CHAPTER # 1

INTRODUCTION OF THE STUDY

1.1 BACK GROUND OF THE STUDY

Allied Bank Ltd. was established in 1942 and since then, it has expanded its

network, becoming one of the largest commercial banks of the country. It offers different

services to its customers. Initially it was known as Australasia bank. The banks initially

paid up capital was Rs. 0.12 million and the bank started its operations at Lahore under

the chairmanship of Khawaja Bashir Bukhsh. In the first eighteen months, the Bank’s

total deposits rose to Rs. 0.431 million. Bank’s total assets at that were Rs. 0.572 million.

In 1974, under the bank’s amalgamation scheme, three banks namely, Sarhad Bank, Pak

Bank and Lahore Commercial Bank were merged into Australia Bank and renamed as

Allied Bank of Pakistan Limited.

In 1991 under the newly introduced scheme of employee stock ownership

program, Allied Bank was sold to its employees. This was how the bank got privatized.

Allied bank is performing well in its operations. After its privatization its performance

improved. This year its total assets, advances, investments, deposits and profitability etc.

increased as compared to previous year.

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1.2 PURPOSE OF THE STUDY
This study is a pre-requisite for the completion of the BS Commerce course. The
other purposes to conduct this study include:

Gathering the relevant information about ABL.

ii) To observe, analyze and interpret the relevant data.

iii) To work practically in an organization.
iv) To develop interpersonal communication.
v) To recommend remedies for the problems.
1.3 SCOPE OF THE STUDY
Internship at ABL was an excellent chance to understand how a bank operates. The
main focus of my study was on financial analysis and SWOT analysis in one of the
branches of ABL. Similarly, different aspects of overall situation of ABL are also covered
in this report.

1.4 RESEARCH METHODOLOGY

The methodology of the report for collection of data is primary as well as
secondary. The biggest source of information is my personal observation while working
with staff and having discussions with them.

1.4.1 Primary Data

The sources for primary data collection are as follows:
i) Personal observation.
ii) Discussion with officers.
1.4.2 Secondary Data

The sources for secondary data are as follows:

i. Manuals.
ii. Journals.
iii. ABL’s own half yearly magazine.
iv. Others magazines.
v. Annual reports.

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 CHAPTER # 2

INTRODUCTION TO BANKING AND ALLIED BANK LIMITED

2.1 ORIGIN OF BANKING

There are different opinions about the origin of the word “Bank”. According to

some authors the word “Bank” is derived from the “Banco” or “Bancus” which means a

bench. It was due to the fact that the Jews merchants in Liambordy transacted their

business of money exchange on benches. if the business of any merchant failed, the

people destroyed his ‘Banco’. From this practice the word “Bankrupt” has evolved.

According to another opinion, the word “Bank” is derived from the German word “Back”

which means joint stock fund. Later on this word “Back” was initialized into “Bank” or

“Banke”.

2.2 HISTORY OF BANKING

As regards the growth of modern commercial bank, it can be traced as early as

600 BC. G. Crowther in his famous book, “An Outline of Money”, has traced the history

of modern English commercial banking. According to him, “the present-day banker has

three ancestors; “(1) the merchants (2) the goldsmiths and (3) the moneylenders.”

3
The Merchants

The earliest stage in the growth of banking can be traced to the working of

merchants. These merchants were traders in commodities. They carried on the trading

activities from one place to another. It was risky for the traders to keep money with

themselves for payment. The traders with high reputation began to issue receipts, which

were accepted as titles of money. These receipts or letters of transfer also called “hundi” in

Indo Sub- Continent were the first mode of payments. The merchant’s banking thus forms

the earlier stage in the evolution of modern banking.

The Goldsmiths

The second stage in the growth of banking is normally traced to earlier

goldsmiths. These goldsmiths also called Seths in India used to receive gold and silver for

safe custody. The goldsmiths began to issue receipts for the metallic money (gold and

silver) kept with them. These receipts with the passage of time became payable to the

bearer on demand. In this way the ‘goldsmiths’ note, become a medium of exchange and

a mean of payment. The goldsmiths, thus, can rightly be termed as the introducer of the

modern bank note.

The Moneylenders

The third stage in the development of banking arose when the goldsmiths became

the moneylenders. By experience the goldsmiths (who were called money lenders) came

to know that they could keep a small proportion of the total deposits for meeting the

demands of customers for cash and the rest they could easily lend. In Economic

terminology, we can say that they allowed the overdraft facilities to their depositors.

4
2.3 DEFINITION OF BANKING
Like many other subjects and social sciences no precise definition can be given

from the study of banking also. Different authors have defined and described this subject,

keeping in view the particular functions and modern banking, but the basic idea is the

same. Banking has now become a multi-service organization with wider scope and area

of its influence. However, different writers give the following definitions of bank from

time to time.

The definition in the banking companies Act 1962 is “Bank means a person,

transacting the business of accepting for the purpose of lending or investment, of deposits

of money from the public repayable on demand or otherwise and withdrawal by cheques,

drafts or orders or otherwise and includes any post office saving Bank.

According to the Crowther, “A bank collects money from those who have it spare or who

are saving it out of their Incomes. It lends money to those who require it.

2.4 DEVELOPMENT OF BANKING IN PAKISTAN

Like any other institutions, at the time of freedom of Pakistan in 1947, it inherited

a poor and weak system of banking. It was due to the fact that most of the important

sectors of the economy including banking was controlled by Hindu nation. At the time of

partitions, these non-Muslim bankers transferred the bank resource to India. Bank staff

mainly consists of non-Muslim and also migrated to India. At the time of independence,

there were only two Pakistani Banks, i.e., Habib Bank Limited and Australasia Bank. At

this stage, Pakistan had 631 branches of scheduled bank and 411 offices of non-scheduled

banks. Even from these branches the money and other financial resources were

5
transferred to India because their Head Office were located in India, which also badly

affected the banking business of the country at early stage.

It was not possible to setup the central bank immediately after independence hence it was

agreed to act reserve bank of India as central bank of Pakistan till 30 th 1948. But it failed

to safeguard the interest of Pakistan’s banking affairs. It was now felt that establishment

of country’s own central bank is only solution for the removal of financial difficulties and

for sound development of banking system in the country. As result of this, SBP, being the

central bank of the country was established on 1st July 1948 inaugurated by

Quaid-e-Azam Muhammad Ali Jinnah, the first Governor General of Pakistan. SBP in

addition to its normal duties as a central bank played a very important role in the

development, controlling modernizing the banking system of the country. With the

development, now commercial banks with countrywide branches were established.

Sooner they extended their branches to the foreign countries. Moreover specialized in

financial institutions like ADBP, PICIC, NDFC, HBFC, IDBP were also created to help

and finance the particular sectors of the economy like industry, agriculture and housing.

All the commercial banks, incorporated in Pakistan and carrying on the bank business in

the country or abroad including ABL were privatization like other units of the economy as

a matter of policy of the ruling government. This step is taken in view of poor

performance and other weaknesses on the banking services. A privatization commission

was setup in January 1991. Two banks namely ABL and ABL were privatized and

transferred to private sector. In addition to the policy, government has allowed the

established of new private bank in August 1991 a result of which many new banks like

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Indus Bank, Soneri Bank, Askari Bank were established having their branches in all

important cities of country with the largest banking facilities administration.

2.5 BRIEF HISTORY OF ALLIED BANK LIMITED

Commercial banks are playing a vital role in the economic development of a

country. At the time of independence, Pakistan had only 487 branches of commercial

banks, which were further reduced to 196 as a number of branches of different banks

shifted to India or U.K. At the time of independence there were two main banks of

Muslim community i.e. Habib Bank Limited and Australasia Bank Limited remained

with Pakistan and took over the task of development of banking in Pakistan.

Australasia Bank Limited was the first Muslim Bank, which was established on the soil

of Pakistan on December 3, 1942. Under the Banks (Nationalization) Act 1974, all

commercial banks were nationalized. Due to its three regional banks namely Sarhad

Bank, Pak Bank and Lahore Commercial Bank were merged into Australasia Bank with

effect from 1st July 1974, and was renamed as Allied Bank of Pakistan Limited. On

September 12, 1991 Allied Bank became the world’s first bank to be owned and managed

by its employees. Allied Bank has a domestic network of 756 branches, About 60

domestic branches of the bank spread all over the country are authorized to deal in

foreign exchange. There is a network of 59 foreign correspondents of the banks all over

the world.

7
 In the domestic field operations, ABL has established its presence all over the

country. Its field operation is one of the most extensive among the leading banks in

Pakistan. Every province has a provincial chief usually a SEVP (Senior Executive Vice

President) who overlooks the operations of ABL in that particular province. Islamabad

and Gilgit regions are with Punjab province and Kashmir region with KP province. Under

the provincial chief are the General Managers, who are either EVP (Executive Vice

President) or SVP (Senior Vice President). The number of General Managers depends

upon the complexity and extensiveness of the field operations in the province. Below the

General Managers are the Circle Executives, who are Senior Vic-Presidents or Vice

Presidents.

Circle Executives are in charge of geographical circle areas such as Islamabad

circle in which Chakwaal, Gilgit areas are also included. Circle Office controls about 2-3

Zonal Offices. Punjab has 10 Circle Offices. Zonal Offices are managed by a Vice

President (VP) or Additional/Assistant Vice President (AVP). In each zone there are 20-30

branches, which are managed by branch managers who are Grade-I or Grade-II Officers.

There are a lot of Grade-III and non-grade employees, in each branch.

8
2.6 FUNCTIONS OF ALLIED BANK LIMITED

Functions of ABL are summarized below:

Accepting Deposits

The primary function of the commercial bank is to receive surplus balances of

individuals, public houses and institutions and to honor cheques drawn upon them. The

funds deposited with Allied Bank are as follows:

(a) Current deposits.

(b) Profit and Loss Sharing Account (Saving).

(c) Fixed Deposits.

Financing

The other important function of the ABL is to provide finances to the individuals and

business houses against securities at a certain fixed rate of interest. ABL tried to attract

the idle funds of the public and lend them at higher rate of interest then what they pay to

their customers following four types of financing takes place at ABL:

Demand Finances.

Running Finances.

Cash Finances.

Fixed Asset Financing.

Fixed asset finances are long-term finances. These are provided to projects for purchase
of machinery and cost of purchase.

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Agency Services To Customers

Following are the agency services to ABL: -

i. Collection of Cheques.

ii. Collection of Dividends.

iii. Purchase and Sale of Securities.

iv. Execution of Standing Instructions.

v. Transfer of Funds.

vi. Acts as an Agent.

General Utility Services

ABL also performs a number of other general utility services to his client,

which are as follows:

i. Foreign Exchange Business.

ii. Acts as a Referee.

iii. Acceptance of Bills of Exchange.

iv. Issue of Traveler’s Cheques.

v. Collection of Utility Bills.

vi. Locker.

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2.7 MANAGEMENT AND ORGANIZATION OF
ALLIED BANK LIMITED:
The ownership, management and control of all the commercial banks were taken
over by the Government of Pakistan on January 1, 1974. The financially weaker banks
were merged with the banks, which had strong footing. As a result of merger of banks,
five major banking companies were formed.

Banking Council was formed under the Nationalization Act. It has a Chairman, a Deputy
Governor of the State Bank, one official of the Ministry of Finance and five but not less
than three other members.

The management and organizational structure of the nationalized commercial banks have
uniformity. We describe this structure in brief: -

1. Board of Directors

In the management of the banks, the Board of Directors is at the top of the
controlling bodies. Since there are no private shareholders now, so there is no general
meeting of the shareholders and are no elected directors. The Board now consists of a
nominated President, a Secretary and 9 other members. After nationalization of Banks in
1974, most of the powers of Board have been transferred to the Banking Council and
Executive Board. The Secretary of the Board presents the Annual Report of the Bank.

2.Executive Board

The general direction and supervision of the affairs of commercial banks lies in
their respective Executive Boards. The Federal Government appoints the President,
Secretary and 9 other members of the Executive Board.

3.Chief Executive

The President is the administrative head of a bank. He presides over the meetings of
the Executive Board, manages and controls the affairs of the bank. The president holds
office at the pleasure of Federal Government.

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4.Divisional Chiefs

In order to improve the management and operation of a bank, it has been split up
into a number of divisions. Each Division of a bank placed under the supervision and
control of Divisional Chief or Senior Executive Vice-President (SEVP) or Executive
Vice-President (EVP).

For sound business purpose, the main divisions of a commercial bank are as under:

(1) International Division.

(2) Personnel Division. (HRM division)
(3) Inspection and Audit Division.
(4) Credit Division.
(5) Planning and Coordination Division.
(6) General Division.
(7) MIS Division (Now call IT Division).
(8) Central division
5.Branch Managers

Each zone of a commercial bank is divided into several branches. The control and
supervision of each branch is mostly entrusted to AVP or officer of class II. A few big and
financially sound branches are even administered by SVPS and VPS.

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2.8 DEPARTMENTS IN THE ABL
ABL has various departments, which are performing different jobs assigned to them. It
has following six departments.
1. Cash Department.
2. Remittance Department.
3. Bills Department.
4. CD Department.
1. CASH DEPARTMENT

Cash department deals with the cash in the bank. The basic function of cash
department is that it receives money from people and makes payment to people. When
the bank receives money, it is deposited with the bank and cheque is presented to the
customers with the help of which they can withdraw money at any time.

2 REMITTANCE DEPARTMENT

The bank transfers a large proportion of money from one place to another or from
person to person. The department, which deals with transfer of money, is called
Remittance Department. Transfer of money takes place through the following bills of
exchange.
i. Mail Transfer
ii. Telegraphic Transfer
iii. Demand Draft
i. Import and Export Department
ii. Remittance Department
iii. Collection and Exchange Department
iv. Foreign Currency Account Department
3 BILLS DEPARTMENTS

Bills department is mainly concerned with collection of bills and lodging of bills.
There are two main types of bills.
a) Clean Bill
b) Documentary Bill

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4 CD DEPARTMENT

The basic purpose of CD department includes following functions such as

maintaining records of saving account holders, current account holder, their signatures,
their scrutiny etc.

2.9 Organization Hierarchy

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CHAPTER # 3 WHAT I HAVE LEARNED

The report presents the eight weeks complete work at Allied Bank Limited
Dalazak Road Branch, I observed different work related with me being a finance student,
which are listed below

3.1 GENERAL BANKING

General banking means performing the daily routine works. General banking has the
various departments performing the various functions. These departments of general
banking are as follows:

Deposit Department
Allied Bank Limited accept the following types of deposits:

Current Deposit

The holder of this type of account is allowed to deposit or withdraw money as and
when he likes. Thus he may deposit or withdraw money several times in a day if he likes.
Businessmen and companies usually open this type of account. The bank does not give
any portion of profit to this kind of account holders. Current account can be opened with
minimum initial deposit of Rs.500/-.

Fixed Deposit

Allied bank also offered the fixed deposit account to its customers. In this type of
account the deposits are accepted for a period of maximum 5 to 7 years. A fixed interest
is paying on the deposits. If the customer wants to withdraw his amount then he will give
a 7 days notice to the bank.

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Profit & Loss Sharing Saving Account

The commercial banks are accepting interest free deposits from January 01, 1982.
Under interest free system, PLS saving accounts are opened in proper introduction with
sums not less than Rs.500/- to individuals (single or joint) charitable institutions,
provident and other funds of local bodies; and in all other cases where the account are to
be opened under the order of a competent law.

PLS saving account having a running minimum credit balance of Rs.500/- would be
eligible for sharing profit/loss of the bank. The bank at the close off shall determine the
rate of profit or loss on PLS saving account each half-year. In its safe discretion and the
bank’s decision will be final. Zakat is also deducted from this account at the rate of 2.5%.
If the balance exceeds from deduction limit.

3.2 Account Opening Department

The opening of new account is the establishment of customer-bank relationship. By

opening an account at a bank, a person becomes a customer of the bank. Before a banker
opens a new account, he should ascertain whether or not the person desirous of opening
the account. The banker should determine the prospective customer’s integrity,
repeatability, occupation and the nature of account.

The business by the introductory reference given at the account opening negligence in
this informal preliminary investigation may result in serious consequences not only for
the banker concerned directly, but also for other bankers and the general public who is
affected indirectly.

Account of the Customers Individual’s Accounts

An individual can open either PLS saving account or current Account. He can open
the account in any branch of the bank. When an individual deposits the initial amount he

16
fills a pay-in slip and deposits the initial amount to the cashier. The officer handling the
application, verify the form and ask the customer to come after one week, if he requires a
chequebook. After one week the chequebook is given to customer & can handle his
account.

When an account is opened with a banker, the customer gives the banker a specimen
signature, on the specimen signature card. These cards are specially designed for this
purpose. The name of customers, and account number are entered on it. When a customer
brings his cheque to withdraw the money, the banker check his signature with the
specimen signature, and then issue the required amount. If the cheque signature is
different from the specified signature, the banker returned the cheque with remark
“Signature Differs”.

The main problems occur in the individual account are death of customer, Insolvency of
Customer.

Joint Account

These are the accounts of two or more persons who are neither partner nor trustee.
When such an account is opened, it is necessary that the banker should obtain clear
directions as to whether one or more of them shall operate upon the account.

Partnership Account

The account is to be operated according to instructions given at the time of opening

the account. Every partner in a firm has an implied power to bind his co-partners by
drawing and endorsing of cheques. The drawing, accepting, and endorsing of bills of
exchange, and making and endorship of partner has an Implied authority to countermined
payment of any cheque drawn on the firm’s account and the banker is bond to comply
with the instructions issued by that partner.

In addition, the account opening forms duly signed by all partners and the
specimen signatures cards containing the specimen signatures of true and authorised

17
persons, and allow the operations on the account under those signatures as long as the
authority is not terminated. When a banker receives a notice of death, retirement or
dismissal of the authorised person, they should stop the operation on the account and wait
for a fresh resolution authorising another person for operation. However, the banker
should honour the cheques signed by authorised person before death, retirement or
dismissal, because they were valid instruments before the termination of his authority.
Any doubt or suspicion should be referred to the company.

Cheque Book

A checkbook contains a number of cheques, which is given to a customer upon

written request. It enables a customer to make withdrawal from his account or made
payment to various parties by an issue of cheque.

Know Your Customer (KYC)

When the customer wants to take loan or they wants to take loan for their business or
any other personal needs so for this, a customer must open the account if the customer is
Pakistani so he is treated as the Pakistani customer is treated but in case if he is non-
residential so in this case passport, valid visa, purpose of stay, nature of business means
for which business he borrow the loan from bank, and source of funding or source of
income. So for these all process a form is used which is called KYC (Know Your
Customer). And beside this the bank are also maintain different other information’s like: -

1: Each bank / DFI shall formulate and keep in writing, a comprehensive Know Your
Customer policy approved by the Board of Directors.

2: All reasonable steps should be taking to determine the true identity of every
prospective customer.

3: CNIC verification from NADRA.

4: Banks / DFIs shall obtain ‘Introduction’ on the new account to assess the prospective
customer’s / account holder’s integrity, respectability, and the nature of business.

18
Regular Customer

When the regular or account holder used the DD so the ABL charge 150=.05%
commission. And the account holder directly deposits as much amount in his account as
he wants to sent through DD or through ONLINE.

Walking Customer

When the walking customer used the DD so the ABL charge 250= .20% commission
and the walking customer pay the cash on the counter and then he want to send the DD.
And the posting charges of the ABL are 75 per DD.

In case if the demand draft is above 100,000 so in this situation a Test Code No is sent
with the DD. This is secret code no. One figure is taken from the manager and one figure
is given by the accountant then both figures are added then write down the Test Code No.

19
 CHAPTER 04
ANALYSIS
4.1 Ratio Analysis

Ratio analysis is an important and old technique of financial analysis. Ratios are
important and helpful in the reference that:
These simplify the comprehension of financial statement and tell the whole story of
changes in the financial conditions of the business. These provide data for inter-firm
comparison. The ratios highlight the factors associated with successful and unsuccessful
firms, also reveal strong and weak firms. These help in planning and forecasting these
can assist management in its basic functions of forecasting, planning, coordination and
control. These help in investment decision in case of investor and lending decision in case
of Bankers etc. However, the ratios are only indicators, they cannot be taken as final
regarding good or bad financial position of the business other things have also to be seen.
Great care is needed while calculating meaningful ratios and in interpreting them.
Although there are several ratios, which an analyst can employ yet the type of ratios he
would, use entirely depends on the purpose for which the analysis is done i.e., a creditor
would keep him abreast about the ability of a concern to cover up its current obligations
and so would care about current and liquid ratios, Turnover of receivables, coverage of
interest by the level of earnings etc.

CATEGORIES OF RATIO ANALYSIS:

 Liquidity ratios
 Activity ratios
 Debt ratios
 Profitability ratios
 Market ratios

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 LIQUIDITY RATIOS

The liquidity of a firm is measured by its ability to satisfy its short-term

obligations as they come due. Liquidity refers to the solvency of the firm’s overall
financial position i.e. the ease with which it pays its bills. Due to low or declining
liquidity firm moves towards financial distress and bankruptcy.
CURRENT RATIO:

The current ratio, one of the most commonly cited financial ratios, measure the
firm’s ability to meet its short-term obligations. It is expressed as follows:
Current assets
Current ratio = Current liability
Years 2019 2018 2017
Current ratio 1.42 1.02 1.31

RESULT:
From the above ratios it is clear that the firm’s investment in current assets has increased.
In 2018 it is in better position to pay its obligations as they come due. But in three years
we can see that the firm has the ability to pay its current liabilities efficiently. The
standard for this ratio is 2:1 it is calculated by the current assets by total of the current
liabilities.
DEBT RATIO
The debt position of a firm indicates the amount of other people’s money being used to
generate profits. In general, the financial analyst is most concerned with long term debts,
because these commit the firm to a stream of payment s over the long run.
Debt ratio = Total liabilities
Total assets
Years 2019 2018 2017

Debt ratios 0.864958 0.860627 0.877075

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RESULT:
The ratio indicates the more than half of the assets financed by the debt. This ratio is
almost showing the same trend throughout the previous three years. Debt ratio indicates
the greater the risk and more financial leverage it has. It also shows that firm has paid
some portion of the debt during the year 2019.
4. Profitability Ratio
Return on total assets
Return on equity
Earnings per share
 RETURN ON TOTAL ASSETS:

It measures the overall effectiveness of management in generating profits with its

available assets. The higher the Return on total assets better will be the performance.
Earning available for common stockholders
Return on total assets =
Total assets
Year 2018 2017 2016
ROA 5.030% 5.505% 5.219%

RESULT:
The return on investment of the firm is 5.03 % in 2019. It is less than the previous year. It
shows that firm generates Rs.5.03 for each Rs.100 of the investment which is very poor
for the company progress.

RETURN ON EQUITY:
Earning available for common stockholders
Return on total assets =
Total Equity
Year 2019 2018 2017

22
 ROE (%)
28.313 34.73238 34.448881

RESULT:
The return on equity of the firm is 28.313% in 2019. It is less than the previous year. It
shows that firm generates Rs.28.313 for each Rs.100 of the investment made by the
partners or shareholders of the company (which are privately owned by four brothers).

4.2 SWOT ANALYSIS

The main purpose of doing SWOT analysis is to highlight all aspect of the bank. We
can say that it is a tool to get a quick overview of bank’s strategic situation. It is an
effective technique for analyzing the strengths, weakness, and opportunities and threat of
an organization. It tells us about the firm position. It helps the readers to understand the
performance of the bank very easily. It forecast the future status and point out the
problems likely to come in achieving the specified objectives.

As like the other banks the ABL have some strength, weakness, opportunities and
threats, which are as under: -

1 Strengths
Strength is present within an organization and when utilized, become a means of
distinction from competitors.
ABL is a schedule commercial bank with good branch networks in KP. Equipped with
modern technology. Trained & qualified professionals. Low level of employee
satisfaction and commitment.
Good banking relations with other financial institutions as well as with the customers,
which give positive results in goodwill & loyalty of the customers towards the
organization. Courteous staff. Regular training programmes for their employees, which
are still very less in majority of other banks. Sound computer network.
Introduction of the Auto Cash Teller Machines (ATM).

23
First bank to privatize, which has, now become the leader in market with largest online
ATM network in the country.
Allied Direct Internet Banking offers the convenience to manage and control your
banking and finances-whenever & wherever it is required.
The people in the organization under consideration are highly satisfied with there
jobs.
The abl adopt such a strategy, which is hard for its competitors to copy or match. Just like
they do not deduct Rs. 15 charges on the withdrawal of money through ATM.
No charges (15) deducted by abl from its customers, which is no doubt, is the big strength
of ABL.
Gradually increasing deposits.
Master card is accepted around the world.
The bank has the authority to deal in foreign exchange and guarantee for importers and
exports
The banks offers new schemes and facilities from time to time which keeps not only the
customers of the bank committed but also leads to a growing sound base of deposits.
The current customers list of ABL is very large and having a large number of deposits.
2 Weaknesses
Weaknesses are the shortcoming in the structure or functioning of the bank and
need to be taken care of immediately. It is usually because of these weaknesses that the
competitors leave us behind in the race.
Centralized decision-making.
Excessive paper work & lengthy procedure for obtaining loan.
Absence of sound and organized marketing & MIS deptt.
Relying more on the rented building.
Improper selection of premises for branches i.e. Regional Office Peshawar is on the 1st
floor, which create problems for customers and especially for aged customers.
The management is not dynamic like other banks e.g. Habib Bank, ABL and UBL etc.
The employees are totally unaware about the latest technology.

24
8. The top management especially manager are not well educated therefore they
cannot perform their duties efficiently as well as effectively. Which may directly affects
the goodwill of the bank.

9. The recruitment process is very lengthy it should be trimmed & lack of

transparent system of recruitment and selection.

10. Lengthy advancement procedures. For advancement every borrower either sole
proprietorship, partnership, joint stock companies, individual etc is require to fulfill
certain conditions for loan. Depending on the nature of loan sometimes the loan process
take too much time due to legal formalities such as documentation, providing of
guarantee, pledge, etc.

11. Though there are training academies at the zonal levels, but the training programs
are usually confined to the managerial staff, there is a need of training at all the levels.

12. The performance appraisal system is ineffective

13. Misuse of telephone Internet, printer machine and other facilities available to the
employees of the bank must be handled properly.

14. Lack of transparent system of recruitment and selection.

15. No fix tenure for promotion.

16. Low level of employee satisfaction and commitment.

17. Unattractive branch locations and interior.

3 Opportunities

Opportunities are always present in the external market whoever grab it first, is the

25
market leader. Means an external situation, which an organization can benefit from, is
called opportunity for that organization. ABL can grab the following opportunities

1. Opening of new branches inside as well as outside the boundaries.

2. Inter-branch transaction through computer network.

3. Providing new investment opportunities for the people of the country.

4. Serving new customers or expanding into new geographical markets or product

segments.

5. Customer’s feedback on different products and services has really improved the
bank’s performance and encouraged the atmosphere for other future policies.

6. Opening the business schools.

7. Give information to the bank employees about the latest facilities. That they can
easily cope with the any situation.

8. Launching new marketing schemes to boost up the deposits. As well as to extend

the company’s brand name or reputation to new geographic areas.

9. Sponsoring more and more games.

10. There is good opportunity for the bank to sponsor games on provincial and
national levels for its publicity. Just in 2006 they sponsor the Pak VS India cricket series.

11. Training can enhance the employee’s skills

12. Focus on small business, export/ import sector.

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13. The adoption of new and energetic marketing teams can increase the disbursement
of loans and new customers can be searched out.

14. Using the Internet and E-commerce technologies to dramatically reduce the cost
and to pursue new sales opportunities.

15. ABL has an opportunity to expand its new technological advancement like Tele
banking and Internet banking facilities in order to serve the customers more efficiently.
Especially, E-Banking is a new opportunity which is a flourishing business in foreign
countries and can also be here, if ABL takes the initiatives.

16. Strong promotional strategies can attract huge deposits for the bank.

17. The bank has a major opportunity to invest in different valuable projects As well
as in other parts of the country.

18. In the present time the Overseas Pakistani are interested to invest in Pakistan so
the bank has the opportunity to invest with them in a different project. Which can really
helpful for the development of a country success.

19. The bank has an opportunity to invest in the new market segments like IT,
business, software business etc.

4 Threats

Threats are also part of your external environment and pose a constant danger to
an organization’s operations. However, a proficient is the one that converts these threats
into opportunities.

27
1. Not adopting itself with the changing marketing strategies of other financial
institutions. I.e. Crore Patti of HBL, Car Aamed of UBL etc.

2. Closed and sick industries/projects financed by the Bank.

3. Slow industrialization in the country.

4. Changing political & economic conditions.

5. High turnover of already trained employees from the bank.

6. Increasing foreign banks in the country. Which provide highly specialized and
attractive services provided by foreign banks to their customers

7. Un-consistency in government policies regarding to business and economic

sector.

8. Strict regulations by the government over credit facilities to the customers as to

meet the prudential regulations

9. And last but not least, slower economic growth rate of the country.

10. Increasing number of private foreign bank in the country.

11. The e- banking facility offered by different national and international banks is a
serious threat to ABL.

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 CHAPTER # 5

CONCLUSION & RECOMMENDATIONS

Following are some conclusion & recommendations for Allied Bank, Ltd.
1. ADVERTISING:

Bank must let potential customers know that all attractions for banking exist. This is done
by advertising on television and obtaining press coverage, in conjunction with direct
mail, window displays, leaflet in branches and in appropriate other locations (such as
hotels, shops, etc.) and including leaflets in statement of accounts sent to existing
customers in the hope that they will tell potential customers about the services provided
by our bank.
2. INCREASED ATM’S LOCATIONS:

Some personal sector customers prefer not to come to branch. They increasingly want to
deal with the bank in other ways, such as home banking or use of Automated Teller
Machines (ATMs), which need to be at every branch or some important shopping plazas
and airports etc.
3. INCREASED SERVICES:

One way to retain the customers is to offer a wide range of services such as tax advice,
free life insurance equivalent to amount deposited, shares portfolio management, fund
management facility, etc., complimentary to the core services. Banks must have a slightly
different mix of services and mean of providing these such that customers can choose the
mix that suits them best.
4. MANAGEMENT OF TIME:

There should be a good management of time for the sake of employees i.e. offering them
free break hours instead of making them work in this time as well.

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 5. GROWTH SCOPE FOR EMPLOYEES:

ABL should provide greater facilities to its employees, and give them bonuses for their
hard work and Promotions as well. There is a criticism on the banking management that
the salaries of the employees are decreasing in every succeeding year. And I think this
will shake the confidence and working habit of the employees

6. BANKING PROFESSIONALS:

The bank should hire banking professionals having experience in their respective fields
that will boost the performance of the company as currently BBA Hons s are produced
for this field so they should be hired for enhancing the performance of company.
7. ATTRACT CUSTOMERS:

The banking company should offer such policies which would attract customers which
are denied by other banking in the market.
8. JOB ROTATION AND PROMOTIONS:

Most of the bank employees, are sticking to one seat only with the result that they
become master of one particular job and loose their grip on other banking operation. In
my opinion all the employees should have regular job experience all out-look towards
banking. The promotion policy should be adjusted

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References

Personal observation and interview with staff members of branch.

Google.com

www.Alliedbankltd.com.pk

Annual report of ABL 2018

Annual report of ABL 2019

State Bank of Pakistan http://www.sbp.org.pk
Statistical Bureau of Pakistan http://www.fbs.gov.pk

31
 ANNEXURE # 1

BALANCE SHEET
AS AT 31 December 2019,2018,2017
  2019 2018 2017
 ASSETS (Rs. In '000') (Rs. In '000') (Rs. In '000')
Cash and Balances with Treasury Banks 39,631,219 39,683,883 32465976.00
Balances with other Banks 4,106,526 3,867,591 6649659.00
Lending to Financial Institutions 4,100,079 1,051,372 21081800.00
Investments 97,790,391 115,358,590 64450761.00
Advances 262,508,830 218,959,786 198236682.00
Operating Fixed Assets 17,320,485 16,082,781 9073276.00
deferred tax assets - - 174886.00
Other Assets 19,828,228 17,896,838 11044909.00
  445,285,758 412,900,841 343177949.00
LIABILITIES      
Borrowings from financial institutions 10,551,468 10,479,058 7089678
Deposits and other accounts 22,663,840 39,406,831 23943476
Sub-ordinate loans 330,245,080 292,088,347 257185110
Liabilities against assets subject - 479,232 1597440
Other liabilities 440,295 1,183,586  
  21,252,942 11,716,465 11177125
NET ASSETS 385,153,625 355,353,519 300992830
Reserves 6,282,768 6,282,768 5463276
Inappropriate profits 36,772,321 34,000,927 24662446
  11,065,723 7,054,472 6278593
Minority interest 54,120,812 47,338,167 36404315
  69 63 52
Surplus/ (deficit ) on revaluation 54,120,881 47,338,230 36404367
  6,011,252 10,209,092 5780752

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  60,132,133 57,547,322 42185119

ANNEXURE # 2

INCOME STATEMENT
For the Years 2019,2018,2017
  2019 2018 2017
Mark-up /return/ interest earned 40,049,505 31791754 25784853
Mark-up/ return/ interest expensed 11,592,922 7858819 4509146
Net Mark-up /return/ interest income 28,456,583 23932935 21275707
Provision for diminution in the value of investment 2,683,994 105269 121197
Provision against non-performing loans and advances – net 1,335,127 2959583 1014540
Bad debts written off directly - 199 47000
Income earned as trustee to various funds 21,867 5,859 483
Dividend income 451,312 535,813 746276
Income from dealing in foreign currencies 727,564 693,408 692010

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Gain on sale of securities – net 748,139 1,507,610 605865
Unrealized loss on revaluation of investments (99,531) (3,329)  
Other income – net 1,201,834 1,002,160 577703
Total non-mark-up / interest income 5,929,848 6,514,136 4947508
  30,367,310 27,382,020 25040478
Administrative expenses 7580302 5,440,305 6505576
Other provision / (reversal) – net 10120 (3,743) 11411
Other charges 920991 642,780 66708
Total non-mark-up / interest expenses 8511413 6,079,342 6583695
Share of profit of associated undertaking 30843 1,223,633 474030
Profit before taxation 21886740 22,526,311 18930813
Current year 7387345 6,463,560 5709140
Prior years -865344 -1294586 593906
Deferred 16348 899,898 61213
Profit after taxation 15323227 16,441,670 12540879
Basic and diluted earnings per share - after tax 24.39 26.17 19.96

34