You are on page 1of 94

INTRODUCTIO N

1. Objective of the studying the Organization:
Banking is one of the most sensitive businesses all over the world. Bank play very important role in the economy of a country and Pakistan in bi exemption. it influences and facilitates many different but integrated economic activities like resources mob imitation, poverty elimination, production and distribution of public finance, the economy of Pakistan is growing day by day with an accelerated pace, to meet the requirements of these pace sound banking system is needed so that one can meet the financial needs of individuals and corporation also the agricultural, industrial, business sectors. Allied bank was formally known as the Australasia bank established on 3rd December, 1942 in the city of Lahore, this is before the formation of Pakistan. it was formed with a paid up share capital of RS.0.12 million under the Chairmanship of Khawaja Bashir Bux, the bank had attracted deposits, equivalent to RS.0.431 million in its first eighteen months of business. Total assets then amounted to Rs.0.572 million, deposits come to RS.101.554 billion and total assets equal Rs.121.164 billion. In this report I have tried to cover all the necessary aspects of banking by ABL. The primary purpose of the internship is to fulfill the academic requirements of my study as it is compulsory to do practical work in an organization and to implement the tools that they have studied for the analysis, there are some secondary purposes associated like To gain practical knowledge and experience that will help in future to get good opportunities (jobs).Another objective of my work experience was to relate the gained knowledge from books and institute with working organization so that I can see the different between concepts and their implementations. To gain confidence, which usually lack when any one enter in any, firm for the first time, therefore work experience removes certain fears and flaws that can create problem for any student. This internship will provide me with the exposure of the finance field. The internship is considered as the most efficient tool for learning the procedures and processes of any sort of profession. As I being the management student, this internship would prove to be as the most suitable method of teach the management practices have studied the world class courses here at A.IO.U which I think will definitely be found in actual practice in any organization. The courses will relate to the real work in one or other aspects. The internships are meant to provide the students to apply their

learning's that they do in classes to the real situations. As I have intended to do my majors at finance so I will try to seek my personal attitude towards finance during this internship. Generally, it is noticed that there is remarkable difference between market knowledge and bookish knowledge although the concepts are same but their application is different. During my internship i tried to delineate this difference, and was personally curious about the feeling of professional financial work in an office environment. Banking is a wide field and the whole aspects of banking cannot be covered in the eight week period so i tried to cover the important aspects by using most important most fusible technique. However this study of ABL’s will help the management to identify their weakness and strengths so that they can minimize the threats and can avail the benefit from the opportunities. This internship report will be source information for all those who are the interested in the study of financial and competitive position of ABL. The source of data in this report included interviews of management, customer response interviews and discussion with staff members and personal observation personal observations. In the way to write report required different secondary data sources included ABL annual reports brochures, manuals, website and business reviews. Time is the major factor which hinders the dynamics of bank processing's. Lack of documented material provide to be another constraints in this regard as most of the material is confidential, therefore, internees are not allowed to get "handouts" Most of the times people were not free to answer my queries or they were not interested it all in my work. No one is entitled to retrieve its result for any purpose except authorized bank I personnel for official purpose. Research student are not allowed to retrieve and use any confidential material for any purpose, as it is again the bank policy. Banks play a central and very important role in the monetary life of a country, that’s why they are well thought-out as the livelihood of modern economy. Today no one can deny the importance of Banking in the economy. They facilitate and expedite trade and commerce and provide a variety of services that one can’t imagine with out Banks. The requirement of the Master degree in Business Administration is fulfilled when an internship of eight weeks has been done. The dedicated students polishes there professional skills in there specialized field. Main purpose of this program is to make students familiar with the personal interaction in career settings and practical work as it fosters the development of communication skills to work practically
o o

To analyze the performance of ABL at the branch level and bank level. To highlight the important features of financial products offered by ABL

2

o o

To analyze the bank through different techniques i.e. Horizontal, Vertical. To apply the knowledge gained in practical field.

This report is a reflection on my experience when I was internee in ABL, main branch Abbottabad. Since its inception in 1942, ABL has maintained a steady growth over the sixty years span of its operations. After its nationalization in 1974, it was denationalized in 1991 and the employees became the owners of ABL, through the unique concept of ESOP (Employees Stock Ownership Scheme)

3

10. New Branches were opened in Karachi. commitment to professionalism. and wrongly so. Ludhaina. Later it network spread to Multan & Quetta. and by the end of 30th June 1947 capital increased to Rs. The Hindus had since the late 1880s established a commanding presence in these areas and industry. 143 billion and total assets equal Rs.431 million in its first eighteen months of business. Jhang. In the early 1940s the Muslim community was beginning to realize the need for the active participation in the field of trade and industry. Gujranwala and Kasur. Sargodha.1 Brief history of the Organization Established in December 1942 as the Australasia Bank at Lahore with a paid-up share capital of PKR 0. Batala. The initial equity of the Bank amounted to Rs 0. adaptation to changing environmental challenges resulting into all round growth and stability. The bank was identified with the Pakistan Movement. 1947. Jalandhar.It had been severely hit by the riots in East Punjab.12 million under the Chairmanship of Khawaja Bashir Bux. Today Allied Bank's paid up Capital & Reserves amount to Rs. 170 billion. They decided to respond to the challenge and took lead in establishing this first Muslim bank on the soil of Punjab that was to become Pakistan in December 1942. that Muslims were temperamentally unsuited for this profession. including Abdul Rahman Malik who was amongst the original Board of Directors.5 billion. The Bank financed trade in cloth and food 4 . which was raised to Rs 0. Peshawar. (Amritsar. was an exclusive enclave of the Hindus and it was widely believed. Rawalpindi.12 million. the bank had attracted deposits.5 million by the end of first full year of operation. in particular. Delhi and Angra (Agra)) were closed down. trade and commerce in the undivided Sub-continent was completely dominated by them. Banking. Total assets then amounted to PKR 0. At the time of independence all the branches in India. 0. Sialkot. The Allied Bank's story is one of dedication. and his business associates.572 million. by the name of Australasia Bank Limited.728 million. Australasia Bank was the only fully functional Muslim Bank on Pakistan territory on August the 14th.673 million and deposits raised to Rs 7. It was particularly galling for Khawaja Bashir Bux and Abdul Rahman Malik to hear the gibe that Muslims could not be successful bankers. equivalent to PKR 0.2 Overview of the Allied Bank Limited 2. deposit exceeded Rs. envied and aspired by many.

116 new branches were opened during 1974 and the Bank started participation in the spot procurement agriculture program of the Government. better profitability & unique corporate culture symbolizing family feelings & professional fraternity.34 billion to Rs 22 billion during this period. Branches increased from 353 in 1974 to 748 in 1991. The added advantage of ESOP that it strengthens the workers stake in the free enterprise system. Unfortunately it lost 51 branches in the separation of East Pakistan which became Bangladesh. Deposits rose from Rs 1. The first year was highly successful one: profit exceeded the Rs 10 million mark. Despite the difficult conditions prevailing and the substantial set back in the Bank’s business in India. and Advances and investments from Rs 1. 5 .1991 is the historical date as on this date the bank became the country’s 1st bank to be reconstituted as an institution jointly owned by its employees through the unique concept of Employees Stock Ownership plan [ESOP] developed by the Allied Management Group headed by Mr. By the end of 1973 the bank had 186 branches in West Pakistan. ESOP Revolution (Employee stock ownership plan) under the philosophy of ESOP ownership of an enterprise is transferred to its employees who are in an advantageous position in running the enterprise.46 billion. Khalid Latif enabled the bank staff to react creatively to the privatization challenge. The articulation of the ESOP is a landmark in the financial history of Pakistan-indeed of the entire world . September 10. in job securities. Those seventeen years of the Bank saw a rapid growth. It also opened three branches in the UK.It is a practical step ensuring an increase in workers participation and in productivity a means for enhancing an equitable redistribution of financial assets & an effective strategy for achieving the cherished goal of national self-reliance. Investments rose by 72 percent and advances exceeded Rs 1080 million for the first time in bank history. The bank did well in despite losing lot of its assets.000 during 1947-48. More that 7500 staff members acquired a share in the bank.By the end of 1970 it had 101 branches. deposits rose by over 50 percent and approached Rs 1460 million.grains and thus played an important role in maintaining consumer supplies during riot affected early months of 1948. Allied Bank from 1974 to 1991 In 1974. Australasia Bank made a profit of Rs 50. the Board of Directors of Australasia Bank was dissolved and the bank was renamed as Allied Bank.

the Bank’s ownership was transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group. the 8 th . 1. In 1993 the First Allied Bank Modaraba (FABM) was floated.based products and services to its diverse clientele 6 .038 (Billion). assets and deposit base. Allied Bank’s capital and reserves were Rs. 10 th and 17 th August in ISE. In August 2004 as a result of capital reconstruction. Allied Bank entered in a new phase of its history. Allied Bank registered an unprecedented growth to become one of the premier financial institutions of Pakistan.536 (Billion) and deposits were Rs. ILL shareholders were issued ABL shares in lieu of the ILL shares held by them.f. He is an ex. The bank has the largest network of on-line branches in Pakistan and offers various technology based products and services to its diversified clientele through its network of more than 700 branches. the Bank has built itself a foundation with a strong equity. Today. assets and deposits base offering universal banking services with higher focus on retail banking.president of MCB Bank Ltd.525 (Billion) and assets amounted to Rs. Application for the listing of ABL shares in all the Stock Exchange Companies of Pakistan was made. The Bank also has the largest network of over 700 online branches in Pakistan and offers various technology. After privatization. as the world’s first bank to be owned and managed by its employees. In May 2005 Ibrahim Leasing Limited was amalgamated by transfer to and vested in with and into Allied Bank Limited. 76.Privatization 1991 to 2008 As a result of privatization in September 1991. with its existence of over 60 years. Allied Bank enjoyed an enviable position in the financial sector of Pakistan and was recognized as one of the best amongst the major banks of the country.LSE & KES. 87. It offers universal banking services. while placing major emphasis on retail banking.e. Muhammad Aftab Manzoor has taken charge as CEO and President of the Bank on August 13 2007. ABL was formally listed and trading of the shares of the Bank commenced w. Today the Bank stands on a solid foundation of over 63 years of its existence having a strong equity.

and such other instruments as may be approved by the State Bank) and investment of all kinds. scrips of valuables on deposit or for safe custody the collecting and transmitting of money and securities. obligations. drafts. bonds. Allied bank engages in following function The borrowing. scrips or other forms of securities (participation terms certificates. scrips (participation term certificates. securities (participation term certificates. shares. and withdrawable by cheque. collecting and dealing in bills of exchange.) as defined in the Banking companies’ ordinance. ABLhas proved its strength as a leading Banking sector entity. raising. order or otherwise. the lending or advancing of money either upon or without security. the purchasing and selling of bonds. bills of lading. of deposits of money from the public. underwriting and dealing in stock. the granting and issuing of letters of credit. the buying. term finance certificates. traveller’s cheques and circular notes. selling and dealing in bullion interest the buying and selling of foreign exchange including foreign bank notes. issuing on commission. Allied Bank limited (ABL) is principally engaged in the business of Banking (“banking means the accepting. the acquiring. term finance certificates. warrants. the negotiating of loans and advances. term finance certificates. the drawing. debentures. railway receipts. hundies. and such other instruments as may be approved by the State Banks) on behalf of constituents or others.2 Nature of the Allied Bank Limited Allied Bank Limited (ABL)is one of the dynamic commercial Bank of Pakistan by capturing largest market share amongst new Banks and has provided good value to its shareholders. holding. promissory notes. the receiving of all kinds of bonds. discounting. debenture stock. repayable on demand or otherwise. draft. and securities whether transferable or negotiable or not.2. making. accepting. funds. selling. and such other instruments as may be approved by the State Bank) and other instruments. for the purpose of lending or investment. 7 . debentures. coupons. 1962 over the year. certificates. or taking up of money. buying.

76 13.902 28.795 Deposit 61. Revenu 5027.239 25.468 6120.008 2.104 17.3 Business Volume of ABL: Rs in (Million) 2.333 14.431 Pre-tax Profit 1.859 3.243 2. which shows a tremendous growth in deposit.3 billion but in 2009 it decrease due to opening of new branches all over the Pakistan.923 2.625 39.778 69.737 8 .022 2.838 85.com.210 After tax profit 1.027 6.264 14736.pk) website 25000 20000 15000 10000 5000 0 2005 2006 2007 2008 2009 From deposit point of view it can be concluded that from the year 2005 to 2009.179 100.78 12.977.007 2.48 8. 99.780 Investments 22.92 Source: ABL (www.83 9 143.006 2.657 83. Advances 44.708 28.2.2 billion in 2008 it was 3. From the table we also conclude the result of pre-tax profit which also show increase from 1. From the above table a conclusion can be made that bank sees up and down from earning per share but it is only due to opening of new branches.103 1. T.734 10333.681 131.120 10.9 billion to 2. as the number of required branches once achieved the bank will increase its earning per share. the total deposits has increased about 100-110%.736 19.347 2.42 7. The overall progress of the bank is very good in private sector.250 2.005 2.009 Total Revenue 5.708 118.175 19708.319 .037 Return per Share 8.abl.

3 Employee in ABL Bank Year Employee 2004 2005 2006 2007 2008 2009 6768 6909 7139 8181 8325 8713 Staff Strength Permanent Temporary/on contract Bank’s own staff strength at the end of the year Outsourced Total Staff Strength Total 8.855 2.835 11.690 No of Employee in ABL Abbottabad (BISE) Branch Designation Assistant Voice President Officer in Grade-I Officer in Grade-II Officer in Grade-II I Senior Assistants Massagers Total No s 2 12 10 5 1 5 35 9 .713 142 8.

1. In order to obtain Allied Cash+ Card. where appropriate. The dully-filled form should be handed over the Manager of the Branch where the customer is maintaining his account. for ease of understanding. 4. The Customer can feel absolutely safe his Allied Cash + Card because it can only be used with the Personal identification Number (PIN).1All-Time Banking Allied Bank has introduced the Allied Cash last year also referred to as ATM card. Other services include customer being able to inquire about the balance of his/her account or printing an abbreviated (mini) statement showing the most recent eight transactions up to the previous working day.1. The customer will now have the convenience of withdrawing cash from any of ABL’s ATMs (Auto Taller Machine) conveniently located in major cities at any time of the day or night even on closed days/holidays. Non-account holders would first have to open an account with Allied Bank to have access to this facility. which is given to him by the bank.4 Product/ service Lines of Allied bank of Pakistan 4. the customers simply have to fill out prescribed Application form available at selected Allied Bank Branches in Karachi and Lahore. Graphical representations have been employed.2Allied Umrah Aasan 10 .

Its salient features are: o o o o o It is free of interest and markup. o Due to any reason if Umrah Applicant needs to withdraw his/her application. Aazmeen have to submit a copy of their NI Cards and Passports with the application.000/.000 per o person as first installment. The charges include Airline return ticket. Aazmeen from Lahore and Islamabad will have to pay an extra Rs. Makka to Madina and Median to Jeddah).for Airline fare. It allows the intending pilgrims (Aazmeen) to make payment of Umrah charges in monthly installments. 4. issues its Master Card to 11 . 3. Fee Visa.1. Using this scheme family. who cannot afford to incur the lump sum expenses for Umrah. 2. 45.person on every 5th day of the month. Umrah packages are of 10 days duration. Rest of the money is to be deposited through monthly installments of Rs.S.3Master Cards The customer can now become the holder of a true Credit Card here in Pakistan. U. he/she will given a refund of all money deposited through installments till that time. relatives and household servants can be sent for Umrah. Around 2500 Aazmeen are to be sent for Umrah every month. Applicants have to deposit the monthly installment using deposit slips still 5th of o o every month.This unique scheme facilities those persons. 2. Defaulters will not be included in the draw. Total package for Aazmeen from Karachi is being Rs. Lucky winners of the draw are duly informed by their respective branches. o o Makka. o If an Applicant wins in the draw he/she is required to pay the balance amount through monthly installments on returning from Umrah. family accommodation and traveling within Saudi Arabia (Jeddah to Application for whole Family/Group can be filed through a single Application form.000.A.000/. o All applicants of a family/group are sent for Umrah even if only one member of that family/group is declared successful in the draw. At the time of submitting the application Aazmeen has to deposit Rs. Allied Bank under license from Master Card International.

Eligibility Age – 18 to 64 years. Hotels. 1.annual fee). Minimum Deposit amount – Rs.50% per month is charged.000/. Life insurance up to 5 times of the customer’s deposit amount with no extra cost. The features of this scheme are: Prospective client who will maintain a return free deposit for at least 3 months shall eligible to avail interest free/mark-up free finance.500/.000. Once purchases are made. but if he decides to spread the payments over several months a service charge @ 2.anyone meeting the eligibility criteria. It doesn’t cost the customer anything if he pays in full within the due date. 500/membership fee + Rs.(Rs. Insurance cover up to Rs. Full payment of claim in case of Death Permanent total Disability. Nursing Homes. 12 . Pharmacies. 5. Payment of profit on monthly basis. No medical examination for deposit up to Rs. 500. In case the required payment is not received the operation of the Master Card is automatically. In order to avoid disruption in use of the card. the card is activated after receipt of overdue payment only. Allied Bank – Master Card is safer than cash and simpler than checks. restaurants. 50. With the Allied Bank Master Card the customer is assured of a service meeting the highest international standards maintained by Master Card. the customer signs a voucher and that’s it he is not required to take extra troubles. it is essential that a least minimum payable amount of the bill be paid regularly.and age up to 60. Once the customer obtains his card. 4. The Allied Bank Master Card helps the customer pay without the complications of cash or checks. Premium shall be paid by the bank.000/. In such case. automatic renewal on face value. he simply presents it at Shops.4Allied Tahafuz Deposit Scheme Brings the customer unparalleled life insurance covers along with attractive monthly profit.000/. As Competitive rate profit.000/. suspended by the system. Supermarkets. The customer has been an account holder with the Allied Bank to apply for the Allied Bank – Master Card that is available to the customer for an initial fee of Rs. 2.or multiples thereof.1. The statements also give the last date for payment so the customer can avoid paying service charges. Every month the customer receives a statement showing details of transactions. outstanding and the minimum amount due. Petrol Pumps and hundreds of other establishments which display the familiar Master Card sign throughout Pakistan and abroad.

Deposit amount Rs.1. 4. 3 months with automatic rollover facility.(non-refundable) plus documentation cost on actual basis. routed through designated foreign exchange companies and correspondent banks with whom special arrangements have been made in this regard.and multiples thereof. Minimum deposit period for eligibility of finance. 6 months. Premature encashment allowed. Through the Allied Express Services.075% p.1. The Hajj forms and other related services are provided by the bank. the 13 .1. 3 months. Same amount of finance for half the period of deposit or same period of finance for half the amount of deposit. Maximum period of finance. The aim of this scheme is to provide an opportunity to the depositors to take advantage of a real Riba Free economic environment and avail Prospective client will maintain a return free deposit for at least 3 months shall be eligible to avail interest free/mark-up free finance. ABL ensures that beneficiaries’ Accounts in ABL branches are credited with in 48 hours of receiving home remittance information from overseas. Minimum deposit period. 4. In case of default/delay in repayment @ 0.000/. 100.4. Maximum period to avail finance 12 months from the maturity of deposit. 100/. Every month (30 days) completed by the deposit shall be taken into account for calculation of entitlement of finance.a. However. Formula for calculation of entitlement of finance.6Home Remittances The Bank having a network of 755 branches all over Pakistan.5Allied Karzas Scheme (No Interest/Markup) Allied Bank moves a step forwards by introducing interest free banking through Allied Karzas Scheme. Finance proposal processing fee Rs.7Hajj Services The Bank serves the intending pilgrims by helping them in performing this religious obligation.055% per day (20. without any penalty/charge._ to be placed in charity A/C. undertakes to provide safe and instant payment of remittance from expatriates.

each year. immediately after the Hajj policy is announced by the Government of Pakistan. Consumers may drop bills with crossed checks into a drop box available at the branches under “Checks Drop-in” system. For convenience of the customers.1. gas and telephones.8Utility Bills All branches of the Bank collect utility bills of electricity. 4. Hence banks introduce traveler’s checks in order to protect against any contingency. Non-farm credits are allowed for livestock (goats. 4. factory including social forestry and fisheries (inland and marine excluding deep sea fishing).terms and conditions for accepting the Hajj forms from intending pilgrims are in accordance with the Hajj Policy announced by the government.1.1.12 Allied Bank Rupee Travelers Checks Carrying cash to strange alien location can prove to be risky as a single incident can render one without monetary backup of any sort. Hajj applications are available with all branches during Hajj season. Utility Bills are collected by the branches during banking hours and also in he evening banking on all working days.10 Lockers Allied Bank Lockers are available in three different sizes Small. sheep and cattle).1.1. Imp clients/customers through large number of authorized branches where trained and motivated staff is available to handle the business on behalf of 4. Bills can be paid through cash or checks. farm and non-farm credits. Locker holders need not have an account in the Bank.9Agricultural Finances Bank under Agricultural Financing Schemes envisaged by he State Bank of Pakistan extend short.11 customer. 14 . The farm credits are extended for production (inputs) and development purposes. medium and long term. poultry. Medium and Large on a yearly fee. 4. 4.

The degree to which officers and employees contribute their talents to the progress and welfare of the bank in discharging duties and responsibilities. The delivery of goods is made against payment. this is not the reporting hierarchy but merely represents the positions and grades on the basis of seniority and grades.quarterly. that is the acquiring of deposits.13 Seasonal Finance Running Finance is a short-term loan allowed by the bank for a period of one year. which could be monthly. The markup is recovered on the products of daily outstanding balance. The running finance account can be operated and daily sale proceeds can be deposited into the account. the investing or converting such deposits into earning assets. are performed. The running finance is suitable for meeting day-to-day financial needs of the business.1 Management Hierarchy The management hierarchy represents the different positions and designations in the hierarchy of the ABL. and the servicing of such deposits. President Senior Vice President 15 . The manner in which the functions of banking. biannual or annual. Demand Finance is disbursed in lump sum or in accordance with the agreed disbursements schedule and it is repayable as per the agreed installments. ABL STRUCTURE 5 Comments on Structure of ABL Successful and profitable banking management depends on two principal factors.4.1. 5. However. Cash Financeis allowed against pledge of goods.

The middle level management consists of regional general Manager and Regional Controller of Operations. II and other lower Staff 16 . Any person in the hierarchy above the branch manager can be appointed as RGM and controller operations. These positions are not fixed.2 Functional Hierarchy Branch Manager The functional hierarchy represents the reporting order in the hierarchy of ABL. President and CEO Board of Director Head of Departments Regional General Manager Controllers of operation Branch Manager Office G-I.Vice President Senior Executive Vice President [rosodmemtPresident Executive Vice President Regional General Manager Managerxecutive Vice President 5. The hierarchy has president and directors at top management level and officers Grade I. II and Grade III at the lower level management of ABL.

to manage their policy making body/decision making bodies which are given as under: a. Board of Directors b. regional functionality. 1 representative of GOP. (Annexure Attached) 5. money circulation. Head Office is an administrative office to manage all its branches and offices.5 Executive Committee 17 . and 1 for private sector so it comprises of 7 persons.3 Structure of Head Office Allied Bank of Pakistan Head Office is situated in Karachi having branches. and their human resources and so on. 1 Representative of PBC. ABL has its offices and corporate branches spreader all over the country. Executive Committee c. Divisional Head Offices and Provincial Headquarters The head office has nine divisions which are divided in to different wings. 5. The Head Office is responsible for central affaires and delegation of powers / authority to the Regional Headquarters.5. 3 SEVPs.4 Board of Directors The Board of Directors (BOD) of ABL is comprises of President.

To manage these regions. 5. looks after the affaires of the regions. The ABL has 29 regions in four provinces and Azad Kashmir. Quetta and Peshawar. These nine divisions are: Management Support Audit and inspection Treasury Management Marketing and Development Credit Policy Management Overseas Banking Special Assets Management Bank Secretariat 5. a Regional Management Committee is allocated which consists of the following designations. EVP and divisional chiefs.6 Divisional Chiefs The Bank has nine division which are working under SEVP.8 Regional Management Committee The management has designed the banking structure into regions and their sub-divisions.The executive committee consists of President and nine members and one of the members also perform the functions of Secretary of the committee. The provincial head quarters of these chiefs are situated in Lahore. This body monitors day to day affaires of the Bank and is sanctioning authority of financial and business proposal. The executive committee nominates the divisional Heads. Karachi. 5.7 Provincial Chiefs To enhance and manage the performance of banking system. • • • Business Chief Operational Chief Risk Management Chief 18 . the administration also has divided the power of sanctioning finance and other credit facilities through provincial chiefs by province-wise.

There is foreign exchange department which works under deposit department (Annexure-III shows this 6. “ Mr. relation at end of reports.• Compliance Chief 6 Organization Branch Structure 6. Shahid” SVP is the chief Manager and Mr. At present branch is providing services in all areas of banking.) There are six departments in Abbottabad Branch i.2 Staff order of this Branch 19 . Asim is operation manager who is AVP. In ABL Balakot branch Balakot was opened in 1997. There are 10 employees in Bank.1 Structure of Balakot Branch.e. Credit department Accounts department Deposit department Remittances department Cash department IT department Credit and Accounts department directly comes under the supervision of chief manager the rest of department answerable to manager operation and manager operation responsible to chief manager.

Teller works under customer service manager. 20 . Offices Grade-I. Officers Grade-II. Customer Service Manager and HR Manager.The staff order of the branch is as follows: Branch Manager Officer G-I Officer G-II Customer Service Manager Manager Operation Teller Messenger Branch Manager is a head within the branch. HR manager is also works under branch manager having responsibility to hire contract employees within local community and also to handle and manage payroll system for branch employees.e. cash department and IT department having their proper designations while customer service manager is also under branch manager has to take the responsibility to handle and motivate customer. account department. Officers Grade-II & II are also divided into these departments like credit department. remittances department. Messenger and teller also works under HR manager. Under branch manager there are four main designations i.

.3. vouchers and advices. Afterward it will go for signature verification after which it will be given to cashier for payment. Then cheque is passed on to the computer operator to entry it in computer.3 ABL Various Departmental Review: Different departments of ABL are working which are given as under: 6.6.1 Current Saving Department In ABL current saving department mainly deals with cheques. 21 . First of all a cheque holder have to present his/her cheque to the person responsible for issuing the tokens.

credits & balances) Profit due. 22 . Statements: To close the daily record a number of statements have to be printed out. Inoperative and Unclaimed a/c All ATM transactions Detail of GL entries (official & non customer transactions) Summary of all a/c (debits.remittances are subject to ultimate receipt of advices from the corresponding branch to materialize the transactions. etc.Computer Operations: In ABL the computer section have several duties that are as under. Dormant. Statements like: Day’s transactions (sequence) Overdrawn facilitated a/c statement Markup sheet Inter branch transactions Detail of PLS and Current a/c Day’s transactions (a/c wise) Operative. Daily T ransactions: To record all the transactions in case of deposits made by the people and also to record all the withdrawals made by the people or customers. Most of the-inter branch or intra branch. Vouchers: To record all the vouchers made by the remittance department. Advices: To record all advices received from other branches. Then these vouchers are sent to computer operator to record those in computer. Remittance department have to prepare debit and credit vouchers for about every transaction recorded in their department. These advices also have to be recorded in computer. transferred. Each transaction has to be recorded in its appropriate head of account with the help of prescribed codes. disbursed.

The borrowed capital of the bank is than the bank own capital. All the commercial banks declare the rate of profit every year that is paid on these accounts on the basis of their monthly credit balance. The bank may therefore use these deposits. Commercial banks do not receive these deposited for safekeeping purpose only. When the bank receives the amount of deposited as a depositor. Larger the difference between the rate at which these deposits are borrowed and the rate at which they lend-out the greater will be the profit margin of the bank. Thus the bankers are not required is always available to bank for giving to loans to their customers. it become the owner of it. the depositor is required to give to prior notices a week or two. Deposits are referred to as the “life blood small” for any banking sector. The owners of such account are not allowed to withdraw money more than once are twice a week. Larger the funds lend-out the greater will be the return earned on them and greater the amount of return on these deposits earned greater will be the profit for the bank.6. Thus these deposits also serves as source of credit certain by the commercial banks. Profit will be determined on daily product basis while it will be paid on monthly basis & will be paid on the minimum balance between the first day & last day of the month. as it deems appropriate. Bank’s borrowing is mostly in the form of deposits. But there is an implicit agreement that the amount owned by the bank will be paid back to the depositors on demand or after a specified period of time. The rate or profit on this type of account varies from time to time. Receiving of deposits is a basic function of all commercial banks. Taxes will be imposed according to the rules & regulation. The bank will determine the proportion of profit & its decision will be final. In case of withdrawal of large sum.3. Zakat will be deducted on the exceeding amount as exempted from the Zakat deduction.2 Account Department Bank borrowing funds from outside parties is more important because the entire banking system is based on it. These deposits are lend-out to different parties. Kinds of Account: There are numbers of account that ABL offers to its customer keeping in mind their needs and dealing. Saving Bank & PL Account: In Pakistan the saving Bank accounts are know as profit and profit and loss sharing accounts (PLS A/C) fowling the illumination of bank. It is because of this interrelated relationship. In Pakistan post offices & 23 .

The profit allowed on these account depend on the duration longer the duration of the deposits the higher will be the rate of profit. the bank allows the overdraft facilities to current account holders & the prevailing rate of markup is charged from these customers. 24 . Every time money is deposited with the bank an application from filled and the bank issue a fixed deposit receipt for amount deposited along with specific period. In ABL the minimum amount required to open the current account is Rs. While two opens joint account and partnership account are more person and the bank fallow their instructions for the conduct of the account. This type of account you can open joint account also which can be operated by anyone. Current Account: There is no limit of withdraw of money from these accounts. No profit is paid to account beside this that the account holder has the facility to taking s much money as he wants. The depositors who are wishing to close his account are required to present his cheques to the bank in order to draw the credit balance and to close the account. In general. 500. The depositor is given a cheque book. The operation of fixed account is different from saving & current accounts. This is because the depositors may withdraw current deposits at any time and as such the bank is not entirely free to employ such deposits.national saving centers also maintain this savings bank account to encourage saving habits among the people. Fixed term deposits may be in the joint names of two or more person. The customers are required maintaining the minimum credit balance in their account in case of failing incidental charges are recovered from defaulters. Fixed deposit receipt is given to the depositor and the bank retains the counterfoil of the same receipt. At the time of opening this account. Fixed Deposit Account/Term Deposits These deposits are also called as time deposits : because these deposits are based on the fixed duration.500 is to be deposited. In practice the bankers do not allow any profit to such deposits in Pakistan. Subsequently the account is opened & account number is located. The period for which these deposits are kept with bank are ranged from seven days to ten years in light of the agreement between the customer and the banker. Similarly limited companies can also open their current account. The payment to one of those people will not discharge by the bank without the authority of others. a minimum amount of Rs. Individual account is opened in the name of the single personal one person on whose name it is opened only conduct it.

Signature card: At the time of opening an account a specimen signature card containing two signature of the customer is required which the manager of the branch attaches with application form. Application from for Opening of Accounting: A person who wishes to open a bank account is required to complete this from the personal information is to be furnished. 6. The application signs the declaration to effect that he has understood the rules and regulation of the bank. Introduction: As required by the banking law the new customer needs to be introduced by the account holder of the same branch where the account is being opened. Cheque Book: After completing formalities for opening saving and current a cheque book s issued to the customer for withdrawing cash from his or her account at the time of need. The bank also charges excise duty on cheque book. During the operation of account the signature is verified when the cheque is presented for payment . The cheque contains minimum 25 pages & maximum 100 pages.Opening and operation of bank account: As discuss earlier there is a prescribed procedure for opening different types of account. The manager or any other bank officer may introduce the new customer if they know them personally . Following steps re followed while opening a new account.3.3 Advances Department 25 .

Profitability Principle: The end result of every business activity should be to earn some profit. The security should be considered a safety for the bank only in case of unexpected emergencies. It is always beneficial for the bank to finance for short-term requirements. The sources of repayment should be clear and definite Purpose Principle: The purpose of the advances should be legitimate and productive. It is also our duty to ensure that our lending policies are not against the social conditions or bindings 6. National Interest and Suitability Principle: It is our moral as well as legal obligation to ensure that no loaning is running counter to national interest.Lending Principles : The basis function of the bank is to accept deposit and lend money to the borrowers against a spread so to be able to give some profit to the depositors as well as to earn profit for the bank. The borrower should not invest the money borrowed in unproductive or speculative business.4 Credit Department 26 . Liquidity Principle: The money which has been landed to the borrower should be returned to the bank on demand or as per repayment schedule provided by the client.. While lending the money to the borrowers the bank should observe the following lending principals: Safety Principle: It means that the landed money will come back along with interest or service charges etc. All the relevant documents of securities must be obtained & got valuation of the property or any other security should be assessed correctly. Security Principle: The proposal should be dealt on its merit not on security. The credit restrictions by the central bank should not be violated & it should also be ensured. Spreading of Risk Principle: It is always safe for the bank to spread the risk in large number of borrowers instead of loaning huge amount to few big shots. Similarly the bank must get some profit out of the activity of lending so that the depositors could get their shares as well as the shareholders could earn something for their investments. funds are not being utilized for speculative business. It should be ensured that the banks.. it is better to obtain different types of securities instead of concentrating on one security.3.

Allied Bank Ltd. By Cash Credit: In this the bank lends money to the borrower against tangible security. Lien: Lien is the bank right to with hold property until the claim on the property is paid. Cash credit is favorite loan for large commercial & industrial concern . The total amount of the loan is not paid in one installment. receives the saving of the people and lends it for short term to its customers. 27 . When it is against collateral securities. Short Term Finance: Allied Bank Ltd. Beside these ABL also lend money against life policies and immovable property. It is also called term loan. The borrower has to pay markup on the amount borrowed. but the actual or constructive possession remains with the creditor or bank though the borrower has no right to sell it. The bank looks at their lien as a protection against loss or overdraft or any other credit facility. it is called “Secured Overdraft” & when borrowing customer can not offer any collateral security except his personal security then the accommodation is called “Clean Overdraft”. By Overdraft: This the most common type of bank lending.The main function of the credit department is to lend money to the customer. In ordinary lien the borrower remains the owner of the property. ABL allows its customer to withdraw an excess of the balance form their account which the borrowing customers have in credit and thus called overdraft. Lends money in the form of clean advances against promissory notes as well as secured advances against tangible and marketable securities. for the construction of building and for the purchase of machineries. Short-term finance is generally given for a period of one year or less in durationdium Term Finance. The duration range of the intermediate term finance is from one year to three years. Long term finance is generally given for the compilation of big projects. Intermediate term finance is usually given for the expansion of an existing business or for the purchase of new equipments. This facility is given to regular reliable & well established customer. When a borrower requires temporary accommodation. Long Term Finance:This type of finance is required for the period of more than five years.

ABL transfers money from one place to another by the following means: Mail Transfer: When a customer requests the bank to transfer his money from this bank to any other bank or the branch of some other bank. rather the profit margin is different in different type of loan. 6. branch gives tern & condition to the party. When approval from head office is given. the first thing he has to do is to fill an application form.3. then firstly.Producer of Applying for Loan: Any customer who applies for loan should have an account (usually current account) with ABL branch concerned. If the customer is the account holder of the bank. Bank does not advance 100% loan against a security. That account must be in running position. The ABL made payment of only open cheques on the counter and prohibits the payment of crossed cheques. The remittances department transfers the funds from one bank to other bank and from one place to another place. In which he states that he/she wants to transfer the money from this bank to that bank by mail. 28 . he has to deposit the money and than above procedure will be adopted to transfer his money. In remittances department the collection take place.5 Remittances Department Another important department in ABL Khyber Bazar Branch is Remittances Department. operating personal will proceed further with steps like: Writing a debit voucher for a/c holder’s a/c Preparing an advice in favor of stated bank/branch Writing credit voucher for GL Mail the advice If the customer is not the account holder of this bank.

company or local authority. Filling a form and depositing the amount written on it prepare 2} Draft. firm. Demand Draft: Demand Draft is another way of transfer of money from one bank to another bank. Payee is a person named there in. no excise duty is charged only commission and telegram charges are charged. It is neither transferable nor negotiable and as such it is payable to the payee named there in. It is a written order to its branches or to another bank to pay the stated amount on draft. from where he is given a receipt and in accordance with this receipt he is issued The following are the main essential of draft: It is a Negotiable Instrument. Unlike pay order. These are 29 . drawn upon and payable by the same branch of the bank. The sender deposits the money to be transferred plus bank charges at the bank counter. Issuing/paying branch is one which issues/pays on presentation.3. 6. The remittances officials send a telegram to concerned branch with specified code words and the receiving branch makes payment to the beneficiary. The following are the parties to a pay order. ABL has introduced the fastest transfer of money. Pay Order: Pay order is the most convenient simple and secure way of transfer of money. On TT. Purchaser is a person. There are two basic functions performed by the cash department.Telegraphic Transfer: With the changing requirements of the customer.6 Cash Department This is the most important and critical department in a Bank. The sender is required to apply through a form in which he will give all the necessary details about the sender and beneficiary. The sender deposits the amount of DD plus commission and other charges on the bank counter. Vouchers are sent by ordinary mail to keep the record. It is issued by. a form is required to be filled for the issuance of the demand draft in which necessary particulars about the beneficiary and sender are given.

The cashier collects the cash and counts it and after verification the cashier stamps the deposit slip.3. Every customer has its own ledger account and has separate ledger cards in which his / her total record is kept. amount of the money both in figures and in words. After filling the deposit slip the Cash amount along with the deposit slip is submitted with the cashier. which is to be drawn. 6. For opening the account NIC & introduction is required of the same bank. Cashier has to prepare a list of bills’ serial number. For deposit of the money the individual has to fill the deposit slip in which the account holder writes his name. The cashier also record the deposits made by the customers in credit sheets daily. Euro & Pound The account is open with 1000 dollar if it is less 5-dollar per month is deducted. First of all the customer presents his cheque to the cashier The cashier records the account number and the amount. Bill collection is also one of the main functions of bank.Receipts: An individual who has account in the Bank can deposit money in his account.7 Foreign Currency Department Like Pak rupees account the foreign currency has many accounts like Saving account Current account Term deposit account. Account number. If the computer passes the cheque. a copy of which is to be sent to the corresponding organization. The bank deal in three type of foreign currency account Dollar. Payments: The procedure of clearance of a cheque or payments is as following. The deposits of all customers of the bank are controlled by mean of ledger account. the Passing officer signs the cheque and sent it to the cash counter then cashier pays the written amount to the customer and then in the end cashier records the amount paid in computer. One part of the deposit slip is given back to the customer and the other part of the deposit slip remains with the bank for the record purposes. Then the cashier check the cheque number in the computer for the verification whether the account holder has such amount in his account which he is demanding or not. If any person wants to import 30 .

Lahore. secondly clearing stamp of next date and If the cheque is not local then the inter city clearing stamp is required. if the account holder of ABL receives the cheque of other bank like City Bank. The institution N. If any branch needs foreign exchange they sent to this branch.T service is only in few cities. The account holder can sent the amount in foreign bank account. Cheque number and the amount are written in the register.T. They send the different cheque to different banks. The branch sent excess foreign currency to its main branch.I. Cheque book is also issued to the account holder & the foreign currency Account number is given to him. ABL provide foreign currency on Pak rupee at booking rate and the central office sent Rates In foreign currency department the remittance is sent through Foreign Telegraphic Transfer. provides the services in clearing the cheque. The people in the foreign country sent the amount through S.T service is not available so the cheque is sent through T. Weekly and monthly report of all the transaction is given to the stock exchange.S. Debit Credit Voucher is used.F. Rawalpindi.goods from foreign. 6.T.F. The cheque of inter city is send through N.F. When any transaction is made the bank inform stock exchange daily.T. And where. The N. The foreign currency note is counted and recorded in the cash memo book. Different accounts can b open like joint account or company account. And the cheque book is return while closing the account. 31 .C. The charges are deducted while closing the foreign currency account.3.I. an account is required and for international trading the FC is needed. the N. and he submits it in ABL branch to be cashed. After this three kind of stamps are required first bank name stamp.I. If any transaction is made the daily report is given to the central office Karachi daily. In this FBC & FBR is done. Some cheques are local and some are outstation.I. like Karachi. At the same time the clearing process starts. The thankful letter is sent for opening the foreign currency account to account holder and introducer.F.8 Clearing Department In clearing process.F.I. First the bank name. Habib Bank Limited etc.W.

The clearance of cheque is informed through advice. For this purpose the Debit & Credit voucher is used. Some cheque is drawn on ABL. When they realized the opposite entry is made. The account holder account is credited. Out Ward Bill for collection: OBC means the cheque of other banks. Some cheque is not passed so they should return so Rs. When the cheque is cleared the today stamp is required. one copy is remain in the bank and the other copy is sent to the related branch. This is called outward clearing. 100 is deducted and if the cheque is inter city then the postage charges is deducted. These cheques will be entered in the outward clearing register. and postage 32 . And the advice is sent for the clearance of cheques. When they sent OBC the OBC is credit & OBR is debited and the advice is made on that time. It is entered in the OBC register. The income A\c commission is credited.

monitors returns / spreads and reports on various performance indicators including asset / liability mismatch. While ensuring overall financial management. regulatory requirements. which are Budget and Finance & DRC. independent from line management. FND is responsible for maintaining the account records and systems in accordance with internal policies. Finance division is further divided into subdivision. This ESVP is also DH (Divisional Head) of this department.4 Finance & Account Operations: The Bank’s management is responsible to establish and maintain an adequate and effective system of internal controls and procedures. All 33 . It also establishes policies and procedures relating to finance function. This division is responsible for keeping the records of all the transaction of different branches. corporate governance and international accounting standards. financial reporting and accounting function. financial control. The management is also responsible for evaluating the effectiveness of the bank’s internal control system that Covers material matters by identifying control objective and reviewing significant policies and procedures. inter-alia includes. The Finance Division (FND) is the hub of all financial information for maintaining statutory accounts and measuring the performance of the Bank. There are 15 people working in this department for all branches of Allied bank and the final authority in this department is ESVP. review and assessment of the adequacy and effectiveness of the control activities across the bank as well as to ensure implementation of and compliance with all the prescribed policies and procedures. 6. The scope of Audit and Credit Risk Review Group (A & CRRG).FINANCE DEPARTMENT & ACCOUNT Structure of ABL Finance & Account Division: ESVP heads finance division.

control activities are ongoing process that includes identification. In addition. 34 . through its regional offices.significant and material findings of the internal audit reviews are reported to the Audit Committee of the Board of Directors. the management of Allied Bank is in the process of adopting an internationally accepted COSO (Internal Control – Integrated) Framework with the assistance of a reputable advisory firm in accordance with SBP Guidelines on Internal Controls. ensures adherence to the regulatory requirements and bank’s internal policies and procedures. Vigorous efforts are made by Operations Group to improve the Control Environment at grass root level by continuous review & streamlining of procedures to prevent & rectify control lapses as well as imparting training at various levels. The bank has already completed the detailed documentation of the existing processes and controls. Also projections of evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may eteriorate. Recognizing it to be an ongoing process. The Bank’s internal control system has been designed to provide reasonable assurance to the Bank’s management and Board of Directors. The Compliance Group. no matter how well designed. The bank has addressed some of the major gaps identified during the exercise and is at an advanced stage of developing and implementing remediation plans for the remaining gaps. evaluation and management of significant risks faced by the Bank. together with a comprehensive gap analysis of the control design. with specific emphasis on KYC/AML. Note: Structure and Functions of the Finance Department (Annexure attached) The Audit Committee actively monitors implementations to ensure that identified risks are mitigated to safeguard the interest of the bank. comprehensive management testing plans and framework are being developed for ensuring on-going operating effectiveness of key controls. The Internal Controls Division under the ambit of Operations Group is entrusted with the responsibility of expediting rectification of irregularities and control lapses in branches’ operations and various controlling offices pointed out through audit reviews. All Internal Control Systems. have inherent limitations that they may not entirely eliminate misstatements. However.

often close to top managers and to departments that develop the financial data those managers need. often up to 50 or 60 per week.Allied Bank expects the complete various stages of its Internal Control Program and achieve external auditors’ certification on internal controls over financial reporting in 2010. The example is cash flow projections 35 . The role of the financial manager. The team of CFO of the bank is will equipped with the latest computer technology to increase the efficiency of the bank financial operations. government agency. Financial managers of the bank play an increasingly important role in mergers and consolidations and in global expansion and related financing. and other type of organization have one or more financial managers. Financial managers oversee the preparation of financial reports. They commonly work long hours. The financial manager of the bank has specialized knowledge to reduce risks and maximize profit. The CFO of the bank monitor and control the flow of cash receipts and disbursements to meet the business and investment needs of the bank. direct investment activities. acting as business advisors to top management. is changing in response to technological advances that have significantly reduced the amount of time it takes to produce financial reports. ABL bank financial managers advise senior managers financial and other matters. financial managers typically have direct access to state-of-the-art computer systems and information services. particularly in the bank.5 The Role of Financial Mangers: Almost every firm. Managers also develop strategies and implement the long-term goals of their organization. The Board of Directors being ultimately responsible for the internal control system endorses the management evaluation and efforts to adopt above mentioned internationally accepted standards in improving controls and processes to ensure better risk mitigation. Work environment in Allied bank for financial manager: Working in comfortable offices. Financial managers generally are required to attend meetings of financial and economic associations and may travel to visit subsidiary firms or to meet customers. 6. The CFO of the bank work on teams. and implement cash management strategies.

The Bank. technology support impacts service delivery standards and customer satisfaction levels. The every new branch opened during the year was operational with on-line Banking from day one. The ABL has a countrywide communications network utilizing Satellite. trusts. Radio and Leased Line links. cash management and credit management to get new market for the bank and to attract business. They also manage the organization’s budget. This included the ABL bank Offshore Banking Unit in Bahrain. or programs. The other function of the bank CFO such as lending. The list covers a wide range from upgrading the SWIFT connectivity of the Bank. ( which was linked to the Head Office and the Treasury via a Virtual Private Network (VPN). The value addition from this area has made a significant contribution towards successfully expanding and managing the customer base of the Bank. This has provided the Bank with on-line country wide ATM / Inter-branch transaction capability. Through it. The Bank's existing systems were also updated. and investments.are needed to determine whether loans must be obtained to meet cash requirements or whether surplus cash should be invested in interest-bearing instruments. which is now known as "One-Link". the Local Area Network (LAN) in each branch is connected with the Wide Area Network (WAN) of the Bank. The CFO of the bank also responsible of Risk and insurance programs to minimize risks and losses that might arise from financial transactions and business operations. operations. including sales. mortgages. along with a foreign partner Bank.6 Use of Electronics data in decision making: The Electronic Technology Division (ETD) is responsible for managing the Bank's technology needs. During the year. In an age of ever increasing competitive pressures. 6. He also establishes relationships with other financial institutions in terms of accounts. to enhancing an Oracle based Human Resource 36 . This includes not just establishing and maintaining technology infrastructure for providing operational support to all units of the Bank. or electronic financial services. but also encompass introducing latest state-of-the-art technology-driven products and service delivery systems. is the original co-founder of the first inter-Bank ATM switch in Pakistan. a large number of new technology initiatives were successfully implemented.

The range of utility bills presently payable via the Internet and the ATM network is to be increased. ABLhas fully automated transitive processing systems for back-office support. New initiatives include developing an Oracle based application for State Bank of Pakistan reporting. ABLhas an Electronic Technology System at Head Office Rawalpindi. Its branch network is connected online real time and its customers have access to off site as well as on site ATMs.all over Pakistan. 5. Electronic Bills Payment System via the Bank's ATM network and the Internet.Management Information System. Data Mining and Warehousing Project. the Bank will focus on improving customer service standards and products range by focusing on new and emerging e-commerce and internet related technologies. subject to agreements with the utility companies. The technology area has ambitious plans for the future. The Electronic Technology System provide following services: Online Banking Internet Banking Auto Teller Machine (ATM) Phone Banking Balance Transfer facility Online Availability Of Different Application Form Technology has played a pivotal role in meeting customer expectations. particularly with respect to speed and quality of service. This system provides services to the individual-to-individual Accounts Holders. In addition to the above. information required by upper Management / State Bank & Government Departments.4 Mobilization of funds in ABL: 37 . and enhancement of the ATM network to the international CIRRUS network standards. The list includes Call Centers. Its phone Banking services and Internet Banking facility allows customers to enjoy routine-Banking services from any here any time in the world.

089 23. For lending advances bank need money and this money comes from customer through deposit.140 81.pk Fixed Deposits are continuously increasing from 2005 to 2008 while in 2009 it is decreasing.068 129.762 13.463 20.829 have a continuous increase up till 2009 i. Markup income means the difference between interests paid to depositors and receives interest from loan.e. in 2006 these are at 97. The Allied bank top management. expert management and CFO do lot of working before introducing any scheme once they work on that scheme and take final decision than they launch that scheme.abl.999 40.465 Other Deposits 66 97.241 49.698 81. 2: Saving Account.484 www.com. So main source of funds in bank is deposit and same with Allied bank for mobilization of funds Allied bank top management make policies in the guidelines of SBP policy.911 57.904 a great change. (Rs. 415. And Allied bank also works for profit and this profit mostly comes from markup income and non markup income. Through which Allied bank raise fund.406 18.e.748 116. 1: C urrent Account.5 Generation of funds in ABL Financial institution works for profit and specially commercial bank the primary objective is profit. In Million) YEAR 2005 2006 2007 2008 2009 Fixed Deposits 6. 38 . The major change is in other deposits i. 3: Term & fixed Deposit Account. 125 290 415 Total Deposits 163.925 28.605 Current Accounts 11.264 140.854 64. in 2005 these are 66.550.349 29.997 Saving Deposits 42. 5. Saving deposits are increasing from 2005 to 2009 as well as current assets are increasing. In Allied bank following schemes are used for mobilization of fund. And non markup income means the income receives by giving different types of services to customers receive commission on the services.275 37.The basic function of bank is accepting deposit and lending advances and the difference is the bank profit.

Allied bank also invests in stock exchange and earns dividend this dividend income also the generation of funds of Allied bank. And through this Allied bank balance sheet figure goes up and these funds are used for advances and for investment purpose. Allied bank also gives different services to its clients which are in the shape of advances and also bank help them in there business in return of these loans bank gets interest and its commission which is also the source of funds. Allied bank also generate fund by dealing in foreign currencies.com. 2. 1. Deposits 3. (In Million) 39 . the reserve fund.Allied bank also generates funds through loaning / Investment & Commission / Exchange.pk 5. Paid up capital. Borrowing from non-deposit sources.abl. All these sources are very important sources and through this bank have generated lot of fund. (In Million) S. Allied bank make very strong policy in raising fund that’s why every year the figure of these funds increase upward. These are main sources besides these main sources.6 Sources of Fund in ABL: The sources by which Allied bank get fund are following.# Generation of Fund 200 5 1 Net Mark-up / Interest Income 407 200 6 448 2007 2008 2009 8780 1259 6 1514 3 3 7 2 Fee Commission & Brokerage Income 524 708 838 1013 1072 3 Dividend Income 37 26 51 109 137 4 Income from dealing in foreign currencies 112 180 356 5844 655 5 Other income 278 177 206 321 336 Total Income 502 7 558 1 1023 3 1462 6 1734 www.

9 Allocation of Funds in ABL: (In Million) S. Throw www.S. Allied bank always invests in safe investment due to which risk of loss is minimized.p k The bank has main three sources of funds: In 2005 reserve funds are 2759 which is increased to 6948 in 2009 which shows the growth of bank.e. In Pakistan all the financial institution works under the guideline of state bank same with Allied bank that strictly follows the policies and restrictions of state bank of Pakistan. 17553.com.abl.e.abl.com. 3.p k 40 .# SE CTOR 2005 2006 2007 2008 2009 01 Cash & balances with treasury Bank 6678 8762 11766 14879 13356 02 Balance with others Bank 2650 4847 5550 7333 3497 03 Lending to financial institutions 5770 2324 10172 8392 14444 04 Investment 22104 17239 25708 28625 39431 05 Advances 44777 69838 85976 99179 100780 06 Fixed assets 1979 2595 3192 3810 5128 Bank accept deposit and on these deposit bank gives interest for this interest and for his own profit bank allocate these fund in different sector. In 2005 deposits are 61656 which is also in increasing up till 2009 i.# YEAR 2005 2006 2007 2008 2009 01 Reserve Fund 2759 4317 5862 5814 6948 02 Deposits 61656 83318 118794 131839 143036 03 Borrowings 15903 13781 10562 14964 17553 www. Beside this bank also invest in other businesses but in the guideline of state bank. Due to these policies every bank maintain 8% of CRR (cash required return) with state bank of Pakistan which now 6% due to liquidity. 143036 and also the borrowings are 15903 in 2005 increasing continuously to 2009 i. State bank of Pakistan has check and balance on banks that they not invest fund of depositor in risky investment. The main allocation of fund in Allied bank is lending advances from these bank earn interest income through which he pays to depositor and remaining difference is bank profit.

In the United States. These statements provide an overview of a business' profitability and financial condition in both short and long term. reports on a company's assets.Reconciles the difference between net equity at two different points in time.Also referred to as Profit or loss statement. Some companies also issue a statement of stockholders' equity and a statement of comprehensive income. the Securities and Exchange Commission (SEC) has the legal responsibility for establishing the content of financial statements. There are four basic financial statements: 1. Balance Sheet . Income Statement . 2. Cash FlowStatement . but it generally defers to an 41 . which provide additional detail on changes in the equity section of the balance sheet. liabilities and net equity as of a given point in time. Financial statements issued for external distribution are prepared according to generally accepted accounting principles (GAAP).Reports on a company's cash flow activities. which are the guidelines for the content and format of the statements. 5. 3.Also referred to as statement of financial condition. Allied bank also maintains 6% CRR with state bank of total demand/time liability which help them in case of emergency. 4. an income statement. Statement of Stockholder's Equity . reports on a company's results of operations over a period of time. particularly its operating. such as investors and lenders of funds. investing and financing activities.8 Critical Analysis of Theoretical Concepts Financial statements (or financial reports) are formal records of a business' financial activities. Financial statements provide information of value to company officials as well as to various outsiders.which depositor has trust on banks. and a statement of cash flows. Publicly owned companies are required to periodically publish general-purpose financial statements that include a balance sheet.

Financial analysis is then performed on these statements to provide management with a more detailed understanding of the figures.independent body. These statements are also used as part of management's report to its stockholders. liabilities and owners' equity (net worth). The balance sheet. the Financial Accounting Standards Board (FASB). also known as a "statement of financial position". thus providing them with the basis in making investment decisions. 1. promotion and rankings. Financial institutions (Banks and other lending companies) use them to decide whether to grant a company with fresh working capital or extend debt securities (such as a long. to determine and promote accepted principles. Owners and managers require financial statements to make important business decisions that affect its continued operations. Internal Users: Are owners. Users of Financial Statements Financial statements are used by both internal and external users. Banks. as it form part of its Annual Report.term Bank loan or debentures) to finance expansion and other significant expenditures. managers. 2. Financial analysis are often used by investors and is prepared by professionals (Financial Analysts). employees and other parties who are directly connected with a company. Employees also need these reports in making collective bargaining agreements (CBA) with the management. together with the income statement and cash flow statement. Prospective investors make use of financial statements to assess the viability of investing in a business. reveals a company's assets. External Users: Are potential investors. in the case of labor unions or for individuals in discussing their compensation. government agencies and other parties who are outside the business but need financial information about the business for a diverse number of reasons. Balance Sheet A balance sheet. make up the cornerstone of any company's 42 .

financial statements. the financial statements are built to be used together to present a complete picture of a company's finances. or the means used to operate the company. How the Balance Sheet Works The balance sheet is divided into two parts that. Owners' equity. The balance sheet is one of the most important pieces of financial information issued by a company. and it represents a source of funding for the business. is the amount of money initially invested into the company plus any retained earnings. The main formula behind balance sheets is: Assets = liabilities + shareholders' equity This means that assets. If you are a shareholder of a company. It is important to note. are balanced by a company's financial obligations along with the equity investment brought into the company and its retained earnings. Assets are what a company uses to operate its business. must equal (or balance out) each other. that a balance sheet is a snapshot of the company’s financial position at a single point in time.rather. This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders' equity). it is important that you understand how the balance sheet is structured. shows how much revenue and profit a company has generated over a certain period. It's called a balance sheet because the two sides balance out. It is a snapshot of what a company owns and owes at that point in time. The income statement. based on the following equation. Neither statement is better than the other . how to analyze it and how to read it. on the other hand. 43 . while its liabilities and equity are two sources that support these assets. referred to as shareholders' equity in a publicly traded company.

44 .FINANCIAL ANALYSIS 7 Financial Analysis Financial statement analysis is the principal mean of reporting the financial condition and the result of operations of an organization. investors usually focus on analyzing profitability. There claims are short term. This analysis helps many parties in making decision who are interested in business activities. So bond holders are more interested in cash-flow ability of the firm. on other hand. suppliers are interested in liquidity of the firm. Similarly government agencies analyze financial data for the tax purpose. creditors and investors all undertake financial statement analysis. and the ability of the firm to pay these quickly is best judged by an analysis of the firm’s liquidity. To improve the quality of decision making. proper analysis of these statements helps a lot. The type of analysis varies according to the specific interests of the party involved. Investors are commonly concerned with present and future earnings. The firm itself and outsider providers of capital. or in other words we can say that financial analysis are carried out for the purpose of identifying the financial strengths and weaknesses of an organization by properly establishing the relationship between the balance sheet and income statement items. They would also be concerned with the firm’s financial conditions insofar as it affects the ability of the firm to pay dividend and avoid bankruptcy. For example. Management also analyzes financial analysis for the purpose of internal control and to check the performance of the firm. As a result. are long term. The claims of the bondholders.

425 17.145.573.038 85.392 85.497.282.987 1.842 6.866 11.810 3.054 5.919 2.430 11.004.525 61.051 15.588 182.Allied Bank Limited Balance Sheet From 2005 to 2009 2005 2006 2007 2008 2009 Rupees in thousands 6.759.656.018 2.036.703 1.999.812.444.964.512.430 11.230 13.732.053.148 7.392.265.033.459.794.336 .848 1.799.356.113 3.838.164 166.948.796 80.641 3.795 118.350 14.903.099.279 5.595.950 1.093 1.607 83.239.519 962.902 107.885 ASSETS Cash & balances with treasury Banks Balances with other Banks Lending’s to financial institutions Investments Advances Operating fixed assets Deferred tax assets assets Other LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities 973.770.587.141.099.265.159 1.766.333..023 3.046.315.162 1.998.172.780.242 8.227.006.847.144.459 806.901.754 6.680 1.060 101.324.431.905.976.300 37.1.002 3.005 44.839.192.627.781.066 12.219.143 22.500 2.087 17.386.915 39.925 14.149 7.171.271.944 1.338 1.700 2.340.839 10.448 136.753 526.055 13.358 169.814.587.000 2.777.592 1.986 1.980 2.077 2.026 8.987 NET ASSETS Share capital Reserves Un-appropriated profit Surplus on revaluation (Net to Tax) 45 .104.342 5.842 2.540 145.016.563 442.866 567.317.046.092 9.762.645 1.650.428 --1.625.156 25.979.907 166.393 2.997.217 736.603.555 10.016.507.301 5.425.166 4..690 131.538 69.842 6.053.218.899 5.230 12.535.678.707 .093 8.980.788 5.151.338 14.550.055 2.1.298 471.331 5.862.619.318.599 4.255.716 2.167.895 99.434.179.680 1.979 2.839.000.333 3.708.477 154.128.562.862 3.194 8.074 5.879.369.283 143.553.898 5.092 8.810.499 2.372 100.230 12.

000 4.385.740 2.487.036.085 1096881 -381227 Profit after taxation 1103065 1.593.206 4.715 4.996 2249974 2681012 Un-Appropriated profit brought forward .694.278.103.193 99.374 6977313 8685624 Net mark-up / interest income 2.842.– – 1617597 1799979 Profit available for appropriation 1103065 1.065 1. commission and brokerage income 524.529 3.948 1.825 112474 2361251 Other income 278.740 2.566 2139254 4565496 3.502.179 2.040 2.992 1128513 3921741 Net mark-up / interest income after provisions 2.377 838.552.318 51.081 3346855 2299785 Profit before taxation 1901800 2.021.591.040 2.923.774 983875 98535 – prior years' – – -188.578 3.www.698 12596921 15143241 Mark-up / return / interest expensed 1.608 404.abl.com.547 1128137 3920240 (Reversal) / provision for impairment in the – Bad debts written off directly 7 .021.398 638.168 251.073.633.308.859.555 376 1501 www.611 196.817 3283494 4801587 1901800 2.436.845.399 Capital reserves (reserve for issue of bonus shares) 114.819 321758 336809 Total non-markup / interest income 953.808 180.648 206.528 277.985 3277353 4789536 Other charges 1227 138 1.106 3.218 584344 655761 Gain on sale of investments 540.021.040 2.658 26.898 6630349 7101372 Non mark-up / interest expenses Administrative expenses 1.528 315.558 113006 -245812 798735 919.700 837.p k Allied Bank Limited Profit & Loss From 2005-2009 2005 2006 2007 2008 2009 Mark-up / return / interest earned 4.370.-233950 – Deferred -74.775 708.561 1013660 1072868 Dividend income 37.452.842.992 356.904 43.528 1.092 894.p k 46 .613 384.923.996 3867571 4480991 Appropriations: Statutory reserve 220.331 4.081 3346855 2299785 Taxation – current 873.923.304 1.089 828.609 1.688.170 226.053 1.336 251.859.639 876.512 177.996 -value of investments – 38.317 2.471 601.abl.170 497.845.143 109326 137079 Income from dealing in foreign currencies 112.066 -36.900.054.057 5.229 Proposed cash dividend 228.780.com.324 5619608 6457617 Provision(Non-performing loans & Advances) 308.247 .379.753 1.117.206 8.332 4491095 2535876 Non mark-up / interest income Fee.832 6141 12051 Total non-markup / interest expenses 1437531 1.339.315 Revenue reserves 539.

Assets 15. Activity ratios focus mainly on current accounts to show how well the company manages its operating cycle (which include receivables. such as the working capital and debt-to-equity ratios.89 1.008. 7.964.89 which increase in 2006 to 1.06 2.018 14.31 2. such as from the balance sheet and the income statement. provide information on how well the company can meet its obligations and how they are leveraged.489.180.252 C.648 11.087 20. For the balance sheet.878.576 Current Ratio 0.604 27. It is important to note that some ratios will need information from more than one financial statement. using financial ratios (like the debt-to-equity ratio) can show a better idea of the company’s financial condition along with its operational efficiency.758 15.183 31. it can be looked now at some techniques used to analyze the information contained within the balance sheet. The main types of ratios that use information from the balance sheet are financial strength ratios and activity ratios. The main way this is done is through financial ratio analysis. inventory and payables).55 As we see the current ration of Allied bank we increase every year from 2005 to 2008 but if we see 2009 in that year downward tread current ration decrease from 2. Financial strength ratios.297.315 30. These ratios can provide insight into the operational efficiency of the company.876.05 in 2008 to 1.05 1.935.034 15.605.099. Current Ratio = Current Assets / Current Liabilities 2005 2006 2007 2008 2009 C.3. in 2003 the current ratio is 0.7. This can give investors an idea of how financially stable the company is and how the company finances itself. Financial ratio analysis uses formulas to gain insight into the company and its operations. It is calculated as.55 in 2009. Liabilities 16. It measures ability to meet current debts with current assets.3 Ratio Analysis With a greater understanding of the balance sheet and how it is constructed.06 due to decrease in current liabilities although current assets decreases in 2006 but current liabilities decrease 47 .1 Current Ratio This ratio indicates the business liquidity position over specific period of time.

the more the company will have trouble in meeting in its obligations. But in 2009 it decrease due to liquidity problem and this year Allied bank clear its bill which are due on him. In 2007 again current ration increase which is good sign for Allied bank. 2. The amount of debt a company uses has both positive and negative effects.more than current liabilities the reason of decrease in current assets is due to decrease in lending to financial institutions also in this year bank made less investment compare to last year. 5 2 1. higher the profitability as with the increase in leverage the financial risk increases. the higher is the profitability of financial distress and bankruptcy. Financial leverage is concerned with the proportion of debts to its equity. Thus the more debt. Leverage ratios measure the amount of financial leverage. The more the debt.2 Leverage Ratio Financial leverage is the extent to which a company is financed with debt. On the other hand debt is the major source of financing and banking industry typically uses the higher percentage of debt. Higher the leverage. 5 1 0. In 2009 current ration increase very high compare to other years. Commonly used leverage ratios are debt to ratio. Debt financing provides significant tax advantage and its transaction costs are low than that of equity. The reason is same that in this year current assets increase very much and current liabilities decrease very much compare to last year. This is due to the same reason of last year. 48 . 5 0 2005 2006 2007 2008 2009 Last five year financial statements of ABL 7. ABL has maintained and constructed funds to settled short debts and is in sound position.3. and debt to equity ratio. In 2008 bank also borrow less compare to last year.

934 0.94 0. It shows a proportion or percentage of business total debts to its shareholders funds.3. this ration exhibit that slight increase in 2006 with gradual decrease over the next few years up to 2009. It also indicates the proportion of rights of the outsiders on the assets of the business.477 154. Debt to Equity Ratio = Total Debts / Share holders Equity + debt 2005 2006 2007 2008 2009 49 .151. 932 0.93 0.033. 928 0. 2006 and 2007.907 166.3.93 0. 938 0.905.008 2.93 The debt ratio of Allied bank is very constant through out the last 5 years only little bit change in last 2 years compare to 2005.7. balance sheet indicates that substantially less than 95% of the organizations assets were financed by out side which has shown gradual decrease in 2007.3 Debt Ratio This ratio shows the percentage of debt to the total assets.94 0.4 Debt to Total Capitalization Ratio It is the ratio which is also used to measure the financial leverage or risk of any business. 936 0.099. 942 0.588 182.2009 from 94. 926 0.08% in 2007 to 93.902 107. Debt Ratio = Total Debts / Total Assets 2.94 0.060 101.512.27% in 2009.2008.009 Total Debts 80.898 Total Assets 85.171.885 Debt Ratio 0.386.007 2. 0. 924 2005 2006 2007 2008 2009 7.358 169.006 2.94 0.167.005 2.340.980.540 145.448 136.

06 101. then definitely the business ability to pay interest enhances.619. In 2005 debt to equity ratio is 20. If the ratio’s trend shows increasing trend.44 136.15 18.905.512.59 which decrease in 2006 to 18.Total Debts Equity(D+E) Debt to Equity Ratio 80.11 14.901.898 0 8 7 8 3.645 20.369.59 18. 25 20 15 10 5 0 2005 2006 2007 2008 2009 INTEREST COVERAGE RATIO Any business may measure its ability to pay interest out of its annual profit interest and taxes in number of times with the help of interest coverage ratio.35 169.340.980.53 16.151.47 154.092 9.066 12.15 in 2006 again rise due to increase in total debt in this year bank total deposit increase very much due to change in rate before this bank pays less interest rate but due to rate change in market Allied bank also change it and attract more customer.04 The debt to equity ration shows Conservative approach to debt/equity ratio indicates smaller amount of funds came from shareholders equity than outsiders provided comparison between the year’s shows that the ratio has considerably decreased which shows credibility of the organization and stakeholders’ protection.149 7.279 5.573. Interest Coverage= Earning before interest and taxes / Interest Expense 2005 2006 2007 2008 2009 50 . In 2008 this ration goes down and same trend in 2009 the reason is stakeholders investment in bank.099.

2005 2006 2007 2008 2009 Interest Expense 1.5 1 0. it increased to 2.668.379.117.685. 0.60 1.624 9 Interest Coverage 1.5 0 2005 2006 2007 2008 2009 In next all year this ration trend is downward the main reason of this is increase in interest rate and also competition in banking TOTAL ASSET TURNOVER This ratio shows the efficiency of the business in relation to its total assets. 1.264 in next respective years.5 2 1.37 2. 3 2.37 In 2005.26 Profits before taxes available to cover interest expense have been fluctuating unevenly through 2005-2009.313 8. In other words it indicates the revenue generated in number of time by utilizing all assets. Decrease was indicated in 2007 to 0.479 and 0.54 0.47 0.278.977.374 6. sector.66 0. the reason of this increase is that this year Allied bank make huge profit this not only Allied bank but every bank this year make huge profit due to grooming of banking sector.54 in 2006. TAT= total revenue / Total Assets 51 .206 4.

0.04 0. With slight decrease in 2007 as compared to 2006 and 2005.08 0.03 0.073.6% in 2008 and 8. 7.100 of revenue generated.06 0.885 Assets TAT 0.780. ABL has shown improvement and increase in total assets turn over which is a healthy contribution.143.698 12.09 0.04 0.Net sales Total 2005 2006 2007 2008 2009 4.07 0.05 0.206 8.3% in 2009. 6% in 2007. In other words. The reason of improvement is that total assets of Allied bank goes up every year which due to opening of new branches. we can say that a company is earning net amount in rupees against every Rs.715 4.907 166.06 0.921 15.167.588 182.08 ABL has shown consistent development in ability to general sales using available assets. If the net margin profit increases its shows the increase in the profitability state of business.540 145.02 0.04 0.487.01 0 2005 2006 2007 2008 2009 NET PROFIT MARGIN This ratio indicates the earning capacity of business in percentage against its total revenue. Net profit margin= Net profit after taxes / total revenue *100 2005 2006 2007 2008 2009 52 .596.241 85386902 107.171.07 0.033.099.

85% in 2006. Bank is well equipped to pay back in case all the deposits are called without going to the debtors.879. Liquidity Quick Ratio = Quick Assets / Total Deposits x 100 2005 2006 2007 2008 2009 Quick Assets 6. Possible reason may be increase in operating expenses and increase in inflation rate.762.03% in 2007.766.02 17.681. The minimum Cash Reserve Requirement by SBP for commercial banks is 5% & 15% in the form of Govt.780. Quick assets to deposits ratio show how much liquid money is in hand to meet obligations without going to the creditors or the money market. It reflects very positively on the liquidity of the Bank.012 Net sales 4.24 1 Net profit margin 27. 143.921 15. to 23.925 14.839.996 2.055 Total Deposits 61.596.021.318.206 8.230 13.70 Return on sale increased from 27% to 42.34 In our case.28 9.698 12.026 8.040 2.866 11.073.86% in 2008 and 17.84 10.356.690 131. In the following years despite of increase in sales. securities.707 53 . 45 40 35 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 LIQUIDITY QUCIK RATIO Quick Assets refer to the most liquid assets which readily be converted into cash.249.28 3 Liquidity Quick Ratio 10.Net profit after taxes 1.143.07 42.678.794.923.607 83.103. the ratio is much above the benchmarked level and ranges between 38 – 48%. net profit has decreased.487. 17.065 1.85 23.51 9.90 11.86 17.795 118.656.036.974 2.7% in 2009.715 4.

47 ROI has shown uneven variations in 2005.885 ROI 1.681.540 145.907 166.12 10 8 6 4 2 0 2005 2006 2007 2008 2009 RE TURN ON INVESTMENT It shows the net profit earned against utilization of total assets in term of percentage.35 1.040 2. This is an important ratio to measure the profitability as well as optimal utilization of available assets.974 2.29 1.249.021.923.996 2.39 1. ROI= Net profit after taxes / Total assets * 100 2005 2006 2007 2008 2009 Net profit after taxes 1.033. 2 1.167. 2006 and 2007 with considerable stability in 2008 and 2009.012 Total Assets 85386902 107.79 1.5 0 2005 2006 2007 2008 2009 54 .171.099. In general again country economic condition.5 1 0.103.065 1. competition in banking sector and organizational restructuring may be the affective causes.588 182.

so it is not as such alarming.780.690 131. 55 .794.838.087 17.162 Borrowings 15. the bank borrowing are increasing over the years but this increase can be neglected because the balance sheet shows the bank borrowing figure of the last day of income year. 80 60 40 20 0 2005 2006 2007 2008 2009 GROSS PROFIT MARGIN The gross profit is calculated by subtracting the mark up expenses from its markup income.ADVANCES TO DEPOSITS RATIO A steady increase in the advances has been observed over the years. bank preferably invests in govt.656.318.903.73 71.75 which is in decrease.55. this might have been returned the very next day.976. The gap in deposits and advances figures is because of investment in securities.92. Advances to Deposits ratio =Advances / Deposits + Borrowed Funds x 100 2005 2006 2007 2008 2009 Advances 44.392 85.338 14.75 143.781. which are risk free.055 13. It is a very good sign as deposit money is not sitting idle and is used in a viable manner.562. The above ratios indicated the amount earned by NBP against each Rs.555 10. The Bank seems to be a regular borrower from the inter bank market. in the year 2007 there is a decline at 64.372 100.553.55 62.777.46 then again increase in year 2008 at 66.46 66.895 99.839. 100 of markup in order to meet the operating expenses of the business.964.73 which is increasing in the year 2006 i.538 69.036.607 83.525 Deposits 61. in the year 2009 it is on 62.283 Advances to Deposits 57.92 64. securities.179.707 In the year 2005 the ration is 57.e.795 118. 71.

27 34.64% in 2009 due to competition in the banking sector and fluctuation in the economic stability has caused this decrease in gross profits.780.901.619.50 27.206 8.1 0 2005 2006 2007 2008 2009 RETURN ON EQUITY The percentage earning after paying taxes by any business against its shareholder’s funds can be measured with the help of return on equity.487.369.5 0.51 0.645 Return on Equity 28.502.974 2.457.996 2.021.42 15.324 5.2 0.279 5.106 3.3 0.15 56 . If there is an increase in ROE.39 22.Gross profit margin= Gross profit / Net sales 2005 2006 2007 2008 2009 Gross profit 2.370.066 12.715 4.43 23.92 1 Gross profit margin 0.065 1.596. 0.040 2.099.66 0.573.012 Shareholders equity 3.44 0. it shows the stability of the business in terms of profit earning.7 0.698 12.073.6 0.617 Net sales 4.608 6.103.4 0. ROE= Net profit after taxes / Shareholders equity * 100 2005 2006 2007 2008 2009 Net profit after taxes 1.681.8 0.694.75 0.143.923.149 7.619.092 9.249.241 With considerable increase in 2006 from 66% to 75% profits have decreased in the following years to 42.000 4.

1 76.27% in 2005 to 34.748 Total risk weighted assets 38.16% in 2009. the following formula is used to measured it.31 2.95 (Rs in thousand) 57 .810.331 5. 40 35 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 CAPITAL ADE QUACY RATIO Total eligible regulatory capital held 38.06 1.894.07% 11.Return on shareholders equity has substantially decreased in 2007 and onwards from 34.206 8.73 2. Again possible reasons might be increased competition among banks and fluctuating economic conditions of the country.116 555.960. Highest return was achieved in 2004 with increase from 28.128.862 3.919 2.780.192. FAT= Net Sales / Fixed Assets Particulars 2005 2006 2007 2008 2009 Net sales 4.5% in 2006 to 22.680.023 3.073.573 Capital adequacy ratio 13.979.715 4.75 3.50% FIXED ASSETS TO NET SALE This ratio is used to calculate the relation between the total sales to total fixed assets that mean how much sales to fixed assets.428 FAT 2.848 63.979.5% in 2006.698 12596921 15143241 Fixed Assets 1.595.2 586.487.

468 612.807 13.06 that is almost doubled to assets which is positive sign of organization development in next FY-06 it reduced and again 2.504 1.5 2 1.175 19.461 In the above table the performance of bank is batter in FY-05 but it decreased in FY-06 to due high competition and inflation the revenue is not increased and expenses increased and lead to decrease the bank performance.260.5 3 2.5 1 0.The relation b/w the fixed assets to net sale in FY-05 is 2.333.736.872.817.027.211 Debt Ratio 1.523 6.5 0 2005 2006 2007 2008 2009 INCOME TO EXPENSE RATIO The income to expenses ratio used to measure the efficiency of bank how much expenses paid by bank to generate the income.207 1.708. However in the FY-07 the performance of bank is increased by cuts in expenses and increased in revue and reach to batter position.75 in FY-07 and tend to increase in FY-08 and again decline in FY-09 3.734 10.436 1. In other word it shows relation between total income and total expenses and the following formula is used to calculate it.487.737 Total Expenses 2. 58 . Income to Expense Ratio = Total income /Expense (Rs in thousand ) Particular 2005 2006 2007 2008 2009 Total Income 5.191 10.962.264 14.785 0.140 2.

In FY-09 the Total current assets to income is high and almost doubled to base year of 05. The following way is used to calculate it. CAT= Net Sales /Total Current Assets Particulars 2005 2006 2007 2008 2009 Net sales 4.412 0.604 27.828 (Rs in thousand) In connection to current assets to sales the performance of bank is batter in FY-05 which gradually increased in the nest four year. It shows the batter management of current utilization for generation of revenue.605.073.5 0 2005 2006 2007 2008 2009 CURRENT ASSETS TO NET SALES This ratio is used to measure the performance of bank current assts to its income.780.487.5 1 0.206 8.319 0.2 1.252 4 CAT 0.31 5 30.698 12596921 15143241 Current Assets 15. that show the management assets best placement 59 .282 0.182 18.489. in the FY-09 the international economic recession but still bank performance is batter in relation to its current assets.715 4.099.297.03 15.270 0. What is total income in use of current assets? Hara it is concluded that how much current asset is productive to generate the sales.935.

7 0.2 0.1 0 2005 2006 2007 2008 2009 NOTE Overall ABL has best performed in 2006 with increased net profits. it is best to compare ratios with industry averages. 60 .6 0.8 0.5 0. Onwards 2006 ABL has converted their operations into fast growing institution in Pakistan.9 0.3 0.0.4 0. return on equity. The result can be seen in the years 2007 to 2009 but it is expected that the financial position will grow up in the year 2008.

67 106.83 231.79 Unappropriated profit 100 142.45 213.71 251.12 188.56 310.22 176.21 170.02 Deferred tax assets Other assets 100 102.04 www.35 Liabilities Bills payable 100 126.48 Net assets 100 119.abl.31 70.56 263.7 131.35 125.3 Investments 100 77.07 161.16 100 125.39 Advances 100 155.19 14.44 250.pk 61 .52 of tax 100 119.49 225.27 58.66 66.81 200 Balances with other Banks 100 182.49 100 125.HORIZANTAL ANALYSIS OF ALLIED BANK BALANCE SHEET FOR THE LAST FIVE YEARS ENDED 31 DECEMBER 2005 TO 2009 Rupees in thousands 2005 2006 2007 2008 2009 Assets Cash & balances with treasury Banks 100 131.96 Lending’s to financial institutions 100 40.99 116.com.15 219.01 243.5 178.15 Surplus on revaluation of assets – net 100 38.85 188.01 221.91 finance lease Deferred tax liabilities 100 65.07 Operating fixed assets 100 131.38 388.31 91.63 267.51 169.43 276.2 222.45 Other liabilities 100 133.15 219.92 192.38 Deposits and other accounts 100 135.26 192.1 110.29 176.28 235.42 94.89 246.91 3.97 192.13 192.91 211.67 213.01 243.87 269.27 145.97 270.45 212.93 194.34 Reserves 100 156.99 Sub-ordinated loans Liabilities against assets subject to 100 37.04 Represented by Share capital 100 110 132 175.93 209.9 169.8 Borrowings from financial institutions 100 86.42 210.21 170.3 129.43 334.37 191.45 259.02 135.

The rapid increase in the above heading was seen but not as much as in the year 2009. It can be clearly seen from the heading investment. operating fixed assets and other assets. It shows the reliance of the bank is to expand the business. but in the year 2009. 192%. the position looked like stagnant. Bills payable were increased to 269% in the year 2009 as compare to year 2005 but from various increasing steps of 126% in2006. It clearly had shown the attraction of new clients towards ABL. with treasury and other banks. the reason of this is In the year 2009. with treasury and with other banks has been increased from the year 2005 to 2008 very sharply. 2007. Even in the previous years 2006 to 2008. 2008 and 2009 respectively. we can see a constant growth from the year 2006 to 2009. a tremendous fall was recovered. 213% and 231% in the years 2006. a major investment has been made in the expansion phase. Lending to financial institutions was reduced to 40% in the year 2006 and then rapid increase was seen in 2007 but in the year 2009.Horizontal analysis balance sheet In the above analysis. Bills payables. if we look overall assets situation. and all the other values are shown/calculated in percentage in subsequent years. it falls to 200 and 132. deposits and other accounts and other liabilities had shown a synonymous type of trends. The trends were continuously seen and shown in the following paragraph with figures. Liabilities: The position of liabilities was very much similar to the assets. deposits were tends to increased to 135%. The investment was increased from 129% to 178% operating fixed assets from 192% to 259% and other assets 267% to 388% in the same year. Other liabilities were also shown the similar trend and raised to 334% from 2005 to 2009. 62 . but in the year 2009. However. The same reason can be predicted. The generation of funds has been invested in order to expand the business in 2009. Similarly. So far as the advances are concerned. It is a sharp increase. for horizontal analysis we take year 2005 as a base. Hence. which justifies the decrease in cash balances at bank. 135% in 2007 and 188% in 2008. there was continuous increase from year 2006 to 2008. Assets: As we can see that cash balances at bank. we can conclude that the bank’s assets position had been increasing year to year which lead to stability as well as growth.

However, borrowing from financial institutions had fallen in the year 2006 and 2007 but there is increased in year 2008 and 2009. it may be the change in the methods of borrowing by the treasury department of the ABL. Liabilities against assets subject to finance lease had reduced very quickly from 2005 to 2006 and even in the year 2007, the bank had no such liability. Deferred tax liabilities had shown uneven increase or decrease. It may be due to change amount of provision against deferred taxation. The net assets figure showed the best trends in the year 2006 as sharp increase were recorded. Afterwards, the trend of increase was not stopped but at a lower rate was observed. Equity: The share capital of the ABL was increased from year to year but in 2009 a rapid fund raising was seen through issuing of new shares. The trust of investors enabled to bank to raise equity and to expand the network of ABL banking system in various parts of the country. As in the ratio analysis we have also observed the expansion phase of ABL was 2007 to 2009. in the same manner, the reserves of the bank directly proportionate to the share capital. The surplus on revaluation of assets was reduced to 38% in the year 2006 and then increased very quickly in the year 2007 to 106% but in the year 2009; the surplus was reduced to 14%. The cause of reduction was transferring the surplus to reserves as well as the amortization against such surplus.

63

HORIZANTAL ANALYSIS OF PROFIT AND LOSS STATEMENT FOR LAST FIVE YEARS ENDED 31 DECEMBER 2005 TO 2009

2005 2006 2007 2008 2009 Mark-up / return / interest earned 110.15 215.55 309.22 371.73 100 Mark-up / return / interest expensed 100 80.98 310.11 505.75 629.57 Net mark-up / interest income 100 125.09 167.12 208.59 239.69 Provision against non-performing 100 89.91 206.97 365.65 1270.63 loans and advances (Reversal) / provision for impairment 100 in the 100 102.25 195.12 365.77 1271.11 Net mark-up / interest income after 100 128.04 163.5 188.26 106.3 provisions Non mark-up / interest income Fee, commission and brokerage 100 134.99 159.79 193.16 204.44 income Dividend income 100 69.89 135.81 290.31 364.01 Income from dealing in foreign 100 160.44 315.77 518 581.31 currencies Unrealized gain/loss on revaluation of investments Other income 100 63.78 74.26 115.53 120.93 Total non-markup / interest income 100 171.27 162.78 224.3 478.69 100 140.39 163.29 198.55 212.66 Non mark-up / interest expenses Administrative expenses 100 128.47 180.46 228.18 333.46 Other provisions / write offs Other charges 100 11.25 149.31 500.49 982.15 Total non-markup / interest expenses 100 128.37 180.44 228.41 334.02 100 149.48 150.34 175.98 120.93 Extra ordinary / unusual items Profit before taxation 100 149.48 150.34 175.98 120.93 Taxation – current 100 100.28 94.86 112.62 11.28 – prior years' – deferred 100 -58.22 -262.41 -150.87 328.17 100 115.14 104.8 137.33 -47.73 Profit after taxation 100 174.34 183.31 203.97 243.05 Unappropriated profit brought forward Profit available for appropriation 100 174.34 183.31 350.62 406.23

64

Appropriations: Transfer to: Statutory reserve 100 174.34 183.31 0 0 Capital reserves (reserve for issue of bonus shares) Revenue reserves 100 191.89 165.61 0 0 Proposed cash dividend 100 110 99 0 0

100 220 435.6 0 0

Unappropriated profit carried B/F 100 174.34 183.31 0 0

Basic/ diluted earnings 100 145.33 152.85 85.19 101.59
www.abl.com.p k

HORIZONTAL ANALYSIS INCOME STATEMENT
Markup/return/interest earned : The markup and interest income was slightly increased in the year 2006 but rapid increase was recorded in the subsequent years and even it went up to 371% in the year 2009 as compare to year 2005. The fast increase may be due to increase in investment in those portfolio, which yielded higher returns. It may also be due to increase in the advances and loans given to the businessmen and various clients of ABL.

Markup/return/interest expensed the depositors trend towards ABL and expansion of the business put the trend over the period 2005 to 2009 in such a manner that it increased tremendously from year to year, especially this rapid trend was observed in the year 2008 i.e. 505% as compare to 310% in the year 2007. Obviously the increase in the deposits of the ABL the markup/interest expense ratio was increased. Net markup/ interest income This head of income is derived by subtracting the interest/markup expense from interest/markup income. The trend here was looked to be very attractive and consistent, 125% in the year 2006, 167% in 2007, 208% in 2008 and 239% in 2009. from this we can conclude that ABL was making optimal utilization of available deposits and able to generate attractive profits.

65

The reason is to introduce a lot of branches to deal in foreign exchange. The functionality of the bank was also increased which ultimately increased the fee. However. commission and brokerage income. the business of foreign currency exchange was groomed in the last five year with a swing. the competition environment has been created. It is a fact that increase in receivables put impact on chances of bad debts that may be the reason for increase in the Provision against non-performing loans and advances especially in the year 2008 and 2009. Income from dealing in foreign currencies According to an article published in the management accountant edition NOV-DEC 2009. another reason might be the depreciation of local currencies against world reputed currencies like US dollars. 193% in 2008 and 204% in 2009. The rapid increase in the dividend income clearly indicates the policy of treasury department to make more investment in the risky business to get higher profitability. UK pounds and EUROS.Provision against non-performing loans and advances: The rapid and fast increase in provision against Provision against non-performing loans and advances caused by issuing new loans and advances to attract customers. Fee. commission and brokerage income: The last paragraph enumerated that ABL was successful by attracting new customers. The policy of ABL looked very successful as the dividend income was 364% in 2009 when we compare it to year 2005. 159% in 2007. The trend of increase was very consistent as 134% in year 2006. the major change was observed in the year 2008 when a tremendous increase was indicated. ABL was succeeded to add new clients and customers. As we have already discussed in various parts of the report that in the last few year. especially in the year 2008. The same trend can be seen from this analysis. In the same year. Other income 66 . which in turn competes to introduce new products. Dividend income Dividend income earned by the bank on account of investment made in stock markets.

but the major portion is administrative expenses. but in 2009. Basic/diluted EPS EPS in the years 2006 and 2007 was ideally increased but in the year 2008 it fell down to 85%. the rapid increase was seen. Non-markup/interest expenses Non markup/interest expenses head includes administrative expenses. a slight increase was recorded. The same was observed here. However. So far as. the trend was established and a continuous increase was seen. Profit before taxation and after taxation The profit before taxation was increased to 149% in the year 2006 as compare to base year 2005. 183% in 2007 and 174% in 2006 keeping in view the year 2005 as base. but afterwards. other provisions/writeoff and other charges. The constant increase up to year 2008 was recorded. again a rapid increasing trend was observed. But in the year 2007. it shows a similar trend of increasing. The reason may be the total reliance of the bank on interest income. It was because of adjustments of provision for taxations current as well as provisions for deferred taxation. The reason may be the same it the expansion phase of the ABL. then definitely impact in the form of reduction in profits can be there. the slight increasing trend continuous. 2009 was the year in which before taxation profit fell down to 120% as compare to 175% in 2005. profit after taxes is concerned.Other income of the bank should be directly proportionate to increase in interest income as well as increase in the clients/customers of the bank. The possible reason may be introduction of new branch in various cities resulting increase in operating cost. The trend was looked alike the interest and non-interest income. The continuous increase in after tax profit went up to 243% in year 2009 as compare to 2003% in 2008. When operating cost increasing trend was higher than revenue generation. which fell to 63% as compare to year 2005. The decreases in EPS may be issue of 67 . However. the trend in the ABL was quite opposite in the year 2006. The growth in the ABL not only increased the income portion but also increased the expenses portion. However. In the year 2007.

68 . But year 2009 against showed the growth in EPS as compare to year 2008.new shares fro fund raising and introduction of new branches of the ABL throughout the country.

29 2.02 lease Deferred tax liabilities 1 0.46 79.54 60.36 1.18 Sub-ordinate loans 0.53 20.84 Reserves 70.74 9.65 10.79 13.com.34 2.67 1.73 77.83 24.abl.26 1.81 Other assets 2005 2006 2007 2008 2009 26 16 18 17 22 52 65 59 60 55 1.33 Deposits and other accounts 76.62 7.88 2.74 82.28 Other liabilities 1.04 100 100 100 100 100 Liabilities Bills payable 11112 Borrowings from financial institutions 19.66 1.93 1.26 22.VERTICAL ANALYSIS OF BALANCE SHEET FOR THE LAST FIVE YEARS ENDED 31 DECEMBER 2005 TO 2009 Assets Cash balances with treasury Banks 8 8 8 9 7 Balances with other Banks 3 5 4 4 2 Lending’s to financial institutions 7 2 7 5 8 Investments Advances Operating fixed assets 2.02 85.19 1.2 2.45 20.37 87.19 1.3 3.47 0.p k VERTICAL ANALYSIS OF BALANCE SHEET 69 .42 2.42 Un-Appropriated profit 18.52 0.71 17.76 Liabilities against assets subject to finance 0.74 0.89 Net assets 100 100 100 100 100 Represented by Share capital 29.67 1.23 0.45 57.99 2.41 0.07 84.72 Surplus on revaluation of assets – net of tax 100 100 100 100 100 www.

The overall positions of assets are not fluctuating.28% in the year 2009 as compare to 1% in year 2005.55% in year 2009 with slight increase and even decrease in year 2007. it contributed between 1% to 2% shares to total liabilities.32%.05 but again 2009 enhanced to 7. Keeping in view the base as total assets we can conclude that major portion of assets comprised of advances. which gave uneven idea. The remaining 2% to 3% share of total liabilities comprised of liabilities against assets subject to finance lease.92% to other banks. Another considerable contribution was of investment i. The overall picture of the assets looked very stable. In the year 2004 it declined to 2. In 2005.21% in 2005 to 1. the deposits were about 76. The total share was 55. Subordinated loans share in year 2005 was nil. The liabilities against assets subject to finance lease were terminated in the year 2008 and also not found in 2009. In short we can conclude that ABL was able to maintain its liabilities with stability. in the year 2008. Liabilities The major portion of total liabilities was of deposits and other accounts that was a good sign for ABL. Lending to the financial institutions is only head of account under assets. but from the year 2006 to 2009.73% in year 2009. in the year 2009. one quarter of total assets in approximation. the total percentage of cash balances declines to 7. The percentage share of deferred tax liabilities decreased to 0. 59. with other bank lending’s to other financial institution and other assets. The share of bills payable seemed to be very much stable as 1. Remaining about 25% share of total assets related to cash balances with treasury bank.Assets In the vertical analysis the total value of assets are taken as a base in order to calculate percentage share of each head of account in the assets. the share was declined by 2% and then in 2009 by 1%. 65. Similarly in 2008 it reduced to 5. and total percentage of total assets was recorded at 87.02%.25% in year 2008.17% in year 2007. However.33% with treasury and 1. In year 2005. The diversion was transferred to borrowings from financial institution.93.74% of total liabilities. deferred taxation and other liabilities. Cash and balance with treasury bank and with other banks showed a similar view. share of advances was 52. the share in year 2006 and 2007 tend to increase as in 2007.e.01. about more than a half of total assets in each year. Shareholders equity 70 . However. 59.17 but thin in 2007 it increased to 7.44% in 2006.

But overall reserves remained constant.85% as against in the year 2009 VERTICAL ANALYSIS OF 71 . However. Bank’s policy is to transfer all the revenue reserves to ‘Reserves Account’. the balance sheet showed unappropriated profit of 17% to 18%. The major portion of the equity section was also recorded as reserve. The portion of share capital during this period tend to decrease due to high profitability.From this section one thing looked very clear that in the year 2005 to 2008. in the year 2008. the ABL has not any unappropriated profit. but in 2009 the issue of large amount shares converted the share to 24. It means that after distribution of dividend.

17 53.6 www.1 22.02 0.82 -1.02 0.83 7.15 25.42 19.9 0.9 2 2.14 5.01 Bad debts written off directly 6.75 0.53 6.36 PROVISIONS Provision (Non-performing loans & advances) 6.24 24.69 15.31 84.4 47.PROFIT AND LOSS STATEMENT FOR LAST FIVE YEARS ENDED 31 DECEMBER 2005 TO 2009 Administrative expenses 2005 2006 2007 2008 2009 Mark-up / return / interest earned 81.9 82.94 31.35 0.56 72.33 77.89 (Reversal) / provision for impairment in the value of investments 0.83 46.59 30.43 0.24 2.97 3.19 – deferred -1.9 Total expenses markup and non mark up 62.45 3.39 Profit after taxation 21.07 Non mark up expenses Administrative expenses 28.01 investments Other income 5.25 57.98 Unrealized gain/loss on revaluation of 0 0 0 -0.83 0.7 Income from dealing in foreign currencies 2.5 – prior years' -1.02 6.66 19.44 11.62 -0.33 Profit before taxation 37.32 19.27 13.06 Total non-markup / interest expenses 28.67 22.49 0.03 73.57 15.97 26.31 8.02 14.88 5.15 25.18 7.49 0.44 27.98 85.3 Other provisions / write offs Other charges 0.04 0.71 Total non-markup / interest income 18.57 8.18 1.38 14.25 41.28 24.abl.44 18.16 Total markup and non mark up income 100 100 100 100 100 Mark up expenses 27.66 19.08 22.35 44.52 23.pk VERTICAL ANALYSIS OF INCOME STATEMENT 72 .74 0.77 -1.71 11.02 0.29 88.14 4.54 2.33 Gain on sale of investments 0 8.84 Non mark up income Fee.15 5.com.68 0.71 1. commission and brokerage income 10.57 15.96 3.67 Taxation – current 17.44 Dividend income 0.76 11.57 30.72 -4.12 6.97 0.48 76.

76% in 2008. The non-markup income comprised of fee. However. The above analysis clearly indicated a major portion of total income was a markup income.97% in year 2007 and 0. In the year 2005. commission and brokerage income. income from dealing in foreign currencies gain on sales of investment (almost negligible) and other income. we can conclude that ABL was succeeded to maintain the share of markup income to its total income. thus leasing 37. And it should be as the business of banking is based upon it. In short. the trend of expenses tends to increase. But from the year 2007 to 2009. Its ultimate effect is predicted to 73 . All the other corresponding figures are based on it. Income As earlier discussed.17%. But again in year 2009. commission and brokerage income whose share were started to decline from the year 2007 to 2009.03% but it was reduced to 73. The tremendous increase in total expenses was recorded in the year 2007 by 18% but afterwards by 4% in 2008 and further 11% in 2009 the PBT for the year 2009 was minimum i. The decline in the PBT was not due to decrease in profitability but due to excessive operating cost incurred for expansion.83% in 2006 and 11.56% leaving 46.67% as compare to all of the years mentioned in the profit. The non-markup income portion was about 20% in each year except in 2006 and 2009 against due to gain on Sales of investment. The increase in operating cost was due to expansion and introduction of new branches as discussed earlier.98% in 2009 as against 0. As we can see in the above analysis the total markup and non-markup income showed 100% in each year. However. the income group was consisted of both markup income and nonmarkup income.31% because of diversion towards gain on sale of investment. it fall down and the same reason was record.For the whole income statement the combination of both markup/interest and nonmarkup/income was taken as a base. dividend. the year 2006 and 2009 figures were offset by gain on sale of investment as 8. In the year 2006 and 2009. the share of markup income was 81. In the year 2007 and 2008 it again remained increased and stable. the ABL was succeeded to reduce the share of expenses to 53.e.83% profit before taxation. The total expenses (both markup and non-markup) share to total income was 62. the decline was affected by gain on sale of investment.44% for PBT. 11. The combination of all of these non-markup income portion showed same picture except fee.

the proportion of both markup and non-markup looked same but year 2006 showed a different picture. The basic emphasis of the bank is PBT rather than PAT. The reason may be again the expansion phase. the portion of markup income was more as compare to non-markup portion. Its reasons may be that the ABL was succeeded to hold major portion of business and to attract the depositors to make their investment there. Definitely. when all the branches will operate at its capacity level. Organizational Analysis of “Allied Bank” with other top players 74 . The PAT share showed the same trend as we have discussed in PBT figures. the PB T share shall increase. As it is a fact that higher profit higher taxation.coming one or two years. but onwards. In the year 2005. Finally we can conclude that profitability and financial position of ABL were tend to increase from year to year and showed very stable position. Ultimate result can be seen from portion of markup expenses enhancement. The bank was also succeeded to implement the policy of provision for taxation in good manner as that can be judged from PAT. Its operating (non-markup) expenses portion was 30% as against just 18% markup.

9 27.Rs.. ( Billion) NBP HBL UBL ABL Balance Sheet Cash& bank Bal.9 61% 63% 58% 65% 76% 73% 11% 11% 10% 11% 13% 11% 10% 9% 8% 6% 7% 7% 74% 74% 71% 66% 77% 79% In Percentage 200 7 NBP HBL UBL ABL 200 200 200 8 9 7 200 8 200 9 200 7 200 8 200 9 200 7 200 8 200 9 Balance Sheet Mkt share Deposit 12 13 12 12 12 11 10 9 8 6 7 7 Capital adequacy 14 13 12 10 9 8 8 8 7 13 12 8 Return on assets 2.2 1..546 .7 16.2 2.Pk 173 180 113 208 174.2 8.13. 4 75 .5 7.1 18.9 5.5 3 Return on Equity 20 21 17 22 24 23 25 29 25 31 29 38 Interest spread 1.5 6.7 2.5 13 14.1 20. price 244 .8 17 12.7 10.6 12.7 7.2 11..8 4.9 30.7 9.27.2 21.5 Market Cap.3 5.1 16. EPS 7 24 2 19.3 9 28.0 Ratio 8 13. expenses Pre Tax Profit Net Income Loan deposit Mkt Share advances 2007 2008 2009 2007 2008 2009 2007 2008 2009 2007 2008 2009 121 142 119 84 89 77 39 49 71 42 60 35 180 140 157 187 120 107 115 66 62 125 64 69 320 316 269 346 349 317 289 255 210 191 198 180 668 635 578 653 590 529 499 436 358 385 343 299 523 502 463 528 459 433 392 344 297 288 257 229 97 82 76 63 53 41 39 33 24 50 42 24 Income Statement 32.2 26.6 6.8 8.6 23.4 11.2 12.4 4.1 9.7 6.5 29 36.7 6 4.6 5.1 5 4.8 21.8 2 2.1 8.9 21.4 9.8 6. 3 . 5 22.8 11.5 19.8 13.9 6.4 7.7 4 3.4 13.648 .5 9. 17.8 7.7 18.2 12.2 9.2 14.7 22 15 19. 9 9.9 15.5 Fee/Pre tax 40 46 49 44 45 57 60 50 55 29 27 44 Revenue Expenses 315 297 272 225 235 212 225 227 219 431 387 303 Current share 261.9 25.690 .8 6 15. 3 13.1 13.8 39.4 14.381 .8 27.9 26.7 4 Price earning 8.1 15.7 11.9 12.3 19.8 10.1 19. Advances Assets Deposits Equity Gross revenues Net interest income Non interest Income Admin.1 2.5Share o/s min 709 .9 2.4 18.8 5 5.4 14.2 3.9 18.5 22.1 13.3 11.2 1.2 29.4 4. Invest.6 8.1 5. 2 17.9 7.

when it fell from 28% to 13%. as compared to 45% of NBP 76 . The advances of ABL grew by 11% in FY09 as compared to 5. The growth in non-interest income for ABL in FY09 is around 22%. all the fluctuations for all the banks have been witnessed in the same direction. Even in this area ABL has outperformed other major players. the growth for ABL has been in line with that of its peer except for NBP whose growth though has fluctuated but still is above the other players in the market. The banking sector is dominated by National Bank Limited.The advance growth rate for the top players has shown a similar trend. as compared to 14% of UBL and 2% of MCB.58% of NBP and -4% of UBL and MCB each during the year under review. Another major comparison between ABL and the other top players is that in the growth of the net interest income. It can be clearly seen that the growth in PAT of ABL has been much above the other top players. As can be witnessed from the above that the deposit growth rate has been fluctuating over the last 5 years. The growth in the net interest income is 41% in FY09 as compared to 18% of UBL. The balance sheet indicates the trend of growth of deposits for the players. The reason cited for this slowdown was the slow growth of M2 . Habib Bank Limited. In case of the non-interest income. 16% of MCB and 3% of NBP.Rs. United Bank Limited and MCB Bank Limited. Another major trend seen in the banking sector has been the growth in profits after tax for the top players. During FY09 there was a growth of 71% in ABL's PAT. As can be observed ABL's performance in terms of advances growth rate has been better from the top players during the last 5 years. Allied Bank Limited. A major decline was seen in the growth of deposits for ABL in 2008.

Meanwhile. The continuing pressure in the operation environment suggests that the challenges for the banking sector would persist in 2010. However. while remaining prudent under the circumstances would continue to emphasis on improving cost effective deposit mix. building risk weighted assets by ensuring quality and optimizing costs to pursue the strategy of maintaining steady growth. deficit of 1. while LSM has also lately shown signs of recovery. risks to these improvements remain as inflationary pressures have not completely abated. 77 . mainly inflation and contraction in external imbalances bodes well for the revival of economic activity. ABL. The rising fiscal slippages. the commodity prices may spur again to unmanageable levels and foreign inflows (for instance from Friends of Democratic Pakistan (FoDP) and other bilateral arrangements) may not materialize on time. The major impetus for growth is expected to come from the services sector.Future-Prospects: The recent economic trends suggest the possibility of a modest recovery during 2010.1% in 2009 poses another challenge. A sizeable portion of it also relates to increasing expenditure on defense and security. The positive improvement in macroeconomic indicators. the severe energy shortages and the sensitive security situation remain a major threat to the potential output of the economy.5% of GDP for 2010 as compared to 1.

financial discipline. expansion of economic markets and cultural diversity. 1: Total Quality Management: Ours is the age of cutthroat competition. They take all the routine activities as a boring job. integration of financial services.SHORT FALLS / WEAKNESSES OF THE ORGANIZATION A short falls/weakness is defined as an area in an organization where the organization is not as good at doing something as its competitors or a thing which an organization lacks thus putting the organization at disadvantage in comparison to its competitors. The middle management should need to have basic understandings about complicated management processes. scarcity of resources. marketing/product strategies. ABL has centralized power system. In these complicated and conflicting financial and economic scenarios the need of TQM in the ranks of domestic Banking industry is indispensable. thus discouraging the middle investors. Human resource administration and above all genuine leadership qualities to adequately operate within a highly sensitive and complicated industry. financial and treasury management techniques. It has high markup rates. technological advancement. There is urgent need of having TQM in the realm of Allied Bank. Major account benefits are for army officials. crisis management tools. At the dawn of WTO and increasing chances of investment Banking among the SARRC countries the TQM is the need 78 . Based on the above definition Allied Bank Limited has the following weaknesses • • • • • • • Employees at branch level are not properly motivated to work by heart. Lack of international branch network There is less communication between different levels of management The selection criteria for employees are not on merit basis. soundness and transparency of Banking system.

Allied Bank must pay attention to this shift and start thinking strategically for providing high quality products and services to customers. how service can be improved and where operating system breakdowns occur. 4: Employee Involvement: The employees are not involved in decision-making. 2: Wastage of time: There is major problem of wastage of time of customer due to less injection of stag where needed 3: Reward System: The employees are really upset about their salaries and promotions. Deposit slips.of the hour. very high which cannot be ignorable. ATM forms.537 billion in2009. Employees sometime use it as it looks like free.1% from $6. 6: Extra telephone calls budgets: The telephone calls budget is also.772 billion in 2003 to $9. Give very little chance to employees in decision making only those who are near to manager are involve in this procedure. The Allied Bank should determine where improvement is needed. the changing Global Commercial Banking Industry Structure. 79 . the reward system is not up to standard as other organization are. and other type of stationary. total commercial Banking assets are expected to climb at an average annual growth rate [AAGR] of 7. According to a study from Business Communications Company. Online Form etc. why they occur and how they can be avoided. 5: Wastage of Stationary: Another problem that I observed is wastage of stationary like Account opening Forms. Inc.

All of them continue to receive encouraging response from the consumers but still considerable attention is required for further improvement. technology. directing and controlling organization systems and resources to achieve objectives. ABLis a bit slow in committing itself to seek out new opportunities and make its existing operations more efficient. The ETD staff working at branch level is not fully trained because their technological skills are less developed for which the Bank along with the ETD has to make a complete. human. planning. ATM (Auto Teller Machine). suppliers. organizing. should be groomed through professional development. Online Banking. Online Availability of Different Application Form. physical. 80 . sound and separate training program to develop their skills. competition. As staff being the principal asset of the Bank. developments and technologies by including new products and services.Conclusion ABLis a leading market player in the financial sector in Pakistan. financial. Internet Banking. Managing risk is actually managing the organization.e. A valuable system is created by the conversion of a available resources i. and intangible assets into goods and services that fulfill the needs of the customers and save the vest interests of Banking and financial organization. Although Phonic Banking. constituents. customers. Managing risk must come from within and act to change the organization and its response to changes in the environment. Knowledge of Risk Management is Missing: The main purpose of financial and Banking organization is to create valuable system by interacting with its environments. Risk management performs all these diversified but integrated work to achieve maximum out-put. Despite of the fast changing market conditions and narrowing of traditional lucrative margins on loans. government. etc. economy. Balance Transfer Facility. The Electronic Technology Department (ETD) needs further improvement.

81 . Allied Bank Pakistan has created risk management group at head office but they must adopt this police at regional level to save the best interests of the Bank and enhance the chances of investments.Now many domestic Banks are hiring experts of risk management to secure their precious assets.

The cooperative staff helped me a lot and provided me the basis for recommendations and also pointed out some areas. and the payment of utility bills more quickly as they are doing. To get suggestions.Recommendations Recommendations are supposed to be the most important part of internship report. The H. For that purpose. I suggest the following recommendations. Despite of the fast changing market conditions and reduction of traditional profitable margins on loans. The future focus of the ABLshould be to improve the automation of the accounting processes and enhance the quality and effectiveness of MIS. supported by technology based services.M Department of the ABLshould effectively increase its focus on providing in house training staff.R. 82 . where the change for the development is essential. The Bank should plan to enhance its ATMs and Internet Banking Services with new features like inter-branch funds transfer. The ABLshould increase press coverage and advertising to create effectively market it’s corporate as well as product/Brand image. Allied Bank Limited is a bit slow in commit itself to seek out new opportunities and make its existing operations more efficient. discussions have been conduct with the staff of ABL officers. Although the Bank’s products and Services are structured to cover and improve the quality of lives of all important towns and cities but the Bank should also start to explore new markets in the smaller towns in the rural areas of Pakistan for its Retail Banking products. The Bank should also plan to setup a call center and Data Warehouse to enhance the timeliness and quality of services. which should be conducting training services all. A good report is said to be completed and important only when recommendations are given. year around to enhance professionalism and employee development.

should be groomed through counties professional development. 4 Technology Although Phonic Banking. Online Availability of Different Application Form continue to receive encouraging response from the consumers but still considerable attention is required for further improvement. 2 Improvements needed in ETD The Electronic Technology Department (ETD) needs further improvement. and the payment of utility bills. Online Banking. ATM (Auto Teller Machine).The marketing policies and strategies should be clearly written and communicated to all the staff members. As staff being the principal asset of the bank. 5 Refresher courses The employees of the bank should frequently conduct meaningful refresher courses. Because of the new 83 . The ETD(Electronic Technology Department) staff working at branch level is not fully trained because their technological skills are less developed for which the bank along with the ETD has to make a complete. The Bank should also plan to setup a call center and Data Warehouse to enhance the timeliness and quality of services . The Branch Managers must make the use of the staff in pursing the organizational objectives. 1 Employees’ training To increase the efficiency and effectiveness. the management should arrange timely training sessions so that the employees get the complete knowledge of how to deal with the customers and work well in team as well as individually. sound and separate training program to develop their skills. developments and technologies by including new products and services. Internet Banking. Balance Transfer Facility. workshops and seminars so as to improve the knowledge of staff. 3 New Features The bank should plan to enhance its ATMs and Internet Banking Services with new features like inter-branch funds transfer.

R. 11 Marketing Policies and Strategies 84 .R. supported by technology based services such as online banking and ATMs. bank should maintain an attractive and effective environment so that employees feel comfortable while working and it will result in an increase in the efficiency of the bank. 9 Organization Environment To motivate bank’s employees and for attracting more customers.technological developments and severe competition the HRD should train their staff to cope with the new changes. This will be beneficial for the bank’s productivity. 8 Improve advertising The Allied Bank Limited should increase press coverage and advertising to create effectively market it’s corporate as well as product/Brand image. 10 H. which should be conducting training services all year round to improve professionalism and employee development. 6 Automation The future focus of the AB L should be to improve the automation of the accounting processes and improve the quality and effectiveness of MIS.M Department The H. The need for proper human resource is felt badly. 7 Explore New Markets Although the Bank’s products and Services are structured to cover and improve the quality of lives of all important towns and cities but the Bank should also start to explore new markets in the smaller towns in the rural areas of Pakistan for its Retail banking products.M department of the Allied Bank Limited should effectively increase its focus on providing in house training staff.

The Bank should encourage ownership behavior so that everyone feels responsible for performance and reputation of the Bank. 12 Participation of the Staff The Bank must ensure the participation of the staff in all the promotion activities of the bank.The marketing policies and strategies must be clearly written and communicated to all the staff members. The Branch Managers must make the use of the staff in pursing the organizational objectives. the Allied Bank Limited must constantly provide customer satisfaction my delivering products and services through innovative technology and effective human resource management. The Allied Bank Limited can achieve all this through aggressive marketing. This will result in loyalty. and improve the performance of the staff. 85 . and a strict focus on controlling operating costs. 14 Provide Customer Satisfaction In order to earn a striking profit in future. To this end the bank must adhere to the policy of fringe benefits. extending and developing its core competencies and moving out of week and non-core segment. by adding diversified skills to its ETD team. 15 Motivation Every human being needs appreciation in every aspect. prudent management of its risk portfolio. 13 Reshaping the Portfolio The Bank must reshape its portfolio of business by investing in higher growth areas. and to compete in a highly competitive environment. strong collection and recovery efforts. It’s the duty of management to motivate and appreciate their employees. rapid promotions of the capable managers and officials to motivate the staff.

References
• • • • • • • • Annual Report of ABL 2009. Annual Report of ABL 2008. Annual Report of ABL 2007. Annual Report of ABL 2006. Annual Report of ABL 2005. Annual Report of ABL 2004. A Review from Daily “The News”. Iffland, Charles & Langueton, Pierre. (1996) International Banking, Irwin Book Co., New York. • • Khan Rana, Safdar Hussain & Khan Rana, Ahmad Shabir. (1991) Banking Currency and Finance, Ilmi Kutab Khana, Lahore. Sardar Aslam (1999) Banking & Finance Principal (Retd) Govt College of commerce Abbottabad... • • Saeed, M Nasir. (1994) Economics of Pakistan, Ilmi Kutab Khana, Lahore. Siddiqi, Asrar H. (1998) Practice and Law of Banking in Pakistan, 6th Ed, Royal Book Co, Karachi. • • www.AlliedBank.com.pk www.sbp.org.pk

86

Annexure – I ABL Structure

87

MANAGEMENT HIERARCHY

President

Senior Vice President

Vice President

Executive Vice President Senior Executive Vice President [rosodmemtPresident Regional General Manager Managerxecutive Vice President Branch Manager

88

II and other lower Staff 89 .Annexure – II FUNCTIONAL HIERARCHY President and CEO Board of Director Head of Departments Regional General Manager Controllers of Operation Branch Manager Office G-I.

III Structure of Branch 90 .Annexure.

STRUCTURE OF ABL President Board Of Directors Group Operation Chief Credit Committee Regional Operations Chief Operation Manager At Branch Regional Business Chief & Regional Risk Management Chief 91 .

Annexure – IV STAFF ORGANIZATION OF THE BRANCH Branch Manager Officer G-I Officer G-II Customer Service Manager HR Manager Teller Messenger 92 .

Annexure – V ORGANOGRAM OF FINANCE DEPARTMENT Credit Control Officer Account Officer Payments Officer Billing Officer Cashiers Receipts Officer 93 .