National Bank of Pakistan-Strategic Management

Competitive AnalysisNational Bank Of Pakistan

MASROOR ALI SOOMRO

FAISAL AHMADMUSTAFA TALIB

AIJAZ ABDUL KARIM

MAIMOONA KHAN

HAMMAD SYED

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

Business Profile

Products

1. Deposits2. Corporate Advances3. Remittances4. Miscellaneous

Location

Head OfficeNBP Building I.I. Chundrigar Road, Karachi, Pakistan

Financial FactsRevenue ▲PKR One Trillion SurpassTotal assets ▲PKR Rs.1.035 trillion at the year end, up by 9.6% from year end 2009

Board of DirectorsQamar Hussain PresidentNazrat BashirTariq KirmaniHaniya Shahid Naseem

Pakistan

National

Bank

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 13237On Contract 842Outsourced 2350Total Staff Strength 16429

Pakistan

National

Bank

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)

Rating List Financial Position of Commercial BanksAs On Dec 2010

World Ranking

http://www.sbp.org.pk/publications/c_rating/index.htm

Name of Commercial BankPaid up Capital

Reserves Assets Deposits AdvancesProfit After

TaxEarnings Per

shareBranch

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+ AAAAllied Bank 7.65 6.53 449.93 371.28 253.10 8.23 10.5 757 A1+ AAMCB 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+ AABank 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+ AAKASB 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 69Atlas Bank 5.00 0.58 28.97 18.65 20.55 -1.01 -2.0 31Standard Chartered 3.87 0.02 0.32 0.22 0.14 0.00 0.9 162 A1+ AAAJS Bank 8.15 0.02 39.38 26.28 13.98 -0.41 -0.7 11 A1 AHabib Metropolitan 8.73 5.60 1.34 160.31 119.83 2.81 3.2 98 A1+ AA+

Domestic RatingExcel

Top Competitors of NBP

http://www.einfopedia.com/banks-in-pakistan.php

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

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

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

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

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

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

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

Critical Analysis

Evaluation

Questionnaires

Internal Constraints

Obsolete Systems

Lack Of automation

Myopic(Outdates) Business Vision

Bureaucratic Management Structure

Heavy Reliance on Assets

Internal

Factor Evaluation

IFE

Strengths

Western union facilityATM finderGovernment's bank

Customer SatisfactionOnline Banking

Employee's loyaltyWide area of services

WeaknessLack of communication between employeesPunishment is not very strong for employees

Public dealing is not very effectiveStaff shortage

Lack of respect of seniors

Key Internal Factors Weight Rate Weighted

Score Comments “WHY??”

STRENGTHS Large number of branches(1249 local + 22 int)

0.10 3 0.30NBP is one of the oldest and first nationalized bank of Pakistan

Alternate duties in SBP Absence 0.20 4 0.80NBP is the only agent of SBP to collect Govt. dues from both Provincial & Central Govt.

Deposits increasing 0.20 3 0.60Due to its nationalization NBP has more deposits than any other bank.

87% growth in advances in 2010 0.10 3 0.30NBP 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 0.40Due 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

External Constraints

National Bank

Pakistan

Political InterventionAggressive Development by

Competitors

Decreasing Market Share

Rapid Product Substitution

New Players entry

Highly Regulated Environment

External

Factor Evaluation

EFE

Opportunities

Growing banking systemNBP have govt back

Increase in economic activities

Threats

Increase in no of banksModern type of banking

Highly skilled people and managementOnline Banking

Key external forces Weight Rating Weighted

ScoreComments

OPPERTUNITIES

More Significant continuous growth in ASSETS 0.02 4 0.08As 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 0.15265% increase in borrowings, they can be decreased

0.05 3 0.15

Return on asset and return on investment can increase

0.02 4 0.08ROA & 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 0.15proper 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

Key external forces Weight Rating Weighted

ScoreComments

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 0.05Operating fixed assets increased 163% in 2007

0.10 1 0.10Borrowings & 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 0.10Only 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

Competitive

Profile Matrix

CPM

Key Success Factors Weightings NBP HBL MCB UBL ABL SCBRating 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 0.30Management 0.10 3 0.30 4 0.40 3 0.30 3 0.30 3 0.30 3 0.30Local Branches 0.10 4 0.40 2 0.20 3 0.30 3 0.30 2 0.20 2 0.20Customer Loyalty 0.10 3 0.30 3 0.30 3 0.30 2 0.20 2 0.20 2 0.20Foreign Branches 0.05 3 0.15 3 0.15 2 0.10 2 0.10 2 0.10 2 0.10Employees 0.15 4 0.60 3 0.45 3 0.45 3 0.45 3 0.45 3 0.45E-Commerce and Technlogy 0.10 2 0.20 4 0.40 3 0.30 3 0.30 3 0.30 3 0.30Advertiement 0.05 2 0.10 4 0.20 2 0.10 2 0.10 2 0.10 2 0.10Product 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 0.20Total 1.00 3.35 3.15 3.00 2.55 2.60 2.60

Competitive Profile Matrix

Key Success Factors Weightings NBP SCB HBL UBLRating Score Rating Score Rating Score Rating Score

Equity 0.10 3 0.30 2 0.20 2 0.20 2 0.20Deposits 0.20 3 0.60 2 0.40 4 0.80 4 0.80Advances 0.20 4 0.80 3 0.60 2 0.40 1 0.20Investment 0.15 3 0.45 3 0.45 3 0.45 3 0.45Total Assets 0.25 4 1.00 4 1.00 4 1.00 4 1.00No. of Employees 0.10 2 0.10 1 0.10 3 0.10 1 0.10Total 1.00 3.35 2.75 3.05 2.75

Based on the General Management Perspective

Based on the General KPIs Perspective

Excel

Threats

Weaknesses

Opportunities

Strengths

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 - W1. 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 - O1. 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 STRATEGIES1. Leasing business can solve investment problems. (5,4) 2. Growth in assets leads to solve the problem of modern equipment.(4,2)

THREATS - T1. 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 STRATEGIES1. Employee benefits can solve union issues. (5,4) 2. More deposits can be utilize to increase ROI. (4,7)

WT STRATEGIES1. 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)

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

2010

Total AssetsDepositsAdvancesInvestmentsShareholders' EquityPre-Tax ProfitAfter-Tax ProfitEarnings Per Share(Rs.)Number of BranchesNumber of Employees

1,035,025832,152477,507301,324103,76224,41517,56313.05128916457

2009

Total AssetsDepositsAdvancesInvestmentsShareholders' EquityPre-Tax ProfitAfter-Tax ProfitEarnings Per Share(Rs.)Number of BranchesNumber of Employees

944,583727,465475,243217,64394,14221,30017,56213.051,28716,248

2008

Total AssetsDepositsAdvancesInvestmentsShareholders' EquityPre-Tax ProfitAfter-Tax ProfitEarnings Per Share(Rs.)Number of BranchesNumber of Employees

817,758624,939412,987170,82281,36723,00115,45911.491,27615,441

National Bank’s Annual Reports

Financial HighlightsRupees in Million

Excel Link

-

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 2001Deposits 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

Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001Advances 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

Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001Investments 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

2003Excel Link

Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001Shareholder'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

2003Excel Link

Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001Pre-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

2003Excel Link

Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001After-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

2004Excel Link

Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001Earnings 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

Descrp. (Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001Number 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

2003Excel Link

(Rs. In Million) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001No. 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

2003Excel Link

To Formulate

Strategies

Strategic decision options

Matching

Key Factors

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

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.

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