FINI619 Internship Finance Report on National Bank of Paksitan(NBP)

Monday, December 5, 2011

FINI619 Internship Finance Report on National Bank of Paksitan(NBP)

This is FINI619 Internship Finance Report on National Bank of Pakistan.

Overview of the organization

The organization i.e. National Bank of Pakistan was incorporated in Pakistan vides National Bank of Pakistan Ordinance 1949. It was mainly an agricultural credit bank at the beginning.

The Bank opened its six branches in East Pakistan. All six branches were opened at the main jute production centers of that time. Bank started its operations at Lahore and Karachi late in 1949.

In 1950 a subsidiary bank “The bank of Bahawalpur” was held up by National Bank of Pakistan. In the year 1952, just after 3 years of inauguration, the bank was holding about 38% of the total deposits of all the bank of Pakistan. At the end of the year 1959, bank was holding 1/3rd of the total credit portfolio of all commercial bank of Pakistan.

In 2002 the Bank an agreement was signed between NBP and western Union that the operations of Western Union will be conducted by NBP in the Pakistan. NBP was declared as one of the Best in the Emerging Markets by the world’s leading financial journal, “Global Finance”, in its May 2003 issue, after a worldwide survey. The “Bankers Magazine” in July 2003 stated that NBP is the bank with the highest return on capital in Asia and No.8 in the world in terms of the highest return.

NBP enjoys the reputation of the only Pakistani bank which has been ranked among the Top 1000 banks of the world by the prestigious “Banker magazine” in its July 2005 issue and it was also ranked among the Top 100 banks of Asia by the same magazine for its performance in the same year.

In January 2004 NBP introduced its NBP Saibaan scheme. In May 2004, NBP’s standard long-term rating was upgraded by M/S JCR-VIS Credit Rating Agency from AA- (double A minus) to AA with “stable outlook” while standalone short-term rating was maintained at A-1+. This was then the best rating for a local commercial bank in Pakistan.

FINI619 Internship Finance Report is writing that World’s leading financial journal, “Global Finance” in an exclusive survey has stated NBP as the Best Emerging Market Bank from Pakistan for the year 2005. On an all Pakistan basis NBP was awarded the “Kisan Times Award” for its services in the Agriculture Sector, for the year 2005 by the Prime Minister of Pakistan Mr. Shaukat Aziz. The “Banker Magazine” in July 2005 called NBP as the 10th Best Bank in terms of “Profit on Capital” of the world.

NBP introduced its ATM + Debit Card in 2005. “Best Bank in Pakistan” award for the year 2005 was awarded by world’s leading financial journal “Global Finance”. NBP helpline and NBP protection shield were launched during the year 2006. NBP also started the Islamic banking system during the same year. World’s leading financial journal, “Global Finance” has identified NBP as the Best Emerging Market Bank from Pakistan for the year 2006.

NBP was announced “best return on Capital” for 2006 amongst all banks in Asia by “Banker magazine” in July 2007. NBP enjoys the highest rating of ‘AAA’ in the industry assigned by M/s JCR-VIS Credit Rating Company (July 2007) limited on a standalone basis. According to this FINI619 Finance Report that NBP launched premium Aamdani and Premium saver schemes in 2007

NBP has been awarded The Bank of The Year title for 5 times (2001, 2002, 2004, 2005 and 2008) by “The Banker magazine” that is owned by the Financial Times Group, London. National Bank of Pakistan was awarded “The Best Foreign Exchange Bank in Pakistan” title for 4 times (2004, 2005, 2006 and 2008) by the world’s leading financial journal “Global Finance”

Year 2009 has been a historic year for NBP’s I.T infrastructure point as the bank started its implementation program of ‘Core Banking Application (CBA) Software’. At the end of 2009 the Bank has a branch network of 1287 branches with 1265 domestic and 22 overseas branches. During year 2009 11 new domestic branches were opened.

Nature of the Organization

National Bank of Pakistan is basically a Financial Organization. The bank is involved in commercial banking and related services in Pakistan and overseas. The nature of operations conducted by the bank is different and unique from other Banks/financial institutions working in Pakistan. According to FINI619 Finance Internship Report NBP is the largest commercial bank of Pakistan. It has balance sheet size greater than any bank in Pakistan. After redefining its role it has become a modern commercial bank rather than a public sector organization.

The Bank's services are available to individuals, government and corporate sector. It also handles treasury transactions of Government of Pakistan as an agent to the State Bank of Pakistan (in places where SBP does not have a presence). It has a diversified business portfolio and is today a front end player in the debt equity market, agricultural financing, corporate investment banking, retail and consumer banking, treasury services and is taking growing interest in developing the country's small and medium enterprises. It is also fulfilling its social responsibilities of being a corporate citizen

National Bank of Pakistan is a Governmental Organization. it implements the policies of State Bank of Pakistan as it is the agent of SBP. It deals all Government Revenue, collection and payments of salaries, pensions and also payments related to the Government Treasury. The bank also provides services as trustee to National Investment Trust (NIT) and Long-Term Credit Fund (LTCF)

The Bank has expanded its range of products and services to include Shariah Compliant Islamic Banking products. The National Bank of Pakistan generally makes advances for a period not exceeding one year, except in case of small and medium industries where advance may be made for a highest period of five years. The bank makes advances not only against the security of stocks and goods, but also against documents of goods and propriety, shares of various joint stock companies, Insurance policies deposits receipts, Government securities etc.

Strategies of branding used by organization

National Bank of Pakistan has some very distinct brand names like advance salary scheme. In recent past the default ratio has been a higher one I.e. many people who have taken loans were not paying back. The major reason is political pressure of government. Due to this situation the bank is currently maintaining its brand portfolio rather than introducing new brands.

NBP is focusing of line extension strategy of branding and is currently just presenting the same brands in new style and looks. Existing products are being offered with some new additions and improvements. NBP has temporarily stopped some of its schemes as they were not performing up to the desired levels.

NBP is ambitious to adopt brand extension strategy. They really want to extend their brand portfolio but the current economic and market situations do not allow it to adopt this kind of strategy. So NBP sticks to the line extension strategy.

List of main clients

Main clients of the National Bank of Pakistan includes

• Government servants

• Farmers and landlords
• Firms and corporations
• Small businessmen
• State Bank of Pakistan
• Other banks working in Pakistan
• students
• General public

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