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INTERNSHIP REPORT

ON

UNITED BANK LIMITED

SPECIALIZATION: BANKING & FINANCE

SUBMITTED TO: CHAIRMAN, DEPT. OF BUSINESS ADMINISTRATION

SUBMITTED BY: ADNAN FAROOQ ROLL # T-521199 REG # 06PMN0039 382 - RAVI BLOCK, ALLAMA IQBAL TOWN, LAHORE. TEL # 042-5417364 MOB # 0300-6720085

DEPARTMENT OF BUSINESS ADMINISTRATION ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD.


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IN THE NAME OF ALLAH THE MOST BENIFICIENT AND MOST MERCIFUL

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DEDICATED To My Beloved Parents For Having Firm Belief in My Abilities & Whom Prayers Enabled Me To Accomplish This Milestone

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MESSAGE OF THE QUAID


MUHAMMAD ALI JINNAH

We must work our destiny in our own way and present to the world an economic system based on true Islamic concept of equality of manhood and social justice. We will thereby be fulfilling our mission as Muslims and giving to humanity the message of peace which alone can save it and secure the welfare, happiness and prosperity of mankind.

(SPEECH AT THE OPENING CEREMONY OF STATE BANK OF PAKISTAN, KARACHI JULY 1, 1948).

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

FINAL APPROVAL
This is to certify that we have read the report submitted by MR. ADNAN FAROOQ Roll No. T-521199 and It is our judgment that this is of sufficient standard to warrant its acceptance by ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD, for MBA (B&F) degree.

REPORT EXAMINING COMMITTEE

SIGNATURES

STAMP

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ACKNOWLEDGEMENT
All praise to ALMIGHTY ALLAH alone, the Omnipresent and the most Merciful and compassionate. The words are bound, knowledge is limited and time is short to express His dignity. It is one of infinite blessings of ALLAH that he bestowed me with the potential and ability to contribution towards the deep oceans of knowledge already existing. I pay hum-age to greatest personality of the universe; HOLY PROPHET HAZARAT MUHAMMAD (PBUH) Who is forever torch bearer and spring of guidance in every sphere of life. I am deeply indebted and also express my gratitude to my respected teachers at ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD for their support. At the very outset, I am very thankful to Mr. ZULIFQAR AHMAD RANA (AVP UBL) for providing me the opportunity to have an excellent learning experience during my internship at REGIONAL CREDIT ADMINISTTRATION DEPARTMENT-

COMMERCIAL BANKING (RCAD-CB) UNITED BANK LIMITED, LAHORE. It is my privilege and honors to express my deep gratitude and in calculating thanks to Mr. Sohail Amjad Vice President & Head RCAD-CB UBL, Lahore . The person to whom I would like to give my regards is the MIS OFFICER Mr. WASIM AHMAD of RCADCB UBL, LAHORE who gave me very useful tips and information. I might not be able to complete my internship without his cooperation and his kind behavior. I am thankful to all of my teachers especially Mr. Muhammad Azeem and Mr. F. R. Tariq (N. K. Fact College, Lahore). I am thankful to all of my class fellows and friends whom cheerfulness and guidance is an asset for me .I am especially thankful to the bank staff and particularly. Mr. Nabeel Anwar Mr. Badar Munir Mr. Naeem Azam Mr. Mohsin Hassan Mr. Sohail Saeed Mr. Nadeem Saif Senior Vice President & Head North Processing Officer Documentation Officer Documentation Officer Processing Officer Processing Officer 6

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

EXECUTIVE SUMMARY
United Bank Limited (UBL) is the second largest bank of Pakistan with assets of over Rs. 550 billion and a solid track record of forty six years - in addition to the convenience of over 1400 branches serving its customers throughout the country and also at several overseas locations. In this 12 weeks (3 Months) internship program I have worked in Regional Credit Administration Departments (MIS section, Processing section, Documentation section) of this high class bank of Pakistan where I have learned about banking from experienced managers running these sections. This report contains the information and learning about UBL that I learnt during the 12 weeks internship period in United Bank limited. This report deals with History & Nature (Business) of the UBL, its Products and Services, information about main offices and also the review of various departments of the Bank. This report also contains Finance & Accounting operations of the UBL, role of Financial Manager (Branch Manager), Use of Electronic Data in core decision making and the Sources, Generation and Allocation of funds used in the banking operations of the UBL. Recognizing the need of Islamic banking, UBL also provided number of Islamic banking services like Islamic Deposit Schemes and Islamic Fund Based Facilities. At the end of this report, on basis of my observation during internship, financial analysis and SWOT analysis of UBL is provided. Suggestions are also recommended as per learning from analysis. This report will provide a better and brief learning about United Bank Limited.

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

OBJECTIVES
This internship offers me an incredible opportunity to gain real-world experience in the high-stakes finance industry. Most importantly this internship allows me to distinguish myself from my classmates, as I gain a competitive advantage by connecting my coursework with industry experience. Following are important objectives of studying the organization: Categorize the different products and services offered by the financial institution and note how to most efficiently match those products and services with the needs of customers. Analyze the companys financial condition through the financial statements (compute financial ratios and compare to the industry averages). To describe the impact of financial decisions on the health and functioning of the overall organization. To learn the various steps and procedures of credit risk management & administration. Finding out the weaknesses, short comings, strengths and beauties of the credit administration department.

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

TABLE OF CONTENTS
1. OVERVIEW OF THE ORGANIZATION 1.1 BRIEF HISTORY OF THE ORGANIZATION 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.2 ABOUT UBL FORMULATION NATIONALIZATION PRIVATIZATION OF UBL UBL TODAY 01 01 01 01 01 02 02 04 05 05 06 06 06 07 07 08 08 08 09 09 10 10 12 15 15 16 17 18 19

NATURE OF THE ORGANIZATION 1.2.1 1.2.2 VISION STATEMENT MISSION STATEMENT

1.3

BUSINESS VOLUME 1.3.1 1.3.2 1.3.3 1.3.4 REVENUE


DEPOSITS

ADVANCES COMPUTATION OF ADVANCES

1.4

NUMBER OF EMPLOYEES 1.4.1 1.4.2 1.4.3 1.4.4 BOARD OF DIRECTORS STAFF STRENGTH KEY MANAGEMENT MANAGEMENT HIERARCHY

1.5

PRODUCT LINES 1.5.1 1.5.2 1.5.3 DEPOSIT PRODUCTS LOANS & CARDS AGRICULTURAL PRODUCTS 1.5.3.1.1 1.5.3.1.2 1.5.4 1.5.5 1.5.6 FARM LOANS NON FARM LOANS

SMALL BUSINESS NRP SERVICES OTHER SERVICES

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2. ORGANIZATIONAL STRUCTURE 2.1 MAIN OFFICES 2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.2 HEAD OFFICE BRANCHES DOMESTIC NETWORK PROVISIONAL HEADQUARTERS BRANCH HIERARCHY OVERSEAS NETWORK

22 22 22 23 23 23 24 25 26

DEPARTMENTS OF THE UBL

3. STRUCTURE AND FUNCTIONS OF THE ACCOUNTS/ FINANCE AND AUDIT DEPARTMENT 3.1 3.2 3.3 3.4 ORGANIZATIONAL CHART (FINANCE DEPARTMENT) MY LEARNING AS AN INTERNEE FINANCE AND ACCOUNTING OPERATIONS THE ROLE OF FINANCIAL MANAGER 3.4.1 3.4.2 3.4.3 3.5 3.6 3.7 3.8 ACCOUNTS MANAGEMENT CASH MANAGEMENT CREDIT MANAGEMENT 34 34 35 35 35 37 38 38 41 47 47 49 57 57

USE OF ELECTRONIC DATA IN DECISION MAKING SOURCES OF FUNDS GENERATION OF FUNDS ALLOCATION OF FUNDS

4. CRITICAL ANALYSIS OF THE THEORETICAL CONCEPTS 4.1 FINANCIAL ANALYSIS 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5

RATIO ANALYSIS (ABBREVIATIONS USED IN CALCULATIONS 59 CALCULATION OF RATIOS GRAPHICAL REPRESENTATION OF RATIOS EXPLANATION OF FINANCIAL RATIOS HORIZONTAL ANALYSIS 60 62 65 68

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4.1.5.1.1 4.1.5.1.2 4.1.6

BALANCE SHEET PROFIT & LOSS ACCOUNT

68 73 77 77 80 82 83 84 85 86 88 89

VERTICAL ANALYSIS 4.1.6.1.1 4.1.6.1.2 BALANCE SHEET PROFIT & LOSS ACCOUNT

4.2 4.3

ORGANIZATIONAL ANALYSIS FUTURE PROSPECTS OF THE ORGANIZATION

5. SHORT FALLS/WEAKNESSES OF THE ORGANIZATION 6. CONCLUSION 7. RECOMMENDATIONS 8. REFERENCES 9. ANNEXES

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1. OVERVIEW OF THE ORGANIZATION


1.1. BRIEF HISTORY OF THE ORGANIZATION:
1.1.1. ABOUT UBL: The history of UBL can be divided into four main Phases: Formulation Nationalization Privatization UBL Today 1.1.2. FORMULATION: In June 1957, Mr. Agha Hassan Abidi decided to open a Bank different from others, to provide modern facilities to trade and industry and to promote thrift and habit of saving amount common thereby stimulating the economy as a whole. Necessary formalities completed for obtaining registration certificate from State Bank of Pakistan to perform business activities. After passing through all these formalities on 7th November, 1959 United Bank Ltd came into existence as a Schedule bank. The Head office of the Bank was established in the New Jubilee Insurance House, 1.1 Chundrigar Road Karachi. It was registered as a joint stock company. The bank was incorporated with an Authorized Capital of Rs 20,000,000 and issued and subscribed and paid up capital of RS 10, 00,000. Saigol family owned it and Agha Hassan Abedi was its first managing Director. It had posted a profit of 0.7 million in its first year of operation with just eight branches at Karachi. 1.1.3. NATIONALIZATION: As a policy of nationalization fourteen commercial banks was merged into five big banks. So consequently on 21st December 1974 Commerce Bank and Union bank was 12

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merged with the UBL. Mr.Mushtaq Ahmed khan Yousafi took over the charge of UBL. Now, there are six directors, a secretary and a president. 1.1.4. PRIVATIZATION OF UBL: UBL was the largest privatization attempted by the government of Pakistan, launched in June 2001, with 21 interested parties. It was impacted by the adverse developments of the September 11, 2001 and was finally concluded in October 2002, which left stage only three bidders. The consortium comprising Bestway Group (BG), out of the U.K. and Abu Dhabi Group (ADG) from the U.A.E. were finally the winners at a record price. Sale proceed was Rs 12350 million. This signaled the strong confidence reposed by these investor groups, in the improved governance of the country, the economic potential, the banking opportunity and the existing management of the bank. 1.1.5. UBL TODAY: Today the bank has taken progressive steps. The United Bank Limited (UBL) management has launched its new corporate identity and changed its 44 year-old-logo following its privatization. UBL has started the Online Banking & Click n Remit services. CHAIRMAN: His Highness Shaikh Nahayan Mabarak Al Nahayan. DEPUTY CHAIRMAN: Sir Mohammed Anwar Pervez OBE. PRESIDENT & CEO: Mr. Atif R. Bokhari.

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BRANCHES: 1079 Domestic, 17 Overseas Branches. REPRESENTATIVE OFFICES: Tehran Kazakhstan China SUBSIDIARY: United Bank AG Zurich, Switzerland. United National Bank Limited, UK (Joint venture with NBP). UBL Fund Managers Limited. ASSOCIATED COMPANIES: Oman United Exchange Company, Muscat. UBL Insurers Limited. OFFSHORE BANKING UNIT: Export Processing Zone, EPZ Branch, Karachi, Pakistan. HEAD OFFICE: State Life Insurance Corp. Building #1, I.I. Chundrigar Road, Karachi, Pakistan P.O. Box No.: 4306 Phone: (92-21) 111-825-111 Gram: "UNITED" Fax: (92-21) 2413492.

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1.2. NATURE OF THE ORGANIZATION


UBL is a Banking Company, which is engaged in Commercial & Retail Banking and related services domestically and overseas. UBL was set up in 1959 by. Agha Hasan Abedi and is today one of Pakistan's major banks in terms of deposits and advances. The Group's principal activities are to provide commercial banking and other financial services. The Group offers personal banking, cash management, retail loans and other financial services. These services include deposits, savings/current bank account, vehicle loans, personal loans, retail trade finance, global banking, lending to priority sector and small scale sector, foreign exchange and export finance, corporate loans and equipment loans. In 1971 the Government of Pakistan nationalized it. In 2002, the Government of Pakistan sold it in an open auction to a consortium of Abu Dhabi Group and Bestway Group. Since its privatization the bank has been successfully turned around and remains a robust and strong performer in all major segments of its operations. In 2002 it merged its operations in the UK with those belonging to National Bank of Pakistan to form United National Bank Limited, of which it owns 55%, with National Bank of Pakistan owning the remainder. The Bank is making every effort to meet the up-coming challenges through strategic planning and making the best use of the resources at its command. A professional team was appointed in mid 1997 to restructure the bank and to commence rightsizing. The management is also in the process of rationalizing the branch network and identifying and recovering its doubtful and classified portfolio. It has planned to institute major improvements in customer services and internal systems to improve efficiency. It also intends to launch innovative products. The bank is increasing resource mobilization through regular deposit campaigns and accelerating the process of recovery of outstanding advances and non-performing assets.

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1.2.1. VISION STATEMENT


To be a world class bank dedicated to excellence, and to surpass the highest expectations of our customers and all other stakeholders.

1.2.2. MISSION STATEMENT


Set the highest industry standard for quality across all areas of operation, on a sustained basis; Optimize people, processes and technology to deliver the best possible financial solutions to our customers; Become the most sought after investment; Be recognized as the employer of choice.

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1.3. BUSINESS VOLUME


1.3.1. REVENUE:
Particulars 2007 2006 2005 2004 2003

-----------------------------(Rupees in 000)-----------------------------Mark-up / return / interest earned Fee, commission and brokerage income Dividend income / gain on sale of investments Income from dealing in foreign currencies Gain on sale of securities Other income Total Revenue 41,045,543 5,165,066 548,782 827,328 849,367 1,617,563 50,053,649 32,991,603 4,435,465 837,338 659,726 280,864 738,330 39,943,326 20,158,860 2,543,739 583,982 675,109 382,419 1,210,202 25,554,311 9,233,881 1,654,475 1,102,510 668,085 947,945 1,072,756 14,679,652 8,944,260 1,442,642 2,057,314 436,656 1,976,999 607,500 15,465,371

1.3.2. DEPOSITS:
2007 2006 2005 2004 2003

-----------------------------(Rupees in 000)-----------------------------Customers Fixed deposits Saving deposits Sundry deposits Margin deposits Current accounts remunerative Current accounts nonremunerative Total Customers Deposits Financial Institutions Remunerative deposits Non-remunerative deposits Total Financial Institutions Deposits Total Deposits 143,603 24,466 168,069 401,637,816 35,539 25,068 60,607 335,077,873 147,814 147,814 289,226,299 116,424 116,424 230,256,627 8,881 985,938 994,819 185,071,502 127,317,589 153,001,867 4,645,873 2,746,824 5,641,419 108,116,175 401,469,747 114,927,897 121,878,162 4,942,064 2,698,999 1,908,055 88,662,089 335,017,266 79,841,687 122,662,484 4,148,275 2,214,877 1,886,548 78,324,614 289,078,485 42,971,478 118,243,902 3,161,327 1,218,963 393,760 64,150,773 230,140,203 35,945,097 102,372,765 2,728,107 1,212,276 565,433 41,253,005 184,076,683

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1.3.3. ADVANCES:
2007 2006 2005 2004 2003

-----------------------------(Rupees in 000)-----------------------------Performing Non-performing Total Advances 293,373,007 5,981,729 299,354,736 243,237,819 4,072,074 247,309,893 201,152,095 3,658,375 204,810,470 139,669,440 4,481,615 144,151,055 92,513,736 3,611,442 96,125,178

1.3.4. COMPUTATIONS OF ADVANCES:


Performing 2007 Loans, cash credits, running finance etc. In Pakistan Outside Pakistan Bills discounted and purchased (excluding government treasury bills) Payable in Pakistan Payable outside Pakistan 222,660,938 60,310,465 282,971,403 200,080,279 33,369,281 233,449,560 17,759,670 3,011,935 20,771,605 9,273,198 4,771,131 14,044,329 2006 Non-performing 2007 2006

-----------------------------(Rupees in 000)------------------------------

5,301,652 3,820,841 9,122,493 292,093,896

5,661,421 4,080,845 9,742,266 243,191,826 1,462,242 244,654,068

745,115 495,691 1,240,806 22,012,411 22,012,411

876,300 1,334,780 2,211,080 16,255,409 16,255,409

Financing in respect of continuous funding system (CFS) Advances - gross Provision against advances - Specific - General

2,631,139 294,725,035

(1,352,028) (1,352,028)

(1,416,249) (1,416,249) 243,237,819

(16,030,682) (16,030,682) 5,981,729

(12,183,335) (12,183,335) 4,072,074

Advances Net Provision

293,373,007

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1.4. NUMBER OF EMPLOYEES


1.4.1. BOARD OF DIRECTORS: Name His Highness Shaikh Nahayan Mabarak Al Nahayan Sir Mohammed Anwar Pervez, OBE, HPK Mr. Atif R. Bokhari Mr. Omar Ziad Jaafar Al Askari Mr. Zameer Mohammed Choudrey Dr. Ashfaque Hasan Khan Mr. Muhammad Sami Saeed Mr. Aqeel Ahmed Nasir Mr. Aameer Karachiwalla Chairman Deputy Chairman President & CEO Director Director Director Director Company Secretary & Chief Legal SEVP/Group Chief Financial Officer Designation

As at December 31, 2006, the organization had a total staff strength of 15,369 (FY05: 13,479) employees, of which 9,738 were the banks own staff, while the remaining were out sourced resources. Turnover for the year was about 10%, while approximately 1,300 new employees had been hired during the year. 1.4.2. STAFF STRENGTH: STAFF STRENGTH Permanent Contractual basis Bank's own staff strength at the end of the year Outsourced Total number of employees at the end of the year 2007 9,373 9 9,382 5,522 2006 9,734 4 9,738 5,631

14,904 15,369

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1.4.3. KEY MANAGEMENT: Name M. A. Mannan Risha Mohyeddin Baqar Muzaffar Nauman Hussain Ayaz H. Shamsi Aameer Karachiwalla Muhammad Ejazuddin Ali Sameer Mohammad Asghar Saeed Iqbal Ahmed Hafeez Hasan Raza Najeeb Agrawalla Wajahat Husain Designation Group Executive Consumer & Commercial Bank Group Executive Treasury & Capital Markets Group Head Information Technology Group Head Operations Group Executive Human Resources Group CFO Group Audit & Inspection Head Group Executive Risk & Credit Policy Group Commercial Bank Head Group Head Investment Bank Group Head Business Development & Strategic Initiatives Group Head Corporate Banking and Cash Management Group Head Marketing Retail Bank Head of Middle East

1.4.4. MANAGEMENT HIERARCHY: President Board of directors Members executive board Regional chiefs Zonal chiefs Branch managers

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1.5. PRODUCT LINES


1.5.1. DEPOSIT PRODUCTS: UBL has taken progressive steps and has introduced innovative products and services to provide you a variety of banking and financing services including Current and BBA Accounts. UBL UNIFLEX ACCOUNT: UBL has introduced a new checking account ideal for small investors, traders, businessmen and customers from middle income group. They can now afford an amazing rate of return plus value added benefits only available from the UBL UniFlex PLS Savings Account. UBL UNISAVER ACCOUNT: UBL UniSaver Account is an innovative way of serving your banking needs. Be it trade, business or personal finance, the UBL UniSaver allows you maximum flexibility, yet gives you optimum returns. Innovative and flexible checking account. Attractive rates of return. Profit is calculated on monthly average balance. Profit payment is on six monthly basis. Higher returns on higher balances. UBL PROFIT COD: Customer can earn a higher income on their surplus cash by investing it in UBL Profit Certificate of Deposit. UBL Profit helps them earn extra income with their hard earned money, while providing absolute trust and security. Two Types of Profit Payment Options:

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Profit Payment at Maturity. Monthly Profit Payment. PLS REGULAR TERM DEPOSITS RECEIPTS: If customer wish to make a secured long term investment, UBLs Term Deposit Receipt is the smart choice. UBL Term Deposit Receipts provides an attractive rate of return. The profit is credited to the customer account every six months. Customer has the flexibility to choose from a wide range of tenors. Customer can avail the Rollover or Renewed option at any time before encashment. Customer can get TDR en-cashed at any time before maturity period. FOREIGN CURRENCY SAVINGS & FOREIGN CURRENCY TERM DEPOSITS RECEIPTS: United Bank offers the best rates of return on Foreign Currency Deposits in the market. Accounts can be opened in US Dollar, Pound Sterling, Euro, and Japanese Yen at designated branches. All Pakistani nationals residing in Pakistan and outside Pakistan can also open Foreign Currency Accounts. Resident Firms and companies including Investment Banks can open Accounts. Term deposits in foreign currency are offered for the following periods of maturity with variable rates of return: Three Months. Six Months. Twelve Months. There are no cash handling (Cash Deposit & Cash Withdrawals) charges from the customers. Zakat is exempted on these TDRs. Flexible options of rollover or renew the TDR at the time of encashment. Special Rates available from for USD 500,000 and above or equivalent.

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UBL E-TRANSACTION ACCOUNT: When it comes to electronic financial services www.ubl.com.pk is Pakistans favorite Internet destination and why not! With years of experience in innovation United Bank offers a wide spectrum of world-class of electronic services and banking products for trailblazers like you. Save up to Rs. 2400/- with your eTransaction Package which includes: A branch Account with all features of a current account (including checkbook, Visa ATM/Debit Card, etc.). Free Premium Internet Banking Access -- Save up to Rs. 1200/year in subscription fees.

1.5.2. LOANS & CARDS


UBL MONEY: UBL Money, the Personal Installment Loan from UBL provides you with power, control, convenience and the flexibility to manage your financial requirements and realize your dreams. UBL Money is a fixed installment loan. It gives you access to funds starting from Rs. 50,000/- up to a maximum of Rs. 500,000/- without any collateral. UBL Money provides you the flexibility to manage your monthly installments according to your income stream. You can select any tenor from 1 to 5 years in a multiple of 12 months. UBL BUSINESSLINE: UBL Businessline is a running Finance facility that not only provides funds for growth but also enables you to capitalize on profitable opportunities. It is a Credit Line/ OD Facility against Residential Property. It is an evergreen credit line that the customer can use for his/her business expansion. ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 23

UBL CASHLINE: UBL Cashline is a flexible loan that provides you cash up to Rs.500, 000 without any security requirements. It empowers you to take control of your finances. UBL Cashline is aimed to make your life easier. Whether you are a salaried individual or a businessman. Cashline offers you: You can avail this facility if you are: A salaried person of 21 to 60 years, and your monthly net salary is Rs. 15,000 or more; OR A self employed business person/professional between the ages of 21 to 65 years, and your monthly net take home income is Rs. 35,000. UBL DRIVE: UBL Drive allows you to drive away in your own car by making a down payment of just 15% and to top that with low monthly installments. With UBL Drive you can buy your favorite used car (up to 5 years old) at the most affordable rates. UBL Drive is not just a car loan; its a financing facility that gives you Cash on your car, you can get up to 75% of your car value. UBL ADDRESS: UBL Address empowers you to become the proud owner of a home by offering a variety of product and pricing options that are flexible yet affordable. So choose the best product option and pricing to suit your needs. All product options are amortized and range over a tenor of 3 - 20 years. Eligibility Criteria: Minimum monthly income: Rs.15, 000. Age: 23 to 65 years. Resident Pakistani. ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 24

Self-employed businessman (SEB)/professional (SEP) or salaried individual. Minimum loan size: Rs. 500,000. Markup Rates: Segments Salaried SEB/SEP UBL PAYPLUS: If you are a permanent employee of a company (Government, Semi-Government, MNC or Local Corporate Entity/Private/Public Limited), which disburses salary through UBL, then UBL PayPlus (loan against salary) is the right product for you. Through UBL PayPlus, you can now easily avail a loan based on your salary level. Eligibility Criteria: Must be Permanent Employee of company. Maximum Loan Amount of up to 15 gross salaries or PKR 500,000.00 (which ever is less). Installment amount must not exceed 33% of Net Take Home Salary (NTHS). Loan amount not to exceed 90% of already accrued End Service Benefits (ESB). Repayment through 12, 24, 36, 48 or 60 monthly installments. Maximum age should be 55 years on the date of disbursement. UBL CRDIT CARD: UBL Credit Card provides the following facilities: To share the value, excitement and benefits of UBL Credit Card with loved ones, UBL Credit Card offers up to 4 free supplementary cards. Customers can now withdraw cash through their UBL Credit Cards instant cash advance facility from any designated UBL Card Payment Branches nationwide ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 25 Pricing KIBOR + 3.5% = Applicable Markup Rate KIBOR + 4.5% = Applicable Markup Rate

and more than 780,000 ATMs and financial institutions worldwide displaying VISA/PLUS logo. Each time UBL Card members use their UBL Credit Card to purchase airline, train or bus tickets, they are automatically covered against any sort of accident that might befall them while traveling. The coverage amounts are: 1. 2. Classic Card: Up to Rs. 3.5 Million Gold Card: Up to Rs. 7 Million

1.5.3. AGRICULTURAL PRODUCTS

1.5.3.1.1. FARM LOANS PRODUCTION LOAN: Financing is available for Major and Minor crops across Pakistan. Main purpose of financing is to facilitate farmers to purchase Agri Inputs such as Seeds, Fertilizers, Pesticides, Sprayers, hired labor etc. NIACF (REVOLVING CREDIT SCHEME): Loan Tenure 3 years. Documentation once for 3 years. Cleanup once a year. Option for the farmer to use limit as per requirement. Markup is charged on amount used or withdrawn. Minimum Amount PKR 30,000. Maximum Amount as per requirement of the farmer.

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NIADF (DEMAND FINANCE PRODUCTION): Loan Tenure 3 months to 1 year. 18 months for Sugar cane only. Lump sum disbursement of the limit for a specified period. Repayment of loan in bullet payment on maturity (Principal and markup). Minimum Amount PKR 30,000. DEVELOPMENT LOAN: LAND DEVELOPMENT, EQUIPMENTS AND MACHINERY: Financing for Land Improvement, Water course improvement, Tube wells, Lift pumps, Deep turbine pumps, Cotton pickers, Godown, Cold Storage, Harvester, Thresher, etc TRACTOR & VEHICLE FINANCE: To purchase Tractors, Delivery Vans, Mini Trucks, Motor Cycle and other vehicles used for marketing Agri Products. Loan Tenure: 1 to 3 years for Motor Cycle, 1 to 7 years for Tractor, and 1 to 5 years for other 4 wheel vehicles. Other features are: 1.5.3.1.2. NON FARM LOANS LIVESTOCK FINANCING: Dairy Farming, Meat Farming, Fattening of Animals, Rearing of Animals, Construction of Sheds, Milk storage tanks, acquire and establish modern and efficient livestock facilities. POULTRY FINANCING: Poultry Farm structure and equipments, Hatchery farm structure and equipments, Feed Mills, Purchase of Chicks, Feed, Medicines, Storage tanks, Cold storage, Construction of shed, etc.

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Loan Tenure 1 to 5 years. Monthly / Quarterly repayment mode for all loans. Minimum Amount PKR 50,000. Maximum Amount as per requirement. FISHERIES FINANCING: Financing available on Fish seed, Fish feed, Manuring, Construction of pond, Curing and Dying by fishermen, etc.

1.5.4. SMALL BUSINESS


SMALL BUSINESS SCHEME: Under the Small Business Scheme, UBL is providing loans on easy terms to those who wish to set up their own small-scale business. This scheme is aimed at spreading prosperity in the country by reducing unemployment. As more and more people start their own industrial units, the country will move steadily towards economic self-reliance.

1.5.5. NRP SERVICES


UBL has taken progressive steps and has introduced innovative products and services to provide customers a variety of banking and financing services. UBL CLICK N REMIT: United Bank Ltd. is pleased to offer you access to a Reliable, Fast, Secure, Convenient and in-expensive way of remitting money to anyone in Pakistan. The entire transaction is completed online and with just a few clicks of a mouse, your money is on its way to the recipient of your choice. There is no need to visit a bank to use this service. Remitting money is just a click away through UBL Click N Remit.

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TEZRAFTAAR: Free Doorstep Remittances With-in the country or from abroad, UBL offers the most efficient and price competitive service. With their large network of branches, they are poised to offer customer service almost at customer door step. UBL's new remittance service, TezRaftaar offers all overseas Pakistanis the fastest and the most convenient delivery of their money to their beneficiaries in Pakistan. Best of all, TezRaftaar is completely cost free and is available at all UBL branches along the Bank's Network in the Middle East, UK and US. UBL CLICK N BANK: Click N Bank eNRP Account - A simple & convenient way to open, fund and operate account in Pakistan. Its completely online. Some features of this service are: Complete online registration. PKR Accounts operable nationwide. Primary and supplementary ATM cards. Check book (Order online). UBL net banking. UBL ORION: Orion is the First Complete Mobile Payments Solution ever to be launched in the country. The UBL Orion provides the following services: Buy prepaid cards. Share & send money. Send flower & cakes. View current bills. Pay bills etc.

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NRP DIRECT: United Bank brings to you a simple & convenient way to open, fund & operate a bank account in Pakistan. NRP Direct is the first & only deposit account ever to be launched for Non-resident Pakistanis. Now feel at home with your NRP Direct account!

1.5.6. OTHER SERVICES


UBL E-STATEMENT: UBL has launched the UBL e-statement facility which makes it easier for customers to get their statement of accounts and automated transactional debit/ credit alerts right into their inbox. It is available for all Rupee and Foreign Currency Account holders. UBL estatement facility is: Absolutely free of cost. Accessible when you need it. Security. Automated transactional debit/ credit alerts. Easy to read format. UBL WALLET: UBL offers ATM and Debit Card facility to all account holders at all UBL branches anywhere in Pakistan, regardless of whether their branch is online or offline. UBL Wallet VISA ATM & Debit Card has the entire convenience and security account holders desire and the quality they deserve. This Wallet holds all the cash in customers bank account. UBL Wallet VISA also gives the facility of having up to 9 supplementary cards issued against one primary card. All supplementary cardholders will be able to conduct ATM/Debit transactions within the limits of the primary card account. UBL already has its own network of 336 ATMs in 83 cities, which continues to expand by the day. Moreover, UBL Wallet is now part of the 1 Link and VISA networks. These ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 30

allow account holders to use their UBL Wallet VISA across Pakistan at more than 925 ATMs displaying the 1 Link logos and at more than 1 Million ATMs in 150 countries. It is also acceptable on the MNET network of ATMs in Pakistan. UBL Wallet VISA Card will also be acceptable on all local VISA certified machines displaying the VISA Plus sign. Annual Fee (Rs.) Daily Limits (Rs.) Funds ATM Withdrawal Debit Card Transfer (From UBL to UBL) Gold 500 300 250 150 40,000 20,000 100,000 50,000 250 230,000 Funds Transfer (From UBL to other banks) 40,000 250,000

Card Type Primary Supplementary

Silver

UBL HAMRAH: UBL has always been at the forefront in identifying and meeting the financial needs of its valued customers. UBL was the pioneer in introducing Rupee Travellers Cheque facility in Pakistan, as early as 1971. In continuation of the same tradition, UBL in the shape of "Hamrah" Rupee Travellers Cheque enhances this facility for the convenience of its valued customers by offering denominations up to Rs. 10,000. UBL WIZ: UBL Wiz is Pakistans first ever Prepaid VISA Debit Card that provides the convenience, security and benefits of an ATM and Debit Card, locally and internationally. More than just an ATM card, you can use your UBL Wiz everywhere VISA cards are accepted. Whether you are using it online, paying for petrol, shopping or dining, you are accessing money directly from your prepaid card, without having to visit the bank. 31

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

UBL NETBANKING: UBL net banking is an Internet Banking portal offering a simple, convenient and secure method of accessing bank accounts on the Internet. Using UBL net banking, the customers have access to their bank accounts 24 hours a day, 7 days a week and can keep a close eye on their account balances, print account statements, pay bills, transfer funds, track purchases and schedule their recurring payments at the touch of a button and much more. Important features & benefits of this service are: Real-time account balance & summary. Manage multiple accounts. Receive customized alerts. Transfer funds between customers accounts. Pay bills online (Only PTCL & Cellular Services Bills). Send money to anyone using the new PC-to-Person facility. Net banking Phone Banking: 0800-11-825 (toll-free). For people in Azad Jammu Kashmir: (021) 2446949. UBL ONLINE: This service is available only for corporate customers of UBL. This service contains the following features: 24 hours banking. Account statement. Activity log. Electronic data interchange. Search facility. Graphical analysis. Access visa wireless devices. Alerts service. ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 32

2. ORGANIZATIONAL STRUCTURE
Head Office

Provisional Head Quarters

Zonal Office

Hub Branches

Branches
2.1. MAIN OFFICES: 2.1.1. HEAD OFFICE: The Bank's registered office and principal office is situated at State Life Building No. 1, I. I. Chundrigar Road, Karachi.

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2.1.2. BRANCHES: Domestic Branches Overseas Branches 2.1.3. DOMESTIC NETWORK: (IN 2007) Domestic Network Azad Kashmir Baluchistan N.W.F.P Punjab Sindh Total Branches 71 41 163 584 220 1079 1079 17

2.1.4. PROVISIONAL HEADQUARTERS:

Province Balucihstan N.W.F.P Punjab Sindh

Region(City) Quetta Peshawar Lahore Karachi

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2.1.5. BRANCH HIERARCHY

Central Office Karachi


Controlled by President

Regional Office (South)

Regional Office (North)

Sindh Branches

Baluchistan Branches

Northern Area Branches

Punjab Branches

Azad Kashmir Branches

Islamabad Branches

N.W.F.P Branches

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2.1.6. OVERSEAS NETWORK:

HUB Name

Branches

United Arab Emirates Bahrain Yemen Qatar United States of America Export Processing Zone, Karachi Total Branches

9 3 2 1 1 1 17

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2.2. DEPARTMENTS OF THE UBL


CORPORATE BANKING & CASH MANAGEMENT GROUP: (CBG) The Corporate Banking Group has endeavored to be the market leader in their area and builds market share through offering superior service, competitive pricing, and a wide product range to valued corporate clients. The group caters to the needs of multinational companies and medium to large corporate clients, which include private and public sector entities. This group will continue to remain a major contributor to UBLs earnings by taking advantage of tremendous growth potential of corporate accounts. The group requires talented, qualified, and proactive human resources. Front line relationship managers require a complete grasp of UBLs credit policies and procedures as they directly affect existing and future credit portfolio handling. The Corporate Banking Group focuses on attracting and servicing large portfolio customers. Our forte is providing exemplary customer service using the "Single Window" concept and product superiority. The Relationship Management team manned by highly qualified individuals from the industry has steadily expanded UBL customer base and continues to enhance their cordial relations with our esteemed clients. Despite the sluggish economic growth in recent years, UBL outperformed all the other local banks in the corporate banking sector primarily due to CBG's emphasis on establishing and enhancing relationships with foreign/local blue chip and middle market customers thereby capturing significant market share. UBL's appetite for large exposures coupled with dedicated Structured Finance Unit, and an innovative team of professionals having extensive experience of Corporate Banking gives it the right platform to succeed in todays competitive and a demanding environment. The success of CBG has been established from the fact that UBL received the 'No.1 ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 37

Euromoney 2000' Best Local Bank award and recognized it to have out performed all other banks. In year 2000, UBL was also voted as the best Corporate Bank by the customers of a major foreign bank in a survey. Aggressive marketing combined with professionalism has led to an increase in UBL's market share with top corporate customers and in some cases replacing Foreign Banks. Presently, its portfolio includes the quality names in the country, which were initially confined to foreign banks only. CBG Offers full spectrum of services:

COMMERCIAL BANKING/SME (CB): The Commercial Banking Group caters to the needs of commercial entities and small and medium enterprises, as defined in the State Bank of Pakistans Prudential Guidelines. This group deals with commercial clients of small to medium size in both private and public sectors. dedicated staff. This group aims to fulfill necessary business needs of its customers, which are more numerous than corporate clients. However, their individual requirements are relatively much smaller than those demanded by corporate clients. In view of the peculiar nature of this business segment, which involves a higher turnover, a much wider network is needed. It operates in almost every city of the country with qualified and

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CREDIT ADMINISTRATION DEPARTMENT: (CAD) Composition of Credit Functions: Credit & Marketing. Credit Administration. CREDIT & MARKETING: Market new relationships to increase banks asset based portfolio. Financial Analysis, Evaluation and Processing of credit Line Proposals. Monitoring of Credit portfolio through Client visits, Factory visits, Inspections, and prepare Call Reports, Visit Reports in this regard. Responsible for the compliance of all Pre-approval instructions/regulations issued from time to time by Head Office Credit Policy, SBP and other regulatory bodies including obtaining CIB, Borrower Basic Fact Sheet, Compliance of ratios as required under Prudential Regulations, Per party limit etc. CREDIT ADMINISTRATION: Disbursement of Credit Facilities including Preparation of Security/Charge documents, perfection of collateral, Ensure compliance of SBP regulations/Credit Policy, HO Circulars & Issuance of Disbursement Authorization Certificate (DAC). Regular monitoring of Collateral & Asset based portfolio through Weekly Roosters/Diaries, CARS Reports, Credit Maintenance, Identify exceptions and follow for the rectification of the same. MIS related to Credit & Credit Admin. Department. Monitoring of Mark up accruals, recoveries thereof. Liaison with various outside agencies (RCAD Head). Miscellaneous Jobs.

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CONSUMER BANKING GROUP: The Consumer Banking Group provides financial facilities to individuals through a diverse product line. Its success depends on the design of versatile and effective products and comprehensive communication and marketing strategies. Agility in monitoring the portfolio and following up with its customer base, which is wholly comprised of individuals, is also an essential requirement. This group operates in nearly all major cities of Pakistan, and also in some international locations through UBLs network of branches and trained sales force. This group offers products such as home loans, personal loans, auto loans, business loans, and credit card facilities, etc. Consumer banking requires regular training of its workforce and the need for imparting basic product knowledge to sales staff is highly pronounced in this group as they are in direct contact with the customer base. This group conducts business based on structured products that fit into the needs of its target market. Product Process Manuals are

developed for these products and are provided with the Credit Policy and Procedure guidelines. Risk management for the consumer has to play a dominant role in formulation and revision of credit policies, monitoring of portfolio quality and devising effective strategies aimed at minimizing the inherent risks. INVESTMENT BANKING GROUP (IBG): The Investment Banking Group specializes in providing innovative and unique advice to its clients, assisting them in meeting challenges in an ever-changing market. The group is equipped with adequately experienced professionals. This group will either lead or participate in major Term Finance Certificates in the market. It offers a full spectrum of services, including Term Finance Certificates, Syndicated Loans, Structured Finance, Leveraged Buyouts, Project Finance, Quasi40

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Equity Products, Independent Advice, Equity Placements, IPOs, Equity Underwriting, Mergers, Corporate Restructuring, Acquisitions and other products. Although the Corporate Banking Group supports the product line of the Investment Banking Group, the special nature of these products demands a more active involvement of risk management. Transactions such as Project Finance offer limited recourse and such transactions need to be structured in a way as to mitigate inherent risks. Risk management is to be proactively involved in Investment Banking Group transactions, right from the time of initiation until the time of execution. TREASURY & CAPITAL MARKETS GROUP: The major roles of the Treasury and Capital Markets Group include: Managing the banks liquidity and balance sheet requirements as per UBL and State Bank of Pakistan guidelines, Dealing in foreign currencies on behalf of its customers, and Providing treasury and foreign exchange related financial services to its clients. This Group consists of highly qualified and experienced human resources who are actively involved in dealing with other banks and financial institutions to execute transactions in various currencies. In performing these tasks, it undertakes credit risk, which is identified, monitored, and managed by the middle office. INTERNATIONAL DIVISION: The International Division manages overseas operations including credits handled by the network of overseas branches. With careful planning and detailed surveys of the market, the International Division will explore better quality businesses and products and manage them efficiently to enhance UBLs profitability and turn the overseas branch network into a highly profitable unit of the Bank.

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The Global Credit Risk Management Division monitors and manages the risk, credit process and procedures at overseas branches. FINANCIAL INSTITUTIONS DIVISION (FI): This is an independent division operating as a profit center and is responsible for catering to all financial business requirements of banking and non-banking financial institutions. This division caters to the financing needs of all local banks, foreign banks, and other financial institutions including leasing companies, investment banks, DFIs, insurance companies, mutual funds, etc. Like the Corporate Banking Group, the Financial Institutions Division also operates with a structure of relationship managers, providing comprehensive solutions to its clients. In order to strengthen the divisions credit analytic capabilities, the Financial Institutions Risk Management Unit oversees the risk related to financial institution related transactions. The Financial Institutions Risk Management Unit is part of the Risk Group. ISLAMIC BANKING GROUP (IB): The roles and functions of the Islamic Banking Group shall be: To manage and be responsible for the operations of Islamic Banking Business (IBB), including policy and procedural matters; To liaise with other departments in the bank and the Shariah Advisor to ensure smooth operations of IBB(s); To ensure that all funds pooled into the Islamic Banking Fund (IBF) are channeled into Shariah-compliant financing and investment activities; To arrange training of staff of Islamic banking; To arrange for compilation and submission of such returns, as may be required to be submitted to the State Bank of Pakistan from time to time; To ensure that all directives and guidelines, particularly those applicable to Islamic banking, issued by the State Bank of Pakistan are strictly complied with; ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 42

To maintain the Statutory Cash Reserve and Liquidity Requirements with the State Bank as prescribed from time to time by the State Bank of Pakistan; and To assume other roles and responsibilities as determined by the bank or the State Bank of Pakistan from time to time. HUMAN RESOURCE DEPARTMENT: (HR) UBL is the place for you if you are willing to materialize all your deliverables in alignment with the organizations holistic vision to grow and excel. Committed and competent work force is the primary asset in providing value addition to stakeholders of a business organization. HR Division is responsible for attracting, selecting and recruiting the right people from the market. UBL is proud of its highly professional, transparent and objective approach in its recruitment and selection processes. After applying the eligibility criteria, which depends on the Job grade, a series of selection procedures are applied before hiring employees. Normally the candidates go through the process of test, group discussion and interview. The Interview is conducted by a team of internal as well as external professionals of the related area. Sophisticated recruitment and selection tools like oracle based data management system; online application and behavioral based interviewing techniques have been introduced. FINANCE DIVISION: Responsible for book-keeping and accounts, this Division at the head office, prepares all financial returns. The Division is actively involved in preparing market comparative analysis, consolidation of Bank's budgets, its monitoring and constant review of various financial indicators. Finance Division works as the back bone for all Bank's operations. The Division, which reports directly to the President and Chief Executive of the Bank, has been instrumental in preparation of Bank's business plans and future strategies.

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INFORMATION TECHNOLOGY DEPARTMENT: Operations of UBL have been significantly streamlined post-privatization, however further plans for improving operational efficiency are under-way. Currently the bank is using internally developed distributed database software called UNIBANK. This software is utilizing Oracle Financials at the back end. As all daily banking transactions are stored at the respective branches, consolidation at the head office takes place at day end. The bank has specialized software to support its various functions and the focus for some time has now been on enterprise application integration (middleware). The management launched a transformation program in 2006 which aims to accomplish bank-wide business and technology reengineering. The business aspect of this program is expected to improve performance through implementation of uniform business processes and training is ongoing in this respect. AUDIT DEPARTMENT: The Board Audit Committee (BAC) comprising three members meets every quarter and is responsible, among other things, for ensuring the effectiveness of the internal audit function and systems for monitoring compliance. Internal audit procedures include routine branch and business function audit as well as special surprise audits. There is also a dedicated compliance division mainly to follow up on the recommendations advised by the audit team. The deliberations of BAC however reflect concern regarding the overall control environment. The audit and inspection department has been highlighting issues with regard to operational control weaknesses at the branch level. While most of these are routine in nature, further emphasis on HR training may help in improving the control environment. Some of the issues raised by the external auditors pertain to the capacity of the existing software applications, which the management expects to address over the near term. 44

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3. STRUCTURE AND FUNCTIONS OF THE ACCOUNTS/FINANCE/AUDIT DEPARTMENT


3.1. ORGANIZATIONAL CHART: (FINANCE DEPARTMENT)
CFO/Head Global Shared Services

TBA 1 Deputy CFO

Head-Investor Relations

Head of FinanceMiddle East

Financial Controller-Genesis & Automation

Financial Controller-Advances & Overseas

TBA-4 Assistant Manager-Genesis Project

ManagerTaxation

Manager-Overseas Accounts

Manager-Write off Cell

Asst. Manager Overseas Accounts

Division Head / Financial Controller


Manager Finance Central Accounts & Payments

Financial Controller Statutory

TBA 2 Financial Controller


Senior Manger Finance Consumer

Manager Finance Employee Funds

Manager Central Payments

Asst. Manager Statutory Accounts Asst. Manager OFAMS

Manager Consumer Accounts


TBA 3 Manager Consolidated

Senior Manager Finance SBP Reporting

Manager MISAgri & Micro Credit


Manager-SBP Returns/Unclaimed Deposits

Asst. Manager Islamic Banking Accounts

Manager ALCO

Manager MIS & Budgeting

Manager-HO Budgeting, BOD Reports & Bench Manager CAPEX

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3.2. MY LEARNING AS AN INTERNEE:


I worked as an internee in the United Bank Limited Regional Credit Administration Department-Commercial Banking (RCAD-CB), Corporate Centre Branch, M.M.Alam Road, Gulberg II, Lahore.

3.3. FINANCE & ACCOUNTING OPERATIONS:


Every branch has its own Accounts Department which is responsible to record and process each & every business transaction taking place during the working day. This Department consolidates the position of the branch at the day end in the shape of Assets, Liabilities, Revenues and Expenses. This position is daily sent to the Finance Department of Head Office which consolidates all these Statement of Affairs bank wise. This position is sent to the State Bank of Pakistan (SBP) and SBP publishes on weekly basis overall consolidated Statement of banks in business news papers like Business Recorder (BR). The main function of Finance Department of Head Office is to maintain smooth liquidity of bank by arranging funds from SBP and other banks if required. This Department is also responsible for making physical investment on behalf of bank into government securities and other corporate securities.

3.4. THE ROLE OF FINANCIAL MANAGER:


FINANCIAL MANAGER: The person which manages the financial resources of a business is called financial manager. EXPLANATION: The emergence of financial management as a distinct management discipline is relatively recent and linked to changes in business and socio-economic scenario, brought about by ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 46

the advancements in computer and information technology, emergence of multi-product and multi-division corporations with complex and dynamic organizational set-ups, increasing global competition etc. Finance, no doubt, is the sine qua non of business operations, and traditionally the role of financial manager (known as an accountant or accounts manager) was limited to managing business finance or counting the beans. However, the emerging discipline of financial management varies considerably from its traditional functions and extends to more inclusive functions of growing the beans. Almost every firm, government agency, and other type of organization has one or more financial managers who oversee the preparation of financial reports, direct investment activities, and implement cash management strategies. Because computers are increasingly used to record and organize data, many financial managers are spending more time developing strategies and implementing the long-term goals of their organization. ROLE & DUTIES OF FINANCIAL MANAGER: The duties of financial managers vary with their specific titles, which include controller, treasurer or finance officer, credit manager, cash manager, and risk and insurance manager. Controllers direct the preparation of financial reports that summarize and forecast the organizations financial position, such as income statements, balance sheets, and analyses of future earnings or expenses. Controllers also are in charge of preparing special reports required by regulatory authorities. Often, controllers oversee the accounting, audit, and budget departments. Treasurers and finance officers direct the organizations financial goals, objectives, and budgets. They oversee the investment of funds, manage associated risks, supervise cash management activities, execute capitalraising strategies to support a firms expansion, and deal with mergers and acquisitions. Credit managers oversee the firms issuance of credit, establishing credit-rating criteria, determining credit ceilings, and monitoring the collections of past-due accounts. Managers specializing in international finance develop financial and accounting systems 47

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for the banking transactions of multinational organizations. Cash Managers: monitor and control the flow of cash receipts and disbursements to meet the business and investment needs of the firm. For example, cash flow projections are needed to determine whether loans must be obtained to meet cash requirements or whether surplus cash should be invested in interest-bearing instruments. Risk and insurance managers oversee programs to minimize risks and losses that might arise from financial transactions and business operations undertaken by the institution. They also manage the organizations insurance budget. Financial Institutions: such as commercial banks, savings and loan associations, credit unions, and mortgage and finance companies, employ additional financial managers who oversee various functions, such as lending, trusts, mortgages, and investments, or programs, including sales, operations, or electronic financial services. These managers may be required to solicit business, authorize loans, and direct the investment of funds, always adhering to Federal and State laws and regulations. Branch Managers: of financial institutions administer and manage all of the functions of a branch office, which may include hiring personnel, approving loans and lines of credit, establishing a rapport with the community to attract business, and assisting customers with account problems. The trend is for branch mangers to become more oriented toward sales and marketing. It is important that they have substantial knowledge about all types of products that the bank sells. Financial managers who work for financial institutions must keep abreast of the rapidly growing array of financial services and products. 3.4.1. ACCOUNTS MANAGEMENT: Being the Manager of the branch it is the duty of the Branch Manager to properly manage the accounts that are deposited in the respective branch. Main duties of Branch Manager regarding accounts management are: To ensure that the Accounts Officer is maintaining proper books of accounts including basic accounting controls like daily verification of cash in hand, daily ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 48

entry of cash & bank vouchers, Bank Reconciliation statements, accounting of Receipts / Payments correctly. To supervise and maintain the Assets Records of branch including obsolescence / Sale through auction or otherwise, conducting physical verification of assets annually and reporting variations, if any, to HQs & BEC. To prepare the Annual Programme and Budget (APB) and Annual Report of the Branch with the help of the Accountant/Statistical Assistant and concerned unit heads, supported by the volunteers. There is system used in the UBL called UNI Bank for the accounts management. The reports generated on this system should review on daily basis by Branch Manager under his signatures and also by the Area Manager and a complete record of these reports in date order should be filed. 3.4.2. CASH MANAGEMENT: The key person in banking is the Branch Manager who is not only responsible for mobilization of deposits for the bank but also to generate foreign exchange and other business for the bank. He is also taking care that customers of bank are properly served & their problems are immediately solved. He is also responsible for cash management & credit management. In every city there is a Main Branch (Feeding Branch) of a bank (UBL) which is custodian of cash. All excess cash in the branch is deposited with this branch & whenever any branch needs cash to pay off to the depositors, the Branch Manager is required to make requisition to this Main Branch & the Main Branch provides the required cash accordingly. 3.4.3. CREDIT MANAGEMENT: As regarding credit management there is a department in the bank called Credit Administration Department (CAD). Deposits are the liabilities of bank while advances are the assets of the bank. To balance these two sides, bank attracts the current as well as ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 49

prospective customers to deposit their savings by offering high rate of interest/ profit, while in order to increase its assets, bank attracts its customers by Corporate Banking Group (CBG) & Commercial Banking Group (CB). When the credit facilities are approved then work of credit administration department starts. It performs two functions: Pre-dispersal function (before advancing facility) Post-dispersal Function (after credit facility is dispersed) It keeps three sections named as: Processing Section Documentation Section MIS (Management Information System) Section Relationship managers (RMs) bring cases from customers and present to RCAD. RMs have direct contact with customers. Case first comes to Processing Officer who checks the necessary prudential requirements if so then case is forwarded to Risk Management Department (RMD) otherwise send back to ( RM) to fulfill necessary requirements. Risk Management Department (RMD) verifies attached documents and send back documents after risk analysis and mention how much loan is to issue (under SBP limitations). Documentation Officer verifies the originality of documents attached and finally DAC (disbursement authorization certificate) is issued to customer. MIS keeps record of the customer in computer. And customer account is opened in the UNI bank (it is also software which keeps record that how much loan the customer has availed). Under mentioned process flow diagram present the right picture.

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PROCESS FLOW DIAGRAM OF LOAN DISBURSEMENT:

Customer

Relationship Manager

CA Package Preparation

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Rejected Rejected

Processing Section
If approved

Rejected

CRM
If approved

Documentation Section
If Verified

DAC Issued

Customer Receives Loan

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3.5. USE OF ELECTRONIC DATA IN DECISION MAKING:


In todays banking new devices have been introduced for efficient & courteous service to the client. Like Online Banking, Net Banking, Mobile Banking, Auto Teller Machines (ATMs) & Electronic Cashiers. In UBL most of the decisions are made after getting approval from authority using electronic data. Now a days Statements of Accounts are not dispatched to the account holders. Instead they have been given option to get their Statements printed while using Net Banking. UBL has its own network of 336 ATMs in 83 cities. Moreover customers can gave all types of instructions in respect of their transactions through E-mails, Net & Mobile Banking. So we can say that electronic data is very widely used in todays banking. In branches UBL is using their personal software called UNI Bank 2000. To maintain and exercise and better controls on operations, UNI Bank 2000 provides controls in the shape of daily override/exceptions reports to the branch manager & respective staff. The exceptions include the following: Transaction by un-issued/loose cheques. Transactions over debit limit of user. Transactions on limit expired accounts. Transactions of excess over limit in Party accounts. Back dated transaction in the accounts. Transaction in restricted accounts. Reversal entries. Change in customer name, address or other details. etc. These reports are reviewed by the Manger of the branch and also by the Area Manager which helps them in decision making. This system also provides the following Statements/Reports: ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 52

(A)NON-AUTOMATED & AUTOMATED SPOKES FROM HUBS:


DAILY: UNIDD032 Contra. UNIPD052 Hub generated customer transactions. UNIDD110 Sub ledger. Statement of condition. List of new accounts. Customer accounts/status maintenance. Unidd040 (ATM transactions). MONTHLY: Consolidated income/expenditure. Incidental charges. Customer ledger dormant/active. QUARTERLY: Unclaimed deposits. Size wise deposits. Debit to deposit accounts. Classification of deposit accounts. HALF YEARLY: Customer transactions ledger. Account amendment report Profit posting report. YEARLY: Zakat exemption report. ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 53

Zakat deduction report.

(B) AUTOMATED SPOKES ON A DAILY BASIS:


UniRemote transaction (Inward/outward). Daily override. Teller cash report. Utility scroll/vouchers. Clearing schedules. Remittances vouchers. MOBILE COMPUTING DEVICE: Mobile computing device is provided only to authorize UBL employees in order to perform business activities with special business requirements. LAPTOPS: According to ITG (Information Technology Group-UBL) Policy this type of equipment must be used for official purposes only. Laptops are provided to the persons with the designation having SVP (Senior Vice President) or higher. PDA :( PERSONAL DIGITAL ASSISTANT) The intended use for the PDA is to facilitate UBL employees for the following business objectives: 24x7 Access to UBL corporate Emails. Updated contact list. List of tasks. Access to GAL (Global Address List). Any other services that may be offered by UBL ITG to corporate users.

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CARS (CREDIT ANALYST REPORTING SYSTEM):


PURPOSE OF CARS: CARS is a system which is design to cater the following purposes: CCAMS (CAD- Credit Administration Management System) replacement Tagging process SBP reporting (Corporate / commercial CIB & Consumer CIB) Inter-departmental reports Account tagging is also a part of CARS. Parties which have availed loan facility from UBL are tagged in CARS with their specific accounts. Consumer blue forms are generated for individual and sole proprietorship accounts. Following details should be entered in the software. If single of them is missing, blue form is considered incomplete keeping insufficient data; New and old NIC Gender Customer and his/her father/husband name Date of birth Home address Business name and address Security which is to be pledged REPORT VIEWING: CARS have also option to view many reports like account tagging summary, blue form, central liability report etc. Most common report is blue form. After construction of blue form its report is viewed and prints out is taken for record.

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CREDIT RISK ENVIRONMENTS ADMINISTRATION & MANAGEMENT SYSTEM (CREAMS): UBL is from few Pakistani Banks which keeps centralized information system. CREAMS is one of them. CREAM is highly customizable and parameterizes able software. CREAM is developed with the ideology that it can operate in all parts of the world. Certainly there are different operational, monitoring and regulatory requirements depending upon the region where the bank is operating. Further more; a single bank may operate in more than one region of the world. Parameterization lets CREAM behave according to the requirement of the region. This customization is a one time initiative and once CREAM has the requisite information, it will behave according to the banks requirement. This section will explain the all CREAM setup screens one by one. It must be noted the once the Parameterization phase is completed by bank then bank must lock this section. That is only authorized person (Mostly Credit Head & MIS Officer) can enter to this section, not every one who is using CREAM application. CREAM provides end to end automation of Credit Risk Environment i.e. credit risk origination, analysis and assessment, measurement, pricing and management together with credit risk review, administration and monitoring, all this in accordance with banks credit risk policy. Thus CREAM becomes a unique product that provides complete and most flexible credit risk management solution. It fully supports the pillars of BIS/BASEL II and the Risk Environment and assesses the credit risks in trading and banking books. It is the most comprehensive risk management tool available.

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SCREENSHOT OF CREAMS:

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3.6. & 3.7. SOURCES & GENERATION OF FUNDS:


Main sources and generation of funds for the bank are as under: 1. Deposits from Customers. 2. Borrowings from Financial Institutions. 1. DEPOSITS FROM CUSTOMERS:

2007

2006

2005

2004

2003

-----------------------------(Rupees in 000)-----------------------------Customers Fixed deposits Saving deposits Sundry deposits Margin deposits Current accounts remunerative Current accounts nonremunerative Total Deposits from Customers 127,317,589 153,001,867 4,645,873 2,746,824 5,641,419 108,116,175 401,469,747 114,927,897 121,878,162 4,942,064 2,698,999 1,908,055 88,662,089 335,017,266 79,841,687 122,662,484 4,148,275 2,214,877 1,886,548 78,324,614 289,078,485 42,971,478 118,243,902 3,161,327 1,218,963 393,760 64,150,773 230,140,203 35,945,097 102,372,765 2,728,107 1,212,276 565,433 41,253,005 184,076,683

COMMENTS: Total deposits from customers have been increased 118% in 2007 as compared to 2003. This increase is due to major increase in Fixed & Saving deposits of the bank. Current accounts remunerative includes pre IPO (Initial Public Offering) / private placement receipts of Rs 4,185 million deposited with the bank on account of subscription money towards UBL's fourth issue of 10 year term finance certificates. The total issue consists of Rs 6,000 million under pre-IPO / private placement and the remaining Rs 1,500 million represents the proposed Initial Public Officer to the general public. The issue of these term finance certificates has been approved by the State Bank of Pakistan. These term finance certificates will be sub-ordinate as to the payment of principal and profit to all other indebtedness of the bank (including deposits) and are not ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 58

redeemable before maturity with approval of SBP. The rate of mark-up on these term finance certificates would be KIBOR plus 0.85% per annum for the first five years and KIBOR plus 1.35% per annum during the last five years to maturity. 2. BORROWINGS FROM FINANCIAL INSTITUTIONS:
Details of borrowings from financial institutions Secured Borrowings from the SBP under: Export refinance scheme Long-term financing under export oriented projects Locally manufactured machinery refinance scheme Borrowings from other financial institutions Repurchase agreement borrowings Unsecured Call borrowings Overdrawn nostro accounts Trading Liabilities 13,607,326 912,190 658,304 15,177,820 Total Borrowings 59,103,350 4,600,000 542,162 1,068,801 6,210,963 38,490,586 4,000,000 113,991 1,479,852 5,593,843 21,790,480 500,000 79,998 750,000 1,329,998 11,975,684 128,533 128,533 7,710,375 2007 2006 2005 2004 2003

-----------------------------(Rupees in 000)------------------------------

6,708,853 4,945,514

9,414,812 5,333,691

7,453,261 303,410

5,988,377 -

4,325,125 -

1,620 11,655,987 32,269,543 43,925,530

3,382 14,751,885 17,527,738 32,279,623

5,195 7,761,866 8,434,771 16,196,637

9,872 5,998,249 17,830 4,629,607 10,645,686

18,299 4,343,424 557,441 2,680,977 7,581,842

COMMENTS: Borrowings under Export refinance scheme the bank has entered into agreements with the State Bank of Pakistan (SBP) for extending export finance to customers. As per the terms of the agreement, the bank has granted SBP the right to recover the outstanding amount from the bank at the date of maturity of finances by directly debiting the current account maintained by the bank with SBP. These borrowings are repayable within six months up 59

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

to June 2008. Borrowings under long-term financing under export oriented projects have been made from SBP for providing financing facilities to customers for import of machinery, plant, equipment and accessories thereof (not manufactured locally) by export oriented units. According to agreements with SBP, locally manufactured machinery refinance scheme were obtained for providing finance to customers against locally manufactured machinery. The repurchase agreement borrowings are secured against market treasury bills and carry mark-up at rates ranging from 8.9% to 10.00% per annum (2006: 8.19% to 8.82% per annum). These borrowings are repayable latest by August 2008. The call borrowings carry mark-up at rates ranging from 9.3% to 12.00% per annum (2006: 8.1% to 10.1% per annum) and are repayable latest by January 2008.

3.8. ALLOCATION OF FUNDS:


Banking deposits are used and allocated in the following channels: 1. Lending to Financial Institutions. 2. Investments (In Securities). 3. Advances 1. LENDING TO FINANCIAL INSTITUTIONS:
2007 2006 2005 2004 2003

-----------------------------(Rupees in 000)-----------------------------Call money lending Repurchase agreement lendings Lendings to banks / financial institutions Total lendings to financial institutions 2,777,757 13,809,706 8,194,260 24,781,723 447,360 21,950,095 7,174,615 29,572,070 1,199,534 11,769,693 4,898,325 17,867,552 1,876,465 8,011,490 8,472,678 18,360,633 840,000 18,210,791 4,045,237 23,096,028

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Comments: Call money lendings carry mark-up at rates ranging from 9.50% to 11.00% per annum (2006: 6.70% to 10.35% per annum) and are due to mature latest by March 2008. Securities held as collateral against repurchase agreement lendings includes the Market Treasury Bills and Pakistan Investment Bonds. These carry mark-up at rates ranging from 9.20% to 9.90% per annum (2006: 7.99% to 9.40% per annum) and are due to mature latest by March 2008.Lendings to banks / financial institutions carry mark-up at rates ranging from 5.45% to 12.63% per annum (2006: 5.45% to 12.63 %per annum) and are due to mature latest by March 2011. 2. INVESTMENTS (IN SECURITIES):
2007 Investments by segments Federal Government Securities Market Treasury Bills Pakistan Investment Bonds Foreign currency bonds Government of Pakistan Islamic Bonds Government of Pakistan US Dollar / Euro Bonds Federal Investment Bonds Total Federal Government Securities Provisional Government Securities Overseas Governments Securities Foreign securities Market Treasury Bills Total Overseas Governments Securities Other Overseas Securities Foreign securities CDC SAARC Fund 2006 2005 2004 2003

-----------------------------(Rupees in 000)------------------------------

58,345,964 21,395,430 1,055,801 1,123,894 2,170,415 84,091,504 -

32,594,095 7,848,875 1,382,986 694,271 1,247,217 13,906 43,781,350 -

29,193,297 7,190,650 1,694,788 833,386 279,575 32,725 39,224,421 1,207

17,377,405 10,002,541 2,024,073 1,403,469 45,026 30,852,514 1,207

20,342,718 9,829,874 2,280,646 1,235,859 318,608 34,007,705 31,207

5,827,021 1,937,613 7,764,634

2,344,109 705,937 3,050,046

924,001 197,204 1,121,205

1,284,123 96,317 1,380,440

971,718 91,111 1,062,829

310 310

505 505

162,576 65,501 228,077

161,809 124,144 285,953

156,268 279,245 435,513

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2007 Investments by segments Fully Paid-up Ordinary Shares Listed companies Unlisted companies Total Fully Paid-up Ordinary Shares Units of Mutual Fund Term Finance Certificates, Debentures, Bonds and Participation Term Certificates Term Finance Certificates Unlisted Listed Total TFCs Bonds Debentures Participation Term Certificates Commercial Paper Total TFCs, Debentures, Bonds, PTCs Investments in subsidiaries and associates Total investments at cost Provision for diminution in value of investments Investments (net of provisions) (Deficit) / surplus on revaluation of available for sale securities Deficit on revaluation of held for trading securities Total Investments

2006

2005

2004

2003

-----------------------------(Rupees in 000)------------------------------

3,449,960 441,106 3,891,066 262,201

2,494,,698 497,288 2,991,986 1,222,338

2,128,551 432,680 2,561,231 550,000

752,602 303,392 1,055,994 350,000

303,349 1,280,028 1,583,377 350,000

6,000,195 985,184 6,985,379 5,018,444 8,300 46,920 12,059,043 8,249,575 116,318,333 (351,191) 115,967,142 (365,741) (15,755) 115,585,646

7,629,656 1,197,666 8,827,322 5,310,415 11,289 55,169 14,204,195 2,257,829 67,508,249 (400,639) 67,107,610 156,063 (3,335) 67,260,338

8,332,720 1,077,637 9,410,357 8,094,854 169,351 70,087 17,744,649 1,917,829 63,348,619 (634,003) 62,714,616 313,108 (780) 63,026,944

8,116,726 645,732 8,762,458 9,754,423 176,277 77,267 18,770,425 2,462,558* 55,159,091 (540,402) 333,995 (1,044) 54,953,728

1,353,456 5,076,908 6,430,364 9,304,056 196,667 94,687 78,490 16,104,264 2,200,476 55,775,371 (640,229) 1,381618 56,516,760

COMMENTS: Investments include certain approved / government securities which are held by the Bank to comply with the Statutory Liquidity Requirement determined on the basis of the Bank's demand and time liabilities as set out under section 29 of the Banking Companies Ordinance, 1962. ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 62

Investments include Rs. 282 million (2006: Rs. 282 million) held by the State Bank of Pakistan and National Bank of Pakistan as pledge against demand loan, TT / DD discounting facilities and foreign exchange exposure limit sanctioned to the Bank and Rs. 5 million (2006: Rs. 5 million) held by the Controller of Military Accounts (CMA) under Regimental Fund Arrangements. During the year 2007 the bank has made a fresh capital injection of CHF 10 million in United Bank AG Zurich, Switzerland and Rs 40 million in UBL Fund Managers Limited to support the business needs of the respective subsidiaries. United Bank Financial Services (Private) Limited (UBFSL) was registered as a Modaraba Company under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980. During the year, keeping in view UBFSL's dormant status, the management has surrendered UBFSL's license to act as a Modaraba Management Company. As a result, the Registrar of Modaraba Companies and Modarabas cancelled the registration of UBFSL as a Modaraba Management Company. Pursuant to the cancellation of this registration UBFSL has decided to wind up its dormant operations under the Companies Easy Exit Scheme 2007 issued by the Securities and Exchange Commission of Pakistan. Unlisted companies amount includes the Bank's subscription towards the paid-up capital of Khushhali Bank Limited amounting to Rs. 200 million (2006: Rs. 200 million). Pursuant to Section 10 of the Khushhali Bank Ordinance, 2000 strategic investors including the Bank cannot sell or transfer their investment before a period of five years that has expired on October 10, 2005. Thereafter, such sale/ transfer would be subject to the prior approval of SBP. In addition, profit of Khushhali Bank Limited cannot be distributed as dividend under clause 35(i) of the Khushhali Bank Ordinance, 2000. However, Khushhali Bank Ordinance is in process of amendment under which the restriction on the dividend payments is expected to be deleted. Moreover, the shareholders of Khushhali Bank Limited at the Extra Ordinary General Meeting held in December 2007 have passed a resolution stating that Khushhali Bank be licensed and operated under the Micro Finance Institution Ordinance, 2001 under the conversion structure stipulated by the State Bank of Pakistan which does not restrict the distribution

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63

of dividend to members. * During the year, the bank has reversed exchange translation reserve recognized on revaluation of bank's investment in overseas subsidiaries and associate in prior years amounting to Rs. 854.729 million. This reversal is in accordance with the requirements of International Accounting Standard -21, 'The effect of changes in foreign exchange rates'. There was no impact on profit or loss for the current or prior period as the revaluation was taken directly to equity in the year in which it arose. 3. ADVANCES:
Performing Loans, cash credits, running finance etc. In Pakistan Outside Pakistan Bills discounted and purchased (excluding government treasury bills) Payable in Pakistan Payable outside Pakistan 5,301,652 3,820,841 9,122,493 292,093,896 Financing in respect of continuous funding system (CFS) Advances - gross Provision against advances - Specific - General Total Provision against advances Advances Net Provision (1,352,028) (1,352,028) 293,373,007 (1,416,249) (1,416,249) 243,237,819 (1,162,987) (1,162,987) 201,152,095 (260,937) (260,937) 139,669,440 (118,977) (118,977) 92,513,736 2,631,139 294,725,035 5,661,421 4,080,845 9,742,266 243,191,826 1,462,242 244,654,068 2,686,883 7,067,883 9,754,766 201,221,080 1,094,002 202,315,082 3,871,559 7,767,493 11,639,052 138,602,836 1,327,541 139,930,377 2,247,692 4,080,137 6,327,829 92,024,631 608,082 92,632,713 222,660,938 60,310,465 282,971,403 200,080,279 33,369,281 233,449,560 169,599,106 21,867,208 191,466,314 113,521,983 13,441,801 126,963,784 74,934,525 10,762,277 85,696,802 2007 2006 2005 2004 2003

-----------------------------(Rupees in 000)------------------------------

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Non - Performing Loans, cash credits, running finance etc. In Pakistan Outside Pakistan Bills discounted and purchased (excluding government treasury bills) Non - Performing

2007

2006

2005

2004

2003

-----------------------------(Rupees in 000)------------------------------

17,759,670 3,011,935 20,771,605

9,273,198 4,771,131 14,044,329

9,831,330 5,540,208 15,371,538

11,827,862 6,152,872 17,980,734

10,354,782 6,250,428 16,605,210

2007

2006

2005

2004

2003

-----------------------------(Rupees in 000)-----------------------------Payable in Pakistan Payable outside Pakistan 745,115 495,691 1,240,806 22,012,411 Financing in respect of continuous funding system (CFS) Advances - gross Provision against advances - Specific - General Total Provision against advances Advances Net Provision (16,030,682) (16,030,682) 5,981,729 (12,183,335) (12,183,335) 4,072,074 (13,301,990) (13,301,990) 3,658,375 (15,621,718) (15,621,718) 4,481,615 (15,305,058) (15,305,058) 3,611,442 22,012,411 876,300 1,334,780 2,211,080 16,255,409 16,255,409 417,400 1,171,427 1,588,827 16,960,365 16,960,365 286,514 1,836,085 2,122,599 20,103,333 20,103,333 252,687 2,058,603 2,311,290 18,916,500 18,916,500

COMMENTS: Performing advances given under various Islamic financing modes amounting to Rs 339.477 million at December 31, 2007 entered into during the year by the Islamic Banking branches of the bank.Non-performing advances include Advances having Gross Book Value of Rs.1, 043.568 million (2006: Rs. 199.770 million) and Net Book Value of Rs. 166.605 million (2006: Rs. 174.465 million) though restructured and performing have been placed under nonperforming status as required by the revised Prudential Regulations issued by the State Bank of Pakistan, which requires monitoring for at least one year before any up gradation is considered.

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During the year the State Bank of Pakistan has introduced certain amendments in the Prudential Regulations in respect of maintenance of provisioning requirements against non-performing loans and advances vide BSD Circular No. 7 dated October 12, 2007. The amendments made in the provisioning requirements and the resulting additional provision of Rs 3.803 million is explained below: Under the revised guidelines issued by SBP, banks cannot avail the benefit of discounted forced sales value of mortgaged assets held as collateral by the banks against their nonperforming (excluding housing finance portfolio) loans for the purpose of determining the provisioning requirement to be maintained for non-performing customers with effect from December 31, 2007. Previously, the Prudential Regulations issued by SBP allowed banks to avail the benefit of discounted forced sales value of mortgaged assets held as collateral against non-performing loans of over Rs 10 million while determining the provisioning requirement there against. Had the provision against non-performing loans and advances been determined in accordance with the requirement previously laid down by SBP, the specific provision against non-performing loans and advances would have been lower and consequently profit before taxation and advances (net of provisions) as at December 31, 2007 would have been higher by approximately Rs 3,314 million. As noted above in accordance with the revised guidelines issued by SBP, banks are allowed to avail the benefit of forced sales value of mortgaged assets held as collateral against their non-performing housing finance portfolio while determining provisioning requirement against such portfolio. However, the forced sales value of the mortgaged assets would only be allowed to the extent of 50% of its value during the first two years from the date of classification of the respective non-performing customers and no benefit would be admissible in subsequent years. Previously, the Prudential Regulations allowed banks to avail the benefit of forced sales value of mortgaged assets held as collateral against their non-performing housing finance portfolio without any specified time limit. Had the provision against non-performing housing finance portfolio been determined in accordance with requirement previously laid down by SBP, the specific provision against non-performing housing finance ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 66

portfolio would have been lower and consequently profit before taxation and advances (net of provisions) as at December 31, 2007 would have been higher by approximately Rs 240.288 million. In addition, as per the revised regulations the overdue time period for classifying personal loans as 'loss' has been reduced from one year to 180 days and as a result the category of 'doubtful' has been dispensed with. Had the provision against non-performing personal loans been determined in accordance with the requirement previously laid down by SBP, the specific provision against non-performing personal loans would have been lower and consequently profit before taxation and advances (net of provision) as at December 31, 2007 would have been higher by approximately Rs 249.319 million. Although the bank had made full provision against its non-performing portfolio as per the category of the loan, however, the bank still holds enforceable collateral in the event of recovery through litigation. These securities comprise of charge against various tangible assets of the borrower including land, building, plant and machinery, stock in trade etc.

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4. CRITICAL ANALYSIS OF THE THEORETICAL CONCEPTS RELATING TO PRACTICAL EXPERIENCES:


4.1. FINANCIAL ANALYSIS:
BALANCE SHEET OF FIVE YEARS
Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Fixed assets Deferred tax asset net Taxation Recoverable Other assets Total Assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities - net Deferred liabilities Other liabilities Total Liabilities Represented By: Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net Total Liabilities & share Capital 2007 2006 2005 2004 2003

-----------------------------(Rupees in 000)-----------------------------57,526,451 4,191,128 24,781,723 115,585,646 299,354,736 16,918,844 11,925,428 530,283,956 6,079,341 59,103,350 401,637,816 5,996,696 2,232,344 12,813,005 487,862,552 48,939,840 14,034,476 29,572,070 67,260,338 247,309,893 5,234,463 906,661 10,008,132 423,265,873 4,560,649 38,490,586 335,077,873 5,998,344 9,275,034 393,402,486 34,074,786 12,717,100 17,867,552 63,026,944 204,810,470 4,449,324 2,273,005 7,829,770 347,048,951 4,159,964 21,790,480 289,226,299 3,999,192 6,204,746 325,380,681 5,704,749 255,248,632 23,844,435 17,699,334 18,360,633 54,953,728 144,151,055 3,969,006 5,194,892 4,439,580 272,612,663 3,811,284 11,975,684 230,256,627 3,500,000 288 17,274,461 11,386,434 23,096,028 56,516,760 96,125,178 3,754,236 5,486,357 283,171 3,001,793 216,924,418 2,975,910 7,710,375 185,071,502 39,995 1,535,059 4,541,704 201,874,545

8,093,750 10,261,958 15,653,703 34,009,411 8,411,993 42,421,404 530,283,956

6,475,000 8,298,873 12,429,853 27,203,726 2,659,661 29,863,387 423,265,873

5,180,000 6,225,461 7,350,813 18,756,274 2,911,996 21,668,270 347,048,951

5,180,000 5,915,928 3,274,439 14,370,367 2,993,664 17,364,031 272,612,663

5,180,000 4,678,317 1,384,490 11,242,807 3,807,066 15,049,873 216,924,418

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PROFIT & LOSS ACCOUNTS OF FIVE YEARS:


2007 2006 2005 2004 2003 -----------------------------(Rupees in 000)-----------------------------Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against loans and advances net Provision for diminution in value of investments net Bad debts written off directly Net mark up / return / interest income after Provisions Non Mark up / Interest Income Fee, Commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities Unrealized loss on revaluation of investments Other income Total non mark-up / return / interest income Non Mark-up / Interest Expenses Administrative expenses Other provisions / write offs net Other charges Total nom mark-up / interest expenses Profit Before Taxation Taxation Profit After Taxation Unappropriated profit brought forward Transfer from surplus on revaluation of fixed assets net of tax Profit Available For Appropriation 41,045,543 16,936,187 24,109,356 5,493,226 (6,303) 935,123 17,687,310 32,991,603 12,126,809 20,864,794 1,972,936 74,573 269,349 18,547,936 20,158,860 6,045,948 14,112,912 1,277,002 112,666 38,140 12,685,104 9,233,881 1,732,760 7,501,121 435,414 (100,381) 3,841 7,162,247 8,944,260 1,888,349 7,055,911 444,871 104,285 12,897 6,493,858

5,165,066 548,782 827,328 849,367 (15,755) 1,617,563 8,992,351 26,679,661

4,435,465 837,338 659,726 280,864 (3,335) 738,330 6,948,388 25,496,324

2,543,739 202,343 675,109 382,419 (780) 1,210,202 5,013,032 17,698,136

1,654,475 154,565 668,085 947,945 1,072,756 4,497,826 11,660,073

1,442,642 80,315 436,656 1,976,999 607,500 4,544,112 11,037,970

13,420,977 236,281 17,430 13,674,688 13,004,973 4,602,383 8,402,590 12,429,853 20,832,443 63,028 20,895,471

10,952,275 226,313 25,980 11,204,568 14,291,756 4,823,524 9,468,232 7,350,813 16,819,045 94,454 16,913,499

7,874,013 335,409 7,066 8,216,488 9,481,648 3,532,616 5,949,032 3,274,439 9,223,471 94,148 9,317,619

6,794,311 (34,422) 10,456 6,770,345 4,889,728 1,188,184 3,701,544 1,384,490 5,086,034 94,214 5,180,248

6,153,913 551,840 5,501 6,711,254 4,326,716 1,691,098 2,635,618 (797,100) 1,838,518 73,096 1,911,614

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4.1.1. RATIO ANALYSIS: ABBREVIATION USED IN CALCULATIONS: Words Abbreviation

Earning after tax Net Markup income Gross markup income Total income Operating income Operating expenses Total Share holder Equity Net Sales Market price per share Earning per share Earning before tax Total outstanding shares Book Value Dividend per share Total debt Total liabilities Interest Earned Total Assets

EAT NMI GMI T.I OP OE TSE N.S MPS EPS EBT TOS BV DPS T.D T.L I.E T.A

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4.1.2. CALCULATION OF RATIOS:

Ratio Type

Formula

2007

2006

2005

2004

2003

-----------------------------(Rupees in 000)------------------------------

Profitability Ratios
Net profit after tax EAT/IE 8,402,590/41,045, 543=20.47% 24,109,356/41,045 ,543=58.74% 33,101,707/17,687 ,310=1.87 8,402,590/34,009, 411=24.71% 8,402,590/530,283 ,956=1.58% 299,354,736/401,6 37,816=74.53% 9,468,232/32,991, 603=28.70% 20,864,794/32,991 ,603=63.24% 27,813,182/18,547 ,936=1.50 9,468,232/27,203, 726=34.80% 9,468,232/423,265 ,873=1.79% 247,309,893/335,0 77,873=73.81% 5,949,032/20,158, 860=29.51% 14,112,912/20,158 ,860=70.00% 19,125,944/12,685 ,104=1.50 5,949,032/18,756, 274=31.72% 5,949,032/347,048 ,951=1.71% 204,810,470/289,2 26,299=70.81% 3,701,544/9,233,8 81=40.09% 7,501,121/9,233,8 81=81.23% 11,998,947/7,162, 247=1.68 3,701,544/14,370, 367=25.76% 3,701,544/272,612 ,663=1.36% 144,151,055/230,2 56,627=62.60% 2,635,618/8,944,2 60=29.47% 7,055,911/8,944,2 60=78.89% 11,600,023/6,493, 858=1.79 2,635,618/11,242, 807=23.44% 2,635,618/216,924 ,418=1.21% 96,125,178/185,07 1,502=51.94%

Gross spread ratio Income Expense ratio Return on Equity ratio (ROE) Return on Asset ratio (ROA) Loan/deposit ratio

NMI/GMI

T.I/O.P

EAT/TSE

EAT/T.A

Loan/Deposits

Activity Ratios*
Total asset turnover Fixed Asset Turnover N.S/T.A 41,045,543/530,28 3,956=7.74 41,045,543/16,918 ,844=2.43 32,991,603/423,26 5,873=7.79 32,991,603/5,234, 463=6.30 20,158,860/347,04 8,951=5.80 20,158,860/4,449, 324=4.53 9,233,881/272,612 ,663=3.39 9,233,881/3,969,0 06=2.33 8,944,260/216,924 ,418=4.12 8,944,260/3,754,2 36=2.38

N.S/F.A

Market Ratios
Earning per share (EPS) Book Value per share Revaluation per share EAT/TOS 8,402,590/809,375 =10.38 34,009,411/809,37 5=42.02 8,411,993/809,375 = Rs. 10.39 9,468,232/647,500 =14.62 27,203,726/647,50 0=42.01 2,659,661/647,500 = Rs. 4.11 5,949,032/518,000 =11.48 18,756,274/518,00 0=36.21 2,911,996/518,000 = Rs. 5.62 3,701,544/518,000 =7.15 14,370,367/518,00 0=27.74 2,993,664/518,000 = Rs. 5.78 2,635,618/518,000 =5.09 11,242,807/518,00 0=21.70 3,807,066/518,000 = Rs. 7.35

TSE/TOS

SOR/TOS

Leverage Ratios
Debt-to-Equity ratio Debt Ratio/Debtto-Total Assets T.D/TSE 59,103,350/34,009 ,411=1.74% 59,103,350/530,28 3,956=11.15% 38,490,586/27,203 ,726=1.41% 38,490,586/423,26 5,873=9.09% 21,790,480/18,756 ,274=1.16% 21,790,480/347,04 8,951=6.28% 11,975,684/14,370 ,637=0.83% 11,975,684/272,61 2,663=4.39 7,710,375/11,242, 807=0.69% 7,710,375/216,924 ,418=3.55%

T.D/T.A

*Figures in Times.

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FINANCIAL RATIOS
Five Years Progress 2007 2006 2005 2004 2003

Profitability Ratios
Net profit after tax 20.47% 28.70% 29.51% 40.09% 29.47%

Gross spread ratio

58.74%

63.24%

70.00%

81.23%

78.89%

Income Expense ratio

1.87%

1.50%

1.50%

1.68%

1.79%

Return on Equity ratio (ROE)

24.71%

34.80%

31.72%

25.76%

23.44%

Return on Asset ratio (ROA)

1.58%

1.79%

1.71%

1.36%

1.21%

Loan/deposit ratio

74.53%

73.81%

70.81%

62.60%

51.94%

Activity Ratios*
Total asset turnover 7.74 7.79 5.80 3.39 4.12

Fixed Asset Turnover

2.43

6.30

4.53

2.33

2.38

Market Ratios
Earning per share (EPS) Rs. 10.38 Rs. 14.62 Rs. 11.48 Rs. 7.15 Rs. 5.09

Book Value per share

Rs. 42.02

Rs. 42.01

Rs. 36.21

Rs. 27.74

Rs. 21.70

Revaluation per share

Rs. 10.39

Rs. 4.11

Rs. 5.62

Rs. 5.78

Rs. 7.35

Leverage Ratios
Debt-to-Equity ratio 1.74% 1.41% 1.16% 0.83% 0.69%

Debt Ratio/Debt-to-Total Assets

11.15%

9.09%

6.28%

4.39%

3.55%

*Figures in Times.

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4.1.3. GRAPHICAL REPRESENTATION OF RATIOS:


PROFITABILITY RATIOS:

90 80 70 60 50 % 40 30 20 10 0 2007 2006 2005 Years 2004 2003

Net Profit After Tax Gross Spread Ratio

2 1.5 % 1 0.5 0 2007 2006 2005 Years 2004 2003

Income Expense Ratio Return on Assets

80 70 60 50 % 40 30 20 10 0 2007 2006 2005 Years 2004 2003

Return on Equity Loan/Deposit

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ACTIVITY RATIOS:
7 6 5 x* 4 3 2 1 0 2007 2006 2005 Years 2004 2003 Fixed Assets Turnover

8 7 6 5 X* 4 3 2 1 0 2007 2006 2005 Years 2004 2003

Total Assets Turnover

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MARKET RATIOS:

16 14 12 10 Rs. 8 6 4 2 0 2007 2006 2005 Years 2004 2003

Earning Per Share Revaluation Per Share

45 40 35 30 25 Rs. 20 15 10 5 0 2007 2006 2005 Years 2004 2003

Book Value Per Share

LEVERAGE RATIOS:

1.8 1.6 1.4 1.2 1 % 0.8 0.6 0.4 0.2 0 2007 2006 2005 Years 2004 2003

Debt-to-Equity

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12 10 8 % 6 4 2 0 2007 2006 2005 Years 2004 2003 Debt-to-Total Asset

4.1.4. EXPLANATION OF FINANCIAL RATIOS:


PROFITABILITY RATIOS: These ratios indicate the organizations overall effectiveness of operation. These ratios use margin analysis and show the return on sales and capital employed. Net profit after tax measure profit remaining after deducting all expenses including tax. It should be maximum. Markup/return/interest earned and non markup interest income increased throughout the period i.e. year 2003 up to year 2007. While markup/return/interest expensed was decreased in 2004 as a result of net profit after tax ratio increased in said year while from 2005 to 2007 it shows an increasing trend also that cause a decrease in net profit after tax ratio. Non markup interest expenses have also increasing trend. Gross Spread ratio measure profit after deducting cost of goods sold. Gross spread ratio carry the same trend as explained in above paragraph of net profit after tax ratio. Here Markup/return/interest expenses decreased proportionately in 2003 while from 2004 to 2007 it increased proportionately. Income expense ratio as shows the percentage of expenses so it should be lower. Income expense ratio is increased in 2007 as compared to 2003 due to increase in net markup interest income and non markup/return/interest income while it is ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 76

decreased in 2004, 2005, and 2006 respectively due to decrease in the markup and non markup interest income. ROE measure the return on owners total investment into the business. It should be maximum. ROE has increased from 2003 to 2006 due to increase in EAT while ROE has decreased in 2007 due to decrease in EAT. ROA measure the return of total investment of business. It should be maximum. ROA has similar increasing trend as the ROE because EAT of the bank has increased from 2003 to 2006. Loan deposit ratio has the increasing trend due to increase in the banks deposits and advances portfolio. ACTIVITY RATIOS: These ratios also known as efficiency or turnover ratios, measure how effectively the organization is using its assets. Total asset turnover shows that by investment of Rupee One in average total assets, of the entity how much sale is generated. This ratio shows the utilization of total assets and it should be maximum. Total asset turnover has increased in 2007, 2006, and 2005 as compare to 2003 & 2004 due to increase in markup/return/interest earned (Net Sales). Fixed assets turnover shows that by investment of Rupee One in fixed assets, of the entity how much sale is generated. This ratio shows the utilization of fixed assets and it should be maximum. Fixed asset turnover has increased in 2005 and 2006 due to greater increase in net sales and relatively slow increase in fixed assets in these years. MARKET RATIOS: These ratios are calculated to analyze the market position of a business. EPS means Rupees earned per share by the company. It should be maximum. EPS has an increasing trend from 2003 to 2006 because of increasing trend in EAT. ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 77

Slight drop is observed in EPS in 2007. Book value per share shows value of share as per books. It should be maximum. Book value per share of the bank has increased due to increase in shareholders equity. Revaluation per share of UBL has the increasing trend due to increase in surplus on revaluation of assets per year. LEVERAGE RATIOS: Leverage ratios used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity, assets and interest expenses. Debt to equity ratio shows how much portion of long term funds was financed through long term debt, maximum ratio is 60:40. Debt to equity ratio has increased gradually from 2003 to 2007 because of increase in the banks borrowings and shareholders equity. Debt to total assets or debt ratio serves a similar purpose to the debt to equity ratio. It highlights the relative importance of debt financing to the firm by showing the percentage of the organizations assets that is supported by debt financing. Debt to total asset ratio has also increased gradually from 2003 to 2007 because of increase in borrowings and total assets.

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4.1.5. HORIZONTAL ANALYSIS:


4.1.5.1.1. HORIZONTAL ANALYSIS OF FIVE YEARS BALANCE SHEET:
2007 Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Fixed assets Deferred tax asset net Taxation Recoverable Other assets Total Assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities - net Deferred liabilities Other liabilities Total Liabilities Represented By: Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net Total Liabilities & share Capital 2006 2005 2004 2003

233% (63%) 7.3% 105% 211% 351% (100%) (100%) 297% 144% 104% 667% 117% 100% (100%) 100% (100%) 182% 142% 56% 119% 1031% 202% 121% 182% 144%

183% 23% 28% 19% 157% 39% (83%) (100%) 233% 95% 53% 399% 81% 100% (100%) (100%) 104% 95% 25% 77% 798% 142% (30%) 98% 95% -

97% 12% (23%) 12% 113% 19% (59%) (100%) 161% 60% 40% 183% 56% 100% (100%) (100%) 37% 61% -

38% 55% (21%) (2.8%) 50% 5.7% (5.3%) (100%) 48% 26% 28% 55% 24% 100% (99%) (100%) 26% 26%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

33% 431% 67% (24%) 44% 60%

26% 137% 28% (21%) 15% 26%

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COMMENTS ON HORIZONTAL ANALYSIS OF FIVE YEARS BALANCE SHEET:


TOTAL ASSETS: Total assets of United Bank Limited have increased from Year 2003 to year 2007. As compared to 2003: In Year 2004 there is an increase of 26% in total assets of the bank. This increase is due to increase in both local and foreign currency cash and balances with the treasury banks in hand. This increase is 38%. The other reason of this increase in total assets is due to increase in balances with other banks in the form of current accounts and deposit accounts which increased by 55%. Advances also increased by 50% in the form of loans, cash credits and running finances. Other assets are also increase by 48%. In Year 2005 total assets increased by 60% as compare to 2003 and 27% increase as compare to 2004. This increase is because of: 97% increase in cash and balances with other banks in the form of cash and balances with SBP. Advances increased by 113% as compare to 2003 in 2005. Here advances portfolio is 50% higher than 2004. Increase in advances is due to increase in loans, cash credits and running finances given in Pakistan and outside Pakistan. Investment increased by 12% in 2005 as compare to 2003 due to increase in market treasury bills and banks first time investment in Government of Pakistan Islamic Bonds. Fixed assets of the bank also increased by 19% in 2005 as compare to 2003. This is because of major increase in intangible assets, property and equipment. Other assets also increased by 161% in 2005. This percentage is 76% higher than 2004. In Year 2006 total assets have increased by 95% as compare to year 2003. This shows more increase of 69% and 35% in total assets in 2004 and 2005 respectively. This increase in total assets is because of: Cash and balances with other banks increased by 183% which show an increase of 44% as compare to 2005, where the increase is 105% as compare to 2004. Advances ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 80

increased by 157%. Lending to financial institutions increased by 28%. Fixed assets increased by 39% and other assets increased by 233%. This percentage of other assets is 28% higher than 2005. In Year 2007 total assets have increased by 144% as compare to 2003. In 2007 this increase in total assets are 95%, 53% and 25% more than 2004, 2005, and 2006 respectively. This increase is due to following reasons: Cash and balances with other banks have increased by 233%. This increase is due to increase in local and foreign currency (in hand) cash and balances with other banks, local currency foreign accounts and increase in foreign currency accounts held with National Bank of Pakistan (NBP). Investment increased by 105% which is 72% higher than 2006. This is due to investment in Pakistan Investment Bonds, Government of Pakistan Islamic bonds, Market Treasury Bills, and Government of Pakistan-US Dollar / Euro bonds. Advances increased 211% which is 21% higher than 2006. Fixed assets also increased 351%. Major increase is due to in property and equipment material. This increase is 223% higher than 2006. Other assets increased 297%. TOTAL LIABILITIES: As compare to 2003: In Year 2004 total liabilities have increased in 2004 by 26% as compared to 2003. This increase is due to: 28% increase in bills payable. These bills are payable in Pakistan and outside Pakistan. 55% increase in borrowings. These borrowings include borrowings from SBP. 100% increase in subordinated loans due to Term Finance Certificates (TFCs). 26% increase in other liabilities. 24% increase in deposits and other accounts. This increase is due to increase in saving, fixed deposits, and major increase in current accounts-non remunerative. In Year 2005 total liabilities have increased 61% in this year comparing it with 2003. In 81

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

2005 this increase is 27% more than 2004. This increase is due to: 40% increase in bills payable. This is due to increase in bills payable in Pakistan. 183% increase in borrowings. These borrowings are greater than 2004 and carry a difference of 82% (increase). This is because of secured borrowings from the SBP under export refinance scheme and long term financing under export oriented projects have increased. While call borrowings and trading liabilities (unsecured) also increased significantly. 56% increase in deposits and other accounts. Major increase is seen in fixed; current accounts-remunerative and non-remunerative also increase in current accounts remunerative of financial institutions. 37% increase in other liabilities. In Year 2006 total liabilities have increased by 95% as compared to 2003. This increase is 54% and 21% more than in 2004 and 2005 respectively. This increase is due to: 399% increase in borrowings due to increase in repurchase agreement, export refinance scheme, and long term finance under export oriented projects. These borrowings are 77% more than in 2005. 81% increase in deposits and other accounts due to major increase in fixed, saving, current accounts remunerative and non-remunerative. 104% increase in other liabilities. In Year 2007 total liabilities have increased by 142% as compared to 2003. This increase is 24%, 50% and 91% greater than in 2004, 2005 and 2006 respectively. This increase is due to: Major increase in bills payable which is 104% in 2007. Increase in difference is 33% with 2006. This increase is due to increase in repurchase agreement borrowings and call borrowings. Borrowings increased by 667% which is 54% more than in 2006. 117% increase in deposits and other accounts. This increase is due to significant increase in fixed, saving, and current accounts remunerative. In 2007 there is an increase of 100% in deferred tax liabilities-net. Other liabilities also increased by 142% due to major increase in branch adjustment account.

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TOTAL SHARE CAPITAL: (OWNERS EQUITY) As compare to 2003: In Year 2004 share capital is increased by 15% as compared to 2003 due to increase in: 26% in reserves and 137 increases in unappropriated profit. In Year 2005 share capital is increased by 44% as compared to 2003. This increase is 25% more than in 2004. This increase is due to increase in: 33% in reserves and 431% increase in unappropriated profit. This Unappropriated profit is 124% more than in 2004. In Year 2006 share capital is increased by 98% as compared to 2003. This increase is 38% more than in 2005. This increase is due to increase in: 25% increase in share capital issued for cash and as bonus shares. 77% increase in reserves. Major change occurred in unappropriated profit which is increased by 798% which is 69% more than in 2005. In Year 2007 share capital is increased by 182% as compared to 2003. This increase is 42% more than in 2006. This increase is due to increase in: 56% increase in share capital. 119% increase in reserves. Major increased occurred of 1031% in unappropriated profit. Also an increase of 121% of surplus on revaluation of assets-net, increase in fixed assets and securities.

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4.1.5.1.2. HORIZONTAL ANALYSIS OF FIVE YEARS PROFIT & LOSS ACCOUNT:


2007 Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against loans and advances - net Provision for diminution in value of investments net Bad debts written off directly Net mark up / return / interest income after Provisions Non Mark up / Interest Income Fee, Commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities Unrealized loss on revaluation of investments Other income Total non mark-up / return / interest income Non Mark-up / Interest Expenses Administrative expenses Other provisions / write offs net Other charges Total nom mark-up / interest expenses Profit Before Taxation Taxation Profit After Taxation Unappropriated profit brought forward Transfer from surplus on revaluation of fixed assets net of tax Profit Available For Appropriation 359% 797% 242% 1135% 106% 7151% 172% 2006 269% 542% 196% 343% (28%) 1988% 186% 2005 125% 220% 100% 187% 8% 196% 95% 2004 3% (8%) 6% (2%) (196%) (70%) 10% 2003 100% 100% 100% 100% 100% 100% 100%

258% 583% 89% (57%) 100% 166% 98% 142%

207% 943% 51% (86%) 100% 22% 51% 131%

76% 152% 55% (81%) 100% 99% 10% 60%

15% 92% 53% (52%) 77% (1%) 6%

100% 100% 100% 100% 100% 100% 100%

118% (57%) 217% 104% 201% 172% 219% 1659% 1033% 14% 993%

78% (59%) 372% 67% 230% 185% 259% 1022% 815% 29% 785%

28% (39%) 28% 22% 119% 109% 126% 511% 402% 28% 387%

10% 106% 90% 0.88% 13% (30%) 40% 274% 177% 29% 171%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

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COMMENTS ON HORIZONTAL ANALYSIS OF FIVE YEARS PROFIT & LOSS ACCOUNT:


As compared to 2003: YEAR 2004: In Year 2004 profit increased by 171% as compared to 2003. This increase is due to: Markup / interest earned are increased by 3% as compare to 2003. This increase is due to increase in: on loans and advances interest earned, on deposits with financial institutions and on securities purchase under resale agreements. Net markup / interest income is increased by 6% while markup interest expense is decreased by (8%) due to decrease in on deposits interest expense. Net markup / interest income after provisions is increased by 10% as compared to 2003. Total income has increased in 2004 by 6%. This increase is due to increase in fee, commission and brokerage income by 15%, dividend income by 92%, and income in dealing in foreign currencies by 53%, other income by 77%. Other income is increased due to increase in charges recovered from customers. While gain on sale of securities has decreased by (52%). Profit before taxation is increased by 13%. Taxes reduce by (30%). Profit after tax has increased by 40%. Unappropriated profit brought forward from last year is increased by 274%. This results 177% increase. Transfer of fixed assets from surplus also increases by 29%. Thats why profit available for appropriation is increased by 171%. YEAR 2005: In Year 2005 profit increased by 387%% as comparing it with 2003. This increase in profit is 80% greater than in 2004. This increase is due to: Markup / return / interest earned are increased by 125%. This increase is 118% greater than in 2004. This significant increase in 2005 is due to increase in: on loans and advances from customers and financial institutions and on investment in available for sale securities and associates, on deposits with financial institutions, on discount income and on securities purchased under resale agreements. Net markup / interest income is ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 85

increased by 100% which is 88% more than in 2004. While interest expense has increased by 220% due to increase in: on deposits interest expense, on securities sold on repurchase agreement, on long term and other short tem borrowings , on securities sold under repurchase agreements.. Net markup interest income is after provisions are increased by 95% as compared to 2003. Total income has increased in 2005 by 60% which is 52% more than in 2004. This increase is due to: 76% increase in fee, commission and brokerage income, 152% increase in dividend income, 55% increase in income from dealing in foreign currencies. 100% increase in unrealized loss on revaluation of investment and other income is increased by 99% while gain on sale of securities decrease by (81%). Profit before taxation increased by 119%. This increase is 94% more than in 2004. Taxes increased by 109%. Profit after taxation is increased by 126%. Unappropriated profit brought forward increased by 511% which 137% more than in 2004. This all causes an increase of 387% in profit available for appropriation. YEAR 2006: In Year 2006 profit increased by 785% as comparing it with 2003. This increase in profit is 226% and 82% more than in 2004 and 2005 respectively. This increase is due to: Markup / interest earned are increased 269% as compare to 2003. This increase is due to: increase in interest earned on loans and advances from customers and financial institutions, and interest earned on investment. Net markup / interest income is increased by 196% as compared to 2003 which is 48% higher than in 2005. While interest expense is increased by 542% due to major increase in interest expense on deposits, on securities sold under repurchase agreements and on long term borrowings. Net markup interest income increased by 186% in 2006 as comparing it with 2003. Total income has increased by 131% as compared to 2003 which is 44% and 119% more than in 2005% and 2004 respectively. This increase is due to: 207% increase in fee, commission and brokerage income. This is an increase of 74% as compared to 2005. 943% increase in dividend income. 51% increase in income from dealing in foreign currencies. 22% 86

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

increase in other income. 100% increase in unrealized loss on revaluation of investments. While (86%) decrease on gain on sale of securities. Profit before tax increased by 230% which is 51% more than in 2005. Taxes ratio is increased by 185% in 2006. Profit after tax is increased by 259 which is 59% higher than in 2005. Unappropriated profit doubled in this year. These changes or increase causes an increase of 785% in the profit available for appropriation. YEAR 2007: In Year 2007 profit increased by 933% comparing it with 2003. This increase in profit is 24%, 124% and 303% more than in 2006, 2005 and 2004 respectively. This increase is due to: Markup / return / interest earned are increased by 359% as compare to 2003. This increase is due to: increase in interest earned on loans and advances from customers and financial institutions, discount income, deposit with financial institutions. Net markup / interest income is increased by 242% while interest expense increased by 797% due to increase in expense on deposit, on long term borrowings. Net markup interest income increased by 16% as compare to 2006. Total income has increased by 142% which shows an increase of 5% than in 2006. This increase is due to major increase in: fee, commission and brokerage income by 258%. Dividend income by 583%, 166% increase in other income. 89% increase in foreign currency income and 100% increase in revaluation of investment. Increase in profit before tax is slow than in 2006.Actually profit before tax is decreased here in 2007 by (9%) as compare to 2006. It is only 201% which (9%) less than in 2006. Profit after tax increase by 219% which shows a slow increase as compared to 2006. Major increase is seen in unappropriated profit brought forward 1659% which is 69% higher than in 2006. Overall this causes an increase of 993% in profit available for appropriation.

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4.1.6. VERTICAL ANALYSIS: 4.1.6.1.1. VERTICAL ANALYSIS OF FIVE YEARS BALANCE SHEET:
2007 Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Fixed assets Deferred tax asset net Taxation Recoverable Other assets Total Assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities - net Deferred liabilities Other liabilities Total Liabilities Represented By: Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net Total Liabilities & share Capital 2006 2005 2004 2003

10.85% 0.79% 4.67% 21.80% 56.45% 3.19% 2.25% 100% 1.15% 11.14% 75.74% 1.13% 0.42% 2.42% 92%

11.56% 3.32% 6.99% 15.89% 58.43% 1.24% 0.21% 2.36% 100% 1.08% 9.09% 79.16% 1.42% 2.19% 92.94%

9.82% 3.66% 5.15% 18.16% 59.02% 1.28% 0.65% 2.26% 100% 1.20% 6.28% 83.34% 1.15% 1.79% 93.76%

8.75% 6.49% 6.73% 20.16% 52.88% 1.45% 1.91% 1.63% 100% 1.40% 4.39% 84.46% 1.28% 0.00% 2.09% 93.63%

7.96% 5.25% 10.65% 26.06% 44.31% 1.73% 2.53% 0.13% 1.38% 100% 1.37% 3.55% 85.32% 0.02% 0.71% 2.09% 93.06%

1.53% 1.93% 2.95% 6.41% 1.59% 8% 100%

1.53% 1.96% 2.94% 6.43% 0.63% 7.06% 100%

1.49% 1.79% 2.12% 5.40% 0.84% 6.24% 100%

1.90% 2.17% 1.20% 5.27% 1.10% 6.37% 100%

2.39% 2.16% 0.64% 5.19% 1.75% 6.94% 100%

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COMMENTS ON VERTICAL ANALYSIS OF FIVE YEARS BALANCE SHEET: Comparing figure from 2003 to 2007. TOTAL ASSETS: Here Total Assets includes: Current Assets + Fixed Assets + Other Assets. Where Current Assets include: All assets excluding Fixed Assets and Other Assets. Current assets of the bank have increasing trend from 2003 to 2004 (96.89% and 96.92% respectively). This increase is due to increase in: cash and balances with treasury banks, balances with other banks, advances. In 2003 and 2004 bank need the current assets more to fund their day-to-day operations. This increase in current assets is due to increase in: local and foreign currency cash and balances with the treasury banks, balances with other banks in current and deposit accounts form, loans, cash credits and running finances. Deposits with State Bank of Pakistan are maintained to comply with the statutory requirements issued from time to time. Deposits with other central banks are maintained to meet the minimum cash reserves and capital requirements pertaining to the foreign branches of the Bank. Although these current assets are in good position in 2005, 2006, and in 2007 but there is slight or minor decrease. This slight decrease is due to decrease in: Balances with other banks, lending to financial institutions, investments. If current assets fall short more than this in future, then the bank will have to scramble for other sources of short-term funding, either by taking debt. But overall current assets of the bank are in healthy and satisfactory position. Fixed assets increased in 2007 as compare to 2003 but like current assets there is a slight decrease in fixed assets. Increase is due to increase in capital work-in-progress, property and equipment. Fixed assets are the long-term base of the banks operation strategy, represented by all the equipment, facilities, IT infrastructure and long-term contracts the bank has invested in to conduct business. These assets are the revenue generators, which together form the base from which the company functions from week to week. So these are also well handled by the bank.

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Other assets have the increasing trend since 2003. This increase in other assets is due to increase in: Income / mark-up accrued in local currency and income / mark-up accrued in foreign currency. TOTAL LIABILITIES: Total liabilities of UBL have the increasing trend over all. Total liabilities have increased from 2003 to 2005. While there is a slight decrease in 2006 and 2007. But this decrease is not too big. Increase in liabilities is due to: Borrowings, subordinated loans, other liabilities and deposits and other accounts. This increase is due to increase in: Borrowings from SBP, term finance certificates. While these borrowings have been made from SBP for providing financing facilities to customers for import of machinery, plant, equipment and accessories thereof (not manufactured locally) by export oriented units. Money deposited with a bank becomes a liability of the bank, because the bank has an obligation to pay the depositor the money deposited; usually on demand. (The money deposited is an asset for the depositor; but this asset will not be recorded by the bank because it is not the bank's asset. This shows that banks need more debt from other financial institutions from 2003 to 2005 especially. However there is no major increase found in the banks liabilities portion. Liabilities increase also shows that banks need more funds in these years to complete its higher operational activities. OWNERS EQUITY OR SHARE CAPITAL: Share capital or issued capital or capital stock refers to the portion of a company's equity that has been obtained (or will be obtained) by trading stock to a shareholder for cash or an equivalent item of capital value. Share capital or owners equity has increased from 2003 to 2007. This increase is due to increase in reserves and unappropriated profit. In 2007 Owners equity has increased by 8% as compare to 2003 which is 6.94%.

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4.1.6.1.2. VERTICAL ANALYSIS OF FIVE YEARS PROFIT & LOSS ACCOUNTS:


2007 Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against loans and advances - net Provision for diminution in value of investments net Bad debts written off directly Net mark up / return / interest income after Provisions Non Mark up / Interest Income Fee, Commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities Unrealized loss on revaluation of investments Other income Total non mark-up / return / interest income Non Mark-up / Interest Expenses Administrative expenses Other provisions / write offs net Other charges Total nom mark-up / interest expenses Profit Before Taxation Taxation Profit After Taxation Unappropriated profit brought forward Transfer from surplus on revaluation of fixed assets net of tax Profit Available For Appropriation 100% 41.26% 58.74% 13.38% (0.02%) 2.28% 43.09% 2006 100% 36.76% 63.24% 5.98% 0.23% 0.82% 56.22% 2005 100% 30.00% 70.00% 6.33% 0.56% 0.19% 62.92% 2004 100% 18.77% 81.23% 4.72% (1.09%) 0.04% 77.56% 2003 100% 21.11% 78.89% 4.97% 1.17% 0.14% 72.60%

12.58% 1.34% 2.02% 2.07% (0.04%) 3.94% 21.91% 65%

13.44% 2.54% 2.00% 0.85% (0.01%) 2.24% 21.06% 77.28%

12.62% 1.00% 3.35% 1.90% (0.004%) 6.00% 24.87% 87.79%

17.92% 1.67% 7.24% 10.27% 11.62% 48.71% 126.27%

16.13% 0.90% 4.88% 22.10% 6.79% 50.80% 123.41%

32.70% 0.56% 0.04% 33.32% 31.68% 11.21% 20.47% 30.28% 50.75% 0.15% 50.91%

33.20% 0.69% 0.08% 33.96% 43.32% 14.62% 28.70% 22.28% 50.98% 0.29% 51.27%

39.06% 1.66% 0.04% 40.76% 47.03% 17.52% 29.51% 16.24% 45.75% 0.47% 46.22%

73.58% (0.37%) 0.11% 73.32% 52.95% 12.87% 40.09% 14.99% 55.08% 1.02% 56.10%

68.80% 6.17% 0.06% 75.03% 48.37% 18.91% 29.47% (8.91%) 20.56% 0.82% 21.37%

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COMMENTS ON VERTICAL ANALYSIS OF FIVE YEARS PROFIT & LOSS ACCOUNTS: Comparing figures from 2003 to 2007. PROFIT AVAILABLE FOR APPROPRIATION: Profit available for appropriation have the increasing trend overall from 2003 to 2007. In 2003 profit is 21.37% only which gradually increase by 56.10%, 46.22%, 51.27% and 50.91% in 2004, 2005, 2006, and 2007 respectively. This increase in profit is due to following reasons: Markup / return / interest expensed have increased from 2003 to 2007. Net markup / interest income have increased but this increase is less than thats in 2003 and 2004. In 2007 interest income is 58.74% while this percentage is 81.23% in 2004 and 78.89% in 2003. Net markup / return / interest income after provisions have also increased but this increased is slow as compare to 2003 and 2004. Total income has also increased from 2003 to 2004 but this ratio of increasing trend is slow in 2007, 2006 and 2005. This increase is due to major increase in fee, commission and brokerage income, dividend income and other income. Administrative expenses have increased from 2003 to 2007. This increase in administrative expenses due to increase in personnel cost, premises cost and other operating cost. Profit before taxation is 31.68% while this percentage is 48.37% in 2003. While profit after tax has a mix up trend of increase and decrease. In 2005 profit after tax has increased 40.09% while this percentage is 20.47% in 2007. Unappropriated profit brought forward has the increasing trend. Unappropriated profit that is brought forward is 30.28% in 2007. After adding the unappropriated profit this profit is increased by 50.98% and 50.75% in 2006 and 2007 respectively. This all causes an increasing trend in the profit available for appropriation. These figures of profit available for appropriation tell that bank has gaining a significant growth in recent years after its privatization and better management skills.

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4.2. ORGANIZATIONAL ANALYSIS: (COMPARISON WITH OTHER BANKS)


UBL COMPARISON WITH MUSLIM COMMERCIAL BANK & HABIB BANK LIMITED:
Particulars UBL MCB HBL -----------------------------(Rupees in 000)-----------------------------401,637,816 292,098,066 531,298,127 Deposits 299,354,736 218,960,598 382,172,734 Advances 8,402,590 15,265,562 10,084,037 Profit 1,079 1,026 1,489 Branches* 14,904 17,120 14,552 Employees*

*Figures in Numbers. If we compare UBL with MCB and HBL, we observe that HBL is a big banking group as compare to UBL and MCB. Deposit wise HBL is in front of both UBL and MCB. Although UBL is in good position as compare to MCB in deposit situation. It shows customers trust on both banks. HBL again ahead in case of advances portfolio as compare to UBL and MCB. Here health portfolio of advances places the UBL in second position which is a good indicator. But profit wise MCB is in front of both HBL and UBL in year 2007. Branches of HBL are greater than UBL and MCB. There is a less difference between UBL and MCB in number of branches. MCB has greater number of employees as compared to UBL and HBL. These figures show that HBL and MCB are in much better position than UBL. After the privatization business of UBL taking high growth. The Bank's long term rating is AA +, which denotes good credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The short-term rating is A-1+, which denotes the highest certainty of timely payment. Short-term liquidity, including internal operating factors and / or access to alternative sources of funds, is outstanding and safety is just below risk free Government of Pakistan's short-term obligations. The bank is increasing resource mobilization through regular deposit campaigns and accelerating the process of recovery of outstanding advances and non-performing assets. The Bank is making every effort to meet the up-coming challenges through strategic ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 93

planning and making the best use of the resources at its command. These financial figures and improving condition of the bank shows that UBL is among the leading commercial banks of Pakistan.

4.3. FUTURE PROSPECTS OF THE ORGANIZATION: (UBL)


UBL is focusing on bringing the next level of consumer banking in Pakistan, emphasizing on its You First vision. UBL aims to offer products that will change the industry norms by providing innovations, options and flexibility unmatched so far by any other bank due to the investment made in the state-of-the-art systems at UBL. UBL plans to expand the market by its vast distribution network. UBLs products & services are being developed keeping in view the increased level of consumer awareness due to increased accessibility of information, and hence the demand for better products and services with options. Management believes that their business process reengineering initiative supported by their customized core banking technology platform will also help them to compete more effectively in the changing landscape of the Pakistani banking sector. Banks Credit Risk Environmental and Monitoring system which is in its final stages of implementation is expected to assist them in more effective post disbursement monitoring. They expect their efforts in this area to show positive results in the coming months. Macro economic and political instability, going forward, will continue to impact growth and profitability of the banking sector. Management believes that political reconciliation will result in renewed attention to economic management and hence improvement in the operating environment. Management is focusing on converting the manual branches into online branching system and also to expend their branch network domestically and internationally. Management is also keen to increase the ATM network in future and plans have prepared for it. Management believes the bank is well positioned to take advantage of the next economic upturn. 94

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5. SHORT FALLS / WEAKNESSES OF THE ORGANIZATION:


Following are the weaknesses of the United Bank Limited; The bank achieved a profit before tax of Rs. 13 billion in 2007 which is 9% lower than in that of last year. Asset quality was impacted by an increase in non performing loans in the consumer and commercial business. Fixed asset turnover ratio was decreased in 2007. This shows the decrease in sales in 2007. Net profit after tax ratio decreased in 2007. UBL provisioning coverage of NPL Loans also fell from 84% to 79%. Given the monetary tightening, the consumer portfolios throughout the industry witnessed deterioration in 2007. During the Year 2007 weaknesses identified in the Internal Control System by the auditors. EPS has decreased from 14.62% (2006) to 10.38% (2007).

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6. CONCLUSION:
United Bank Limited is one of the largest Commercial Bank in Pakistan. UBL has a growing presence in the international market through 17 branches in various foreign countries, with significant activity in Middle Eastern markets, particularly in United Arab Emirates and the Kingdom of Bahrain. Additional branches in the Arabian region will be established during the ongoing year. Paid-up capital of UBL was increased by way of bonus issue during FY06. Along with healthy reserves and retained earnings, UBLs total net worth, adjusted for final cash dividend, increased to Rs. 27.9b (FY05: Rs. 20.4b). Deposit base of the bank increased by approximately 16% to Rs. 335.1b (FY05: Rs. 289.3b) as at December 31, 2006, with significant increase coming through the fixed deposit schemes. Deposits further increase in 2007. As UBL has a growing international presence, almost 19% of the total deposit base is mobilized from the overseas branches and contributed almost 52% to the growth during FY06. Increasing markup rates on the banking book, resulted in a substantial widening of spreads (FY06: 5.4%; FY05: 4.5%) and drove interest based earnings to new highs. Profitability was also supported by increased fee and commission based income. Profitability is increased in 2007 (20.9b) by 23% as compared to 2006 (16.9). Net advances increased to Rs. 299.3b (FY06: Rs. 247.3b) during 2007. Both corporate and consumer lending have contributed to the growth achieved during FY06. The banks consumer portfolio is one of the largest in the sector at Rs. 44.5b (FY05: Rs. 28.3b), where the auto product has acquired a significant market share. Overseas operations have also contributed to this growth. While increase in overseas operations has a risk benefit in terms of increased geographical diversification, the bank has taken some fairly large exposures. Total asset size of UBL increased by approximately 25% to Rs. 530.3b as at December 31, 2007 from Rs. 423.3b at the end of the previous year. In future years, the bank is likely to sustain strong profitability indicators with the persistent growth in lending and continued investment in high margin consumer lending. This all shows a well and rapid growth of this world class bank.

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7. RECOMMENDATIONS:
On the basis of financial analysis we see that the Banks strengths are more than its weaknesses but still there is room for a lot of improvement and innovation. Following are some of the suggestions and recommendations that I want to give on the basis of shortfalls / weaknesses found in the bank. The profitability in 2007 was impacted by a change in the prudential Regulations according to which the benefit of collateral was withdrawn while calculating the provisioning requirements against non performing loans. This resulted in an incremental provisioning charge of Rs. 3.8 billion on UBL books in year 2007. Had this charge not been taken, the increase in profit before tax would have been 18% higher from the same period last year. So it must be improved. Asset quality was impacted by an increase in non performing loans (consumer and commercial business) which coupled with subjective classifications by the SBP resulted gross NPL to gross loans amount increased. In this regard SAM (Special Assets department) of UBL must take progressive steps with the collaboration of CAD department to low down the NPLs ratio by carrying effective management of credit risk. In 2007 decrease in fixed asset turnover ratio shows the decrease in sales of the bank. Bank must utilize its resources and fixed assets especially in proper manner to generate higher sales in future. Healthy portfolio of fixed assets must be maintained by the bank. Net profit after tax ratio decreased in 2007. In this regard bank must control its interest expenses and administrative expenses because administrative expenses grew by 23% to Rs. 13.4 billion in year 2007, mainly due to continued investments in upgrading and expending UBL branch network domestically and overseas, higher personnel cost on account of the banks Early Retirement Scheme and ongoing costs in the consumer business. Although these steps are taken by the bank to upgrade its branches and operations but it cause decrease in the net profit after tax ratio in 2007 as comparing it with 2006 and respective years. So a better control is required on the banks expenses. ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD 97

Provisioning coverage of NPL Loans must be improved by both SAM and CAD departments. The management of risks and uncertainties associated with problem credits requires a different and more intense approach than normal management. The unit must staff with experienced officers who possess the specialized expertise required for managing problem credits. Consumer portfolios throughout the industry witnessed deterioration in 2007 because of monetary tightening conditions. So there must be close monitoring of portfolios and enforcing appropriate controls to manage delinquencies and mitigate the impact of structured fraud, which has been making subtle advances in the industry. Management ensures the efficient and effective Internal Control System by risk assessment, identifying control objectives, reviewing pertinent policies / procedures, establishing relevant control procedures and monitoring. All policies and procedures are monitored, reviewed and compared with existing requirements and necessary amendments are made accordingly. Steps must taken to avoid non repetition of those in all possible manner. Management took steps to effectively monitor control environment of the bank, resulted in improvement in the overall working of the branches and departments. Earnings per share is generally considered to be the single most important variable in determining a share's price. An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal would be a "better" company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures. EPS can be increased by increasing the revenue and decreasing the expenses of the bank. Cost also plays a major role in generating EPS. If management focus to have good cost control on EPS.

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8. REFERENCES:
All of the references and sources from where the data gathered for this report are mentioned herewith for your kind concern. ORGANIZATION: Annual Reports of United Bank Limited. UBL Credit Policy. CARS and CREAMS Manual of UBL. http://www.ubl.com.pk. https://ublfunds.com/ubl/financial_reports.htm. WEB PORTALS: http://www.sbp.com.pk. http://www.ibp.org. http://www.thebankers.com. http://www.pacra.com.pk. http://www.gulfeconomist.com.pk. http://www.privatisation.gov.pk. http://www.finance.gov.pk.

BOOKS:
Practice and Law of Banking in Pakistan by Dr. Asrar H. Siddiqui.

Fundamentals of Financial Management by James C. Van Horne & John M. Wachowicz, JR.

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9. ANNEXES: ORGANGRAMS:
MANAGEMENT AT HEAD OFFICE

Board of Directors

Chairman of the Board

Managing Director

Director

Credit Division

Admin. Division

Finance & Intl Treasury Division

Recovery Division

I.T. & Operations Division

Audit & Inspection Division

Business and Marketing Division

Regional Offices

Lahore

Faisalabad

Gujrawala

Multan

Rawalpindi

Karachi

Peshawar

Quetta

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MANAGEMENT OF A TYPICAL BRANCH

Manager/ Chief Manager

Manager Credits

Manager Operations

Manager Foreign Exchange

Second Officer

Second Officer

Second Officer

Procession officer

Administration Officer

Import Incharge/Officer

Distribution Officer

Internal Working Officer

Export Incharge/Officer

Correspondence Officer

Internal Working Officer

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LIST OF ILLUSTRATIONS Words Abu Dhabi Group Annual Program Budget Auto Teller Machines Bestway Group Branch Manager CAD-Credit Administration Management System Capital Expenditures Certificate of Deposit Chief Executive Officer Chief Financial Officer Commercial Banking Continuous Funding System Corporate Banking Group Credit Administration Department Credit Analyst Reporting System Credit Application Credit Information Bureau Credit Risk Environments Administration & Management System Customer Relationship Manager Development Financial Institution Disbursement Authorization Certificate End Service Benefits Financial Institution Financial Manager Global Address List Habib Bank Limited Head Office Information Technology Group Investment Banking Group Islamic Banking Karachi Interbank Offered Rate Management Information System Market Treasury Bills Muslim Commercial Bank ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD Abbreviation ADG APB ATM BG BM CCAMS CAPEX COD CEO CFO CB CFS CBG CAD CARS CA CIB CREAMS CRM DFI DAC ESB FI FM GAL HBL HO ITG IBG IB KIBOR MIS MTB MCB 102

Words Net Take Home Salary Officer For Financial and Assets Management Services Personal Digital Assistant Relationship Manager Risk Management Department Rupee Travelers Cheque Self Employed Businessman Self Employed Professional State Bank of Pakistan Term Deposit Receipt Term Finance Certificates Total Branch Automation United Bank Limited

Abbreviation NTHS OFAMS PDA RM RMD RTC SEB SEP SBP TDR TFCs TBA UBL

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