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Financial Management

Projects Proposal
Selected Company:

United Bank Limited


Tariq Abbasi


Junaid Khan
Haseeb Bukhari
Mohsin Iqbal
Ahmed Shoaib
Sardar Ghazali Khan Siknader
Fahad Khushnood Dar

March 9, 2014

MBA 2K14 B

NUST Business School

National University of Sciences & Technology

Banking sector plays an important role in financial stability of an economy. Bank plays an important
role as financial intermediary for the developments of economy. In Pakistan due to non-existence of debt
market banks plays an important role in fund channelizing from depositor to borrower The economic
development of a country is dependent on its available resources and optimal utilization of these scared
resources. Bank plays an important role for the economic development by offering financial resources to
public and private sector.
Pakistani banking sector is developing at a rapid growth since last 64 years. State Bank of Pakistan was
the first central bank formed in 1948 after the independence. After the State bank of Pakistan Act 1956,
SBP encouraged private sector to form banks. The private sector created some illegal and unhealthy
competition in banking sector of Pakistan. Due to these conditions in 1974 government took action to
nationalize all the banks. The banking sector experienced inferior performance due to protection of
government to its employees. The government took initiative in 1990s to again privatize the banking
sector. Currently banking sector of Pakistan comprises of State Bank of Pakistan (SBP), commercial
banks, specialized banks, Development Finance Institutions (DFIs), Microfinance banks and Islamic
banks. Currently there are 36 commercial banks, 4 specialized banks, and 6 Islamic banks at the end of
June 2010.
In banking sector the determinants of profitability is well researched. The profitability measurement
varies from study to study. The key indicators of profitability are Return on Assets (ROA), and Net
Interest Margin (NIM).

In banking sector, there is so much more competition, as almost 40 companies are operating in market.
Entry or exit of any single firm play a vital role in term of profit and market condition force the bankers
to change their strategy regarding any product or service which they are providing.
The experts and analysts predicted a very promising future for Pakistani Banks, in terms of profitability
and growth. It can also be examined by monetary policy, decreasing in nonperforming loans and by
increasing spreads.
The banking sector further classified into different categories.

Foreign Banks
Islamic Banks
Private Banks
Specialized Banks
Public Sector Banks
Micro Finance Banks / Institutions
Development Financial Institutions

UBL started operating in Pakistan on November 7th, 1959. The first branch of UBL started operating at
I.I Chandigarh Road, Karachi, the todays banking hub of the country. Within a period of six months,
UBL had branches in the major cities of the country; the branches were located in Karachi, Lahore,
Lyallpur, Dacca, and Chittagong.
UBL holds the honor to be the first bank of Pakistan to have a branch abroad. UBL opened its branch on
William Street in London in 1963. UBL was also first among other banks to start saving scheme for
school going children in 1960 and it also founded Pakistans first Staff College of employees in 1964.
Opening of three online branches in Karachi, way back in 1971 is also one of the biggest achievements
of UBL. UBL was also the first among others to introduce credit card in 1970s by the name UNICARD.
UBL retained its pace to be the first in different aspects and introduced Islamic banking before any
other bank followed by introduction e-banking facilities at hajj. To properly fulfill the requirements of
the commercial banking and exercise control over banking sector, State Bank of Pakistan was
established in 1948.After the introduction of State bank different commercial banks came
into progress amongst which one was United bank limited. Real turn took place in the banking section
when we renowned banker AghaHassan Abidi took initiate step of opening a bank. His dream
true when the first branch of UBL was opened at Macloed Road (Now I.I Chundrigar
Road) on 7Th November 1959.This achievement was secured after passing through many
problems and after completion of a lot of legal formalities. UBL was established on
24/07/1959as a public limited company with registered office at I.I Chundrigar road
Karachi. The Authorized capital was Rs.20,000,000/- issued, subscribed and paid up capital was
Rs.10,000,000/- divided into shares of Rs.10/-


Few days ago, United Bank Limited broadcasted its CY 14 results, where the bank stated consolidated
earnings of PKR24.0bn, EPS of PKR19.32 with a profit of PKR 5.38 per share. Bank also declared final
cash dividend of PKR 4 per share, taking full year payout to PKR 11.5 per share.
Furthermore, management notified that the bank is focusing on increasing the lending portfolio; where
energy sector will be the key focus going forward. Bank stated that non-performing loans have increased
by PKR2.3bn during the year to PKR 57.1bn as the bank witnessed significant NPL accretion in 3Q
owing to default from Byco.
Reason of selecting this bank is above mentioned declaration by bank which encouraged us to select this
organization for our Financial Management project. We have planned to explore the reason behind this
achievement. While 2nd reason for choosing this organizations are as follows.
Data is easily available.
Right competitor is available.
Well known and stable organization, where we will have a chance to apply major concepts
studied in Financial Management.

Our selected competitor is HABIB BANK LIMITED.


Particulars on Dec 2013

Total Assets
Market Share
Rating by JCR-VIS
Medium to long term
Short term
Stock Prices on
International Branches
Domestic Branches
No. of employees
Companys Products
Profits After Tax 2012-13

Selected Company UBL

1,009,739 (in Million)
Rs. 131.99
Loans, Cards, investments, etc.
18,614 (in Million)

Direct Competitor HBL

1,715,271 (in Million)
Rs. 161.21
Over 25
Loans, Cards, investments, etc.
23,027 (in Million)

Time Series:
Base year will be 2009 while analysis year will be 2012, 2013, 2014 but may be later on, we will adjust
the base year due to certain factors if limitation is not the issue and their no time constraint.
Our main focus will be on
Financial Analysis that will cover Vertical Analysis, trend analysis, common size analysis as well
as Ratio Analysis of UBL.
Risk Management analysis with the help of CAPM Model & Beta.
Pest Analysis of UBL and comparison with HBL. Showing that how external factors are
affecting the companys performance overall.
In the last, interpretations of the results and recommendations if necessary.
We will complete this project in almost 3 phases. We will start from vertical analysis followed by Ratio
Analysis and interpretation and will further move on risk management analysis with the help of CAPM
Model & BETA.