Name Muhammad Ibrahim

Submitted to Sir Shoaib Hassan

Semester 5th 320006
Project Financial Analysis
Company Allied Bank Ltd
Allied bank limited – Analysis of financial statements. Year 2018 vs 2019
Allied Bank Limited was established in Lahore in 1942.Now It is fifth largest banks operating in Pakistan with
a network of 1393 branches located in almost 400 cities and towns.

The bank offers full range of retail, commercial and corporate banking services with a focus on service
delivery through technology. Additionally, it provides general banking services to agricultural, industrial and
individual customers across Pakistan. The bank's fundamental strength lies in its strong lending capability, as
well as providing a variety of financial services, which has allowed ABL to diversify and enhance its deposit
base.

Bank also contain the foreign representative( non-transactional ) offices including china , Dubai and Beijing
and also Bank caters the needs of the domestic corporate and other customers in financing import and
export transactions. Here, ABL's products include foreign letters of credit, guarantees, remittances,
acceptances and collections. The long-term credit rating of the bank as assigned by PACRA is AAA and short-
term rating is A1+. Further, the ABL is the holding company of ABL Asset Management Company Limited.

 Ibrahim Holdings (Private) Limited is the parent company of the Bank and its registered office is in
Pakistan.
 The Bank is the holding company of ABL Asset Management Company Limited.
 The registered office of the Bank is situated at 3 - Tipu Block, Main Boulevard, New Garden Town,
Lahore

How well the financial statements of ABL Bank have been prepared?

The financial Statements of any company consist of 5 reports:

1. Balance sheet
2. Profit and loss statement
3. Cash flow statement
4. Notes to the account
5. Statement of changes in equity

investors, creditors, and other business people rely on accounting information to make intelligent,
informed decisions. The balance sheet, the profit and loss account and the statement of cash flows
provide a large part of the information that is used for making decision. Various techniques are used
to analyze and interpret financial statement data as well as to check weather the statements are well
prepared or not.

Here are some red flags we encounter while analyzing the financial reports of the ABL bank:
Rising debt to equity ratio:
This ratio is calculated as total liabilities divided by the total shareholders’
equity. And the total debt to equity ratio of ABL bank is remain around 128% in 2019 and now it stood at
150.08% at of 2Q20 and the average debt to equity ratio of year stood at 176.73% as for a bank this ratio is
remain higher as compare to the other sectors because bank has to borrow in order to lend so, if the debt to
equity ratio is more than 100% then the red flag should be raised but for a bank it should not succeed more
than 150%.

Revenue trending down:

Significant increased has been seen in the bank profit after tax in FY2018 it stood
at 12880million while in FY2019 it raises to 14112million pkr which shows 10% growth in PAT which is
positive sign for any investor. And revenue from subsidiary also raise to 783,478pkr as compared to perivous
year.

Other expenses on the balance sheet:

Other expenses on the balance sheet also raises from FY2018 108,3994 TO 128,5405
FY2019 which some include increase in the donation to national management foundation for construction
and hostel building.

Steady cash flow:

While analyzing the cash flow from operating activities, investing activities, and financing
activities all shown the significant raise in their values FY18 33680 TO 98964, FY18 9256 TO 69017, FY18
8815 TO 10967 FY19 which shows positive impact over the creditor and investor.

financial positon of ABL bank:

if we look at the below financial figures of the abl bank FY19 there is significant drop in
the cash and balance of the bank but overall bank assets and liabilities of the bank rises as well as bank
borrowing and deposits of the bank.
 Rs. in Million

Mar-19 Dec-18
Cash and Balances with
89,561 101,753 (12,192)
Banks
Lending to Fis 162,862 53,786 109,076
Investments 481,263 672,587 (191,324)
ASSETS Mar-19 Dec-18 Var.

Other Assets 36,372 33,750 2,622

TOTAL ASSETS 1,244,146 1,352,390 (108,244)
LIABILITIES
Deposits 1,007,532 984,463 23,069
Borrowings 89,851 225,883 (136,032)
Bills Payable 7,303 7,753 (450)
Other Liabilities 30,289 25,502 4,787
TOTAL LIABILITIES 1,134,973 1,243,601 (108,626)
NET ASSETS 109,173 108,790 384
EQUITY and RESERVES
Share Capital 11,451 11,451 -
Reserves 75,166 74,262 904
Equity Tier I 86,617 85,713 904
Equity Tier II 109,173 108,790 383

From our above analysis we can say that the all 5 financial statements are well prepared and have sound
calculation and valid explanation is given for each perspective.
How detailed and helpful are the notes to the accounts: