I chose to write a SWOT report on NATIONAL BANK OF PAKISTAN, as it is the largest commercial bank of Pakistan , it took my attention because this bank came in to being in an unusual manner. Through my experience and knowledge you will see the roles and responsibilities of this commercial bank playing in the banking industry.
MISSION STATEMENT
"To be recognized in the market place by institutionalizing a merit & performance culture, creating a powerful & distinctive brand identity, achieving top-tier financial performance & adopting & living out our core values."
VISION & GOALS
"To be the pre-eminent financial institution in Pakistan & achieve market recognition both in quality & delivery of service as well as the range of product offering."
Work Culture
The work culture of commercial bank is based on its goal of human resource department .Its HRM goal is to nurture and build the skills and competencies of its staff at various levels to meet current needs. Commercial bank is also sought to create a wealth of knowledge that is required for the future requirements of the Bank. At Commercial Bank, success is not by accident. It is a conscious choice and commitment of its employees.
HISTORY OF THE BANK
National bank of Pakistan (the bank) was established on November 9, 1949 under the National bank of Pakistan ordinance, in 1949 in order to cope with the crisis conditions which were developed after trade deadlock with India and devaluation of Indian rupee in 1949.
Initially the bank was established with the objective to extend credit to the agricultural sector. The normal procedure of establishing a banking company under the Companies law was set aside and the Bank was established through the promulgation of the ordinance due to the crisis situation that had developed with regard to financing jute trade.
The Bank commenced on November 20, 1949 in the six important jute centres in the east Pakistan and directed its resources in financing of jute crops. The Banks Karachi and Lahore branches were opened subsequently in December 1949.
The nature of responsibilities of the Bank is different and unique from other banks/ and financial institutions. The Bank acts as an agent to the State Bank of Pakistan for handling Provincial / and Federal Government receipts and payments on their behalf.
The Bank has also played an important role in financing the country's growing trade, which has expanded through the years diversification has took place. Today The Bank finances the export /import business in to the tune of Rs 52.7 billion , where as in 1960 under this head was only Rs 1.54 billions.
OBJECTIVES & ACTIVITIES
ï‚· The Bank is providing all banking services of mercantile and commercial banking permissible in the country, which includes.
ï‚· Handling of treasury transactions for the Government of Pakistan as an agent to The State Bank of Pakistan.
ï‚· Accepting of deposits of money on current, fixed, saving, term deposit and profit and loss sharing accounts.
ï‚· Borrowing money and arranging finance from other banks.
ï‚· Advancing and lending money to its clients.
ï‚· Financing of projects, including technical assistance, project appraisals through long term /short term loans.
ï‚· Financing of seasonal crops like cotton ,wheat ,rice, sugar cane ,tobacco etc
Receiving of bonds, script ,valuables etc for safe custody.
ï‚· Generating ,undertaking , promoting etc ,issues of shares and bonds etc.
ï‚· Transacting guarantee and indemnity business.
ï‚· Providing HAJ services to intending HAJI'S.
OTHER INFORMATION ABOUT THE BANK
BRANCH NETWORK (As on December 2004)
1208 Domestic branches.
18 Over seas branches.
05 Representative offices & a joint venture
OVERSEAS BRANCH NETWORK
Paris, New York, Washington D.C, Tokyo, Osaka, Hong Kong, Kowloon,
Frankfurt, Seoul, Bahrain, Dhaka ,Cairo ,Chittagong , Ashgabat ,Bishkek ,Kabul,
Jalal abad , and KEPZ off shore banking.
SUBSIDIARIES
CJSC Kazakhstan ,Almaty.
NBP Capital Ltd.
National Bank Modaraba Management Co.
National Agriculture Ltd.
Taurus Securities Ltd.
NBP Exchange Company Ltd.
JOINT VENTURE
United National Bank Ltd. UK.
NATIONAL BANK OF PAKISTAN PRODUCTS
NBP Saiban.
NBP Advance Salary
NBP Cash n Gold
NBP Kisan Dost
NBP Rozgar scheme.
SWOT ANALYSIS OF THE BANK
STRENGTH
With the geographical development of its branches, the Bank has been able to extend its services to a much larger number of Pakistanis all over the country. Today it has more than 8.5 million accounts. Bank maintains its presence in all the major financial centres in all the world through its 23 overseas branches and 05 representative offices.
Bank has also its presence on internet, it has modernized its services by installing Automated Teller Machines (ATM) called "CASH LINK" at selected branches and presently `17 ATM's are operating in major cities.
A comprehensive training program has been developed to upgrade and develop core banking skills of the bank's existing staff. Furthermore to boost the staff motivation level and to ensure that those playing a marked improvement in performance are adequately awarded for their efforts, a merit based culture has been promoted through revamping man power recruitment, retention, and performance appraisal systems.
The system of internal control is sound in design and has been effectively implemented and monitored throughout the year. The Board is responsible for establishing and maintaining the internal control system in the bank and for its ongoing monitoring. The process used by the board to review the efficiency and effectiveness of the system of the internal control includes the following :
The Board has formed various committees comprising of non executive directors.
Internal audit department of the bank , conducts the audit of the all branches ,regions and groups at Head office level on ongoing basis to evaluate the efficiency and effectiveness of the internal control system and proper follow up of the irregularities and control weaknesses is carried out.
In pursuit of good professionals NBP has taken the assistance of Institute of Bankers
Of Pakistan (IBP) for recruitment and interview .
National Bank of Pakistan and United Bank Limited are in the process of consolidating their United Kingdom banking operations . The combined bank will be called the Pakistan International Bank (PIB) and the banks share will be 45%of the new capital in the PIB.
ï‚· the organisation culture is very transparent and progressive .
ï‚· employees are always welcomed to give their views in decision making process.
ï‚· bank is always ready to implement latest technology to accomplish their tasks /and goals and to get maximum profits.
ï‚· bank believes in innovations ,simplifications of procedures and reduction in turnaround time and customer friendly services.
ï‚· all the branches have their own internal auditor which minimizes the risk of fraud.
ï‚· branch manager is directly involved with customer dealings and account holder.
ï‚· bank is providing facility of training to new employee's as well as old employee's for using latest technology in efficient manners.
ï‚· the bank has reputation of high customer banking services.
ï‚· the bank has professional ,skilled mannagement with well coordinated branch office system.
WEAKNESSES
There is no service orientation at its branches and this constitutes the "front line" of
The bank is the term of the contact with the customers.
Operations like maintaining of clearance register, signature verification, making of annual accounts in the branches are still manual. While in many other public sectors organization like OGDCL has been already computerized. Due to this account opening, clearance, making of dispatches wastes a lot of time of the branches.
Earning ratios of NBP is lower than the other public sectors commercial banks (PSCB) and local private bank (LPB).
ROE of NBP is 17.09% as compared to 20,9% and 27.2% of(PSCB)and (LPB)
Respectively.
Fund mobilization of NBP is better than the other PSCB but not at par with that of PLB.
ï‚· The organization has the political inter presence among the employees.
ï‚· There is a lack of sound corporate culture in the organization.
ï‚· there is no competition amongst the employees so the work is very slow.
ï‚· There is low market value of the bank's stock which is a bad sign.
ï‚· Bad recovery of overdue advances.
ï‚· Bank account opening procedure is too long (almost 20 pages ).
OPPORTUNITIES
Most of the opportunity available in the Bank come from the regulations and control measures from SBP. The following measures are mutually beneficial to the Bank and Economy.
ï‚· To promote consumer financing in Pakistan ,banks were allowed in july 2002 to provide financing facilities to general public to purchase consumer durable provided their consolidated borrowings for this purpose from the bank does not exceed Rs 100,000/.
ï‚· In August 2002, the State Bank advised the banks to further enhance the scope of Agricultural loan scheme and ensure availability adequate and timely credit to growers / farmers.
ï‚· In order to improve efficiency in the credit appraisal process of the banks in February 23,2003 ,State Bank of Pakistan informed Banks of making credit information bureau
ï‚· CIB facilities online in collaboration with Pakistan Banks Association PBA. In order to resolve the disputes that may arise between the borrowers and banks., the State Bank informed the committee on 10 March 2003.
ï‚· It was decided on 10 October 2001 to create a database of NPL's at the State Bank of Pakistan so as to have consolidated as well as individual borrower wise figures of NPL's on a uniform basis for the purposes of SBP monitoring and for sharing with other banks.
ï‚· In order to improve storage facilities for wheat ,banks were allowed on 16th January ,2002, to provide adequate funds / financing as agricultural loans for a period up to 5-7 years to eligible flour mills and farmers for the construction of silos and other structures that can serve as storage area for procurement of wheat at the debt equity ratio of 40 : 60 and 12 percent mark up .
ï‚· They can get maximum benefits by motivating their employees through reward and promotion.
ï‚· Demand is increasing for the plastic money day -by - day.
ï‚· Good financial position creating a good reputation for future bank loans and borrowings.
ï‚· Skilled work force means that they can be moved and trained in to other areas of business.
ï‚· Spending power has been increased in the local / national economy. If the bank is availing the opportunity.
ï‚· Increase product line to serve large range of customer needs.
ï‚· The organization increases the servicing of customer group.
ï‚· Deployment of sophisticated technology in the offices and branches.
ï‚· NBP is surrounded by competitors ,it has an opportunity to do aggressive marketing to increase its business.
THREATS
Effective from 15 March 2003 ,the maximum profit to be earned by a financial institution on financial assistance to be extended under part -A (local sales)of the scheme for Financing Locally Manufactured Machinery (LMM Scheme)was reduced from 10 percent to 7 percent and refinance rate from 8 percent to 5 percent.
CREDIT RISK:-
It arises from the potential that the borrower or a counter party will fail to perform an obligation or repay a loan. In NBP credit risk in terms of lending policy, approved by the Board of Directors and other laid down procedures out lined in the Bank Book of Institutions and related circulars.
INTEREST RATE RISK:-
It is an exposure of an institution's financial condition to adverse movements in interest rates, weather domestic or world wide .The Bank is exposed to interest / mark -up rate of risk as a result of mismatches or gaps in the amount of interest / mark up base of assets and liabilities.
CURRENCY RISK:-
It arises where the value of financial instrument change due to changes in foreign exchange rates.
ï‚· Market risks are mainly arises from trading activities under taken by the bank.
ï‚· Investment and structural position is present in the banking book.
ï‚· Low morale of employees.
ï‚· Foreign exchange risk arises from fluctuation in the value of financial investment consequent to the change in foreign exchange rate.
ï‚· There is lack of consistence in the policies due to political instability.
ï‚· Rising cost of wages / in general cost of living.
ï‚· NBP has many competitors that are increasing products and are marketing aggressively ,this may cause customers to shift over to the competitors.
Pestle analysis
Political Environment
When we are concerning about the political situation and the back ground of the country, we can see it has good stable government and political environment to develop Pakistan business without any problems or crisis. After over 50 years Pakistan is rapidly developing and foreign and local private investors are starting their investments in Pakistan because of this peace full environment is very good for developing their business. So, the banks have a vital role of this rapidly developing economy because of this peace full environment is pretty much suitable for developing the business.
Economical Environment
When we are concerning economical factors which are affecting in to the banking industry and the financial market of Pakistan, mainly we can see the economical environment is very good & strong to develop the industry since it is open and highly competitive rapidly growing market. Also the economy is developing rapidly it creates more opportunities to develop business related services such as transport, Insurance, finance, advertising & etc. Because of very good economical back ground
the demand of financial services such as corporate banking, leasing, loans & drafts,
Pawning and other related services are rapidly growing and the capital market also is rapidly developing so, economical factors are is clearly very effective and appropriate for successful of business.
Social Environment
When we are concerning about the social environmental factors relating to the banking industry it has to focus customers age, cultural values and believes, income status, social classes and their behaviour in order to develop and create competitive products and services and gain more competitive advantage in this rapidly changing highly competitive market.
Social attitudes and believes are not strong in the rural community about the banking sector. So the Banking company have good opportunity to expand their market segments by well aware and attract more rural people to the banking industry and the financial market. Also it has good trend of attracting urban community towards of finance industry because they are well aware of the banking and other financial services and they are moving to get more benefits and try to develop their lives by using financial services from banking sector and invest their money in to the bank at various range of deposit plans.
Technological Environment
When we are analysing about the technological environmental factors which are affecting Pakistani banking Industry and the financial market, as we all know technology is rapidly changing in daily so we have to develop our service according to rapidly changing modern technology otherwise our products and service become out of date. Also in this fastest growing modern technological world the financial sector is the one of most fastest changing field in the world. Because the world is now become a cash less society they are using E money such as credit cards, debit cards, E banking and online banking and etc. Also the world is changed the customers are not present in the bank at over the counter all are can be done by on line with in few seconds via internet at pleasure of home. So, If we are going to acquire more customers and new customers and the segments have to focus about this new modern develop technologies get in to their wings and have to provide quality effective service to the society by gaining more competitive advantages in this fastest growing industry.
CONCLUSION:-
I have evaluated the information about the bank , and I have come to know that National Bank of Pakistan is playing its role as a leading financial institute and as a bank of pakistani banking industry at financial market , and it is operating towards echieving its desired goals and objectives by utilizing its stregnths and by over coming its weaknesses and by availing the opportinities.
