Comparative Business Analysis of National Bank of Pakistan TOP TEN BANKS OF PAKISTAN -in Strategic Management

1. Competitive Analysis
National Bank Of Pakistan

2. MASROOR ALI SOOMRO
FAISAL AHMAD
MUSTAFA TALIB
AIJAZ ABDUL KARIM
MAIMOONA KHAN
HAMMAD SYED

3. Bank Profile
Key People, Financial, Products
Market share, Branches
Competitors
Internal Factor Evaluation
Major Areas To be covered
External Factor Evaluation
Poter’s Five Forces
Competitive Profile Matrix
Recommendations
Conclusion

4. Business Profile
Products
1. Deposits
2. Corporate Advances
3. Remittances
4. Miscellaneous
Location
Head Office
NBP Building I.I.
Chundrigar
Road, Karachi, Pakistan
Financial Facts
Revenue ▲PKR One Trillion
Surpass
Total assets ▲PKR Rs.1.035
trillion at the year end, up by
9.6% from year end 2009
Board of Directors
Qamar Hussain President
Nazrat Bashir
Tariq Kirmani
Haniya Shahid Naseem
Pakistan
National
Bank

5. Business Profile
Branch Network
Domestic network
(1266 Branches)
Agriculture branches
( 825 Branches)
Market Share
22% of Total Market
share in Pakistan,
Including Government
Entities
Competitiveness
All the Top Banks of Pakistan
Personnel
Permanent 13237
On Contract 842
Outsourced 2350
Total Staff Strength 16429
Pakistan
National
Bank

6. Branches & ATMs
Branch Networks
Islamic network
(5 Branches)
Online network
(156 Branches)
Overseas network
(32 Branches)
Swift network
( 12 Branches)
ATMs Network
ATM network
(ATMs 104)
Army Cant. Areas
(ATMs 136)
Owned By NBP:
(ATMs 107)
In Near Future
More to Come in near
2 to 3 months
Franchised Accounts
(ATMs 2000)
More to come
(ATMs 150)

7. Rating List
Financial Position of Commercial Banks
As On Dec 2010
World
Ranking
http://www.sbp.org.pk/publications/c_rating/index.htm
Name of Commercial Bank
Paid up
Capital
Reserves Assets Deposits Advances
Profit After
Tax
Earnings Per
share
Branch
Network
Credit
Rating Short
Term
Credit Long
Term
(Rs. Bn) (Rs. Bn) (Rs. Bn) (Rs. Bn) (Rs. Bn) (Rs. Bn) (Rs) (Nos)
Habib Bank 6.90 29.36 924.70 747.37 459.75 17.03 16.8 1400 A-1+ AA+
NBP 13.45 24.45 1035.02 832.15 538.61 17.74 13.2 1249 A-1+ AAA
Allied Bank 7.65 6.53 449.93 371.28 253.10 8.23 10.5 757 A1+ AA
MCB 7.60 40.16 188.75 2.10 274.14 0.12 22.2 1038 A1+ AA+
United Bank 1.22 2.41 69.88 56.28 37.65 1.77 9.0 1100 A-1+ AA+
First Women 0.28 0.23 12.70 10.20 6.31 -0.02 0.1 38 A2 BBB+
Bank of Punjab 2.27 0.00 0.19 0.16 0.13 -10.06 -19.0 272 A1+ AA -
Soneri Bank 1.87 2.03 108.11 82.02 54.68 0.13 0.2 90 A1+ AA -
Askari Bank 6.43 7.69 10.78 255.91 152.78 0.92 1.5 235 A1+ AA
Bank Al- Habib 7.32 4.30 301.55 0.25 0.13 360.20 4.9 277 A1+ AA+
Bank of Khyber 5.00 0.55 9.40 36.98 18.24 563.00 1.1 119 A2 A-
Bank Al- Falah 13.49 3.59 0.41 0.35 0.21 0.97 0.7 231 A1+ AA
Faysal Bank 7.31 7.35 250.71 195.31 135.06 1199.00 1.6 225 A1+ AA
KASB Bank 9.51 0.15 56.43 4.63 29.53 0.00 -2.9 41 A2 A -
Meezan Bank 6.98 1.38 154.75 131.07 0.42 1.81 2.6 207 A-1+ AA -
NIB Bank 4.04 8.46 13.66 99.17 74.57 1.49 0.2 240 A1+ AA -
Mybank 5.30 0.32 39.48 29.48 1.95 -1.04 -2.0 69
Atlas Bank 5.00 0.58 28.97 18.65 20.55 -1.01 -2.0 31
Standard Chartered 3.87 0.02 0.32 0.22 0.14 0.00 0.9 162 A1+ AAA
JS Bank 8.15 0.02 39.38 26.28 13.98 -0.41 -0.7 11 A1 A
Habib Metropolitan 8.73 5.60 1.34 160.31 119.83 2.81 3.2 98 A1+ AA+
Domestic
RatingExcel

8. Top Competitors of NBP
http://www.einfopedia.com/banks-in-pakistan.php

9. Competitive Analysis
10%
20%
12%
18%
10%
11%
2%
11%
6%
Paid up Capital
Habib Bank
NBP
MCB
United Bank
Askari Bank
Bank Al- Habib
Bank Al- Falah
Faysal Bank
Standard Chartered

10. Competitive Analysis
25%
20%
34%
2%
6%
4%
3%
6%
0%
Reserves
Habib Bank
NBP
MCB
United Bank
Askari Bank
Bank Al- Habib
Bank Al- Falah
Faysal Bank
Standard Chartered

11. Competitive Analysis
33%
37%
7%
3%
0%
11%
0%
9%
0%
Assets
Habib Bank
NBP
MCB
United Bank
Askari Bank
Bank Al- Habib
Bank Al- Falah
Faysal Bank
Standard Chartered

12. Competitive Analysis
29%
34%
17%
2%
10%
0%
0%
8%
0%
Advances
Habib Bank
NBP
MCB
United Bank
Askari Bank
Bank Al- Habib
Bank Al- Falah
Faysal Bank
Standard Chartered

13. Competitive Analysis
24%
19%
31%
13%
2% 7%
1%
2%
1%
EPS
Habib Bank
NBP
MCB
United Bank
Askari Bank
Bank Al- Habib
Bank Al- Falah
Faysal Bank
Standard Chartered

14. Competitive Analysis
24%
21%
17%
18%
4%
5%
4%
4% 3%
Branch Network
Habib Bank
NBP
MCB
United Bank
Askari Bank
Bank Al- Habib
Bank Al- Falah
Faysal Bank
Standard Chartered

15. Competitive Analysis
31%
33%
0%3%
2%
7%
2%
22%
0%
Profit After Tax
Habib Bank
NBP
MCB
United Bank
Askari Bank
Bank Al- Habib
Bank Al- Falah
Faysal Bank
Standard Chartered

16. Critical Analysis
Evaluation
Questionnaires

17. Internal Constraints
Obsolete Systems
Lack Of automation
Myopic(Outdates) Business Vision
Bureaucratic Management Structure
Heavy Reliance on Assets

18. Internal
Factor Evaluation
IFE
Strengths
Western union facility
ATM finder
Government's bank
Customer Satisfaction
Online Banking
Employee's loyalty
Wide area of services
Weakness
Lack of communication between employees
Punishment is not very strong for employees
Public dealing is not very effective
Staff shortage
Lack of respect of seniors

19. Key Internal Factors Weight Rate
Weighted
Score Comments “WHY??”
STRENGTHS
Large number of branches(1249 local +
22 int)
0.10 3 0.30
NBP is one of the oldest and first nationalized bank
of Pakistan
Alternate duties in SBP Absence 0.20 4 0.80
NBP is the only agent of SBP to collect Govt. dues
from both Provincial & Central Govt.
Deposits increasing 0.20 3 0.60
Due to its nationalization NBP has more deposits
than any other bank.
87% growth in advances in 2010 0.10 3 0.30
NBP issue’s foreign currency bonds & loans against
the gold to support Govt. to increase the foreign
reserves.
WEAKNESS
Lack of marketing effort 0.20 2 0.40
Due to lack of marketing effort NBP does not
promote its corporate image , services on a
competitive way
Inefficient counter services in the rush
hours
0.10 2 0.20
As ATM substitutes presenting cheques at counter
& en-cash it NBP does not have modern equipment
in their branches to give connivance to their
customers,
Lack of modern equipment 0.10 1 0.10
Due to lack of financial products NBP fails to
provide new & innovative schemes to their
customers as other big guns doing these things in a
very pretty manner.
Total 1.00 2.70
Internal Factor Evaluation - IFE
Conclusion:
The company knows its strengths and utilizing them effectively and efficiently in order to conceal its weaknesses.
Excel

20. External Constraints
National
Bank
Pakistan
Political InterventionAggressive
Development by
Competitors
Decreasing Market
Share
Rapid Product
Substitution
New Players entry
Highly Regulated
Environment

21. External
Factor Evaluation
EFE
Opportunities
Growing banking system
NBP have govt back
Increase in economic activities
Threats
Increase in no of banks
Modern type of banking
Highly skilled people and management
Online Banking

22. Key external forces Weight Rating
Weighted
Score
Comments
OPPERTUNITIES
More Significant continuous growth in ASSETS 0.02 4 0.08
As NBP is the only public sector bank
so because of that reason no other
new bank will take over it.
Investment can increase with the rate deposits
increasing
0.05 3 0.15
Can enter in Consumer banking 0.05 3 0.15
265% increase in borrowings, they can be
decreased
0.05 3 0.15
Return on asset and return on investment can
increase
0.02 4 0.08
ROA & ROI can be increase by gaining
profit through improved electronic
banking.
can gain profitability through improved
Electronic banking
0.10 4 0.40
Leasing business 0.05 3 0.15
proper use of Wide range of products and
product line
0.05 4 0.20
New marketing strategies to invest money in
new projects
0.05 3 0.15
Because of the need of micro
financing in the market. NBP must
realize it and take step to cater an
ongoing demand for the agricultural
& industrial sector.
External
Factor Evaluation
Excel

23. Key external forces Weight Rating
Weighted
Score
Comments
THREATS
Merger of some of financial institutions 0.05 2 0.10
NBP faces threats of emergence of foreign
banks as these banks are equipped with
heavy financial powers & innovative ways to
promote their services.
Political pressure 0.10 1 0.10
Because of the change in political arena NBP
have to forward loans to those political
persons which creates a scene of insecurity &
demoralization in the customers.
2350 employees outsourced from single
source
0.01 1 0.01
265% increase in borrowings 0.05 1 0.05
Operating fixed assets increased 163% in
2007
0.10 1 0.10
Borrowings & operating Fixed assets are
increasing dynamically form 2008-10.
New products from private Pakistani and
Foreign Banks.
0.05 1 0.05
Quality of human resources. 0.05 2 0.10
Too slow in HR up gradation 0.05 2 0.10
Only single source is used for employees
outsourcing which effects quality of HR.
Establishment of new private financial
institutions and expansion
0.05 2 0.10
Return on asset and return on investment
decreasing
0.05 1 0.05
Total 1.00 2.27
External Factor Evaluation
The company is aware of the opportunities and taking suitable steps to cater them effectively and efficiently by
avoiding threats.
Excel

24. Competitive
Profile Matrix
CPM

25. Key Success Factors Weightings NBP HBL MCB UBL ABL SCB
Rating Score Rating Score Rating Score Rating Score Rating Score Rating Score
Financial Position 0.10 3 0.30 3 0.30 4 0.40 3 0.30 3 0.30 3 0.30
Management 0.10 3 0.30 4 0.40 3 0.30 3 0.30 3 0.30 3 0.30
Local Branches 0.10 4 0.40 2 0.20 3 0.30 3 0.30 2 0.20 2 0.20
Customer Loyalty 0.10 3 0.30 3 0.30 3 0.30 2 0.20 2 0.20 2 0.20
Foreign Branches 0.05 3 0.15 3 0.15 2 0.10 2 0.10 2 0.10 2 0.10
Employees 0.15 4 0.60 3 0.45 3 0.45 3 0.45 3 0.45 3 0.45
E-Commerce and Technlogy 0.10 2 0.20 4 0.40 3 0.30 3 0.30 3 0.30 3 0.30
Advertiement 0.05 2 0.10 4 0.20 2 0.10 2 0.10 2 0.10 2 0.10
Product And Price
Competition
0.15 4 0.60 3 0.45 3 0.45 2 0.30 3 0.45 3 0.45
Market Share 0.10 4 0.40 3 0.30 3 0.30 2 0.20 2 0.20 2 0.20
Total 1.00 3.35 3.15 3.00 2.55 2.60 2.60
Competitive Profile Matrix
Key Success Factors Weightings NBP SCB HBL UBL
Rating Score Rating Score Rating Score Rating Score
Equity 0.10 3 0.30 2 0.20 2 0.20 2 0.20
Deposits 0.20 3 0.60 2 0.40 4 0.80 4 0.80
Advances 0.20 4 0.80 3 0.60 2 0.40 1 0.20
Investment 0.15 3 0.45 3 0.45 3 0.45 3 0.45
Total Assets 0.25 4 1.00 4 1.00 4 1.00 4 1.00
No. of Employees 0.10 2 0.10 1 0.10 3 0.10 1 0.10
Total 1.00 3.35 2.75 3.05 2.75
Based on the General Management Perspective
Based on the General KPIs Perspective
Excel

26. Threats
Weaknesses
Opportunities
Strengths

27. STRENGTHS - S
1. Largest number of branches.
2. Significant growth in assets.
3. Alternate duties in SBP Absence
4. More deposits than other bank
5. Employee benefits
6. 87% growth in advances.
7. Professional Competence.
WEAKNESSES - W
1. Operating fixed assets increasing.
2. Lack of marketing effort
3. Inefficient counter services in the
rush hours.
4. Lake of modern equipment
5. Investments problems
6. Long term contacts are not
maintained with customers.
7. Liquidity issue.
OPPORTUNITIES - O
1. Electronic banking
2. More Significant continuous growth in
ASSETS
3. Entry in consumer banking
4. Leasing business
5. Wide range of products and product
line can enhance the business.
6. New marketing strategies to invest
money in new projects
SO STRATEGIES
1. Investing in electronic banking.(6,1)
2. Growth in advances so investing in
new projects. (6,6)
3. Professional competence can lead
to new product lines. (7,5)
4. Large number of branches so
efficient for entering in consumer
market. (1,3)
WO STRATEGIES
1. Leasing business can solve
investment problems. (5,4)
2. Growth in assets leads to solve
the problem of modern
equipment.(4,2)
THREATS - T
1. Merger of some of financial
institutions.
2. Political pressure.
3. New products from private Pakistani
and Foreign banks.
4. Quality of human resources.
5. Outsourced employees
6. Establishment of new private financial
institutions and expansion.
7. ROA and ROI decreasing
ST STRATEGIES
1. Employee benefits can solve
union issues. (5,4)
2. More deposits can be utilize to
increase ROI. (4,7)
WT STRATEGIES
1. Pursue horizontal integration
buying facilities of small competitors
can resolve technology issues. (4,3)
2. Using new marketing strategies
new product lines and markets
should be introduced. (2,3) OR (2,6)

28. Portor’s Five Factors
EXISTING MARKET SCENARIO
Consumer Banking
Corporate Banking
Agricultural Banking
Islamic Banking
Investment Banking
Over Seas Money Transfer
SUPPLIERS
SBP & Gov. Pak
CUSTOMERS
1)Gov. employees
2)Overseas Pakistanis
3)Agricultural Sector
4)Revenue Collection Agents
(Got. Inst.)
5)institutional Investors
THREATS (NEW ENTRANTS)
Commercial Banks Islamic
Banks Agricultural Banks
Over Seas Money Transfer
THREAT OF
SUBSTITUTE
PRODUCTS:
Real State Gold
Other Banks
Excel

30. 2010
Total Assets
Deposits
Advances
Investments
Shareholders' Equity
Pre-Tax Profit
After-Tax Profit
Earnings Per Share(Rs.)
Number of Branches
Number of Employees
1,035,025
832,152
477,507
301,324
103,762
24,415
17,563
13.05
1289
16457
2009
Total Assets
Deposits
Advances
Investments
Shareholders' Equity
Pre-Tax Profit
After-Tax Profit
Earnings Per Share(Rs.)
Number of Branches
Number of Employees
944,583
727,465
475,243
217,643
94,142
21,300
17,562
13.05
1,287
16,248
2008
Total Assets
Deposits
Advances
Investments
Shareholders' Equity
Pre-Tax Profit
After-Tax Profit
Earnings Per Share(Rs.)
Number of Branches
Number of Employees
817,758
624,939
412,987
170,822
81,367
23,001
15,459
11.49
1,276
15,441
National Bank’s Annual Reports
Financial Highlights
Rupees in Million
Excel Link

31. -
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Deposits
2010
2009
2008
2007
2006
2005
2004
2003
2002
Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Deposits 832,152 727,465 624,939 591,907 501,872 463,427 465,572 395,492 362,866 349,617
Growth in % 14% 16% 6% 18% 8% 0% 18% 9% 4% --
Excel Link

32. Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Advances 477,507 475,243 412,987 340,319 316,110 268,839 220,794 161,266 140,547 170,319
Growth in % 0% 15% 21% 8% 18% 22% 37% 15% -17% --
-
100,000
200,000
300,000
400,000
500,000
600,000
Advances
2010
2009
2008
2007
2006
2005
2004
2003
2002Excel Link

33. Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Investments 301,324 217,643 170,822 211,146 139,947 156,985 149,350 166,196 143,525 71,759
Growth in % 38% 27% -19% 51% -11% 5% -10% 16% 100% --
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Investments
2010
2009
2008
2007
2006
2005
2004
2003
Excel Link

34. Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Shareholder's Equity 103,762 94,142 81,367 69,271 53,045 37,636 24,900 18,134 14,279 11,959
Growth in % 10% 16% 17% 31% 41% 51% 37% 27% 19% --
-
20,000
40,000
60,000
80,000
100,000
120,000
Shareholder's Equity
2010
2009
2008
2007
2006
2005
2004
2003
Excel Link

35. Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Pre-Tax profit 24,415 21,300 23,001 28,061 26,311 19,056 11,978 9,009 6,045 3,016
Growth in % 15% -7% -18% 7% 38% 59% 33% 49% 100% --
-
5,000
10,000
15,000
20,000
25,000
30,000
Pre-Tax profit
2010
2009
2008
2007
2006
2005
2004
2003
Excel Link

36. Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
After-Tax profit 17,563 17,562 15,459 19,034 17,022 12,709 6,195 4,198 2,254 1,149
Growth in % 0% 14% -19% 12% 34% 105% 48% 86% 96% --
-
5,000
10,000
15,000
20,000
After-Tax profit
2010
2009
2008
2007
2006
2005
2004
Excel Link

37. Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Earnings per Share(Rs.) 13.05 13.05 11.49 14.15 12.65 9.45 4.60 3.12 1.68 0.85
Growth in % 0% 14% -19% 12% 34% 105% 47% 86% 98% --
-
5.00
10.00
15.00
Earnings per Share(Rs.)
2010
2009
2008
2007
2006
2005
2004
Excel Link

38. Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Number of Branches 1,289 1,287 1,276 1,261 1,250 1,242 1,226 1,199 1,204 1,245
Growth in % 0% 1% 1% 1% 1% 1% 2% 0% -3% --
1,140
1,160
1,180
1,200
1,220
1,240
1,260
1,280
1,300
Number of Branches
2010
2009
2008
2007
2006
2005
2004
2003
Excel Link

39. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
No. of Employees 16,457 16,248 15,441 14,079 14,019 13,824 13,745 13,272 12,195 15,163
Growth in % 1% 5% 10% 0% 1% 1% 4% 9% -20% --
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Number of Employees
2010
2009
2008
2007
2006
2005
2004
2003
Excel Link

40. To Formulate
Strategies
Strategic decision options
Matching
Key Factors

41. Internal External Resultant strategy
Large number of
branches(1249 local +
18 int)
+ Consumer banking = Should enter in consumer
banking
87% growth in
advances in 2010 + Leasing business = Entry in Leasing business
Lack of technology + Exit of competitors =
Pursue horizontal integration
by buying competitors facilities
Limited Investment.466
bn vs 173 bn
+
New marketing
strategies for new
products
= invest money in new projects
Employee benefits +
One man show in
branches =
Developing new employee
benefits packages to decrease
union threats
Matching Key Factors to Formulate Alternative
Strategies

43. It is strongly recommended that NBP should automate its branches and develop a
powerful computer network for on-line banking.
Govt. should take keen interest to recover its bad debts, which can improve its
financial position.
HRM department must have a proper plan for placement of employees
NBP must give the proper attention toward increasing the customization.
It should establish a customer-oriented section in each branch for receiving him
respectfully and provide proper guidance that he requires.
Along with the officers, the training must also be given to the clerical staff.

44. There is also a need of proper recruitment and selection program.
New young talent should be introduced to inject the new ideas.
National Bank of Pakistan major fault is that wasn’t keep its pace with on going
changing in banking industry unlike other bank.
Latest reorganizing efforts are necessary to make it cost effective also making its
facility accordingly to modern banking. .
Bank management has to put its all efforts to introduce oriented culture in which
employees give important to the bank and its consumers.
The outlook and interior layout of the branches must be improved.
The procedure of taking services from the bank must be made easier and straight forward