Highlights
CHAPTER 4
EXCUTIVE COMMITTEE
Executive committee consists of one president nine member form which one member also performs function of both as a member and secretary. Executive committee is nominated by board of directors and executive committee nominates the division heads.
Member
Member
Member
Member
Member
Member
Member
Secretary member
Member
President
4.1 Board of Directors:
The Board of directors nominated the number of executive committee and executive committee nominates decisions heads. Board of directors consists of chairman and president, Nine directors and secretary work under him. President is the main body of the Board of Directors and other nine directors and one secretary worked with his in 9 systematic ways.
Board of Directors
Secretary
Directors
Directors
Directors
Directors
Directors
Directors
Chairman and President
4.2 SENIOR MANAGEMENT
Masood Karim Shaikh SEVP & Group Chief, Corporate & Investment Banking Group and CFC
Shahid Anwar Khan SEVP & Group Chief, Commercial & Retail Banking Group
Dr. Asif A. Brohi SEVP & Group Chief, Operations Group
Muhammad Sardar Khawaja SEVP & Group Chief, Audit & Inspection Group
S.M. Rafique SEVP & Group Chief, Board of Directors
Imam Bakhsh Baloch SEVP & Group Chief Compliance Group
Derick Cyprian SEVP & Group Chief, Special Assets Management Group
Amim Akhtar EVP & PSO to the President
Javed Mehmood EVP & Group Chief, Risk Management Group
Muhammad Nusrat Vohra EVP & Group Chief, Treasury Management Group
Nadeem A. Dogar EVP & Group Chief, Information Technology Group
Dr. Mirza Abrar Baig Group Chief, Human Resources Management & Administration Group
Uzma Bashir Group Chief, Organization Development & Training Group
4.3 Director's Report
On behalf of the Board of Directors it gives me great pleasure to present the annual accounts for year ended December 31, 2002. National Bank made many strides during 2002 in positioning If the future both operationally and structurally." reduce decision-making layers and prompt teamwork. The bank has substantially restructured its business. An entire layer of controlling offices i.e. zones has been eliminated and total number of regions enhanced from 9 to 29. A next matrix structure is now in place, which separates the front and back office with special emphasized on corporate governance and enhanced internal controls. This process, which was commenced late 2001, is now fully functional and demonstrating positive results. The rationalization program I for staff reduction and branch closures was. successfully completed in 2002. Going forward objective would be to ensure optimum efficiency in staff levels while balancing the benefits & technology with the branch network.
To meet the challenges of position of NBP as a market leader, training is seen as a critical success factor. Training has been restructured to make it more need based and aligned with the corporate vision of inculcating customer focus and developing core competencies under program "Gearing up for Excellence ". A strategic training management plan was develop _ keeping in view the stakeholders' expectation. We are glad to say that while training is a process of continuous improvement, we have achieved significant results thus far.
To position the bank for capitalizing on the requirements of the relatively lower banked sectors, a dedicated Commercial and Retail-banking group was created. Within a short span of time a number of retail products have been launched and the customer response to these schemes have been very encouraging. New retail products will be offered to cater’ the large diversified customer base of over 9 million, the largest in the country. The success of retail banking is critical to maintaining interest revenue and enhanced fee income. We are confident that withour large customer base and delivery capabilities, NBP will emerge as a market leader in the retail/ consumer business in the very near future.
Corporate banking as a dedicated business is being very well received by the corporate sector. The bank was mandated as a lead manager in significant capital market transactions. Through a combination of a large direct equity portfolio as well as a 25% holding in .NIT, Pakistan's largest mutual fund, NBP has one of the/largest equity portfolios in the country. Given the strong stock market performance In 2002atttpctive trading gains were realized. This area will continue to be one of our key income contributors the capital market gains depth.
NBP continues to be the principal bank for handling the government treasury business. We have also re-activated our subsidiaries catering to non- banking financial activities. We are also planning to open stand-alone Islamic Banking branches. Thus, in combination with our very large and diversified banking base we are truly a universal bank in Pakistan, in a position to offer the entire range of banking and financial products. We regard this as our key competitive edge.
NBP is committed to invest in the development of the bank's Information Technology infrastructure. Several initiatives have been undertaken in this regard. New on line branches I .
were added. The ATM network is being expanded across the country at convenient locations and an ATM switch sharing arrangement is being placed. During the year, the bank signed an agreement with Western Union for expanding the base for documentaries. remittances. We are also developing a strategic plan for Information Technology that synchronizes our future growth with product development.
For overseas operations our focus continues to be on trade financing activity to take advantage of the bank's presence in most countries (16 countries, 20 branches/offices), which are Pakistan's major trading partners. During 2002 we established a wholly owned subsidiary in Amity. Currently we are present in. four of Central Asian countries and our unique representation should provide us with a major competitive edge in the coming years as the Central Asian countries realize their economic potential.
4.4 Financial Performance:
In 2002, NBP increased its pre-tax profit to Rs. 6,045 million from Rs. 3,016 million in 2001, an increase of over 100%. The improved profitability was achieved due to a combination of higher interest revenue, enhanced fee income and run off of the amortization of the 1997 Golden Handshake Scheme. Prudent addition to loan loss. Reserves was made which continues to improve the cash coverage for non performing loans.
All key financial and operating ratios demonstrated improvement. Cost! income ratio was 0.44 (excluding one off provision of Rs. 832 million for benevolent fund and Rs. 513 million for charge for special separation package) as against 0.52 of the last year. Pre-tax return on equity was 45.27% as compared to 25.85% of the current year and is impressive by any yardstick. Pre-tax return on assets improved to 1.43% as against 0.77% of last year. Capital adequacy ratio of the bank is 14.5%, which is 38% higher as compared to 10.52% of last year.
Deposits of the bank increased by Rs. 12 billion. While there was increase in private sector loans due to adjustment I repayment of loans by large public sector entities and substantially lower commodity operations borrowings, advances decreased by Rs. 30 billion.
4.5 Market Recognition:
For the second consecutive year, NBP was recognized as the best bank in Pakistan by the prestigious periodical, " The Banker" UK (a subsidiary of Financial Times Group). Furthermore M/s JCR-VIS Credit Rating Company Limited maintained its rating of AAA, while the standalone rating was raised by one notch to AA-, which is one of the highest in the banking sector.
4.6 Outlook
Going in 2003, the reduction in the interest rate environment will overall have a negative impact on the financial sector's profitability in the short term. To meet these challenges we will focus on building our loan portfolio, both on corporate and retail side. On the retail side focus will be on additional fee business while maintaining stringent controls over cost. Longer term we will be focusing on those sectors in the, country, which have traditionally received less attention from the financial sector, i.e. agriculture, small and medium enterprises and of the entire range of retail products. Our key strength remains our customer base of over 9 million and we are confident that we are positioned to capitalize on the opportunities.
4.7 Corporate and financial reporting framework
(Code of Corporate Governance )
The board is fully aware of its responsibilities established by the Code of Corporate Governance issued by the Securities & Exchange Commission of Pakistan (SECP). The Directors are pleased to give the following declarations/statements to comply with the requirements of the Code.
The financial statements (Balance sheet, Profit and Loss Account, Cash Flow Statement, Statement of Changes in Equity and notes forming part thereof), prepared by the management of the bank give the information required by the Companies Ordinance, 1984 in the manner s required and respectively give a true and fair view of the state of the bank's affairs as at December 31,2002 and of the results of its operations, changes in equity and its cash flows for the year then ended.
Proper books of accounts have been maintained.
Appropriate accounting policies have been consistently applied in the preparation of the financial statements and accounting estimates are based on the reasonable and prudent
CHAPTER 4
EXCUTIVE COMMITTEE
Executive committee consists of one president nine member form which one member also performs function of both as a member and secretary. Executive committee is nominated by board of directors and executive committee nominates the division heads.
Member
Member
Member
Member
Member
Member
Member
Secretary member
Member
President
4.1 Board of Directors:
The Board of directors nominated the number of executive committee and executive committee nominates decisions heads. Board of directors consists of chairman and president, Nine directors and secretary work under him. President is the main body of the Board of Directors and other nine directors and one secretary worked with his in 9 systematic ways.
Board of Directors
Secretary
Directors
Directors
Directors
Directors
Directors
Directors
Chairman and President
4.2 SENIOR MANAGEMENT
Masood Karim Shaikh SEVP & Group Chief, Corporate & Investment Banking Group and CFC
Shahid Anwar Khan SEVP & Group Chief, Commercial & Retail Banking Group
Dr. Asif A. Brohi SEVP & Group Chief, Operations Group
Muhammad Sardar Khawaja SEVP & Group Chief, Audit & Inspection Group
S.M. Rafique SEVP & Group Chief, Board of Directors
Imam Bakhsh Baloch SEVP & Group Chief Compliance Group
Derick Cyprian SEVP & Group Chief, Special Assets Management Group
Amim Akhtar EVP & PSO to the President
Javed Mehmood EVP & Group Chief, Risk Management Group
Muhammad Nusrat Vohra EVP & Group Chief, Treasury Management Group
Nadeem A. Dogar EVP & Group Chief, Information Technology Group
Dr. Mirza Abrar Baig Group Chief, Human Resources Management & Administration Group
Uzma Bashir Group Chief, Organization Development & Training Group
4.3 Director's Report
On behalf of the Board of Directors it gives me great pleasure to present the annual accounts for year ended December 31, 2002. National Bank made many strides during 2002 in positioning If the future both operationally and structurally." reduce decision-making layers and prompt teamwork. The bank has substantially restructured its business. An entire layer of controlling offices i.e. zones has been eliminated and total number of regions enhanced from 9 to 29. A next matrix structure is now in place, which separates the front and back office with special emphasized on corporate governance and enhanced internal controls. This process, which was commenced late 2001, is now fully functional and demonstrating positive results. The rationalization program I for staff reduction and branch closures was. successfully completed in 2002. Going forward objective would be to ensure optimum efficiency in staff levels while balancing the benefits & technology with the branch network.
To meet the challenges of position of NBP as a market leader, training is seen as a critical success factor. Training has been restructured to make it more need based and aligned with the corporate vision of inculcating customer focus and developing core competencies under program "Gearing up for Excellence ". A strategic training management plan was develop _ keeping in view the stakeholders' expectation. We are glad to say that while training is a process of continuous improvement, we have achieved significant results thus far.
To position the bank for capitalizing on the requirements of the relatively lower banked sectors, a dedicated Commercial and Retail-banking group was created. Within a short span of time a number of retail products have been launched and the customer response to these schemes have been very encouraging. New retail products will be offered to cater’ the large diversified customer base of over 9 million, the largest in the country. The success of retail banking is critical to maintaining interest revenue and enhanced fee income. We are confident that withour large customer base and delivery capabilities, NBP will emerge as a market leader in the retail/ consumer business in the very near future.
Corporate banking as a dedicated business is being very well received by the corporate sector. The bank was mandated as a lead manager in significant capital market transactions. Through a combination of a large direct equity portfolio as well as a 25% holding in .NIT, Pakistan's largest mutual fund, NBP has one of the/largest equity portfolios in the country. Given the strong stock market performance In 2002atttpctive trading gains were realized. This area will continue to be one of our key income contributors the capital market gains depth.
NBP continues to be the principal bank for handling the government treasury business. We have also re-activated our subsidiaries catering to non- banking financial activities. We are also planning to open stand-alone Islamic Banking branches. Thus, in combination with our very large and diversified banking base we are truly a universal bank in Pakistan, in a position to offer the entire range of banking and financial products. We regard this as our key competitive edge.
NBP is committed to invest in the development of the bank's Information Technology infrastructure. Several initiatives have been undertaken in this regard. New on line branches I .
were added. The ATM network is being expanded across the country at convenient locations and an ATM switch sharing arrangement is being placed. During the year, the bank signed an agreement with Western Union for expanding the base for documentaries. remittances. We are also developing a strategic plan for Information Technology that synchronizes our future growth with product development.
For overseas operations our focus continues to be on trade financing activity to take advantage of the bank's presence in most countries (16 countries, 20 branches/offices), which are Pakistan's major trading partners. During 2002 we established a wholly owned subsidiary in Amity. Currently we are present in. four of Central Asian countries and our unique representation should provide us with a major competitive edge in the coming years as the Central Asian countries realize their economic potential.
4.4 Financial Performance:
In 2002, NBP increased its pre-tax profit to Rs. 6,045 million from Rs. 3,016 million in 2001, an increase of over 100%. The improved profitability was achieved due to a combination of higher interest revenue, enhanced fee income and run off of the amortization of the 1997 Golden Handshake Scheme. Prudent addition to loan loss. Reserves was made which continues to improve the cash coverage for non performing loans.
All key financial and operating ratios demonstrated improvement. Cost! income ratio was 0.44 (excluding one off provision of Rs. 832 million for benevolent fund and Rs. 513 million for charge for special separation package) as against 0.52 of the last year. Pre-tax return on equity was 45.27% as compared to 25.85% of the current year and is impressive by any yardstick. Pre-tax return on assets improved to 1.43% as against 0.77% of last year. Capital adequacy ratio of the bank is 14.5%, which is 38% higher as compared to 10.52% of last year.
Deposits of the bank increased by Rs. 12 billion. While there was increase in private sector loans due to adjustment I repayment of loans by large public sector entities and substantially lower commodity operations borrowings, advances decreased by Rs. 30 billion.
4.5 Market Recognition:
For the second consecutive year, NBP was recognized as the best bank in Pakistan by the prestigious periodical, " The Banker" UK (a subsidiary of Financial Times Group). Furthermore M/s JCR-VIS Credit Rating Company Limited maintained its rating of AAA, while the standalone rating was raised by one notch to AA-, which is one of the highest in the banking sector.
4.6 Outlook
Going in 2003, the reduction in the interest rate environment will overall have a negative impact on the financial sector's profitability in the short term. To meet these challenges we will focus on building our loan portfolio, both on corporate and retail side. On the retail side focus will be on additional fee business while maintaining stringent controls over cost. Longer term we will be focusing on those sectors in the, country, which have traditionally received less attention from the financial sector, i.e. agriculture, small and medium enterprises and of the entire range of retail products. Our key strength remains our customer base of over 9 million and we are confident that we are positioned to capitalize on the opportunities.
4.7 Corporate and financial reporting framework
(Code of Corporate Governance )
The board is fully aware of its responsibilities established by the Code of Corporate Governance issued by the Securities & Exchange Commission of Pakistan (SECP). The Directors are pleased to give the following declarations/statements to comply with the requirements of the Code.
The financial statements (Balance sheet, Profit and Loss Account, Cash Flow Statement, Statement of Changes in Equity and notes forming part thereof), prepared by the management of the bank give the information required by the Companies Ordinance, 1984 in the manner s required and respectively give a true and fair view of the state of the bank's affairs as at December 31,2002 and of the results of its operations, changes in equity and its cash flows for the year then ended.
Proper books of accounts have been maintained.
Appropriate accounting policies have been consistently applied in the preparation of the financial statements and accounting estimates are based on the reasonable and prudent
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