NATIONAL BANK OF PAKISTAN

S.M. ABBAS ZAIDI,
Research Analyst
, PAGE
July 14 - 20, 2008

In the domestic banking industry of Pakistan, National Bank of Pakistan (NBP) possesses a unique position. NBP is listed in all stock exchanges inside Pakistan. NBP is providing every possible facility to nation's socio-economic development. It also undertakes Government Treasury operations. It is the largest contributory agent of Government and Semi-Govt requirements. It acts as an agent of the Central Bank wherever the State Bank does not have its own branch. NBP provides wide facilities of public sector employees. NBP occupies a unique position in the financial sector of Pakistan. NBP mainly deals in Corporate, Investment, Retail, Commercial and Islamic banking. The bank also provides services as trustee to National Investment Trust (NIT) including safe custody of securities on behalf of NIT. During the year, the bank has increased its authorized capital from Rs 7,500m to Rs 10,000m as approved by share holders. NBP also enjoys the highest credit rating amongst Pakistani banks. JCR-VIS credit rating Co. Ltd upgraded stand alone medium to long term rating of NBP to AAA from AA+. Moody maintained NBP'S financial strength rating at D- thereby recognizing the internal strength and leadership position of the bank. Currently NBP is operating 1,243 branches inside Pakistan and 18 branches outside Pakistan. There are 14,079 employees working for the bank.

NBP IN KARACHI STOCK EXCHANGE

STOCK RATES FY08

2-May

225.05

30-May

153.21

2-Jun

157.90

30-Jun

148.98

1-Jul

147.50

7-Jul

143.13

The month of May was an adversity as it lost 72 points to close at 153.21 due to decreased trend and lack of investment in Karachi stock exchange. In Jun NBP lost six more rates, it was started from 157.90 and to close at 148.98. Recently the starting rate was recorded 147.50 in first July and in seventh July it is 143.13.

FINANCIAL PERFORMANCE

INDICATORS

GROWTH IN %

Total Assets

20%

Investments

50.61%

Lending

(6.72%)

Total Advances

7.77%

Borrowings

(6.98%)

Total Deposits

17.93%

ADR

(8.62%)

Admin Expenses

5.67%

Non-performing loans

6.67%

PAT

11.82%

EPS

11.78%

The Financial performance shows that the Total assets of NBP increased by 20% from FY06 to FY07. Recently the bank has shown Rs 738,286m in 1Q08. NBP advances were increased by 7.77 % over one year and the bank has Rs 361,636m in 1Q08. In FY07 we saw a high investment which had increased by 50.6%. Recently the bank has shown Rs 188,773m in 1Q08. Deposits have increased by almost 18% during one year and now the bank has shown Rs 564,476m in 1Q08. However Lending decreased by 6.72% in FY07 and the bank has shown Rs 24,319m in 1Q08. Borrowings too have decreased with 7% during last year; recently the bank has shown Rs 17,272m in 1Q08. Admin expense was increased of 5.67% in FY07 and now this expense was recorded 4,128,228m during Jan to 31 March FY08. The profit earned by NBP with increase by 11.82 % in FY07 and in 1Q08 it was 55,727,69m. Earning per share (EPS) increased by 11.78% during previous year and currently it was recorded 5.08 in 1Q08. However, ADR ratio decreased by 8.62% in FY07 & Non performing loans increased by 6.67%.

CURRENT PRODUCTS OF NATIONAL BANK

The NBP's Products such as "Presidents Rozgar scheme" for unemployed people, NBP Saibaan for mortgage business and NBP Advance Salary products continue to grow in 2007-08. Currently, NBP is focusing on Small and Medium Enterprises (SMEs) for generating higher yields. NBP also remains the largest agriculture lender in the banking sector in agriculture with approximately 300,000 borrowers and gross disbursement of Rs 28 bn during FY 2006-07. The bank is also providing a unique product under the banner of Kisan dost.

CONCLUSION

National Bank of Pakistan is achieving high standards of customer services and ratios of profitability. Many scientific management techniques are being used to enhance the productivity and good will of the bank in the eyes of common people. National Bank of Pakistan is also introducing corporate culture, risk management tactics, total quality management traditions, and above all concept of good governance in each and every department of National Bank of Pakistan.

NBP is also the only domestic bank of the country which has been compared and included by prestigious Journal "The Asia Week" with other banks in the region. NBP is also the first bank which had started a "Foreign Exchange Company" in order to facilitate the general masses, regularize the inflows of foreign money and control the undesirable blackmailing of private foreign exchange companies in the country. Currently, the bank has shown robust growth in the market in terms of Total Assets, Advances, Deposits and investments. The bank increased its Profit after tax (PAT) and Earning per share (EPS) which is significant. However, there has been a reduction in lending's and ADR mainly due to increase in Non Performing Loans. NBP has been able to produce highly diversified products in the markets. Their main focus is to target common people and to give them maximum facilities. Today our country is facing economic and political crisis but NBP still maintains a solid position the banking sector. However the bank lost high share rates in KSE because of economic crisis during FY08.