The National Bank of Pakistan (NBP) was established on 9th November 1949, in accordance with the National Bank of Pakistan Ordinance 1949. It is Pakistan’s second-largest commercial bank. Headquartered in Karachi, it began operations with 100 personnel and issued capital of Rs. 15 million, providing comprehensive commercial banking and associated services both domestically and internationally.
Following its independence in 1947, Pakistan inherited a weak financial system. Establishing a truly national commercial bank capable of steering the nation through uncertain times was crucial, leading to the creation of NBP. The bank serves as an intermediary for treasury transactions on behalf of the Government of Pakistan and acts as an agent to the State Bank of Pakistan. It manages a network of 18 overseas branches, including the Export Processing Zone branch in Karachi and 1,508 branches operating domestically across Pakistan.
NBP was the first bank in Pakistan to finance against gold and was the first to offer agricultural loans under the Supervised Agriculture Credit Program. It’s also the first bank that initiated the Peoples Credit Scheme for small business owners. Additionally, it provides Islamic banking facilities and trustee services.
Ownership Structure
The bank has 2,127,513,026 issued and outstanding ordinary shares. The chart below shows the bank’s shareholding distributions.
Governance Structure
According to the Bank Nationalization Act of 1974, a minimum of 5 members must be present at all times for the bank to function. The president/CEO of the National Bank of Pakistan (NBP) is the only executive director. The remaining board consists of:
- One non-executive director
- Seven independent directors, one of whom must represent minority shareholders, as per the Code of Corporate Governance.
Evolution of the National Bank of Pakistan
1950s: The Expansion Era
The National Bank of Pakistan expanded its branch network with the establishment of the first overseas branch in Jeddah, Saudi Arabia (1950), a branch in London (1953), and another branch in Baghdad (1957), respectively. The bank took over government treasury operations and established currency chests at 57 of its offices to handle currency distribution. It was able to administer currency chests or sub-chests at 57 of its offices. By 1952, the deposits, which constituted 3.1% of total deposits of all Pakistani banks in 1949, had risen to 38%.
1960s: Initiatives to Encourage Savings
To encourage saving and banking, NBP launched the School Scheme in the 1960s. This scheme was offered to industrial workers, and school and college students. The scheme was operative in 1,189 schools, which raised the deposits to PKR 2.9 million. By 1969, NBP’s “worker scheme” had raised the total deposits to PKR 2.84 million, and the number of accounts opened had crossed 8,767.
1970s: The Nationalization Era
The 1970s witnessed the nationalization of commercial banks operating in the country. The National Bank of Pakistan (NBP), in 1972, upgraded the Supervised Agricultural Credit Program to provide small farmers with accessible and affordable financing. NBP, along with 13 other scheduled Pakistani banks, was nationalized on January 1, 1974.
1980s: Islamic Banking Era
In the 1980s, the government unveiled a three-year plan for the implementation of an Islamic economic system. Under this system, NBP introduced a separate and thorough banking procedure from the branch level to the head office. The restructuring and merging resulted in the closure of 286 locations, reducing the total from 1,646 in 1979 to 1,360 in 1989. The overseas expansion of the bank continued with the opening of a representative office in Beijing and in Seoul, South Korea. The bank gained a significantly stronger and wider equity base by expanding its authorized and paid-up capital twice during the 1980s.
1990s: The Era of Financial Reforms
The 1990s marked a decade of new financial reforms and initiatives. The bank joined SWIFT in 1998, which offers secure and safe financial transactions for its members. The bank celebrated its Golden Jubilee in 1999. The bank’s market share, by the end of the decade, had reached over 22%, and remained the country’s largest financial institution.
2000-2009: The Restructuring Era
The bank underwent a restructuring program where branches that were making losses were either closed or merged. In 2001, the National Bank of Pakistan (NBP) sold 23.2% of its shares in an Initial Public Offering (IPO) and was listed on the stock exchange. The bank reached an agreement in 2002 with Western Union. In 2003, the bank’s wholly owned exchange company was opened for business. With over 30 international awards, NBP became well-known in the Pakistani financial market.
2010 Onwards: Achieving Milestones
The bank updated its vision to become the country’s premier bank that promotes sustainable growth and inclusive development. The bank became the biggest bank in the nation, achieving a milestone of PKR 5 trillion in assets and PKR 3 trillion in deposits. In line with the growing popularity of Islamic banking, the bank successfully launched its “Aitemaad” brand in 2013. In 2015, the bank implemented the Core Banking Application. NBP closed the year 2019 with total assets amounting to PKR 3,124 billion. In 2020, the bank recorded the highest profit ever in its history, i.e., an after-tax profit of PKR 30.6 billion.
Services Offered by the NBP
The National Bank of Pakistan (NBP), in partnership with its joint venture and subsidiaries, offers commercial banking services, including modaraba management, broking, leasing, foreign currency remittances, exchange transactions, asset management, and investment advisory services. NBP organizes its activities under the following eight business segments: corporate finance, trading and sales, retail banking, commercial banking, payment and settlement, agency services, asset management, and retail brokerage.
Corporate Finance
This segment offers the following services:
- Privatization of organizations
- Equity
- Merger and acquisition
- Securitization
- Debt
- Syndication
- Initial Public Offering (IPO)
- Research
Retail Banking
- Provision of retail and private loans
- Merchant and private label services
- Trust and investment advisory
- Deposit facilities
- Retail services
Trading Sales
- Brokerage operations
- Equity investments
- Foreign exchange
- Commodity finance
- Lending and repo services
Payment and Settlements
- Services for financial transfers
- Clearance and settlement
- Collection and payment services
Agency Services
- Escrow management
- Corporate events handling
- Security borrowing
- Issuer and paying agent services
- Depository receipt services
Asset Management
- Investment consulting services
- Modaraba agreement
- Administration of assets
Commercial Banking
- Real estate funding
- Trade finance services
- Guarantees and deposits
- Bills of exchange
Retail Brokerage
- Buying and selling of stocks
- Funds placing services
- Advisory-related services on investment
The bank significantly serves a clientele of more than 9 million customers with a committed workforce of over 150,000 employees. The extensive local and international network of the bank helps it to realize its objectives. According to the annual report issued in 2023, the National Bank of Pakistan (NBP) is the largest capitalized bank in the country with a considerable net asset value of PKR 382.8 billion.
Joint Venture of NBP
The bank also holds substantial stakes in several affiliated businesses as well as in a UK-based joint venture, i.e., the United Nations Bank Limited (UNBL). The UNBL was founded in 2001 as a result of the merger of the UK branches, National Bank of Pakistan and United Bank Limited. NBP holds 45% of shares in UNBL. The UNBL primarily offers retail banking products, wholesale banking, treasury, and money transmission services to financial institutions.
Legacy of Recognition
The NBP has a legacy of recognition for its outstanding contributions to the banking sector. The bank keeps hitting milestones. Some of these are as follows:
- Best Bank for Agriculture in 2021.
- NBP was recognized by Guinness World Records for installing the world’s highest ATM at the Pak-China border.
- Bank of the Year Award
- The “Domestic Systemically Important Bank” award was acknowledged by the State Bank of Pakistan due to its substantial asset base, constituting 14% of the total industrial assets.
The National Bank of Pakistan has been instrumental in the country’s financial evolution through its commitment to sustainable growth and inclusive development, innovative strategies, and a customer-centric approach. The bank has emerged to be the second-largest commercial bank in the country and continues to set benchmarks for the banking industry.
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Ruqayya Yar Muhammad is a fresh graduate of political science from the University of Peshawar and a keen enthusiast of current and international affairs.