Of Total Debt
Total Debt
Year 2008
Year 2009
Year 2010
Bill Payable
10,219,061
10,621,169
8,006,630
Borrowings
40,458,926
45,278,138
20,103,590
Deposits and other accounts
624,939,016
727,464,825
832,151,888
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42,629
106,704
39,656,831
42,269,623
46,160,040
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715,299,108
825,676,384
906,528,852
Sub-ordinated loans
Liabilities against assets subject to
finance lease
Other liabilities
Deferred tax liabilities
Total
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25,274
Working Of Total Assets
Total Assets
Year 2008
Year 2009
Year 2010
Cash and balances with treasury
banks
106,503,756
115,827,868
115,442,360
Balances with other banks
38,344,608
28,405,564
30,389,664
Landings to financial institutions
17,128,032
19,587,176
23,025,156
Investments
170,822,491
217,642,822
301,323,804
Advances
412,986,865
475,243,431
477,506,564
Operating fixed assets
24,217,655
25,147,192
26,888,226
Deferred tax assets-net
3,204,572
3,062,271
6,952,666
Other Assets
44,550,347
59,666,438
53,496,240
817,758,326
944,582,762
1,035,024,680
Total
Debt / Equity Ratio
It indicate what portion of equity and debt for finance its assets
National bank of Pakistan
Ratio
Analysis
Debt to Equity Ratio =
Total liabilities (Debt)
Shareholder equity
Year 2008
715,299,108 / 81,497,458
Debt to
= 8.78 times
Equity Ratio
2010
Year 2009
Year 2010
825,676,384 / 94,265,853
= 8.76 times
906,528,852 / 103,880,048
= 8.73 times
8.73
Debt to Equity Ratio
2009
8.76
2008
8.78
8.7
8.72
8.74
8.76
8.78
8.8
Working Of Shareholder Equity
Shareholder Equity
Year 2008
Year 2009
Year 2010
Share Capital
8,969,751
10,763,702
13,454,628
Reserves
19,941,047
22,681,707
24,450,244
Unappropriate Profit
52,456,204
60,696,510
65,857,438
130,456
123,934
117,738
81,497,458
94,265,853
103,880,048
Surplus on revaluation of fixed
assets
Total
Debt to Tangible net worth ratio
It measures physical worth of the company excluding intangible assets
National bank of Pakistan
Ratio
Analysis
Debt to
tangible net
worth ratio
Debt to tangible net worth ratio = Total Liabilities / Tangible net worth
Year 2008
Year 2009
Year 2010
715,299,108 /102,453,293
= 6.98 times
825,676,384 / 118,888,848
= 6.94 times
906,528,852 / 128,487,598
= 7.05 times
2010
7.05
Debt to Tangible Worth Ratio
2009
6.94
2008
6.85
6.98
6.9
6.95
7
7.05
7.1
Working Of Tangible net worth
Tangible net worth
Year 2008
Year 2009
Year 2010
Net Worth= Total
Assets-Total
Liabilities
817,758,326
-715,299,108
= 102,459,218
944,582,762
-825,676,384
=118,906,378
1,035,024,680
-906,528,852
=128,495,828
Net intangible asset
5,925
17,530
8,230
Tangible net worth=
Net Worth- Net
intangible asset
=102,459,218- 5,925
=102,453,293
=118,906,378-17,530
=118,888,848
=128,495,828-8,230
=128,487,598
Total Capitalization Ratio
Measure long term debt of a company & how to support
company operations and growth.
National bank of Pakistan
Ratio Analysis
Total Capitalization Ratio =
Year 2008
Total
Capitalization
Ratio
Long term debt
Long term debt + Share holder equity
Year 2009
Year 2010
32,393,647 /113,891,105 100,382,664 / 194,648,517
= 0.28 times
= 0.52 times
2010
38,902,486 / 142,782,534
= 0.27 times
0.27
T otal Capitalization
Ratio
2009
0.51
2008
0.28
0
0.2
0.4
0.6
Working Of Long Term Debt
Long Term Debt
Year 2008
Year 2009
Year 2010
Long term- Borrowings
3,049,638
8,220,949
2,949,460
Long term- Deposits and other
accounts
10,400,157
72,432,929
15,979,027
Sub-ordinated loans
Long term- Liabilities against assets
subject to finance lease
Long term- Other liabilities
Deferred tax liabilities
Total
-
-
-
8,757
22,221
62,741
18,935,095
19,706,565
19,911,258
-
32,393,647
-
100,382,664
-
38,902,486
Profitability Ratios
Profitability ratios measure the earning or
profit ability of a firm
Net Profit Margin
National bank of Pakistan
Ratio
Analysis
Net Profit Margin = (Net Income / Sales) *100
Net Profit
Margin
Year 2008
Year 2009
Year 2010
15,458,590 / 60,942,798
= 25.4%
17,561,846 / 77,947,697
= 22.5%
17,563,214 / 88,472,134
= 19.9%
2010
19.9
Net Profit Margin
2009
22.5
2008
25.4
0
5
10
15
20
25
30
Working Of Net Income
Net Income
2008
2009
2010
Net mark–up / interest income
after provisions
26,087,216
25,788,713
33,251,969
Add: Non–mark–up / interest
income
16,415,862
19,025,357
17,632,640
Less: Non–mark–up / interest
expenses
19,502,080
23,513,897
26,469,490
Profit before tax
23,000,998
21,300,173
24,415,119
Less: Taxes
7,542,408
3,738,327
6,851,905
Profit after tax
15,458,590
17,561,846
17,563,214
Return on Assets
National bank of Pakistan
Ratio
Analysis
Return on Assets = (EBIT / Total Assets)*100
Return on
Assets
Year 2008
Year 2009
Year 2010
46,885,766 /
817,758,326
= 5.73%
61,789,822 /
944,582,762
= 6.54%
69,665,595 /
1,035,024,680
= 6.73%
2010
6.73
Return on Assets
2009
6.54
2008
5.73
5.2
5.4
5.6
5.8
6
6.2
6.4
6.6
6.8
7
DuPont Return on Assets
Sales comparisons with net income and assets.
National bank of Pakistan
Ratio
Analysis
DuPont Return on Assets = (Net Income / Sales) * (Sales / Total
Assets)*100
DuPont
Return on
Assets
Year 2008
Year 2009
Year 2010
0.25366 * 0.07425
= 1.89%
0.22530 * 0.08252
= 1.86%
0.19852 * 0.08548
= 1.69%
2010
1.69
DuPont Return On Assets
2009
1.87
2008
1.55
1.91
1.6
1.65
1.7
1.75
1.8
1.85
1.9
1.95
Operating income margin
Operating income margin is used to measure a company's
pricing strategy and operating efficiency.
National bank of Pakistan
Ratio
Analysis
Operating income margin = (EBIT or Operating profit/ Net
Sales)*100
Operating
income
margin
Year 2008
Year 2009
Year 2010
46,885,766 /
60,942,798
= 76.93%
61,789,822 /
77,947,697
= 79.27%
69,665,595 /
88,472,134
= 78.74%
2010
78.74
Operating income margin
2009
79.27
2008
75.5
76.93
76
76.5
77
77.5
78
78.5
79
79.5
Return on Operating Assets
Operating assets are those assets actively used to create sale
and earn profit
National bank of Pakistan
Ratio
Analysis
Return on Operating Assets = (EBIT/ Operating Assets)*100
Return on
Operating
Assets
Year 2008
Year 2009
Year 2010
46,885,766 /
560,836,308
= 8.36%
61,789,822 /
635,805,667
= 9.72%
69,665,595 /
642,862,306
= 10.84%
2010
10.84
Return on Operating Assets
2009
9.72
2008
8.36
0
2
4
6
8
10
12
Working Of Operating Assets
Operating Assets
Year 2008
Year 2009
Year 2010
Cash and balances with treasury
banks
106,503,756
115,827,868
115,442,36
0
Lending to financial institutions
17,128,032
19,587,176
23,025,156
Advances – net
412,986,865
475,243,431
477,506,56
4
Operating fixed assets
24,217,655
25,147,
192
26,888,226
Total
560,836,308
635,805,667
642,862,30
6
Return on Equity
How much profit a company generates with the money
shareholders have invested.
National bank of Pakistan
Ratio
Analysis
Return on Equity = (Net income/ shareholder’s equity)*100
Return on
Equity
Year 2008
Year 2009
Year 2010
15,458,590 /
81,497,458
= 18.97%
17,561,846 /
94,265,853
= 18.63%
17,563,214 /
103,880,048
= 16.91%
16.91
2010
Return on Equity
2009
18.63
18.97
2008
15
16
17
18
19
20
Gross Profit Margin Ratio
Gross profit increase when reduce cost
National bank of Pakistan
Ratio
Analysis
Gross Profit Margin Ratio = (Gross Profit / Net Sales)*100
Gross Profit
Margin
Ratio
Year 2008
Year 2009
Year 2010
37,058, 030
/
60,942,798
= 60.81%
37,458,048 /
77,947,697
= 48.06%
43,221,658 /
88,472,134
= 48.85%
2010
48.85
Gross Profit Margin Ratio
2009
48.06
2008
60.81
0
10
20
30
40
50
60
70
Working Of Gross Profit
Gross Profit
Year 2008
Year 2009
Year 2010
Mark–up / return / interest earned
60,942,798
77,947,697
88,472,134
Less: Mark–up / return / interest
expensed
23,884,768
40,489,649
45,250,476
Total
37,058,030
37,458,048
43,221,658
Activity Ratios
Activity ratios measure a firm's ability to
convert different accounts within their
balance sheets into cash or sales.
Total Assets Turnover
Asset turnover measures how effectively a business is using
assets to generate sales.
National bank of Pakistan
Ratio
Analysis
Total Assets
Turnover
Total Assets Turnover = Net sales/ Total Assets
Year 2008
Year 2009
60,942,798 /
77,947,697 /
817,758,326
944,582,762
= 0.0745 No. of times = 0.0825 No. of times
2010
Year 2010
88,472,134 /
1,035,024,680
= 0.0855 No. of times
0.0855
Total Assets Turnover
2009
0.0825
2008
0.068
0.0745
0.07
0.072 0.074 0.076 0.078
0.08
0.082 0.084 0.086 0.088
Fixed Assets turnover
Fixed Assets Turnover ratio indicates how well the
business is using its fixed assets to generate sales.
National bank of Pakistan
Ratio
Analysis
Fixed Assets
turnover
Fixed Assets turnover =
Net sales/ Fixed assets
Year 2008
Year 2009
Year 2010
60,942,798
/
24,217,655
= 2.52 No. of times
77,947,697 /
25,147,192
= 3.10 No. of times
88,472,134 /
341,560,700
= 3.29 No. of times
2010
3.29
Fixed Assets turnover
3.1
2009
2008
2.52
0
0.5
1
1.5
2
2.5
3
3.5
Market Ratios
Market ratios measure investor response to
owning a company's stock and also the cost
of issuing stock.
Dividend per share
Dividend per share is used to measure the income
received by shareholders from each share owned.
National bank of Pakistan
Ratio
Analysis
Dividend per share = Dividend paid to share holder
Average common share outstanding
Dividend per
share
Year 2008
Year 2009
Year 2010
6,104,894 /
896975
= 6.81 Rs.
5,820,338 /
1076370
= 5.41 Rs.
8,060,510 /
1345463
= 5.99 Rs.
2010
5.991
Dividend per share
2009
5.41
2008
6.81
0
2
4
6
8
Working Of Avg. common share outstanding
Avg. common share outstanding
Year 2008
Avg. common share outstanding=
Share capital amount / Par value of
share
=8,969,751/10
=896975.1
= 896975
Year2009
Year 2010
=10,763,702/10 =13,454,628/10
=1076370.2
=1345462.8
=1076370
=1345463
Earning Per Share
Earnings per share serve as an indicator of a company's
profitability
National bank of Pakistan
Ratio
Analysis
Earning per Share = Profit Available to shareholders or Net income
after tax/ No of shares outstanding
Earning per
Share
Year 2008
Year 2009
Year 2010
15458590
/
896975
= 17.23 Rs.
17561846 /
1076370
= 16.32 Rs.
17563214 /
1345463
= 13.05 Rs.
2010
13.05
Earning per Share
16.32
2009
2008
17.23
0
2
4
6
8
10
12
14
16
18
20
Price Earning Ratio
Price/Earning ratio is a valuation ratio of a company's
current share price compared to its per-share earnings.
National bank of Pakistan
Ratio
Analysis
Price Earning Ratio = Current market Share price/ Earning per
Share
Price
Earning
Ratio
Year 2008
Year 2009
Year 2010
50.32 / 17.23
= 2.92 Rs.
74.37 / 16.32
= 4.56 Rs.
76.82 / 13.05
= 5.89 Rs.
2010
5.8866
Price Earning Ratio
4.557
2009
2.9205
2008
0
1
2
3
4
5
6
7
Conclusion

NBP is a part of State Bank of Pakistan and it is its major strength.

Providing different products and services to its customers. Islamic banking,
student loan scheme, international finance.

Most rising bank with highest return on capital.

Largest market share amongst all Banks in Pakistan.

Highest cost to Income ratio as compare to all other commercial banks.

Net assets of the NBP are increasing day by day.

The net profit is also increasing which may attract the investors.
Recommendations

Improve its EPS because its shows company profitability.

Increase sale and reduce expenses to earn better profit margin

Improve liquidity position by increasing its sale

Increase the current assets as compared to current liabilities

Proper training of staff members

Prevailing friendly environment

Complaint counter should be available

Working capital should be positive .
Thank You