2. Naveed Jamal
Mc MBA (FINANCE)

3. NATIONAL BANK OF PAKISTAN
INTERNSHIP REPORT On
NATIONAL BANK OF PAKISTAN

4. Brief Introduction of the Organization
National Bank of Pakistan was established in 1949 in Pakistan.
Government owned bank.
It acts as an agent of the central Bank where State Bank does not have its own branch.
NBP has an extensive domestic branch network of over 1500 branches located all over Pakistan.

5. Competitors of National Bank of Pakistan
Habib Bank Limited
Bank Alfalah Limited
United Bank Limited
Muslim Commercial Bank
Faysal Bank Limited
Allied Bank Limited
Askari Bank Limited
Bank of Punjab Limited
Meezan Bank Limited
JS Bank Limited

6. Training Program
I worked in the following departments of the National Bank of Pakistan in my internship period:
Account Opening Department
Remittance Department
Credit Department
Clearing Department

7. Account opening Department
This department is concerned with the opening of the accounts of the customers.
I worked in this department from to
It provides different types of accounts for different customers.
In this department I learned that how an account is opened.
Information required for the opening of the account.

8. Remittance Department:
Remittance department is concerned with the transfer of money.
In this department I worked from to
Some instruments are used for the transfer of money such as demand drafts and pay orders.

9. Credit Department
Credit department is concerned with granting loans to different people.
In this department I worked from to
National bank grants loans for different purposes.
Work assigned to me was filling the forms of the customers.

10. Clearing Department
This department is concerned with the clearance of payments and cheques within city or with different cities..
I worked in this department to
In this department I learnt about the inward clearing, outward clearing.

11. Learning Experience
Knowledge Gained: I observe the role of manager and know about management. Skills Learned: I learn about customer dealing and filling the concerned slips. Attitudes Observed/Values Gained: I practically know about team work and cooperation. Most Challenging Task Performed: The most challenging thing is to understand the behaviors and perception of different clients.

12. Ratio Analysis
Ratio analysis compare the financial position of the organization with previous years and shows that whether the business’s financial position is better or worse as compare to previous years.

13. Net Profit Margin:   The net profit margin ratio tells us the amount of net profit and turnover a business has earned in a specific year. Net Profit Margin = Net Profit & (Loss) after Taxation / Net Sales*100  
Year 2011
Year 2012
Year 2013
17,604,722/95,325,179*100 =18.468%
16,162,635/100,092,132 *100 =16.15%
5,500,024/99,027,563 *100=5.55%

14. Gross Spread Ratio: Gross spread ratio is spread of interest between borrowing and lending. We can use the gross spread ratio to determine the profitability and liquidity of a bank. Gross Spread Ratio= NIM or gross income * Interest Income  Net sales = Interest Income =Markup/ Return/Interest earned (P&L A/C) NIM= Net Interest Margin= Interest earned less interest expense (P&L A/C)
Year 2011
Year 2012
Year 2013
/95,325,179*100 =49.11%
/100,092,132*100 =43.63%
/99,027,563*100 =38.58%

15. Spread Ratio:   Spread Ratio is the strategy in options trading that involves buying some number of options and selling a different number of other options of the same underlying market, but of a different strike price.   Spread Ratio = Interest Earned / Interest Expense
Year 2011
Year 2012
Year 2013
95,325,179/48,515,618 =1.96 time
100,092,132/56,417,827 =1.77 time
99,027,563/60,822,881 =1.63time

16. Non Interest Income to Total Income Ratio   Non Interest Income to Total Income = Non interest mark up/Income Total Income   Total Income = Interest Earned + Non interest income
Year 2011
Year 2012
Year 2013
19,337,048/95,325,179+19,337,048
19,337,048/ =0.17 times
23,849,322/100,092,132+23,849,322
23,849,322/ =0.19 times
25,569,773/99,027,563+25,569,773
25,569,773/ =0.21times

17. Return on Assets (ROA): Return on Assets gives an idea as to how efficient bank is at using its assets to generate earning. The higher the Return on Assets (ROA) number, the better, because the bank is earning more money on less investment.   Return on Asset=Net profit after tax/ Average total assets *100
Year 2011
Year 2012
Year 2013
17,604,722/ *100 =2 %
16,162,635/ *100 =1%
5,500,024/ * 100=0.4%

18. Du Pont Return on Assets Ratio:   Return on assets (ROA) is a percentage of the after-tax income as compared to the total assets of the company. The approach determines the impact of assets turnover and profit margin on profits.   DuPont Return on Assets = Net Income /sales*sales/ Average total Assets*100
Year 2011
Year 2012
Year 2013
17,604,722/ =0.02%
16,162,635/ =0.01%
5,500,024/ =0.004%

19. Return on Total Equity (ROE):   Return on total Equity (ROE) compares net profit after taxes to the Shareholder’s Equity. The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.   Return on Total Equity = Net profit or loss after tax/total equity*100
Year 2011
Year 2012
Year 2013
17,604,722/16,818,285*100 =105%
16,162,635/18,500,114*100 =87%
5,500,024/100,859,756*100=5%

20. Debt Ratio:   Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is the ratio of total debt (the sum of current liabilities and long-term liability) and total assets (the sum of current assets, fixed assets, and other assets such as ‘good will’).   Debt ratio = total liabilities/total assets
Year 2011
Year 2012
Year 2013
1,016,926,288/1,149,577,736 =0.88 times
1,169,547,505/1,309,339,305 =0.89 times
1,208,054,552/1,364,341,256 =0.89times

21. Debt / Equity Ratio: A measure of a company's financial leverage calculated, by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.   Debt/Equity Ratio=Total liabilities/shareholders equity
Year 2011
Year 2012
Year 2013
1,016,926,288/16,818,285 =60.47times
1,169,547,505/18,500,114 =63.22 times
1,208,054,552/100,859,756
=11.97times

22. Times Interest Earned Ratio:   Times interest earned (also called interest coverage ratio) is the ratio of earnings before interest and tax (EBIT) of a business to its interest expense during a given period. It is a solvency ratio measuring the ability of a business to pay off its debts.   Time interest earn ratio EBIT= (Profit before tax + mark up)/interest expense
Year 2011
Year 2012
Year 2013
26,011,173+95,325,179/48,515,618 =2.50 times
23,257, ,092,132/56,417,827 =2.19 times
7,078,367+99,027,563/60,822, =1.74times

23. Advances / Deposits Ratio:   Advances / Deposits ratio shows that how much efficiently the bank advances the deposits of their customers to borrower. The more money the bank has loaned out generates more interest income provided the loans. If the ratio is too high, it means that banks might not have enough liquidity to cover any unforeseen fund requirements; if the ratio is too low, banks may not be earning as much as they could be.    Advance deposits ratio = Advances/deposits
Year 2011
Year 2012
Year 2013
525,045,764/927,421,438 =0.57 times
654,690,016/1,037,784,947 =0.63times
615,419,874/1,101,138,574 =0.56 times

24. Dividend per Share: The dividend per share (DPS) ratio is very similar to the earning per share and earning shows what shareholders earned by way of profit for a period whereas dividend per share shows how much the shareholders were actually paid by way of dividends Dividend per share=Dividend/Number of shares
Year 2011
Year 2012
Year 2013
1,681,829/
=0.10 Rs.
2,775,017/18,500,114
=0.15 Rs.
NBP did not declare the dividend for the year 2013 yet

25. Earning per Share Earnings per share (EPS) serve an indicator of company’s profitability. Earning per share (EPS) is the profit attributable to shareholders (after interest, tax and everything else) divided by the number of shares in issue. It is the amount of a company’s profits that belong to a single ordinary share.   Earnings per share = Net profit or loss before tax / No. of Shares outstanding  
Year 2011
Year 2012
Year 2013
17,604,722/ =1.05
16,162,635/18,500,114
= 7.02
5,500,024/21,275,131 =2.59

26. Recommendations
According to my point of view organization is doing well but not in an efficient manner. I have not so much experience that I talk about such big organization but I will recommend some things according to my perception during my internship program in NBP Branch.
As we see the Net profit ratio is going down which is critical for the NBP so NBP should launch some new strategy to increase the profit and for this they should provide the facilities to the customers so they wish to work with the NBP.
Bank should increase quickness and fastness by focusing to reduce the time of delivering services instead of waiting so many hours by customers while receiving services from bank.
If we see the spread ratio it is going down it should be increased by increasing the interest income and interest income can be increased by issuing the debts which will increase the interest income and interest expenses can be decreased by doing so.

27. Return on Assets ratio is going down which is not beneficial for the NBP and NBP should increase the profit and should increase the return on assets by increasing the business of the bank.
Return on total equity shows that the bank earnings from its total equity and it is going down which is not good for the bank they should have to increase it otherwise it shareholders will lose confidence which will be worst for the bank.
Debt ratio is increasing which is not good as lower value of debt ratio is favorable and a higher value indicates that higher portion of company's assets are claimed by its creditors so it should be increased by minimizing the debts taken from the external sources.
Earnings per share are decreasing which is very critical for the NBP because due to this shareholders will lose the confidence and this will be very dangerous for the bank.

28. Thank You