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ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
1
INTERNSHIP REPORT
ON
UNITED BANK LIMITED
SPECIALIZATION:
BANKING & FINANCE
SUBMITTED TO:
CHAIRMAN,
DEPT. OF BUSINESS ADMINISTRATION
SUBMITTED BY:
ADNAN FAROOQ
ROLL # T-521199
REG # 06PMN0039
382 - RAVI BLOCK, ALLAMA IQBAL TOWN,
LAHORE.
TEL # 042-5417364 MOB # 0300-6720085
DEPARTMENT OF BUSINESS ADMINISTRATION
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
2
IN THE NAME OF
ALLAH
THE MOST BENIFICIENT AND MOST
MERCIFUL
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
3
DEDICATED
To My Beloved Parents
For Having Firm Belief in My
Abilities & Whom Prayers Enabled Me
To
Accomplish This Milestone
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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MESSAGE OF THE QUAID
MUHAMMAD ALI JINNAH
“We must work our destiny in our own way and present to the world an economic system
based on true Islamic concept of equality of manhood and social justice. We will thereby
be fulfilling our mission as Muslims and giving to humanity the message of peace which
alone can save it and secure the welfare, happiness and prosperity of mankind”.
(SPEECH AT THE OPENING CEREMONY OF STATE BANK OF PAKISTAN, KARACHI JULY 1,
1948).
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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FINAL APPROVAL
This is to certify that we have read the report submitted by MR. ADNAN FAROOQ
Roll No. T-521199 and It is our judgment that this is of sufficient standard to warrant
its acceptance by ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD, for MBA (B&F)
degree.
REPORT EXAMINING COMMITTEE
SIGNATURES STAMP
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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ACKNOWLEDGEMENT
All praise to ALMIGHTY ALLAH alone, the Omnipresent and the most Merciful and
compassionate. The words are bound, knowledge is limited and time is short to express
His dignity. It is one of infinite blessings of ALLAH that he bestowed me with the
potential and ability to contribution towards the deep oceans of knowledge already
existing. I pay hum-age to greatest personality of the universe; HOLY PROPHET
HAZARAT MUHAMMAD (PBUH) Who is forever torch bearer and spring of
guidance in every sphere of life. I am deeply indebted and also express my gratitude to
my respected teachers at ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD for
their support.
At the very outset, I am very thankful to Mr. ZULIFQAR AHMAD RANA (AVP UBL)
for providing me the opportunity to have an excellent learning experience during my
internship at REGIONAL CREDIT ADMINISTTRATION DEPARTMENT-
COMMERCIAL BANKING (RCAD-CB) UNITED BANK LIMITED, LAHORE. It is
my privilege and honors to express my deep gratitude and in calculating thanks to Mr.
Sohail Amjad Vice President & Head RCAD-CB UBL, Lahore . The person to whom I
would like to give my regards is the MIS OFFICER Mr. WASIM AHMAD of RCAD-
CB UBL, LAHORE who gave me very useful tips and information. I might not be able to
complete my internship without his cooperation and his kind behavior. I am thankful to
all of my teachers especially Mr. Muhammad Azeem and Mr. F. R. Tariq (N. K. Fact
College, Lahore).
I am thankful to all of my class fellows and friends whom cheerfulness and guidance is
an asset for me .I am especially thankful to the bank staff and particularly.
� Mr. Nabeel Anwar Senior Vice President & Head North
� Mr. Badar Munir Processing Officer
� Mr. Naeem Azam Documentation Officer
� Mr. Mohsin Hassan Documentation Officer
� Mr. Sohail Saeed Processing Officer
� Mr. Nadeem Saif Processing Officer
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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EXECUTIVE SUMMARY
United Bank Limited (UBL) is the second largest bank of Pakistan with assets of over Rs.
550 billion and a solid track record of forty six years - in addition to the convenience of
over 1400 branches serving its customers throughout the country and also at several
overseas locations.
In this 12 weeks (3 Months) internship program I have worked in Regional Credit
Administration Departments (MIS section, Processing section, Documentation section) of
this high class bank of Pakistan where I have learned about banking from experienced
managers running these sections.
This report contains the information and learning about UBL that I learnt during the 12
weeks internship period in United Bank limited. This report deals with History & Nature
(Business) of the UBL, its Products and Services, information about main offices and
also the review of various departments of the Bank. This report also contains Finance &
Accounting operations of the UBL, role of Financial Manager (Branch Manager), Use of
Electronic Data in core decision making and the Sources, Generation and Allocation of
funds used in the banking operations of the UBL.
Recognizing the need of Islamic banking, UBL also provided number of Islamic banking
services like Islamic Deposit Schemes and Islamic Fund Based Facilities.
At the end of this report, on basis of my observation during internship, financial analysis
and SWOT analysis of UBL is provided. Suggestions are also recommended as per
learning from analysis. This report will provide a better and brief learning about United
Bank Limited.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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OBJECTIVES
This internship offers me an incredible opportunity to gain real-world experience in the
high-stakes finance industry. Most importantly this internship allows me to distinguish
myself from my classmates, as I gain a competitive advantage by connecting my
coursework with industry experience.
Following are important objectives of studying the organization:
� Categorize the different products and services offered by the financial institution
and note how to most efficiently match those products and services with the needs
of customers.
� Analyze the company’s financial condition through the financial statements
(compute financial ratios and compare to the industry averages).
� To describe the impact of financial decisions on the health and functioning of the
overall organization.
� To learn the various steps and procedures of credit risk management &
administration.
� Finding out the weaknesses, short comings, strengths and beauties of the credit
administration department.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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TABLE OF CONTENTS
1. OVERVIEW OF THE ORGANIZATION 01
1.1 BRIEF HISTORY OF THE ORGANIZATION 01
1.1.1 ABOUT UBL 01
1.1.2 FORMULATION 01
1.1.3 NATIONALIZATION 01
1.1.4 PRIVATIZATION OF UBL 02
1.1.5 UBL TODAY 02
1.2 NATURE OF THE ORGANIZATION 04
1.2.1 VISION STATEMENT 05
1.2.2 MISSION STATEMENT 05
1.3 BUSINESS VOLUME 06
1.3.1 REVENUE 06
1.3.2 DEPOSITS 06
1.3.3 ADVANCES 07
1.3.4 COMPUTATION OF ADVANCES 07
1.4 NUMBER OF EMPLOYEES 08
1.4.1 BOARD OF DIRECTORS 08
1.4.2 STAFF STRENGTH 08
1.4.3 KEY MANAGEMENT 09
1.4.4 MANAGEMENT HIERARCHY 09
1.5 PRODUCT LINES 10
1.5.1 DEPOSIT PRODUCTS 10
1.5.2 LOANS & CARDS 12
1.5.3 AGRICULTURAL PRODUCTS 15
1.5.3.1.1 FARM LOANS 15
1.5.3.1.2 NON FARM LOANS 16
1.5.4 SMALL BUSINESS 17
1.5.5 NRP SERVICES 18
1.5.6 OTHER SERVICES 19
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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2. ORGANIZATIONAL STRUCTURE 22
2.1 MAIN OFFICES 22
2.1.1 HEAD OFFICE 22
2.1.2 BRANCHES 23
2.1.3 DOMESTIC NETWORK 23
2.1.4 PROVISIONAL HEADQUARTERS 23
2.1.5 BRANCH HIERARCHY 24
2.1.6 OVERSEAS NETWORK 25
2.2 DEPARTMENTS OF THE UBL 26
3. STRUCTURE AND FUNCTIONS OF THE ACCOUNTS/ FINANCE AND AUDIT
DEPARTMENT 34
3.1 ORGANIZATIONAL CHART (FINANCE DEPARTMENT) 34
3.2 MY LEARNING AS AN INTERNEE 35
3.3 FINANCE AND ACCOUNTING OPERATIONS 35
3.4 THE ROLE OF FINANCIAL MANAGER 35
3.4.1 ACCOUNTS MANAGEMENT 37
3.4.2 CASH MANAGEMENT 38
3.4.3 CREDIT MANAGEMENT 38
3.5 USE OF ELECTRONIC DATA IN DECISION MAKING 41
3.6 SOURCES OF FUNDS 47
3.7 GENERATION OF FUNDS 47
3.8 ALLOCATION OF FUNDS 49
4. CRITICAL ANALYSIS OF THE THEORETICAL CONCEPTS 57
4.1 FINANCIAL ANALYSIS 57
4.1.1 RATIO ANALYSIS (ABBREVIATIONS USED IN CALCULATIONS 59
4.1.2 CALCULATION OF RATIOS 60
4.1.3 GRAPHICAL REPRESENTATION OF RATIOS 62
4.1.4 EXPLANATION OF FINANCIAL RATIOS 65
4.1.5 HORIZONTAL ANALYSIS 68
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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4.1.5.1.1 BALANCE SHEET 68
4.1.5.1.2 PROFIT & LOSS ACCOUNT 73
4.1.6 VERTICAL ANALYSIS 77
4.1.6.1.1 BALANCE SHEET 77
4.1.6.1.2 PROFIT & LOSS ACCOUNT 80
4.2 ORGANIZATIONAL ANALYSIS 82
4.3 FUTURE PROSPECTS OF THE ORGANIZATION 83
5. SHORT – FALLS/WEAKNESSES OF THE ORGANIZATION 84
6. CONCLUSION 85
7. RECOMMENDATIONS 86
8. REFERENCES 88
9. ANNEXES 89
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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1. OVERVIEW OF THE ORGANIZATION
1.1. BRIEF HISTORY OF THE ORGANIZATION:
1.1.1. ABOUT UBL:
The history of UBL can be divided into four main Phases:
� Formulation
� Nationalization
� Privatization
� UBL Today
1.1.2. FORMULATION:
In June 1957, Mr. Agha Hassan Abidi decided to open a Bank different from others, to
provide modern facilities to trade and industry and to promote thrift and habit of saving
amount common thereby stimulating the economy as a whole. Necessary formalities
completed for obtaining registration certificate from State Bank of Pakistan to perform
business activities. After passing through all these formalities on 7th November, 1959
United Bank Ltd came into existence as a Schedule bank.
The Head office of the Bank was established in the New Jubilee Insurance House, 1.1
Chundrigar Road Karachi. It was registered as a joint stock company. The bank was
incorporated with an Authorized Capital of Rs 20,000,000 and issued and subscribed
and paid up capital of RS 10, 00,000. Saigol family owned it and Agha Hassan Abedi
was its first managing Director. It had posted a profit of 0.7 million in its first year of
operation with just eight branches at Karachi.
1.1.3. NATIONALIZATION:
As a policy of nationalization fourteen commercial banks was merged into five big
banks. So consequently on 21st December 1974 Commerce Bank and Union bank was
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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merged with the UBL. Mr.Mushtaq Ahmed khan Yousafi took over the charge of UBL.
Now, there are six directors, a secretary and a president.
1.1.4. PRIVATIZATION OF UBL:
UBL was the largest privatization attempted by the government of Pakistan, launched in
June 2001, with 21 interested parties. It was impacted by the adverse developments of
the September 11, 2001 and was finally concluded in October 2002, which left stage
only three bidders. The consortium comprising Bestway Group (BG), out of the U.K.
and Abu Dhabi Group (ADG) from the U.A.E. were finally the winners at a record
price.
Sale proceed was Rs 12350 million. This signaled the strong confidence reposed by
these investor groups, in the improved governance of the country, the economic
potential, the banking opportunity and the existing management of the bank.
1.1.5. UBL TODAY:
Today the bank has taken progressive steps. The United Bank Limited (UBL)
management has launched its new corporate identity and changed its 44 year-old-logo
following its privatization. UBL has started the Online Banking & Click n Remit
services.
CHAIRMAN:
� His Highness Shaikh Nahayan Mabarak Al Nahayan.
DEPUTY CHAIRMAN:
� Sir Mohammed Anwar Pervez OBE.
PRESIDENT & CEO:
� Mr. Atif R. Bokhari.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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BRANCHES:
� 1079 Domestic, 17 Overseas Branches.
REPRESENTATIVE OFFICES:
� Tehran
� Kazakhstan
� China
SUBSIDIARY:
� United Bank AG Zurich, Switzerland.
� United National Bank Limited, UK (Joint venture with NBP).
� UBL Fund Managers Limited.
ASSOCIATED COMPANIES:
� Oman United Exchange Company, Muscat.
� UBL Insurers Limited.
OFFSHORE BANKING UNIT:
� Export Processing Zone, EPZ Branch, Karachi, Pakistan.
HEAD OFFICE:
� State Life Insurance Corp. Building #1,
I.I. Chundrigar Road, Karachi, Pakistan
P.O. Box No.: 4306
Phone: (92-21) 111-825-111
Gram: "UNITED"
Fax: (92-21) 2413492.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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1.2. NATURE OF THE ORGANIZATION
UBL is a Banking Company, which is engaged in Commercial & Retail Banking and
related services domestically and overseas. UBL was set up in 1959 by. Agha Hasan
Abedi and is today one of Pakistan's major banks in terms of deposits and advances.
The Group's principal activities are to provide commercial banking and other financial
services. The Group offers personal banking, cash management, retail loans and other
financial services. These services include deposits, savings/current bank account, vehicle
loans, personal loans, retail trade finance, global banking, lending to priority sector and
small scale sector, foreign exchange and export finance, corporate loans and equipment
loans.
In 1971 the Government of Pakistan nationalized it. In 2002, the Government of Pakistan
sold it in an open auction to a consortium of Abu Dhabi Group and Bestway Group.
Since its privatization the bank has been successfully turned around and remains a robust
and strong performer in all major segments of its operations.
In 2002 it merged its operations in the UK with those belonging to National Bank of
Pakistan to form United National Bank Limited, of which it owns 55%, with National
Bank of Pakistan owning the remainder.
The Bank is making every effort to meet the up-coming challenges through strategic
planning and making the best use of the resources at its command. A professional team
was appointed in mid 1997 to restructure the bank and to commence rightsizing. The
management is also in the process of rationalizing the branch network and identifying
and recovering its doubtful and classified portfolio. It has planned to institute major
improvements in customer services and internal systems to improve efficiency. It also
intends to launch innovative products. The bank is increasing resource mobilization
through regular deposit campaigns and accelerating the process of recovery of
outstanding advances and non-performing assets.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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1.2.1. VISION STATEMENT
“To be a world class bank dedicated to excellence, and to surpass the highest
expectations of our customers and all other stakeholders”.
1.2.2. MISSION STATEMENT
� Set the highest industry standard for quality across all areas of operation, on a
sustained basis;
� Optimize people, processes and technology to deliver the best possible financial
solutions to our customers;
� Become the most sought after investment;
� Be recognized as the employer of choice.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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1.3. BUSINESS VOLUME
1.3.1. REVENUE:
Particulars 2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Mark-up / return / interest earned 41,045,543 32,991,603 20,158,860 9,233,881 8,944,260
Fee, commission and brokerage
income 5,165,066 4,435,465 2,543,739 1,654,475 1,442,642
Dividend income / gain on sale of
investments 548,782 837,338 583,982 1,102,510 2,057,314
Income from dealing in foreign
currencies 827,328 659,726 675,109 668,085 436,656
Gain on sale of securities 849,367 280,864 382,419 947,945 1,976,999
Other income 1,617,563 738,330 1,210,202 1,072,756 607,500
Total Revenue 50,053,649 39,943,326 25,554,311 14,679,652 15,465,371
1.3.2. DEPOSITS:
2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Customers
Fixed deposits 127,317,589 114,927,897 79,841,687 42,971,478 35,945,097
Saving deposits 153,001,867 121,878,162 122,662,484 118,243,902 102,372,765
Sundry deposits 4,645,873 4,942,064 4,148,275 3,161,327 2,728,107
Margin deposits 2,746,824 2,698,999 2,214,877 1,218,963 1,212,276
Current accounts –
remunerative 5,641,419 1,908,055 1,886,548 393,760 565,433
Current accounts – non-
remunerative 108,116,175 88,662,089 78,324,614 64,150,773 41,253,005
Total Customers Deposits 401,469,747 335,017,266 289,078,485 230,140,203 184,076,683
Financial Institutions
Remunerative deposits 143,603 35,539 - - 8,881
Non-remunerative deposits 24,466 25,068 147,814 116,424 985,938
Total Financial Institutions
Deposits 168,069 60,607 147,814 116,424 994,819
Total Deposits 401,637,816 335,077,873 289,226,299 230,256,627 185,071,502
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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1.3.3. ADVANCES:
2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Performing 293,373,007 243,237,819 201,152,095 139,669,440 92,513,736
Non-performing 5,981,729 4,072,074 3,658,375 4,481,615 3,611,442
Total Advances 299,354,736 247,309,893 204,810,470 144,151,055 96,125,178
1.3.4. COMPUTATIONS OF ADVANCES:
Performing Non-performing
2007 2006 2007 2006
-----------------------------(Rupees in ‘000)------------------------------
Loans, cash credits, running
finance etc.
In Pakistan 222,660,938 200,080,279 17,759,670 9,273,198
Outside Pakistan 60,310,465 33,369,281 3,011,935 4,771,131
282,971,403 233,449,560 20,771,605 14,044,329
Bills discounted and
purchased (excluding
government treasury bills)
Payable in Pakistan 5,301,652 5,661,421 745,115 876,300
Payable outside Pakistan 3,820,841 4,080,845 495,691 1,334,780
9,122,493 9,742,266 1,240,806 2,211,080
292,093,896 243,191,826 22,012,411 16,255,409
Financing in respect of
continuous funding system
(CFS)
2,631,139 1,462,242 - -
Advances - gross 294,725,035 244,654,068 22,012,411 16,255,409
Provision against advances
- Specific - - (16,030,682) (12,183,335)
- General (1,352,028) (1,416,249) - -
(1,352,028) (1,416,249) (16,030,682) (12,183,335)
Advances – Net Provision 293,373,007 243,237,819 5,981,729 4,072,074
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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1.4. NUMBER OF EMPLOYEES
1.4.1. BOARD OF DIRECTORS:
Name Designation
His Highness Shaikh Nahayan Mabarak Al Nahayan Chairman
Sir Mohammed Anwar Pervez, OBE, HPK Deputy Chairman
Mr. Atif R. Bokhari President & CEO
Mr. Omar Ziad Jaafar Al Askari Director
Mr. Zameer Mohammed Choudrey Director
Dr. Ashfaque Hasan Khan Director
Mr. Muhammad Sami Saeed Director
Mr. Aqeel Ahmed Nasir Company Secretary & Chief Legal
Mr. Aameer Karachiwalla SEVP/Group Chief Financial Officer
As at December 31, 2006, the organization had a total staff strength of 15,369 (FY05:
13,479) employees, of which 9,738 were the bank’s own staff, while the remaining were
out sourced resources. Turnover for the year was about 10%, while approximately 1,300
new employees had been hired during the year.
1.4.2. STAFF STRENGTH:
STAFF STRENGTH 2007 2006
Permanent 9,373 9,734
Contractual basis 9 4
Bank's own staff strength at the end of the year 9,382 9,738
Outsourced 5,522 5,631
Total number of employees at the end of the
year 14,904 15,369
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1.4.3. KEY MANAGEMENT:
Name Designation
M. A. Mannan Group Executive Consumer & Commercial Bank
Risha Mohyeddin Group Executive Treasury & Capital Markets
Baqar Muzaffar Group Head Information Technology
Nauman Hussain Group Head Operations
Ayaz H. Shamsi Group Executive Human Resources
Aameer Karachiwalla Group CFO
Muhammad Ejazuddin Group Audit & Inspection Head
Ali Sameer Group Executive Risk & Credit Policy
Mohammad Asghar Group Commercial Bank Head
Saeed Iqbal Group Head Investment Bank
Ahmed Hafeez Group Head Business Development & Strategic Initiatives
Hasan Raza Group Head Corporate Banking and Cash Management
Najeeb Agrawalla Group Head Marketing Retail Bank
Wajahat Husain Head of Middle East
1.4.4. MANAGEMENT HIERARCHY:
� President
� Board of directors
� Members executive board
� Regional chiefs
� Zonal chiefs
� Branch managers
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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1.5. PRODUCT LINES
1.5.1. DEPOSIT PRODUCTS:
UBL has taken progressive steps and has introduced innovative products and services to
provide you a variety of banking and financing services including Current and BBA
Accounts.
UBL UNIFLEX ACCOUNT:
UBL has introduced a new checking account ideal for small investors, traders,
businessmen and customers from middle income group. They can now afford an amazing
rate of return plus value added benefits only available from the UBL UniFlex PLS
Savings Account.
UBL UNISAVER ACCOUNT:
UBL UniSaver Account is an innovative way of serving your banking needs. Be it trade,
business or personal finance, the UBL UniSaver allows you maximum flexibility, yet
gives you optimum returns.
� Innovative and flexible checking account.
� Attractive rates of return.
� Profit is calculated on monthly average balance.
� Profit payment is on six monthly basis.
� Higher returns on higher balances.
UBL PROFIT COD:
Customer can earn a higher income on their surplus cash by investing it in UBL Profit
Certificate of Deposit. UBL Profit helps them earn extra income with their hard earned
money, while providing absolute trust and security. Two Types of Profit Payment
Options:
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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� Profit Payment at Maturity.
� Monthly Profit Payment.
PLS REGULAR TERM DEPOSITS RECEIPTS:
If customer wish to make a secured long term investment, UBL’s Term Deposit Receipt
is the smart choice. UBL Term Deposit Receipts provides an attractive rate of return. The
profit is credited to the customer account every six months. Customer has the flexibility
to choose from a wide range of tenors. Customer can avail the Rollover or Renewed
option at any time before encashment. Customer can get TDR en-cashed at any time
before maturity period.
FOREIGN CURRENCY SAVINGS & FOREIGN CURRENCY TERM DEPOSITS RECEIPTS:
United Bank offers the best rates of return on Foreign Currency Deposits in the market.
Accounts can be opened in US Dollar, Pound Sterling, Euro, and Japanese Yen at
designated branches. All Pakistani nationals residing in Pakistan and outside Pakistan can
also open Foreign Currency Accounts. Resident Firms and companies including
Investment Banks can open Accounts.
Term deposits in foreign currency are offered for the following periods of maturity with
variable rates of return:
� Three Months.
� Six Months.
� Twelve Months.
There are no cash handling (Cash Deposit & Cash Withdrawals) charges from the
customers. Zakat is exempted on these TDR’s. Flexible options of rollover or renew the
TDR at the time of encashment. Special Rates available from for USD 500,000 and above
or equivalent.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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UBL E-TRANSACTION ACCOUNT:
When it comes to electronic financial services www.ubl.com.pk is Pakistan’s favorite
Internet destination and why not! With years of experience in innovation United Bank
offers a wide spectrum of world-class of electronic services and banking products for
trailblazers like you.
Save up to Rs. 2400/- with your eTransaction Package which includes:
� A branch Account with all features of a current account (including checkbook,
Visa ATM/Debit Card, etc.).
� Free Premium Internet Banking Access -- Save up to Rs. 1200/year in
subscription fees.
1.5.2. LOANS & CARDS
UBL MONEY:
UBL Money, the Personal Installment Loan from UBL provides you with power, control,
convenience and the flexibility to manage your financial requirements and realize your
dreams.
UBL Money is a fixed installment loan. It gives you access to funds starting from Rs.
50,000/- up to a maximum of Rs. 500,000/- without any collateral. UBL Money provides
you the flexibility to manage your monthly installments according to your income stream.
You can select any tenor from 1 to 5 years in a multiple of 12 months.
UBL BUSINESSLINE:
UBL Businessline is a running Finance facility that not only provides funds for growth
but also enables you to capitalize on profitable opportunities.
“It is a ‘Credit Line/ OD Facility’ against Residential Property. It is an evergreen credit
line that the customer can use for his/her business expansion”.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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UBL CASHLINE:
UBL Cashline is a flexible loan that provides you cash up to Rs.500, 000 without any
security requirements. It empowers you to take control of your finances. UBL Cashline is
aimed to make your life easier. Whether you are a salaried individual or a businessman.
Cashline offers you:
You can avail this facility if you are:
� A salaried person of 21 to 60 years, and your monthly net salary is Rs. 15,000 or
more; OR
� A self employed business person/professional between the ages of 21 to 65 years,
and your monthly net take home income is Rs. 35,000.
UBL DRIVE:
UBL Drive allows you to drive away in your own car by making a down payment of just
15% and to top that with low monthly installments. With UBL Drive you can buy your
favorite used car (up to 5 years old) at the most affordable rates. UBL Drive is not just a
car loan; it’s a financing facility that gives you Cash on your car, you can get up to 75%
of your car value.
UBL ADDRESS:
UBL Address empowers you to become the proud owner of a home by offering a variety
of product and pricing options that are flexible yet affordable. So choose the best product
option and pricing to suit your needs. All product options are amortized and range over a
tenor of 3 - 20 years.
Eligibility Criteria:
� Minimum monthly income: Rs.15, 000.
� Age: 23 to 65 years.
� Resident Pakistani.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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� Self-employed businessman (SEB)/professional (SEP) or salaried individual.
� Minimum loan size: Rs. 500,000.
Markup Rates:
Segments Pricing
Salaried KIBOR + 3.5% = Applicable Markup Rate
SEB/SEP KIBOR + 4.5% = Applicable Markup Rate
UBL PAYPLUS:
If you are a permanent employee of a company (Government, Semi-Government, MNC
or Local Corporate Entity/Private/Public Limited), which disburses salary through UBL,
then UBL PayPlus (loan against salary) is the right product for you. Through UBL
PayPlus, you can now easily avail a loan based on your salary level.
Eligibility Criteria:
� Must be Permanent Employee of company.
� Maximum Loan Amount of up to 15 gross salaries or PKR 500,000.00 (which
ever is less).
� Installment amount must not exceed 33% of Net Take Home Salary (NTHS).
� Loan amount not to exceed 90% of already accrued End Service Benefits (ESB).
� Repayment through 12, 24, 36, 48 or 60 monthly installments.
� Maximum age should be 55 years on the date of disbursement.
UBL CRDIT CARD:
UBL Credit Card provides the following facilities:
� To share the value, excitement and benefits of UBL Credit Card with loved ones,
UBL Credit Card offers up to 4 free supplementary cards.
� Customers can now withdraw cash through their UBL Credit Card’s instant cash
advance facility from any designated UBL Card Payment Branches nationwide
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and more than 780,000 ATMs and financial institutions worldwide displaying
VISA/PLUS logo.
� Each time UBL Card members use their UBL Credit Card to purchase airline,
train or bus tickets, they are automatically covered against any sort of accident
that might befall them while traveling. The coverage amounts are:
1. Classic Card: Up to Rs. 3.5 Million
2. Gold Card: Up to Rs. 7 Million
1.5.3. AGRICULTURAL PRODUCTS
1.5.3.1.1. FARM LOANS
PRODUCTION LOAN:
Financing is available for Major and Minor crops across Pakistan. Main purpose of
financing is to facilitate farmers to purchase Agri Inputs such as Seeds, Fertilizers,
Pesticides, Sprayers, hired labor etc.
NIACF (REVOLVING CREDIT SCHEME):
� Loan Tenure 3 years.
� Documentation once for 3 years.
� Cleanup once a year.
� Option for the farmer to use limit as per requirement.
� Markup is charged on amount used or withdrawn.
� Minimum Amount PKR 30,000.
� Maximum Amount as per requirement of the farmer.
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NIADF (DEMAND FINANCE PRODUCTION):
� Loan Tenure 3 months to 1 year.
� 18 months for Sugar cane only.
� Lump sum disbursement of the limit for a specified period.
� Repayment of loan in bullet payment on maturity (Principal and markup).
� Minimum Amount PKR 30,000.
DEVELOPMENT LOAN:
LAND DEVELOPMENT, EQUIPMENTS AND MACHINERY:
Financing for Land Improvement, Water course improvement, Tube wells, Lift pumps,
Deep turbine pumps, Cotton pickers, Godown, Cold Storage, Harvester, Thresher, etc
TRACTOR & VEHICLE FINANCE:
To purchase Tractors, Delivery Vans, Mini Trucks, Motor Cycle and other vehicles used
for marketing Agri Products. Loan Tenure: 1 to 3 years for Motor Cycle, 1 to 7 years for
Tractor, and 1 to 5 years for other 4 wheel vehicles. Other features are:
1.5.3.1.2. NON FARM LOANS
LIVESTOCK FINANCING:
Dairy Farming, Meat Farming, Fattening of Animals, Rearing of Animals, Construction
of Sheds, Milk storage tanks, acquire and establish modern and efficient livestock
facilities.
POULTRY FINANCING:
Poultry Farm structure and equipments, Hatchery farm structure and equipments, Feed
Mills, Purchase of Chicks, Feed, Medicines, Storage tanks, Cold storage, Construction of
shed, etc.
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� Loan Tenure 1 to 5 years.
� Monthly / Quarterly repayment mode for all loans.
� Minimum Amount PKR 50,000.
� Maximum Amount as per requirement.
FISHERIES FINANCING:
Financing available on Fish seed, Fish feed, Manuring, Construction of pond, Curing and
Dying by fishermen, etc.
1.5.4. SMALL BUSINESS
SMALL BUSINESS SCHEME:
Under the Small Business Scheme, UBL is providing loans on easy terms to those who
wish to set up their own small-scale business. This scheme is aimed at spreading
prosperity in the country by reducing unemployment.
As more and more people start their own industrial units, the country will move steadily
towards economic self-reliance.
1.5.5. NRP SERVICES
UBL has taken progressive steps and has introduced innovative products and services to
provide customers a variety of banking and financing services.
UBL CLICK N REMIT:
United Bank Ltd. is pleased to offer you access to a Reliable, Fast, Secure, Convenient
and in-expensive way of remitting money to anyone in Pakistan. The entire transaction is
completed online and with just a few clicks of a mouse, your money is on its way to the
recipient of your choice. There is no need to visit a bank to use this service. Remitting
money is just a click away through UBL Click N Remit.
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TEZRAFTAAR:
Free Doorstep Remittances With-in the country or from abroad, UBL offers the most
efficient and price competitive service. With their large network of branches, they are
poised to offer customer service almost at customer door step.
UBL's new remittance service, TezRaftaar offers all overseas Pakistanis the fastest and
the most convenient delivery of their money to their beneficiaries in Pakistan. Best of all,
TezRaftaar is completely cost free and is available at all UBL branches along the Bank's
Network in the Middle East, UK and US.
UBL CLICK N BANK:
Click N Bank eNRP Account - A simple & convenient way to open, fund and operate
account in Pakistan. It’s completely online. Some features of this service are:
� Complete online registration.
� PKR Accounts operable nationwide.
� Primary and supplementary ATM cards.
� Check book (Order online).
� UBL net banking.
UBL ORION:
Orion is the “First Complete Mobile Payments Solution” ever to be launched in the
country. The UBL Orion provides the following services:
� Buy prepaid cards.
� Share & send money.
� Send flower & cakes.
� View current bills.
� Pay bills etc.
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NRP DIRECT:
United Bank brings to you a simple & convenient way to open, fund & operate a bank
account in Pakistan. NRP Direct is the first & only deposit account ever to be launched
for Non-resident Pakistanis. Now feel at home with your NRP Direct account!
1.5.6. OTHER SERVICES
UBL E-STATEMENT:
UBL has launched the UBL e-statement facility which makes it easier for customers to
get their statement of accounts and automated transactional debit/ credit alerts right into
their inbox. It is available for all Rupee and Foreign Currency Account holders. UBL e-
statement facility is:
� Absolutely free of cost.
� Accessible when you need it.
� Security.
� Automated transactional debit/ credit alerts.
� Easy to read format.
UBL WALLET:
UBL offers ATM and Debit Card facility to all account holders at all UBL branches
anywhere in Pakistan, regardless of whether their branch is online or offline.
UBL Wallet VISA ATM & Debit Card has the entire convenience and security account
holder’s desire and the quality they deserve. This Wallet holds all the cash in customer’s
bank account. UBL Wallet VISA also gives the facility of having up to 9 supplementary
cards issued against one primary card. All supplementary cardholders will be able to
conduct ATM/Debit transactions within the limits of the primary card account.
UBL already has its own network of 336 ATMs in 83 cities, which continues to expand
by the day. Moreover, UBL Wallet is now part of the 1 Link and VISA networks. These
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allow account holders to use their UBL Wallet VISA across Pakistan at more than 925
ATMs displaying the 1 Link logos and at more than 1 Million ATMs in 150 countries. It
is also acceptable on the MNET network of ATMs in Pakistan. UBL Wallet VISA Card
will also be acceptable on all local VISA certified machines displaying the VISA Plus
sign.
Annual Fee (Rs.) Daily Limits (Rs.)
Card
Type Primary Supplementary
ATM
Withdrawal
Debit
Card
Funds
Transfer
(From
UBL
to UBL)
Funds
Transfer
(From
UBL to
other
banks)
Gold 500 250 40,000 100,000 250 40,000
Silver 300 150 20,000 50,000 230,000 250,000
UBL “HAMRAH”:
UBL has always been at the forefront in identifying and meeting the financial needs of its
valued customers. UBL was the pioneer in introducing Rupee Travellers Cheque facility
in Pakistan, as early as 1971. In continuation of the same tradition, UBL in the shape of
"Hamrah" Rupee Travellers Cheque enhances this facility for the convenience of its
valued customers by offering denominations up to Rs. 10,000.
UBL WIZ:
UBL Wiz is Pakistan’s first ever Prepaid VISA Debit Card that provides the convenience,
security and benefits of an ATM and Debit Card, locally and internationally. More than
just an ATM card, you can use your UBL Wiz everywhere VISA cards are accepted.
Whether you are using it online, paying for petrol, shopping or dining, you are accessing
money directly from your prepaid card, without having to visit the bank.
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UBL NETBANKING:
UBL net banking is an Internet Banking portal offering a simple, convenient and secure
method of accessing bank accounts on the Internet.
Using UBL net banking, the customers have access to their bank accounts 24 hours a day,
7 days a week and can keep a close eye on their account balances, print account
statements, pay bills, transfer funds, track purchases and schedule their recurring
payments at the touch of a button and much more. Important features & benefits of this
service are:
� Real-time account balance & summary.
� Manage multiple accounts.
� Receive customized alerts.
� Transfer funds between customer’s accounts.
� Pay bills online (Only PTCL & Cellular Services Bills).
� Send money to anyone using the new PC-to-Person facility.
� Net banking Phone Banking: 0800-11-825 (toll-free).
� For people in Azad Jammu Kashmir: (021) 2446949.
UBL ONLINE:
This service is available only for corporate customers of UBL. This service contains the
following features:
� 24 hours banking.
� Account statement.
� Activity log.
� Electronic data interchange.
� Search facility.
� Graphical analysis.
� Access visa wireless devices.
� Alerts service.
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2. ORGANIZATIONAL STRUCTURE
Head Office
Provisional Head Quarters
Zonal Office
Hub Branches
Branches
2.1. MAIN OFFICES:
2.1.1. HEAD OFFICE:
The Bank's registered office and principal office is situated at State Life Building No. 1,
I. I. Chundrigar Road, Karachi.
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2.1.2. BRANCHES:
Domestic Branches 1079
Overseas Branches 17
2.1.3. DOMESTIC NETWORK: (IN 2007)
Domestic Network Branches
Azad Kashmir 71
Baluchistan 41
N.W.F.P 163
Punjab 584
Sindh 220
Total 1079
2.1.4. PROVISIONAL HEADQUARTERS:
Province Region(City)
Balucihstan Quetta
N.W.F.P Peshawar
Punjab Lahore
Sindh Karachi
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2.1.5. BRANCH HIERARCHY
Sindh
Branches
Baluchistan
Branches
Punjab
Branches
Azad Kashmir
Branches
Islamabad
Branches
N.W.F.P
Branches
Northern Area
Branches
Regional Office
(North)
Regional Office
(South)
Central Office Karachi Controlled by President
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2.1.6. OVERSEAS NETWORK:
HUB Name
Branches
United Arab Emirates 9
Bahrain 3
Yemen 2
Qatar 1
United States of America 1
Export Processing Zone, Karachi 1
Total Branches 17
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2.2. DEPARTMENTS OF THE UBL
CORPORATE BANKING & CASH MANAGEMENT GROUP: (CBG)
The Corporate Banking Group has endeavored to be the market leader in their area and
builds market share through offering superior service, competitive pricing, and a wide
product range to valued corporate clients. The group caters to the needs of multinational
companies and medium to large corporate clients, which include private and public sector
entities.
This group will continue to remain a major contributor to UBL’s earnings by taking
advantage of tremendous growth potential of corporate accounts. The group requires
talented, qualified, and proactive human resources. Front line relationship managers
require a complete grasp of UBL’s credit policies and procedures as they directly affect
existing and future credit portfolio handling.
The Corporate Banking Group focuses on attracting and servicing large portfolio
customers. Our forte is providing exemplary customer service using the "Single Window"
concept and product superiority. The Relationship Management team manned by highly
qualified individuals from the industry has steadily expanded UBL customer base and
continues to enhance their cordial relations with our esteemed clients.
Despite the sluggish economic growth in recent years, UBL outperformed all the other
local banks in the corporate banking sector primarily due to CBG's emphasis on
establishing and enhancing relationships with foreign/local blue chip and middle market
customer’s thereby capturing significant market share.
UBL's appetite for large exposures coupled with dedicated Structured Finance Unit, and
an innovative team of professionals having extensive experience of Corporate Banking
gives it the right platform to succeed in todays competitive and a demanding
environment.
The success of CBG has been established from the fact that UBL received the 'No.1
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Euromoney 2000' Best Local Bank award and recognized it to have out performed all
other banks. In year 2000, UBL was also voted as the best Corporate Bank by the
customers of a major foreign bank in a survey. Aggressive marketing combined with
professionalism has led to an increase in UBL's market share with top corporate
customers and in some cases replacing Foreign Banks. Presently, its portfolio includes
the quality names in the country, which were initially confined to foreign banks only.
CBG – Offers full spectrum of services:
COMMERCIAL BANKING/SME (CB):
The Commercial Banking Group caters to the needs of commercial entities and small and
medium enterprises, as defined in the State Bank of Pakistan’s Prudential Guidelines.
This group deals with commercial clients of small to medium size in both private and
public sectors. It operates in almost every city of the country with qualified and
dedicated staff.
This group aims to fulfill necessary business needs of its customers, which are more
numerous than corporate clients. However, their individual requirements are relatively
much smaller than those demanded by corporate clients. In view of the peculiar nature of
this business segment, which involves a higher turnover, a much wider network is
needed.
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CREDIT ADMINISTRATION DEPARTMENT: (CAD)
Composition of Credit Functions:
� Credit & Marketing.
� Credit Administration.
CREDIT & MARKETING:
� Market new relationships to increase bank’s asset based portfolio.
� Financial Analysis, Evaluation and Processing of credit Line Proposals.
� Monitoring of Credit portfolio through Client visits, Factory visits, Inspections,
and prepare Call Reports, Visit Reports in this regard.
� Responsible for the compliance of all Pre-approval instructions/regulations issued
from time to time by Head Office Credit Policy, SBP and other regulatory bodies
including obtaining CIB, Borrower Basic Fact Sheet, Compliance of ratios as
required under Prudential Regulations, Per party limit etc.
CREDIT ADMINISTRATION:
� Disbursement of Credit Facilities including Preparation of Security/Charge
documents, perfection of collateral, Ensure compliance of SBP regulations/Credit
Policy, HO Circulars & Issuance of Disbursement Authorization Certificate
(DAC).
� Regular monitoring of Collateral & Asset based portfolio through Weekly
Roosters/Diaries, CARS Reports, Credit Maintenance, Identify exceptions and
follow for the rectification of the same.
� MIS related to Credit & Credit Admin. Department.
� Monitoring of Mark up accruals, recoveries thereof.
� Liaison with various outside agencies (RCAD Head).
� Miscellaneous Jobs.
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CONSUMER BANKING GROUP:
The Consumer Banking Group provides financial facilities to individuals through a
diverse product line. Its success depends on the design of versatile and effective products
and comprehensive communication and marketing strategies. Agility in monitoring the
portfolio and following up with its customer base, which is wholly comprised of
individuals, is also an essential requirement.
This group operates in nearly all major cities of Pakistan, and also in some international
locations through UBL’s network of branches and trained sales force. This group offers
products such as home loans, personal loans, auto loans, business loans, and credit card
facilities, etc.
Consumer banking requires regular training of its workforce and the need for imparting
basic product knowledge to sales staff is highly pronounced in this group as they are in
direct contact with the customer base. This group conducts business based on structured
products that fit into the needs of its target market. Product Process Manuals are
developed for these products and are provided with the Credit Policy and Procedure
guidelines.
Risk management for the consumer has to play a dominant role in formulation and
revision of credit policies, monitoring of portfolio quality and devising effective
strategies aimed at minimizing the inherent risks.
INVESTMENT BANKING GROUP (IBG):
The Investment Banking Group specializes in providing innovative and unique advice to
its clients, assisting them in meeting challenges in an ever-changing market. The group is
equipped with adequately experienced professionals.
This group will either lead or participate in major Term Finance Certificates in the
market. It offers a full spectrum of services, including Term Finance Certificates,
Syndicated Loans, Structured Finance, Leveraged Buyouts, Project Finance, Quasi-
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Equity Products, Independent Advice, Equity Placements, IPO’s, Equity Underwriting,
Mergers, Corporate Restructuring, Acquisitions and other products.
Although the Corporate Banking Group supports the product line of the Investment
Banking Group, the special nature of these products demands a more active involvement
of risk management. Transactions such as Project Finance offer limited recourse and such
transactions need to be structured in a way as to mitigate inherent risks. Risk
management is to be proactively involved in Investment Banking Group transactions,
right from the time of initiation until the time of execution.
TREASURY & CAPITAL MARKETS GROUP:
The major roles of the Treasury and Capital Markets Group include:
� Managing the bank’s liquidity and balance sheet requirements as per UBL and
State Bank of Pakistan guidelines,
� Dealing in foreign currencies on behalf of its customers, and
� Providing treasury and foreign exchange related financial services to its clients.
This Group consists of highly qualified and experienced human resources who are
actively involved in dealing with other banks and financial institutions to execute
transactions in various currencies.
In performing these tasks, it undertakes credit risk, which is identified, monitored, and
managed by the middle office.
INTERNATIONAL DIVISION:
The International Division manages overseas operations including credits handled by the
network of overseas branches. With careful planning and detailed surveys of the market,
the International Division will explore better quality businesses and products and manage
them efficiently to enhance UBL’s profitability and turn the overseas branch network into
a highly profitable unit of the Bank.
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The Global Credit Risk Management Division monitors and manages the risk, credit
process and procedures at overseas branches.
FINANCIAL INSTITUTIONS DIVISION (FI):
This is an independent division operating as a profit center and is responsible for catering
to all financial business requirements of banking and non-banking financial institutions.
This division caters to the financing needs of all local banks, foreign banks, and other
financial institutions including leasing companies, investment banks, DFIs, insurance
companies, mutual funds, etc.
Like the Corporate Banking Group, the Financial Institutions Division also operates with
a structure of relationship managers, providing comprehensive solutions to its clients.
In order to strengthen the division’s credit analytic capabilities, the Financial Institutions
Risk Management Unit oversees the risk related to financial institution related
transactions. The Financial Institutions Risk Management Unit is part of the Risk Group.
ISLAMIC BANKING GROUP (IB):
The roles and functions of the Islamic Banking Group shall be:
� To manage and be responsible for the operations of Islamic Banking Business
(IBB), including policy and procedural matters;
� To liaise with other departments in the bank and the Shariah Advisor to ensure
smooth operations of IBB(s);
� To ensure that all funds pooled into the Islamic Banking Fund (IBF) are
channeled into Shariah-compliant financing and investment activities;
� To arrange training of staff of Islamic banking;
� To arrange for compilation and submission of such returns, as may be required to
be submitted to the State Bank of Pakistan from time to time;
� To ensure that all directives and guidelines, particularly those applicable to
Islamic banking, issued by the State Bank of Pakistan are strictly complied with;
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� To maintain the Statutory Cash Reserve and Liquidity Requirements with the
State Bank as prescribed from time to time by the State Bank of Pakistan; and
� To assume other roles and responsibilities as determined by the bank or the State
Bank of Pakistan from time to time.
HUMAN RESOURCE DEPARTMENT: (HR)
UBL is the place for you if you are willing to materialize all your deliverables in
alignment with the organization’s holistic vision to grow and excel. Committed and
competent work force is the primary asset in providing value addition to stakeholders of a
business organization.
HR Division is responsible for attracting, selecting and recruiting the right people from
the market. UBL is proud of its highly professional, transparent and objective approach in
its recruitment and selection processes. After applying the eligibility criteria, which
depends on the Job grade, a series of selection procedures are applied before hiring
employees. Normally the candidates go through the process of test, group discussion and
interview. The Interview is conducted by a team of internal as well as external
professionals of the related area. Sophisticated recruitment and selection tools like oracle
based data management system; online application and behavioral based interviewing
techniques have been introduced.
FINANCE DIVISION:
Responsible for book-keeping and accounts, this Division at the head office, prepares all
financial returns. The Division is actively involved in preparing market comparative
analysis, consolidation of Bank's budgets, its monitoring and constant review of various
financial indicators. Finance Division works as the back bone for all Bank's operations.
The Division, which reports directly to the President and Chief Executive of the Bank,
has been instrumental in preparation of Bank's business plans and future strategies.
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INFORMATION TECHNOLOGY DEPARTMENT:
Operations of UBL have been significantly streamlined post-privatization, however
further plans for improving operational efficiency are under-way. Currently the bank is
using internally developed distributed database software called UNIBANK. This software
is utilizing Oracle Financials at the back end. As all daily banking transactions are stored
at the respective branches, consolidation at the head office takes place at day end.
The bank has specialized software to support its various functions and the focus for some
time has now been on enterprise application integration (middleware). The management
launched a transformation program in 2006 which aims to accomplish bank-wide
business and technology reengineering.
The business aspect of this program is expected to improve performance through
implementation of uniform business processes and training is ongoing in this respect.
AUDIT DEPARTMENT:
The Board Audit Committee (BAC) comprising three members meets every quarter and
is responsible, among other things, for ensuring the effectiveness of the internal audit
function and systems for monitoring compliance.
Internal audit procedures include routine branch and business function audit as well as
special surprise audits. There is also a dedicated compliance division mainly to follow up
on the recommendations advised by the audit team. The deliberations of BAC however
reflect concern regarding the overall control environment. The audit and inspection
department has been highlighting issues with regard to operational control weaknesses at
the branch level.
While most of these are routine in nature, further emphasis on HR training may help in
improving the control environment. Some of the issues raised by the external auditors
pertain to the capacity of the existing software applications, which the management
expects to address over the near term.
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3. STRUCTURE AND FUNCTIONS OF THE
ACCOUNTS/FINANCE/AUDIT DEPARTMENT
3.1. ORGANIZATIONAL CHART: (FINANCE DEPARTMENT)
CFO/Head Global
Shared Services
TBA 1
Deputy CFO
Head-Investor
Relations
Head of Finance-
Middle East
Division Head /
Financial
Controller
Financial
Controller
Statutory
TBA 2
Financial
Controller
Financial
Controller-Genesis
& Automation
Financial
Controller-Advances
& Overseas
TBA-4 Assistant
Manager-Genesis
Project
Manager-
Taxation
Manager-Overseas
Accounts
Manager-Write
off Cell
Asst. Manager
Overseas Accounts
Senior Manger
Finance –
Consumer
Manager
Consumer
Accounts
TBA 3
Manager
Consolidated
Manager Finance
Employee Funds
Asst. Manager
Statutory
Accounts
Asst. Manager
OFAMS
Asst. Manager
Islamic Banking
Accounts
Manager Finance –
Central Accounts
& Payments
Senior Manager
Finance SBP
Reporting
Manager Central
Payments
Manager MIS &
Budgeting
Manager-HO
Budgeting, BOD
Reports & Bench
Manager CAPEX
Manager – MIS-
Agri & Micro
Credit
Manager-SBP
Returns/Unclaimed
Deposits
Manager ALCO
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3.2. MY LEARNING AS AN INTERNEE:
I worked as an internee in the United Bank Limited Regional Credit Administration
Department-Commercial Banking (RCAD-CB), Corporate Centre Branch, M.M.Alam
Road, Gulberg II, Lahore.
3.3. FINANCE & ACCOUNTING OPERATIONS:
Every branch has its own Accounts Department which is responsible to record and
process each & every business transaction taking place during the working day. This
Department consolidates the position of the branch at the day end in the shape of Assets,
Liabilities, Revenues and Expenses.
This position is daily sent to the Finance Department of Head Office which consolidates
all these Statement of Affairs bank wise. This position is sent to the State Bank of
Pakistan (SBP) and SBP publishes on weekly basis overall consolidated Statement of
banks in business news papers like Business Recorder (BR).
The main function of Finance Department of Head Office is to maintain smooth liquidity
of bank by arranging funds from SBP and other banks if required. This Department is
also responsible for making physical investment on behalf of bank into government
securities and other corporate securities.
3.4. THE ROLE OF FINANCIAL MANAGER:
FINANCIAL MANAGER:
“The person which manages the financial resources of a business is called financial
manager.”
EXPLANATION:
The emergence of financial management as a distinct management discipline is relatively
recent and linked to changes in business and socio-economic scenario, brought about by
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the advancements in computer and information technology, emergence of multi-product
and multi-division corporations with complex and dynamic organizational set-ups,
increasing global competition etc.
Finance, no doubt, is the sine qua non of business operations, and traditionally the role of
financial manager (known as an accountant or accounts manager) was limited to
managing business finance or ‘counting the beans.’ However, the emerging discipline of
financial management varies considerably from its traditional functions and extends to
more inclusive functions of ‘growing the beans.’
Almost every firm, government agency, and other type of organization has one or more
financial managers who oversee the preparation of financial reports, direct investment
activities, and implement cash management strategies. Because computers are
increasingly used to record and organize data, many financial managers are spending
more time developing strategies and implementing the long-term goals of their
organization.
ROLE & DUTIES OF FINANCIAL MANAGER:
The duties of financial managers vary with their specific titles, which include controller,
treasurer or finance officer, credit manager, cash manager, and risk and insurance
manager. Controllers direct the preparation of financial reports that summarize and
forecast the organization’s financial position, such as income statements, balance sheets,
and analyses of future earnings or expenses. Controllers also are in charge of preparing
special reports required by regulatory authorities. Often, controllers oversee the
accounting, audit, and budget departments. Treasurers and finance officers direct the
organization’s financial goals, objectives, and budgets. They oversee the investment of
funds, manage associated risks, supervise cash management activities, execute capital-
raising strategies to support a firm’s expansion, and deal with mergers and acquisitions.
Credit managers oversee the firm’s issuance of credit, establishing credit-rating criteria,
determining credit ceilings, and monitoring the collections of past-due accounts.
Managers specializing in international finance develop financial and accounting systems
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for the banking transactions of multinational organizations.
Cash Managers: monitor and control the flow of cash receipts and disbursements to
meet the business and investment needs of the firm. For example, cash flow projections
are needed to determine whether loans must be obtained to meet cash requirements or
whether surplus cash should be invested in interest-bearing instruments. Risk and
insurance managers oversee programs to minimize risks and losses that might arise from
financial transactions and business operations undertaken by the institution. They also
manage the organization’s insurance budget.
Financial Institutions: such as commercial banks, savings and loan associations, credit
unions, and mortgage and finance companies, employ additional financial managers who
oversee various functions, such as lending, trusts, mortgages, and investments, or
programs, including sales, operations, or electronic financial services. These managers
may be required to solicit business, authorize loans, and direct the investment of funds,
always adhering to Federal and State laws and regulations.
Branch Managers: of financial institutions administer and manage all of the functions of
a branch office, which may include hiring personnel, approving loans and lines of credit,
establishing a rapport with the community to attract business, and assisting customers
with account problems. The trend is for branch mangers to become more oriented toward
sales and marketing. It is important that they have substantial knowledge about all types
of products that the bank sells. Financial managers who work for financial institutions
must keep abreast of the rapidly growing array of financial services and products.
3.4.1. ACCOUNTS MANAGEMENT:
Being the Manager of the branch it is the duty of the Branch Manager to properly manage
the accounts that are deposited in the respective branch. Main duties of Branch Manager
regarding accounts management are:
� To ensure that the Accounts Officer is maintaining proper books of accounts
including basic accounting controls like daily verification of cash in hand, daily
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entry of cash & bank vouchers, Bank Reconciliation statements, accounting of
Receipts / Payments correctly.
� To supervise and maintain the Assets Records of branch including obsolescence /
Sale through auction or otherwise, conducting physical verification of assets
annually and reporting variations, if any, to HQs & BEC.
� To prepare the Annual Programme and Budget (APB) and Annual Report of the
Branch with the help of the Accountant/Statistical Assistant and concerned unit
heads, supported by the volunteers.
There is system used in the UBL called UNI Bank for the accounts management. The
reports generated on this system should review on daily basis by Branch Manager under
his signatures and also by the Area Manager and a complete record of these reports in
date order should be filed.
3.4.2. CASH MANAGEMENT:
The key person in banking is the Branch Manager who is not only responsible for
mobilization of deposits for the bank but also to generate foreign exchange and other
business for the bank. He is also taking care that customers of bank are properly served &
their problems are immediately solved. He is also responsible for cash management &
credit management.
In every city there is a Main Branch (Feeding Branch) of a bank (UBL) which is
custodian of cash. All excess cash in the branch is deposited with this branch & whenever
any branch needs cash to pay off to the depositors, the Branch Manager is required to
make requisition to this Main Branch & the Main Branch provides the required cash
accordingly.
3.4.3. CREDIT MANAGEMENT:
As regarding credit management there is a department in the bank called Credit
Administration Department (CAD). Deposits are the liabilities of bank while advances
are the assets of the bank. To balance these two sides, bank attracts the current as well as
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
50
prospective customers to deposit their savings by offering high rate of interest/ profit,
while in order to increase its assets, bank attracts its customers by Corporate Banking
Group (CBG) & Commercial Banking Group (CB).
When the credit facilities are approved then work of credit administration department
starts. It performs two functions:
� Pre-dispersal function (before advancing facility)
� Post-dispersal Function (after credit facility is dispersed)
It keeps three sections named as:
� Processing Section
� Documentation Section
� MIS (Management Information System) Section
Relationship managers (RM’s) bring cases from customers and present to RCAD. RM’s
have direct contact with customers. Case first comes to Processing Officer who checks
the necessary prudential requirements if so then case is forwarded to Risk Management
Department (RMD) otherwise send back to ( RM) to fulfill necessary requirements. Risk
Management Department (RMD) verifies attached documents and send back documents
after risk analysis and mention how much loan is to issue (under SBP limitations).
Documentation Officer verifies the originality of documents attached and finally DAC
(disbursement authorization certificate) is issued to customer. MIS keeps record of the
customer in computer. And customer account is opened in the UNI bank (it is also
software which keeps record that how much loan the customer has availed). Under
mentioned process flow diagram present the right picture.
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PROCESS FLOW DIAGRAM OF LOAN DISBURSEMENT:
If Verified
Rejected
If approved
Rejected
Rejected
If approved
Customer
Relationship
Manager
Processing
Section
CA Package
Preparation
CRM
Documentation
Section
DAC Issued
Customer
Receives Loan
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3.5. USE OF ELECTRONIC DATA IN DECISION MAKING:
In today’s banking new devices have been introduced for efficient & courteous service to
the client. Like Online Banking, Net Banking, Mobile Banking, Auto Teller Machines
(ATM’s) & Electronic Cashiers.
In UBL most of the decisions are made after getting approval from authority using
electronic data. Now a days Statements of Accounts are not dispatched to the account
holders. Instead they have been given option to get their Statements printed while using
Net Banking. UBL has its own network of 336 ATMs in 83 cities.
Moreover customers can gave all types of instructions in respect of their transactions
through E-mails, Net & Mobile Banking. So we can say that electronic data is very
widely used in today’s banking.
In branches UBL is using their personal software called UNI Bank 2000. To maintain and
exercise and better controls on operations, UNI Bank 2000 provides controls in the shape
of daily override/exceptions reports to the branch manager & respective staff. The
exceptions include the following:
� Transaction by un-issued/loose cheques.
� Transactions over debit limit of user.
� Transactions on limit expired accounts.
� Transactions of excess over limit in Party accounts.
� Back dated transaction in the accounts.
� Transaction in restricted accounts.
� Reversal entries.
� Change in customer name, address or other details. etc.
These reports are reviewed by the Manger of the branch and also by the Area Manager
which helps them in decision making. This system also provides the following
Statements/Reports:
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(A)NON-AUTOMATED & AUTOMATED SPOKES FROM HUBS:
DAILY:
� UNIDD032 Contra.
� UNIPD052 Hub generated customer transactions.
� UNIDD110 Sub ledger.
� Statement of condition.
� List of new accounts.
� Customer accounts/status maintenance.
� Unidd040 (ATM transactions).
MONTHLY:
� Consolidated income/expenditure.
� Incidental charges.
� Customer ledger dormant/active.
QUARTERLY:
� Unclaimed deposits.
� Size wise deposits.
� Debit to deposit accounts.
� Classification of deposit accounts.
HALF YEARLY:
� Customer transactions ledger.
� Account amendment report
� Profit posting report.
YEARLY:
� Zakat exemption report.
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� Zakat deduction report.
(B) AUTOMATED SPOKES ON A DAILY BASIS:
� UniRemote transaction (Inward/outward).
� Daily override.
� Teller cash report.
� Utility scroll/vouchers.
� Clearing schedules.
� Remittances vouchers.
MOBILE COMPUTING DEVICE:
Mobile computing device is provided only to authorize UBL employees in order to
perform business activities with special business requirements.
LAPTOPS:
According to ITG (Information Technology Group-UBL) Policy this type of equipment
must be used for official purposes only. Laptops are provided to the persons with the
designation having SVP (Senior Vice President) or higher.
PDA :( PERSONAL DIGITAL ASSISTANT)
The intended use for the PDA is to facilitate UBL employees for the following business
objectives:
� 24x7 Access to UBL corporate Emails.
� Updated contact list.
� List of tasks.
� Access to GAL (Global Address List).
� Any other services that may be offered by UBL ITG to corporate users.
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CARS (CREDIT ANALYST REPORTING SYSTEM):
PURPOSE OF CARS:
CARS is a system which is design to cater the following purposes:
� CCAMS (CAD- Credit Administration Management System) replacement
� Tagging process
� SBP reporting (Corporate / commercial – CIB & Consumer – CIB)
� Inter-departmental reports
Account tagging is also a part of CARS. Parties which have availed loan facility from
UBL are tagged in CARS with their specific accounts. Consumer blue forms are
generated for individual and sole proprietorship accounts. Following details should be
entered in the software. If single of them is missing, blue form is considered incomplete
keeping insufficient data;
� New and old NIC
� Gender
� Customer and his/her father/husband name
� Date of birth
� Home address
� Business name and address
� Security which is to be pledged
REPORT VIEWING:
CARS have also option to view many reports like account tagging summary, blue form,
central liability report etc. Most common report is blue form. After construction of blue
form its report is viewed and prints out is taken for record.
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CREDIT RISK ENVIRONMENT’S ADMINISTRATION & MANAGEMENT SYSTEM
(CREAMS):
UBL is from few Pakistani Banks which keeps centralized information system. CREAMS
is one of them. CREAM is highly customizable and parameterizes able software.
CREAM is developed with the ideology that it can operate in all parts of the world.
Certainly there are different operational, monitoring and regulatory requirements
depending upon the region where the bank is operating. Further more; a single bank may
operate in more than one region of the world. Parameterization lets CREAM behave
according to the requirement of the region.
This customization is a one time initiative and once CREAM has the requisite
information, it will behave according to the bank’s requirement. This section will explain
the all CREAM setup screens one by one. It must be noted the once the Parameterization
phase is completed by bank then bank must lock this section. That is only authorized
person (Mostly Credit Head & MIS Officer) can enter to this section, not every one who
is using CREAM application.
CREAM provides end to end automation of “Credit Risk Environment” i.e. credit risk
origination, analysis and assessment, measurement, pricing and management together
with credit risk review, administration and monitoring, all this in accordance with bank’s
credit risk policy.
Thus CREAM becomes a unique product that provides complete and most flexible credit
risk management solution. It fully supports the pillars of BIS/BASEL II and the “Risk
Environment” and assesses the credit risks in trading and banking books. It is the most
comprehensive risk management tool available.
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SCREENSHOT OF CREAMS:
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3.6. & 3.7. SOURCES & GENERATION OF FUNDS:
Main sources and generation of funds for the bank are as under:
1. Deposits from Customers.
2. Borrowings from Financial Institutions.
1. DEPOSITS FROM CUSTOMERS:
2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Customers
Fixed deposits 127,317,589 114,927,897 79,841,687 42,971,478 35,945,097
Saving deposits 153,001,867 121,878,162 122,662,484 118,243,902 102,372,765
Sundry deposits 4,645,873 4,942,064 4,148,275 3,161,327 2,728,107
Margin deposits 2,746,824 2,698,999 2,214,877 1,218,963 1,212,276
Current accounts –
remunerative 5,641,419 1,908,055 1,886,548 393,760 565,433
Current accounts – non-
remunerative 108,116,175 88,662,089 78,324,614 64,150,773 41,253,005
Total Deposits from
Customers 401,469,747 335,017,266 289,078,485 230,140,203 184,076,683
COMMENTS:
Total deposits from customers have been increased 118% in 2007 as compared to 2003.
This increase is due to major increase in Fixed & Saving deposits of the bank.
Current accounts – remunerative includes pre IPO (Initial Public Offering) / private
placement receipts of Rs 4,185 million deposited with the bank on account of
subscription money towards UBL's fourth issue of 10 year term finance certificates. The
total issue consists of Rs 6,000 million under pre-IPO / private placement and the
remaining Rs 1,500 million represents the proposed Initial Public Officer to the general
public. The issue of these term finance certificates has been approved by the State Bank
of Pakistan. These term finance certificates will be sub-ordinate as to the payment of
principal and profit to all other indebtedness of the bank (including deposits) and are not
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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redeemable before maturity with approval of SBP. The rate of mark-up on these term
finance certificates would be KIBOR plus 0.85% per annum for the first five years and
KIBOR plus 1.35% per annum during the last five years to maturity.
2. BORROWINGS FROM FINANCIAL INSTITUTIONS:
Details of borrowings from
financial institutions 2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Secured
Borrowings from the SBP
under:
� Export refinance
scheme 6,708,853 9,414,812 7,453,261 5,988,377 4,325,125
� Long-term financing
under export oriented
projects
4,945,514 5,333,691 303,410 - -
� Locally manufactured
machinery refinance
scheme
1,620 3,382 5,195 9,872 18,299
11,655,987 14,751,885 7,761,866 5,998,249 4,343,424
Borrowings from other
financial institutions - - - 17,830 557,441
Repurchase agreement
borrowings 32,269,543 17,527,738 8,434,771 4,629,607 2,680,977
43,925,530 32,279,623 16,196,637 10,645,686 7,581,842
Unsecured
Call borrowings 13,607,326 4,600,000 4,000,000 500,000 -
Overdrawn nostro accounts 912,190 542,162 113,991 79,998 128,533
Trading Liabilities 658,304 1,068,801 1,479,852 750,000 -
15,177,820 6,210,963 5,593,843 1,329,998 128,533
Total Borrowings 59,103,350 38,490,586 21,790,480 11,975,684 7,710,375
COMMENTS:
Borrowings under Export refinance scheme the bank has entered into agreements with the
State Bank of Pakistan (SBP) for extending export finance to customers. As per the terms
of the agreement, the bank has granted SBP the right to recover the outstanding amount
from the bank at the date of maturity of finances by directly debiting the current account
maintained by the bank with SBP. These borrowings are repayable within six months up
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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to June 2008.
Borrowings under long-term financing under export oriented projects have been made
from SBP for providing financing facilities to customers for import of machinery, plant,
equipment and accessories thereof (not manufactured locally) by export oriented units.
According to agreements with SBP, locally manufactured machinery refinance scheme
were obtained for providing finance to customers against locally manufactured
machinery.
The repurchase agreement borrowings are secured against market treasury bills and carry
mark-up at rates ranging from 8.9% to 10.00% per annum (2006: 8.19% to 8.82% per
annum). These borrowings are repayable latest by August 2008.
The call borrowings carry mark-up at rates ranging from 9.3% to 12.00% per annum
(2006: 8.1% to 10.1% per annum) and are repayable latest by January 2008.
3.8. ALLOCATION OF FUNDS:
Banking deposits are used and allocated in the following channels:
1. Lending to Financial Institutions.
2. Investments (In Securities).
3. Advances
1. LENDING TO FINANCIAL INSTITUTIONS:
2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Call money lending 2,777,757 447,360 1,199,534 1,876,465 840,000
Repurchase agreement
lending’s 13,809,706 21,950,095 11,769,693 8,011,490 18,210,791
Lending’s to banks / financial
institutions 8,194,260 7,174,615 4,898,325 8,472,678 4,045,237
Total lending’s to financial
institutions 24,781,723 29,572,070 17,867,552 18,360,633 23,096,028
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Comments:
Call money lending’s carry mark-up at rates ranging from 9.50% to 11.00% per annum
(2006: 6.70% to 10.35% per annum) and are due to mature latest by March 2008.
Securities held as collateral against repurchase agreement lendings includes the Market
Treasury Bills and Pakistan Investment Bonds. These carry mark-up at rates ranging from
9.20% to 9.90% per annum (2006: 7.99% to 9.40% per annum) and are due to mature
latest by March 2008.Lending’s to banks / financial institutions carry mark-up at rates
ranging from 5.45% to 12.63% per annum (2006: 5.45% to 12.63 %per annum) and are
due to mature latest by March 2011.
2. INVESTMENTS (IN SECURITIES):
2007 2006 2005 2004 2003
Investments by segments -----------------------------(Rupees in ‘000)------------------------------
Federal Government
Securities
Market Treasury Bills 58,345,964 32,594,095 29,193,297 17,377,405 20,342,718
Pakistan Investment Bonds 21,395,430 7,848,875 7,190,650 10,002,541 9,829,874
Foreign currency bonds 1,055,801 1,382,986 1,694,788 2,024,073 2,280,646
Government of Pakistan
Islamic Bonds 1,123,894 694,271 833,386 - -
Government of Pakistan – US
Dollar / Euro Bonds 2,170,415 1,247,217 279,575 1,403,469 1,235,859
Federal Investment Bonds - 13,906 32,725 45,026 318,608
Total Federal Government
Securities 84,091,504 43,781,350 39,224,421 30,852,514 34,007,705
Provisional Government
Securities - - 1,207 1,207 31,207
Overseas Governments’
Securities
Foreign securities 5,827,021 2,344,109 924,001 1,284,123 971,718
Market Treasury Bills 1,937,613 705,937 197,204 96,317 91,111
Total Overseas Governments’
Securities 7,764,634 3,050,046 1,121,205 1,380,440 1,062,829
Other Overseas Securities
Foreign securities - - 162,576 161,809 156,268
CDC SAARC Fund 310 505 65,501 124,144 279,245
310 505 228,077 285,953 435,513
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2007 2006 2005 2004 2003
Investments by segments -----------------------------(Rupees in ‘000)------------------------------
Fully Paid-up Ordinary
Shares
Listed companies 3,449,960 2,494,,698 2,128,551 752,602 303,349
Unlisted companies 441,106 497,288 432,680 303,392 1,280,028
Total Fully Paid-up Ordinary
Shares 3,891,066 2,991,986 2,561,231 1,055,994 1,583,377
Units of Mutual Fund 262,201 1,222,338 550,000 350,000 350,000
Term Finance Certificates,
Debentures, Bonds and
Participation Term
Certificates
Term Finance Certificates
Unlisted 6,000,195 7,629,656 8,332,720 8,116,726 1,353,456
Listed 985,184 1,197,666 1,077,637 645,732 5,076,908
Total TFC’s 6,985,379 8,827,322 9,410,357 8,762,458 6,430,364
Bonds 5,018,444 5,310,415 8,094,854 9,754,423 9,304,056
Debentures 8,300 11,289 169,351 176,277 196,667
Participation Term Certificates 46,920 55,169 70,087 77,267 94,687
Commercial Paper - - - - 78,490
Total TFC’s, Debentures,
Bonds, PTC’s 12,059,043 14,204,195 17,744,649 18,770,425 16,104,264
Investments in subsidiaries
and associates 8,249,575 2,257,829 1,917,829 2,462,558* 2,200,476
Total investments at cost 116,318,333 67,508,249 63,348,619 55,159,091 55,775,371
Provision for diminution in
value of investments (351,191) (400,639) (634,003) (540,402) (640,229)
Investments (net of
provisions) 115,967,142 67,107,610 62,714,616 - -
(Deficit) / surplus on
revaluation of available for sale
securities
(365,741) 156,063 313,108 333,995 1,381618
Deficit on revaluation of held
for trading securities (15,755) (3,335) (780) (1,044) -
Total Investments 115,585,646 67,260,338 63,026,944 54,953,728 56,516,760
COMMENTS:
Investments include certain approved / government securities which are held by the Bank
to comply with the Statutory Liquidity Requirement determined on the basis of the
Bank's demand and time liabilities as set out under section 29 of the Banking Companies
Ordinance, 1962.
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Investments include Rs. 282 million (2006: Rs. 282 million) held by the State Bank of
Pakistan and National Bank of Pakistan as pledge against demand loan, TT / DD
discounting facilities and foreign exchange exposure limit sanctioned to the Bank and Rs.
5 million (2006: Rs. 5 million) held by the Controller of Military Accounts (CMA) under
Regimental Fund Arrangements. During the year 2007 the bank has made a fresh capital
injection of CHF 10 million in United Bank AG Zurich, Switzerland and Rs 40 million in
UBL Fund Managers Limited to support the business needs of the respective subsidiaries.
United Bank Financial Services (Private) Limited (UBFSL) was registered as a Modaraba
Company under the Modaraba Companies and Modaraba (Floatation and Control)
Ordinance, 1980. During the year, keeping in view UBFSL's dormant status, the
management has surrendered UBFSL's license to act as a Modaraba Management
Company. As a result, the Registrar of Modaraba Companies and Modarabas cancelled
the registration of UBFSL as a Modaraba Management Company. Pursuant to the
cancellation of this registration UBFSL has decided to wind up its dormant operations
under the Companies Easy Exit Scheme 2007 issued by the Securities and Exchange
Commission of Pakistan.
Unlisted companies’ amount includes the Bank's subscription towards the paid-up capital
of Khushhali Bank Limited amounting to Rs. 200 million (2006: Rs. 200 million).
Pursuant to Section 10 of the Khushhali Bank Ordinance, 2000 strategic investors
including the Bank cannot sell or transfer their investment before a period of five years
that has expired on October 10, 2005. Thereafter, such sale/ transfer would be subject to
the prior approval of SBP. In addition, profit of Khushhali Bank Limited cannot be
distributed as dividend under clause 35(i) of the Khushhali Bank Ordinance, 2000.
However, Khushhali Bank Ordinance is in process of amendment under which the
restriction on the dividend payments is expected to be deleted. Moreover, the
shareholders of Khushhali Bank Limited at the Extra Ordinary General Meeting held in
December 2007 have passed a resolution stating that Khushhali Bank be licensed and
operated under the Micro Finance Institution Ordinance, 2001 under the conversion
structure stipulated by the State Bank of Pakistan which does not restrict the distribution
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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of dividend to members.
* During the year, the bank has reversed exchange translation reserve recognized on
revaluation of bank's investment in overseas subsidiaries and associate in prior years
amounting to Rs. 854.729 million. This reversal is in accordance with the requirements of
International Accounting Standard -21, 'The effect of changes in foreign exchange rates'.
There was no impact on profit or loss for the current or prior period as the revaluation
was taken directly to equity in the year in which it arose.
3. ADVANCES:
Performing 2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Loans, cash credits, running
finance etc.
In Pakistan 222,660,938 200,080,279 169,599,106 113,521,983 74,934,525
Outside Pakistan 60,310,465 33,369,281 21,867,208 13,441,801 10,762,277
282,971,403 233,449,560 191,466,314 126,963,784 85,696,802
Bills discounted and
purchased (excluding
government treasury bills)
Payable in Pakistan 5,301,652 5,661,421 2,686,883 3,871,559 2,247,692
Payable outside Pakistan 3,820,841 4,080,845 7,067,883 7,767,493 4,080,137
9,122,493 9,742,266 9,754,766 11,639,052 6,327,829
292,093,896 243,191,826 201,221,080 138,602,836 92,024,631
Financing in respect of
continuous funding system
(CFS)
2,631,139 1,462,242 1,094,002 1,327,541 608,082
Advances - gross 294,725,035 244,654,068 202,315,082 139,930,377 92,632,713
Provision against advances
- Specific - - - - -
- General (1,352,028) (1,416,249) (1,162,987) (260,937) (118,977)
Total Provision against
advances (1,352,028) (1,416,249) (1,162,987) (260,937) (118,977)
Advances – Net Provision 293,373,007 243,237,819 201,152,095 139,669,440 92,513,736
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Non - Performing 2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Loans, cash credits,
running finance etc.
In Pakistan 17,759,670 9,273,198 9,831,330 11,827,862 10,354,782
Outside Pakistan 3,011,935 4,771,131 5,540,208 6,152,872 6,250,428
20,771,605 14,044,329 15,371,538 17,980,734 16,605,210
Bills discounted and
purchased (excluding
government treasury bills)
Non - Performing 2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Payable in Pakistan 745,115 876,300 417,400 286,514 252,687
Payable outside Pakistan 495,691 1,334,780 1,171,427 1,836,085 2,058,603
1,240,806 2,211,080 1,588,827 2,122,599 2,311,290
22,012,411 16,255,409 16,960,365 20,103,333 18,916,500
Financing in respect of
continuous funding system
(CFS)
- - - - -
Advances - gross 22,012,411 16,255,409 16,960,365 20,103,333 18,916,500
Provision against advances
- Specific (16,030,682) (12,183,335) (13,301,990) (15,621,718) (15,305,058)
- General - - - - -
Total Provision against
advances (16,030,682) (12,183,335) (13,301,990) (15,621,718) (15,305,058)
Advances – Net Provision 5,981,729 4,072,074 3,658,375 4,481,615 3,611,442
COMMENTS:
Performing advances given under various Islamic financing modes amounting to Rs
339.477 million at December 31, 2007 entered into during the year by the Islamic
Banking branches of the bank.Non-performing advances include Advances having Gross
Book Value of Rs.1, 043.568 million (2006: Rs. 199.770 million) and Net Book Value of
Rs. 166.605 million (2006: Rs. 174.465 million) though restructured and performing have
been placed under nonperforming status as required by the revised Prudential Regulations
issued by the State Bank of Pakistan, which requires monitoring for at least one year
before any up gradation is considered.
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During the year the State Bank of Pakistan has introduced certain amendments in the
Prudential Regulations in respect of maintenance of provisioning requirements against
non-performing loans and advances vide BSD Circular No. 7 dated October 12, 2007.
The amendments made in the provisioning requirements and the resulting additional
provision of Rs 3.803 million is explained below:
Under the revised guidelines issued by SBP, banks cannot avail the benefit of discounted
forced sales value of mortgaged assets held as collateral by the banks against their non-
performing (excluding housing finance portfolio) loans for the purpose of determining
the provisioning requirement to be maintained for non-performing customers with effect
from December 31, 2007. Previously, the Prudential Regulations issued by SBP allowed
banks to avail the benefit of discounted forced sales value of mortgaged assets held as
collateral against non-performing loans of over Rs 10 million while determining the
provisioning requirement there against. Had the provision against non-performing loans
and advances been determined in accordance with the requirement previously laid down
by SBP, the specific provision against non-performing loans and advances would have
been lower and consequently profit before taxation and advances (net of provisions) as at
December 31, 2007 would have been higher by approximately Rs 3,314 million.
As noted above in accordance with the revised guidelines issued by SBP, banks are
allowed to avail the benefit of forced sales value of mortgaged assets held as collateral
against their non-performing housing finance portfolio while determining provisioning
requirement against such portfolio. However, the forced sales value of the mortgaged
assets would only be allowed to the extent of 50% of its value during the first two years
from the date of classification of the respective non-performing customers and no benefit
would be admissible in subsequent years.
Previously, the Prudential Regulations allowed banks to avail the benefit of forced sales
value of mortgaged assets held as collateral against their non-performing housing finance
portfolio without any specified time limit. Had the provision against non-performing
housing finance portfolio been determined in accordance with requirement previously
laid down by SBP, the specific provision against non-performing housing finance
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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portfolio would have been lower and consequently profit before taxation and advances
(net of provisions) as at December 31, 2007 would have been higher by approximately Rs
240.288 million.
In addition, as per the revised regulations the overdue time period for classifying personal
loans as 'loss' has been reduced from one year to 180 days and as a result the category of
'doubtful' has been dispensed with. Had the provision against non-performing personal
loans been determined in accordance with the requirement previously laid down by SBP,
the specific provision against non-performing personal loans would have been lower and
consequently profit before taxation and advances (net of provision) as at December 31,
2007 would have been higher by approximately Rs 249.319 million.
Although the bank had made full provision against its non-performing portfolio as per the
category of the loan, however, the bank still holds enforceable collateral in the event of
recovery through litigation. These securities comprise of charge against various tangible
assets of the borrower including land, building, plant and machinery, stock in trade etc.
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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4. CRITICAL ANALYSIS OF THE THEORETICAL CONCEPTS
RELATING TO PRACTICAL EXPERIENCES:
4.1. FINANCIAL ANALYSIS:
BALANCE SHEET OF FIVE
YEARS 2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Assets
Cash and balances with
treasury banks 57,526,451 48,939,840 34,074,786 23,844,435 17,274,461
Balances with other banks 4,191,128 14,034,476 12,717,100 17,699,334 11,386,434
Lending to financial
institutions 24,781,723 29,572,070 17,867,552 18,360,633 23,096,028
Investments 115,585,646 67,260,338 63,026,944 54,953,728 56,516,760
Advances 299,354,736 247,309,893 204,810,470 144,151,055 96,125,178
Fixed assets 16,918,844 5,234,463 4,449,324 3,969,006 3,754,236
Deferred tax asset – net - 906,661 2,273,005 5,194,892 5,486,357
Taxation Recoverable - - - - 283,171
Other assets 11,925,428 10,008,132 7,829,770 4,439,580 3,001,793
Total Assets 530,283,956 423,265,873 347,048,951 272,612,663 216,924,418
Liabilities
Bills payable 6,079,341 4,560,649 4,159,964 3,811,284 2,975,910
Borrowings 59,103,350 38,490,586 21,790,480 11,975,684 7,710,375
Deposits and other accounts 401,637,816 335,077,873 289,226,299 230,256,627 185,071,502
Sub-ordinated loans 5,996,696 5,998,344 3,999,192 3,500,000 -
Liabilities against assets
subject to finance lease - - - 288 39,995
Deferred tax liabilities - net 2,232,344 - - - -
Deferred liabilities - - - - 1,535,059
Other liabilities 12,813,005 9,275,034 6,204,746 5,704,749 4,541,704
Total Liabilities 487,862,552 393,402,486 325,380,681 255,248,632 201,874,545
Represented By:
Share capital 8,093,750 6,475,000 5,180,000 5,180,000 5,180,000
Reserves 10,261,958 8,298,873 6,225,461 5,915,928 4,678,317
Unappropriated profit 15,653,703 12,429,853 7,350,813 3,274,439 1,384,490
34,009,411 27,203,726 18,756,274 14,370,367 11,242,807
Surplus on revaluation of assets
- net 8,411,993 2,659,661 2,911,996 2,993,664 3,807,066
42,421,404 29,863,387 21,668,270 17,364,031 15,049,873
Total Liabilities & share
Capital 530,283,956 423,265,873 347,048,951 272,612,663 216,924,418
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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PROFIT & LOSS ACCOUNTS OF FIVE YEARS:
2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Mark-up / return / interest
earned 41,045,543 32,991,603 20,158,860 9,233,881 8,944,260
Mark-up / return / interest
expensed 16,936,187 12,126,809 6,045,948 1,732,760 1,888,349
Net mark-up / interest income 24,109,356 20,864,794 14,112,912 7,501,121 7,055,911
Provision against loans and
advances – net 5,493,226 1,972,936 1,277,002 435,414 444,871
Provision for diminution in
value of investments – net (6,303) 74,573 112,666 (100,381) 104,285
Bad debts written off directly 935,123 269,349 38,140 3,841 12,897
Net mark –up / return /
interest income after
Provisions
17,687,310 18,547,936 12,685,104 7,162,247 6,493,858
Non Mark – up / Interest
Income
Fee, Commission and
brokerage income 5,165,066 4,435,465 2,543,739 1,654,475 1,442,642
Dividend income 548,782 837,338 202,343 154,565 80,315
Income from dealing in foreign
currencies 827,328 659,726 675,109 668,085 436,656
Gain on sale of securities 849,367 280,864 382,419 947,945 1,976,999
Unrealized loss on revaluation
of investments (15,755) (3,335) (780) - -
Other income 1,617,563 738,330 1,210,202 1,072,756 607,500
Total non mark-up / return /
interest income 8,992,351 6,948,388 5,013,032 4,497,826 4,544,112
26,679,661 25,496,324 17,698,136 11,660,073 11,037,970
Non Mark-up / Interest
Expenses
Administrative expenses 13,420,977 10,952,275 7,874,013 6,794,311 6,153,913
Other provisions / write offs –
net 236,281 226,313 335,409 (34,422) 551,840
Other charges 17,430 25,980 7,066 10,456 5,501
Total nom mark-up / interest
expenses 13,674,688 11,204,568 8,216,488 6,770,345 6,711,254
Profit Before Taxation 13,004,973 14,291,756 9,481,648 4,889,728 4,326,716
Taxation 4,602,383 4,823,524 3,532,616 1,188,184 1,691,098
Profit After Taxation 8,402,590 9,468,232 5,949,032 3,701,544 2,635,618
Unappropriated profit brought
forward 12,429,853 7,350,813 3,274,439 1,384,490 (797,100)
20,832,443 16,819,045 9,223,471 5,086,034 1,838,518
Transfer from surplus on
revaluation of fixed assets – net
of tax
63,028 94,454 94,148 94,214 73,096
Profit Available For
Appropriation 20,895,471 16,913,499 9,317,619 5,180,248 1,911,614
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4.1.1. RATIO ANALYSIS:
ABBREVIATION USED IN CALCULATIONS:
Words Abbreviation
Earning after tax EAT
Net Markup income NMI
Gross markup income GMI
Total income T.I
Operating income OP
Operating expenses OE
Total Share holder Equity TSE
Net Sales N.S
Market price per share MPS
Earning per share EPS
Earning before tax EBT
Total outstanding shares TOS
Book Value BV
Dividend per share DPS
Total debt T.D
Total liabilities T.L
Interest Earned I.E
Total Assets T.A
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4.1.2. CALCULATION OF RATIOS:
Ratio Type Formula 2007 2006 2005 2004 2003
-----------------------------(Rupees in ‘000)------------------------------
Profitability Ratios
Net profit after tax EAT/IE 8,402,590/41,045,
543=20.47% 9,468,232/32,991,
603=28.70% 5,949,032/20,158,
860=29.51% 3,701,544/9,233,8
81=40.09% 2,635,618/8,944,2
60=29.47%
Gross spread ratio NMI/GMI 24,109,356/41,045
,543=58.74% 20,864,794/32,991
,603=63.24% 14,112,912/20,158
,860=70.00% 7,501,121/9,233,8
81=81.23% 7,055,911/8,944,2
60=78.89%
Income Expense
ratio T.I/O.P
33,101,707/17,687
,310=1.87
27,813,182/18,547
,936=1.50
19,125,944/12,685
,104=1.50
11,998,947/7,162,
247=1.68
11,600,023/6,493,
858=1.79
Return on Equity
ratio (ROE) EAT/TSE
8,402,590/34,009,
411=24.71%
9,468,232/27,203,
726=34.80%
5,949,032/18,756,
274=31.72%
3,701,544/14,370,
367=25.76%
2,635,618/11,242,
807=23.44%
Return on Asset
ratio (ROA) EAT/T.A
8,402,590/530,283
,956=1.58%
9,468,232/423,265
,873=1.79%
5,949,032/347,048
,951=1.71%
3,701,544/272,612
,663=1.36%
2,635,618/216,924
,418=1.21%
Loan/deposit ratio Loan/Deposits 299,354,736/401,6
37,816=74.53%
247,309,893/335,0
77,873=73.81%
204,810,470/289,2
26,299=70.81%
144,151,055/230,2
56,627=62.60%
96,125,178/185,07
1,502=51.94%
Activity Ratios*
Total asset turnover
N.S/T.A 41,045,543/530,28
3,956=7.74 32,991,603/423,26
5,873=7.79 20,158,860/347,04
8,951=5.80 9,233,881/272,612
,663=3.39 8,944,260/216,924
,418=4.12
Fixed Asset
Turnover N.S/F.A
41,045,543/16,918
,844=2.43
32,991,603/5,234,
463=6.30
20,158,860/4,449,
324=4.53
9,233,881/3,969,0
06=2.33
8,944,260/3,754,2
36=2.38
Market Ratios
Earning per share
(EPS) EAT/TOS
8,402,590/809,375
=10.38
9,468,232/647,500
=14.62
5,949,032/518,000
=11.48
3,701,544/518,000
=7.15
2,635,618/518,000
=5.09
Book Value per
share TSE/TOS
34,009,411/809,37
5=42.02
27,203,726/647,50
0=42.01
18,756,274/518,00
0=36.21
14,370,367/518,00
0=27.74
11,242,807/518,00
0=21.70
Revaluation per
share SOR/TOS
8,411,993/809,375
= Rs. 10.39
2,659,661/647,500
= Rs. 4.11
2,911,996/518,000
= Rs. 5.62
2,993,664/518,000
= Rs. 5.78
3,807,066/518,000
= Rs. 7.35
Leverage Ratios
Debt-to-Equity
ratio T.D/TSE
59,103,350/34,009
,411=1.74%
38,490,586/27,203
,726=1.41%
21,790,480/18,756
,274=1.16%
11,975,684/14,370
,637=0.83%
7,710,375/11,242,
807=0.69%
Debt Ratio/Debt-
to-Total Assets T.D/T.A
59,103,350/530,28
3,956=11.15%
38,490,586/423,26
5,873=9.09%
21,790,480/347,04
8,951=6.28%
11,975,684/272,61
2,663=4.39
7,710,375/216,924
,418=3.55%
*Figures in Times.
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FINANCIAL RATIOS
Five Years Progress 2007 2006 2005 2004 2003
Profitability Ratios
Net profit after tax 20.47% 28.70% 29.51% 40.09% 29.47%
Gross spread ratio 58.74% 63.24% 70.00% 81.23% 78.89%
Income Expense ratio 1.87% 1.50% 1.50% 1.68% 1.79%
Return on Equity ratio (ROE) 24.71% 34.80% 31.72% 25.76% 23.44%
Return on Asset ratio (ROA) 1.58% 1.79% 1.71% 1.36% 1.21%
Loan/deposit ratio 74.53% 73.81% 70.81% 62.60% 51.94%
Activity Ratios*
Total asset turnover 7.74 7.79 5.80 3.39 4.12
Fixed Asset Turnover 2.43 6.30 4.53 2.33 2.38
Market Ratios
Earning per share (EPS) Rs. 10.38 Rs. 14.62 Rs. 11.48 Rs. 7.15 Rs. 5.09
Book Value per share Rs. 42.02 Rs. 42.01 Rs. 36.21 Rs. 27.74 Rs. 21.70
Revaluation per share Rs. 10.39 Rs. 4.11 Rs. 5.62 Rs. 5.78 Rs. 7.35
Leverage Ratios
Debt-to-Equity ratio 1.74% 1.41% 1.16% 0.83% 0.69%
Debt Ratio/Debt-to-Total Assets 11.15% 9.09% 6.28% 4.39% 3.55%
*Figures in Times.
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4.1.3. GRAPHICAL REPRESENTATION OF RATIOS:
PROFITABILITY RATIOS:
0
10
20
30
40
50
60
70
80
90
%
2007 2006 2005 2004 2003
Years
Net Profit After Tax
Gross Spread Ratio
0
0.5
1
1.5
2
%
2007 2006 2005 2004 2003
Years
Income Expense Ratio
Return on Assets
0
10
20
30
40
50
60
70
80
%
2007 2006 2005 2004 2003
Years
Return on Equity
Loan/Deposit
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ACTIVITY RATIOS:
0
1
2
3
4
5
6
7
x*
2007 2006 2005 2004 2003
Years
Fixed Assets Turnover
0
1
2
3
4
5
6
7
8
X*
2007 2006 2005 2004 2003
Years
Total Assets Turnover
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MARKET RATIOS:
LEVERAGE RATIOS:
0
2
4
6
8
10
12
14
16
Rs.
2007 2006 2005 2004 2003
Years
Earning Per Share
Revaluation Per Share
0
5
10
15
20
25
30
35
40
45
Rs.
2007 2006 2005 2004 2003
Years
Book Value Per Share
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
%
2007 2006 2005 2004 2003
Years
Debt-to-Equity
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4.1.4. EXPLANATION OF FINANCIAL RATIOS:
PROFITABILITY RATIOS:
These ratios indicate the organization’s overall effectiveness of operation. These ratios
use margin analysis and show the return on sales and capital employed.
� Net profit after tax measure profit remaining after deducting all expenses
including tax. It should be maximum. Markup/return/interest earned and non
markup interest income increased throughout the period i.e. year 2003 up to year
2007. While markup/return/interest expensed was decreased in 2004 as a result of
net profit after tax ratio increased in said year while from 2005 to 2007 it shows
an increasing trend also that cause a decrease in net profit after tax ratio. Non
markup interest expenses have also increasing trend.
� Gross Spread ratio measure profit after deducting cost of goods sold. Gross spread
ratio carry the same trend as explained in above paragraph of net profit after tax
ratio. Here Markup/return/interest expenses decreased proportionately in 2003
while from 2004 to 2007 it increased proportionately.
� Income expense ratio as shows the percentage of expenses so it should be lower.
Income expense ratio is increased in 2007 as compared to 2003 due to increase in
net markup interest income and non markup/return/interest income while it is
0
2
4
6
8
10
12
%
2007 2006 2005 2004 2003
Years
Debt-to-Total Asset
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decreased in 2004, 2005, and 2006 respectively due to decrease in the markup and
non markup interest income.
� ROE measure the return on owner’s total investment into the business. It should
be maximum. ROE has increased from 2003 to 2006 due to increase in EAT
while ROE has decreased in 2007 due to decrease in EAT.
� ROA measure the return of total investment of business. It should be maximum.
ROA has similar increasing trend as the ROE because EAT of the bank has
increased from 2003 to 2006.
� Loan deposit ratio has the increasing trend due to increase in the bank’s deposits
and advances portfolio.
ACTIVITY RATIOS:
These ratios also known as efficiency or turnover ratios, measure how effectively the
organization is using its assets.
� Total asset turnover shows that by investment of Rupee One in average total
assets, of the entity how much sale is generated. This ratio shows the utilization of
total assets and it should be maximum. Total asset turnover has increased in 2007,
2006, and 2005 as compare to 2003 & 2004 due to increase in
markup/return/interest earned (Net Sales).
� Fixed assets turnover shows that by investment of Rupee One in fixed assets, of
the entity how much sale is generated. This ratio shows the utilization of fixed
assets and it should be maximum. Fixed asset turnover has increased in 2005 and
2006 due to greater increase in net sales and relatively slow increase in fixed
assets in these years.
MARKET RATIOS:
These ratios are calculated to analyze the market position of a business.
� EPS means Rupees earned per share by the company. It should be maximum. EPS
has an increasing trend from 2003 to 2006 because of increasing trend in EAT.
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Slight drop is observed in EPS in 2007.
� Book value per share shows value of share as per books. It should be maximum.
Book value per share of the bank has increased due to increase in shareholders
equity.
� Revaluation per share of UBL has the increasing trend due to increase in surplus
on revaluation of assets per year.
LEVERAGE RATIOS:
Leverage ratios used to calculate the financial leverage of a company to get an idea of the
company's methods of financing or to measure its ability to meet financial obligations.
There are several different ratios, but the main factors looked at include debt, equity,
assets and interest expenses.
� Debt to equity ratio shows how much portion of long term funds was financed
through long term debt, maximum ratio is 60:40. Debt to equity ratio has
increased gradually from 2003 to 2007 because of increase in the bank’s
borrowings and shareholders equity.
� Debt to total assets or debt ratio serves a similar purpose to the debt to equity
ratio. It highlights the relative importance of debt financing to the firm by
showing the percentage of the organization’s assets that is supported by debt
financing. Debt to total asset ratio has also increased gradually from 2003 to 2007
because of increase in borrowings and total assets.
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4.1.5. HORIZONTAL ANALYSIS:
4.1.5.1.1. HORIZONTAL ANALYSIS OF FIVE YEARS BALANCE SHEET:
2007 2006 2005 2004 2003
Assets
Cash and balances with
treasury banks 233% 183% 97% 38% 100%
Balances with other banks (63%) 23% 12% 55% 100%
Lending to financial
institutions 7.3% 28% (23%) (21%) 100%
Investments 105% 19% 12% (2.8%) 100%
Advances 211% 157% 113% 50% 100%
Fixed assets 351% 39% 19% 5.7% 100%
Deferred tax asset – net (100%) (83%) (59%) (5.3%) 100%
Taxation Recoverable (100%) (100%) (100%) (100%) 100%
Other assets 297% 233% 161% 48% 100%
Total Assets 144% 95% 60% 26% 100%
Liabilities
Bills payable 104% 53% 40% 28% 100%
Borrowings 667% 399% 183% 55% 100%
Deposits and other accounts 117% 81% 56% 24% 100%
Sub-ordinated loans 100% 100% 100% 100% -
Liabilities against assets
subject to finance lease (100%) (100%) (100%) (99%) 100%
Deferred tax liabilities - net 100% - - - -
Deferred liabilities (100%) (100%) (100%) (100%) 100%
Other liabilities 182% 104% 37% 26% 100%
Total Liabilities 142% 95% 61% 26% 100%
Represented By:
Share capital 56% 25% - - 100%
Reserves 119% 77% 33% 26% 100%
Unappropriated profit 1031% 798% 431% 137% 100%
202% 142% 67% 28% 100%
Surplus on revaluation of assets
- net 121% (30%) (24%) (21%) 100%
182% 98% 44% 15% 100%
Total Liabilities & share
Capital 144% 95% 60% 26% 100%
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COMMENTS ON HORIZONTAL ANALYSIS OF FIVE YEARS BALANCE SHEET:
TOTAL ASSETS:
Total assets of United Bank Limited have increased from Year 2003 to year 2007.
As compared to 2003:
In Year 2004 there is an increase of 26% in total assets of the bank. This increase is due
to increase in both local and foreign currency cash and balances with the treasury banks
in hand. This increase is 38%. The other reason of this increase in total assets is due to
increase in balances with other banks in the form of current accounts and deposit
accounts which increased by 55%. Advances also increased by 50% in the form of loans,
cash credits and running finances. Other assets are also increase by 48%.
In Year 2005 total assets increased by 60% as compare to 2003 and 27% increase as
compare to 2004. This increase is because of:
97% increase in cash and balances with other banks in the form of cash and balances with
SBP. Advances increased by 113% as compare to 2003 in 2005. Here advances portfolio
is 50% higher than 2004. Increase in advances is due to increase in loans, cash credits and
running finances given in Pakistan and outside Pakistan. Investment increased by 12% in
2005 as compare to 2003 due to increase in market treasury bills and bank’s first time
investment in Government of Pakistan Islamic Bonds. Fixed assets of the bank also
increased by 19% in 2005 as compare to 2003. This is because of major increase in
intangible assets, property and equipment. Other assets also increased by 161% in 2005.
This percentage is 76% higher than 2004.
In Year 2006 total assets have increased by 95% as compare to year 2003. This shows
more increase of 69% and 35% in total assets in 2004 and 2005 respectively. This
increase in total assets is because of:
Cash and balances with other banks increased by 183% which show an increase of 44%
as compare to 2005, where the increase is 105% as compare to 2004. Advances
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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increased by 157%. Lending to financial institutions increased by 28%. Fixed assets
increased by 39% and other assets increased by 233%. This percentage of other assets is
28% higher than 2005.
In Year 2007 total assets have increased by 144% as compare to 2003. In 2007 this
increase in total assets are 95%, 53% and 25% more than 2004, 2005, and 2006
respectively. This increase is due to following reasons:
Cash and balances with other banks have increased by 233%. This increase is due to
increase in local and foreign currency (in hand) cash and balances with other banks, local
currency foreign accounts and increase in foreign currency accounts held with National
Bank of Pakistan (NBP). Investment increased by 105% which is 72% higher than 2006.
This is due to investment in Pakistan Investment Bonds, Government of Pakistan Islamic
bonds, Market Treasury Bills, and Government of Pakistan-US Dollar / Euro bonds.
Advances increased 211% which is 21% higher than 2006. Fixed assets also increased
351%. Major increase is due to in property and equipment material. This increase is
223% higher than 2006. Other assets increased 297%.
TOTAL LIABILITIES:
As compare to 2003:
In Year 2004 total liabilities have increased in 2004 by 26% as compared to 2003. This
increase is due to:
28% increase in bills payable. These bills are payable in Pakistan and outside Pakistan.
55% increase in borrowings. These borrowings include borrowings from SBP. 100%
increase in subordinated loans due to Term Finance Certificates (TFC’s). 26% increase in
other liabilities. 24% increase in deposits and other accounts. This increase is due to
increase in saving, fixed deposits, and major increase in current accounts-non
remunerative.
In Year 2005 total liabilities have increased 61% in this year comparing it with 2003. In
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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2005 this increase is 27% more than 2004. This increase is due to:
40% increase in bills payable. This is due to increase in bills payable in Pakistan. 183%
increase in borrowings. These borrowings are greater than 2004 and carry a difference of
82% (increase). This is because of secured borrowings from the SBP under export
refinance scheme and long term financing under export oriented projects have increased.
While call borrowings and trading liabilities (unsecured) also increased significantly.
56% increase in deposits and other accounts. Major increase is seen in fixed; current
accounts-remunerative and non-remunerative also increase in current accounts
remunerative of financial institutions. 37% increase in other liabilities.
In Year 2006 total liabilities have increased by 95% as compared to 2003. This increase
is 54% and 21% more than in 2004 and 2005 respectively. This increase is due to:
399% increase in borrowings due to increase in repurchase agreement, export refinance
scheme, and long term finance under export oriented projects. These borrowings are 77%
more than in 2005. 81% increase in deposits and other accounts due to major increase in
fixed, saving, current accounts remunerative and non-remunerative. 104% increase in
other liabilities.
In Year 2007 total liabilities have increased by 142% as compared to 2003. This increase
is 24%, 50% and 91% greater than in 2004, 2005 and 2006 respectively. This increase is
due to:
Major increase in bills payable which is 104% in 2007. Increase in difference is 33% with
2006. This increase is due to increase in repurchase agreement borrowings and call
borrowings. Borrowings increased by 667% which is 54% more than in 2006. 117%
increase in deposits and other accounts. This increase is due to significant increase in
fixed, saving, and current accounts remunerative. In 2007 there is an increase of 100% in
deferred tax liabilities-net. Other liabilities also increased by 142% due to major increase
in branch adjustment account.
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TOTAL SHARE CAPITAL: (OWNER’S EQUITY)
As compare to 2003:
In Year 2004 share capital is increased by 15% as compared to 2003 due to increase in:
26% in reserves and 137 increases in unappropriated profit. In Year 2005 share capital is
increased by 44% as compared to 2003. This increase is 25% more than in 2004. This
increase is due to increase in: 33% in reserves and 431% increase in unappropriated
profit. This Unappropriated profit is 124% more than in 2004.
In Year 2006 share capital is increased by 98% as compared to 2003. This increase is
38% more than in 2005. This increase is due to increase in: 25% increase in share capital
issued for cash and as bonus shares. 77% increase in reserves. Major change occurred in
unappropriated profit which is increased by 798% which is 69% more than in 2005. In
Year 2007 share capital is increased by 182% as compared to 2003. This increase is 42%
more than in 2006. This increase is due to increase in: 56% increase in share capital.
119% increase in reserves. Major increased occurred of 1031% in unappropriated profit.
Also an increase of 121% of surplus on revaluation of assets-net, increase in fixed assets
and securities.
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4.1.5.1.2. HORIZONTAL ANALYSIS OF FIVE YEARS PROFIT & LOSS ACCOUNT:
2007 2006 2005 2004 2003
Mark-up / return / interest
earned 359% 269% 125% 3% 100%
Mark-up / return / interest
expensed 797% 542% 220% (8%) 100%
Net mark-up / interest income 242% 196% 100% 6% 100%
Provision against loans and
advances - net 1135% 343% 187% (2%) 100%
Provision for diminution in
value of investments – net 106% (28%) 8% (196%) 100%
Bad debts written off directly 7151% 1988% 196% (70%) 100%
Net mark –up / return /
interest income after
Provisions
172% 186% 95% 10% 100%
Non Mark – up / Interest
Income
Fee, Commission and
brokerage income 258% 207% 76% 15% 100%
Dividend income 583% 943% 152% 92% 100%
Income from dealing in foreign
currencies 89% 51% 55% 53% 100%
Gain on sale of securities (57%) (86%) (81%) (52%) 100%
Unrealized loss on revaluation
of investments 100% 100% 100% - -
Other income 166% 22% 99% 77% 100%
Total non mark-up / return /
interest income 98% 51% 10% (1%) 100%
142% 131% 60% 6% 100%
Non Mark-up / Interest
Expenses
Administrative expenses 118% 78% 28% 10% 100%
Other provisions / write offs –
net (57%) (59%) (39%) 106% 100%
Other charges 217% 372% 28% 90% 100%
Total nom mark-up / interest
expenses 104% 67% 22% 0.88% 100%
Profit Before Taxation 201% 230% 119% 13% 100%
Taxation 172% 185% 109% (30%) 100%
Profit After Taxation 219% 259% 126% 40% 100%
Unappropriated profit brought
forward 1659% 1022% 511% 274% 100%
1033% 815% 402% 177% 100%
Transfer from surplus on
revaluation of fixed assets – net
of tax
14% 29% 28% 29% 100%
Profit Available For
Appropriation 993% 785% 387% 171% 100%
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COMMENTS ON HORIZONTAL ANALYSIS OF FIVE YEARS PROFIT & LOSS ACCOUNT:
As compared to 2003:
YEAR 2004:
In Year 2004 profit increased by 171% as compared to 2003. This increase is due to:
Markup / interest earned are increased by 3% as compare to 2003. This increase is due to
increase in: on loans and advances interest earned, on deposits with financial institutions
and on securities purchase under resale agreements. Net markup / interest income is
increased by 6% while markup interest expense is decreased by (8%) due to decrease in
on deposits interest expense. Net markup / interest income after provisions is increased
by 10% as compared to 2003. Total income has increased in 2004 by 6%. This increase is
due to increase in fee, commission and brokerage income by 15%, dividend income by
92%, and income in dealing in foreign currencies by 53%, other income by 77%. Other
income is increased due to increase in charges recovered from customers. While gain on
sale of securities has decreased by (52%).
Profit before taxation is increased by 13%. Taxes reduce by (30%). Profit after tax has
increased by 40%. Unappropriated profit brought forward from last year is increased by
274%. This results 177% increase. Transfer of fixed assets from surplus also increases by
29%. That’s why profit available for appropriation is increased by 171%.
YEAR 2005:
In Year 2005 profit increased by 387%% as comparing it with 2003. This increase in
profit is 80% greater than in 2004. This increase is due to:
Markup / return / interest earned are increased by 125%. This increase is 118% greater
than in 2004. This significant increase in 2005 is due to increase in: on loans and
advances from customers and financial institutions and on investment in available for sale
securities and associates, on deposits with financial institutions, on discount income and
on securities purchased under resale agreements. Net markup / interest income is
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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increased by 100% which is 88% more than in 2004. While interest expense has
increased by 220% due to increase in: on deposits interest expense, on securities sold on
repurchase agreement, on long term and other short tem borrowings , on securities sold
under repurchase agreements.. Net markup interest income is after provisions are
increased by 95% as compared to 2003. Total income has increased in 2005 by 60%
which is 52% more than in 2004. This increase is due to: 76% increase in fee,
commission and brokerage income, 152% increase in dividend income, 55% increase in
income from dealing in foreign currencies. 100% increase in unrealized loss on
revaluation of investment and other income is increased by 99% while gain on sale of
securities decrease by (81%).
Profit before taxation increased by 119%. This increase is 94% more than in 2004. Taxes
increased by 109%. Profit after taxation is increased by 126%. Unappropriated profit
brought forward increased by 511% which 137% more than in 2004. This all causes an
increase of 387% in profit available for appropriation.
YEAR 2006:
In Year 2006 profit increased by 785% as comparing it with 2003. This increase in profit
is 226% and 82% more than in 2004 and 2005 respectively. This increase is due to:
Markup / interest earned are increased 269% as compare to 2003. This increase is due to:
increase in interest earned on loans and advances from customers and financial
institutions, and interest earned on investment. Net markup / interest income is increased
by 196% as compared to 2003 which is 48% higher than in 2005. While interest expense
is increased by 542% due to major increase in interest expense on deposits, on securities
sold under repurchase agreements and on long term borrowings. Net markup interest
income increased by 186% in 2006 as comparing it with 2003. Total income has
increased by 131% as compared to 2003 which is 44% and 119% more than in 2005%
and 2004 respectively. This increase is due to: 207% increase in fee, commission and
brokerage income. This is an increase of 74% as compared to 2005. 943% increase in
dividend income. 51% increase in income from dealing in foreign currencies. 22%
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increase in other income. 100% increase in unrealized loss on revaluation of investments.
While (86%) decrease on gain on sale of securities.
Profit before tax increased by 230% which is 51% more than in 2005. Taxes ratio is
increased by 185% in 2006. Profit after tax is increased by 259 which is 59% higher than
in 2005. Unappropriated profit doubled in this year. These changes or increase causes an
increase of 785% in the profit available for appropriation.
YEAR 2007:
In Year 2007 profit increased by 933% comparing it with 2003. This increase in profit is
24%, 124% and 303% more than in 2006, 2005 and 2004 respectively. This increase is
due to:
Markup / return / interest earned are increased by 359% as compare to 2003. This
increase is due to: increase in interest earned on loans and advances from customers and
financial institutions, discount income, deposit with financial institutions. Net markup /
interest income is increased by 242% while interest expense increased by 797% due to
increase in expense on deposit, on long term borrowings. Net markup interest income
increased by 16% as compare to 2006. Total income has increased by 142% which shows
an increase of 5% than in 2006. This increase is due to major increase in: fee,
commission and brokerage income by 258%. Dividend income by 583%, 166% increase
in other income. 89% increase in foreign currency income and 100% increase in
revaluation of investment.
Increase in profit before tax is slow than in 2006.Actually profit before tax is decreased
here in 2007 by (9%) as compare to 2006. It is only 201% which (9%) less than in 2006.
Profit after tax increase by 219% which shows a slow increase as compared to 2006.
Major increase is seen in unappropriated profit brought forward 1659% which is 69%
higher than in 2006. Overall this causes an increase of 993% in profit available for
appropriation.
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4.1.6. VERTICAL ANALYSIS:
4.1.6.1.1. VERTICAL ANALYSIS OF FIVE YEARS BALANCE SHEET:
2007 2006 2005 2004 2003
Assets
Cash and balances with
treasury banks 10.85% 11.56% 9.82% 8.75% 7.96%
Balances with other banks 0.79% 3.32% 3.66% 6.49% 5.25%
Lending to financial
institutions 4.67% 6.99% 5.15% 6.73% 10.65%
Investments 21.80% 15.89% 18.16% 20.16% 26.06%
Advances 56.45% 58.43% 59.02% 52.88% 44.31%
Fixed assets 3.19% 1.24% 1.28% 1.45% 1.73%
Deferred tax asset – net - 0.21% 0.65% 1.91% 2.53%
Taxation Recoverable - - - - 0.13%
Other assets 2.25% 2.36% 2.26% 1.63% 1.38%
Total Assets 100% 100% 100% 100% 100%
Liabilities
Bills payable 1.15% 1.08% 1.20% 1.40% 1.37%
Borrowings 11.14% 9.09% 6.28% 4.39% 3.55%
Deposits and other accounts 75.74% 79.16% 83.34% 84.46% 85.32%
Sub-ordinated loans 1.13% 1.42% 1.15% 1.28% -
Liabilities against assets
subject to finance lease - - - 0.00% 0.02%
Deferred tax liabilities - net 0.42% - - - -
Deferred liabilities - - - - 0.71%
Other liabilities 2.42% 2.19% 1.79% 2.09% 2.09%
Total Liabilities 92% 92.94% 93.76% 93.63% 93.06%
Represented By:
Share capital 1.53% 1.53% 1.49% 1.90% 2.39%
Reserves 1.93% 1.96% 1.79% 2.17% 2.16%
Unappropriated profit 2.95% 2.94% 2.12% 1.20% 0.64%
6.41% 6.43% 5.40% 5.27% 5.19%
Surplus on revaluation of assets
- net 1.59% 0.63% 0.84% 1.10% 1.75%
8% 7.06% 6.24% 6.37% 6.94%
Total Liabilities & share
Capital 100% 100% 100% 100% 100%
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COMMENTS ON VERTICAL ANALYSIS OF FIVE YEARS BALANCE SHEET:
Comparing figure from 2003 to 2007.
TOTAL ASSETS:
Here Total Assets includes: Current Assets + Fixed Assets + Other Assets. Where
Current Assets include: All assets excluding Fixed Assets and Other Assets.
Current assets of the bank have increasing trend from 2003 to 2004 (96.89% and 96.92%
respectively). This increase is due to increase in: cash and balances with treasury banks,
balances with other banks, advances. In 2003 and 2004 bank need the current assets more
to fund their day-to-day operations. This increase in current assets is due to increase in:
local and foreign currency cash and balances with the treasury banks, balances with other
banks in current and deposit accounts form, loans, cash credits and running finances.
Deposits with State Bank of Pakistan are maintained to comply with the statutory
requirements issued from time to time. Deposits with other central banks are maintained
to meet the minimum cash reserves and capital requirements pertaining to the foreign
branches of the Bank. Although these current assets are in good position in 2005, 2006,
and in 2007 but there is slight or minor decrease. This slight decrease is due to decrease
in: Balances with other banks, lending to financial institutions, investments. If current
assets fall short more than this in future, then the bank will have to scramble for other
sources of short-term funding, either by taking debt. But overall current assets of the bank
are in healthy and satisfactory position.
Fixed assets increased in 2007 as compare to 2003 but like current assets there is a slight
decrease in fixed assets. Increase is due to increase in capital work-in-progress, property
and equipment. Fixed assets are the long-term base of the bank’s operation strategy,
represented by all the equipment, facilities, IT infrastructure and long-term contracts the
bank has invested in to conduct business. These assets are the revenue generators, which
together form the base from which the company functions from week to week. So these
are also well handled by the bank.
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Other assets have the increasing trend since 2003. This increase in other assets is due to
increase in: Income / mark-up accrued in local currency and income / mark-up accrued in
foreign currency.
TOTAL LIABILITIES:
Total liabilities of UBL have the increasing trend over all. Total liabilities have increased
from 2003 to 2005. While there is a slight decrease in 2006 and 2007. But this decrease is
not too big. Increase in liabilities is due to: Borrowings, subordinated loans, other
liabilities and deposits and other accounts. This increase is due to increase in: Borrowings
from SBP, term finance certificates. While these borrowings have been made from SBP
for providing financing facilities to customers for import of machinery, plant, equipment
and accessories thereof (not manufactured locally) by export oriented units. Money
deposited with a bank becomes a liability of the bank, because the bank has an obligation
to pay the depositor the money deposited; usually on demand. (The money deposited is
an asset for the depositor; but this asset will not be recorded by the bank because it is not
the bank's asset. This shows that bank’s need more debt from other financial institutions
from 2003 to 2005 especially. However there is no major increase found in the bank’s
liabilities portion. Liabilities increase also shows that bank’s need more funds in these
years to complete its higher operational activities.
OWNER’S EQUITY OR SHARE CAPITAL:
Share capital or issued capital or capital stock refers to the portion of a company's equity
that has been obtained (or will be obtained) by trading stock to a shareholder for cash or
an equivalent item of capital value. Share capital or owner’s equity has increased from
2003 to 2007. This increase is due to increase in reserves and unappropriated profit. In
2007 Owner’s equity has increased by 8% as compare to 2003 which is 6.94%.
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4.1.6.1.2. VERTICAL ANALYSIS OF FIVE YEARS PROFIT & LOSS ACCOUNTS:
2007 2006 2005 2004 2003
Mark-up / return / interest
earned 100% 100% 100% 100% 100%
Mark-up / return / interest
expensed 41.26% 36.76% 30.00% 18.77% 21.11%
Net mark-up / interest income 58.74% 63.24% 70.00% 81.23% 78.89%
Provision against loans and
advances - net 13.38% 5.98% 6.33% 4.72% 4.97%
Provision for diminution in
value of investments – net (0.02%) 0.23% 0.56% (1.09%) 1.17%
Bad debts written off directly 2.28% 0.82% 0.19% 0.04% 0.14%
Net mark –up / return /
interest income after
Provisions
43.09% 56.22% 62.92% 77.56% 72.60%
Non Mark – up / Interest
Income
Fee, Commission and
brokerage income 12.58% 13.44% 12.62% 17.92% 16.13%
Dividend income 1.34% 2.54% 1.00% 1.67% 0.90%
Income from dealing in foreign
currencies 2.02% 2.00% 3.35% 7.24% 4.88%
Gain on sale of securities 2.07% 0.85% 1.90% 10.27% 22.10%
Unrealized loss on revaluation
of investments (0.04%) (0.01%) (0.004%) - -
Other income 3.94% 2.24% 6.00% 11.62% 6.79%
Total non mark-up / return /
interest income 21.91% 21.06% 24.87% 48.71% 50.80%
65% 77.28% 87.79% 126.27% 123.41%
Non Mark-up / Interest
Expenses
Administrative expenses 32.70% 33.20% 39.06% 73.58% 68.80%
Other provisions / write offs –
net 0.56% 0.69% 1.66% (0.37%) 6.17%
Other charges 0.04% 0.08% 0.04% 0.11% 0.06%
Total nom mark-up / interest
expenses 33.32% 33.96% 40.76% 73.32% 75.03%
Profit Before Taxation 31.68% 43.32% 47.03% 52.95% 48.37%
Taxation 11.21% 14.62% 17.52% 12.87% 18.91%
Profit After Taxation 20.47% 28.70% 29.51% 40.09% 29.47%
Unappropriated profit brought
forward 30.28% 22.28% 16.24% 14.99% (8.91%)
50.75% 50.98% 45.75% 55.08% 20.56%
Transfer from surplus on
revaluation of fixed assets – net
of tax
0.15% 0.29% 0.47% 1.02% 0.82%
Profit Available For
Appropriation 50.91% 51.27% 46.22% 56.10% 21.37%
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COMMENTS ON VERTICAL ANALYSIS OF FIVE YEARS PROFIT & LOSS ACCOUNTS:
Comparing figures from 2003 to 2007.
PROFIT AVAILABLE FOR APPROPRIATION:
Profit available for appropriation have the increasing trend overall from 2003 to 2007. In
2003 profit is 21.37% only which gradually increase by 56.10%, 46.22%, 51.27% and
50.91% in 2004, 2005, 2006, and 2007 respectively. This increase in profit is due to
following reasons:
Markup / return / interest expensed have increased from 2003 to 2007. Net markup /
interest income have increased but this increase is less than that’s in 2003 and 2004. In
2007 interest income is 58.74% while this percentage is 81.23% in 2004 and 78.89% in
2003.
Net markup / return / interest income after provisions have also increased but this
increased is slow as compare to 2003 and 2004. Total income has also increased from
2003 to 2004 but this ratio of increasing trend is slow in 2007, 2006 and 2005. This
increase is due to major increase in fee, commission and brokerage income, dividend
income and other income. Administrative expenses have increased from 2003 to 2007.
This increase in administrative expenses due to increase in personnel cost, premises cost
and other operating cost. Profit before taxation is 31.68% while this percentage is 48.37%
in 2003. While profit after tax has a mix up trend of increase and decrease. In 2005 profit
after tax has increased 40.09% while this percentage is 20.47% in 2007. Unappropriated
profit brought forward has the increasing trend. Unappropriated profit that is brought
forward is 30.28% in 2007. After adding the unappropriated profit this profit is increased
by 50.98% and 50.75% in 2006 and 2007 respectively. This all causes an increasing trend
in the profit available for appropriation. These figures of profit available for
appropriation tell that bank has gaining a significant growth in recent years after its
privatization and better management skills.
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4.2. ORGANIZATIONAL ANALYSIS: (COMPARISON WITH OTHER BANKS)
UBL COMPARISON WITH MUSLIM COMMERCIAL BANK & HABIB BANK LIMITED:
Particulars UBL MCB HBL
-----------------------------(Rupees in ‘000)------------------------------
Deposits 401,637,816 292,098,066 531,298,127
Advances 299,354,736 218,960,598 382,172,734
Profit 8,402,590 15,265,562 10,084,037
Branches* 1,079 1,026 1,489
Employees* 14,904 17,120 14,552
*Figures in Numbers.
If we compare UBL with MCB and HBL, we observe that HBL is a big banking group as
compare to UBL and MCB. Deposit wise HBL is in front of both UBL and MCB.
Although UBL is in good position as compare to MCB in deposit situation. It shows
customer’s trust on both banks. HBL again ahead in case of advances portfolio as
compare to UBL and MCB. Here health portfolio of advances places the UBL in second
position which is a good indicator. But profit wise MCB is in front of both HBL and UBL
in year 2007. Branches of HBL are greater than UBL and MCB. There is a less difference
between UBL and MCB in number of branches. MCB has greater number of employees
as compared to UBL and HBL.
These figures show that HBL and MCB are in much better position than UBL. After the
privatization business of UBL taking high growth. The Bank's long term rating is AA +,
which denotes good credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions. The short-term rating is
A-1+, which denotes the highest certainty of timely payment. Short-term liquidity,
including internal operating factors and / or access to alternative sources of funds, is
outstanding and safety is just below risk free Government of Pakistan's short-term
obligations.
The bank is increasing resource mobilization through regular deposit campaigns and
accelerating the process of recovery of outstanding advances and non-performing assets.
The Bank is making every effort to meet the up-coming challenges through strategic
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
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planning and making the best use of the resources at its command. These financial figures
and improving condition of the bank shows that UBL is among the leading commercial
banks of Pakistan.
4.3. FUTURE PROSPECTS OF THE ORGANIZATION: (UBL)
UBL is focusing on bringing the next level of consumer banking in Pakistan,
emphasizing on its “You First” vision. UBL aims to offer products that will change the
industry norms by providing innovations, options and flexibility unmatched so far by any
other bank due to the investment made in the state-of-the-art systems at UBL. UBL plans
to expand the market by its vast distribution network. UBL’s products & services are
being developed keeping in view the increased level of consumer awareness due to
increased accessibility of information, and hence the demand for better products and
services with options.
Management believes that their business process reengineering initiative supported by
their customized core banking technology platform will also help them to compete more
effectively in the changing landscape of the Pakistani banking sector. Bank’s Credit Risk
Environmental and Monitoring system which is in its final stages of implementation is
expected to assist them in more effective post disbursement monitoring. They expect
their efforts in this area to show positive results in the coming months.
Macro economic and political instability, going forward, will continue to impact growth
and profitability of the banking sector. Management believes that political reconciliation
will result in renewed attention to economic management and hence improvement in the
operating environment.
Management is focusing on converting the manual branches into online branching system
and also to expend their branch network domestically and internationally. Management is
also keen to increase the ATM network in future and plans have prepared for it.
Management believes the bank is well positioned to take advantage of the next economic
upturn.
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5. SHORT – FALLS / WEAKNESSES OF THE ORGANIZATION:
Following are the weaknesses of the United Bank Limited;
� The bank achieved a profit before tax of Rs. 13 billion in 2007 which is 9% lower
than in that of last year.
� Asset quality was impacted by an increase in non performing loans in the
consumer and commercial business.
� Fixed asset turnover ratio was decreased in 2007. This shows the decrease in sales
in 2007.
� Net profit after tax ratio decreased in 2007.
� UBL provisioning coverage of NPL Loans also fell from 84% to 79%.
� Given the monetary tightening, the consumer portfolios throughout the industry
witnessed deterioration in 2007.
� During the Year 2007 weaknesses identified in the Internal Control System by the
auditors.
� EPS has decreased from 14.62% (2006) to 10.38% (2007).
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6. CONCLUSION:
United Bank Limited is one of the largest Commercial Bank in Pakistan. UBL has a
growing presence in the international market through 17 branches in various foreign
countries, with significant activity in Middle Eastern markets, particularly in United Arab
Emirates and the Kingdom of Bahrain. Additional branches in the Arabian region will be
established during the ongoing year.
Paid-up capital of UBL was increased by way of bonus issue during FY06. Along with
healthy reserves and retained earnings, UBL’s total net worth, adjusted for final cash
dividend, increased to Rs. 27.9b (FY05: Rs. 20.4b). Deposit base of the bank increased
by approximately 16% to Rs. 335.1b (FY05: Rs. 289.3b) as at December 31, 2006, with
significant increase coming through the fixed deposit schemes. Deposits further increase
in 2007. As UBL has a growing international presence, almost 19% of the total deposit
base is mobilized from the overseas branches and contributed almost 52% to the growth
during FY06. Increasing markup rates on the banking book, resulted in a substantial
widening of spreads (FY06: 5.4%; FY05: 4.5%) and drove interest based earnings to new
highs. Profitability was also supported by increased fee and commission based income.
Profitability is increased in 2007 (20.9b) by 23% as compared to 2006 (16.9).
Net advances increased to Rs. 299.3b (FY06: Rs. 247.3b) during 2007. Both corporate
and consumer lending have contributed to the growth achieved during FY06. The bank’s
consumer portfolio is one of the largest in the sector at Rs. 44.5b (FY05: Rs. 28.3b),
where the auto product has acquired a significant market share. Overseas operations have
also contributed to this growth. While increase in overseas operations has a risk benefit in
terms of increased geographical diversification, the bank has taken some fairly large
exposures. Total asset size of UBL increased by approximately 25% to Rs. 530.3b as at
December 31, 2007 from Rs. 423.3b at the end of the previous year. In future years, the
bank is likely to sustain strong profitability indicators with the persistent growth in
lending and continued investment in high margin consumer lending. This all shows a well
and rapid growth of this world class bank.
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7. RECOMMENDATIONS:
On the basis of financial analysis we see that the Bank’s strengths are more than its
weaknesses but still there is room for a lot of improvement and innovation. Following are
some of the suggestions and recommendations that I want to give on the basis of short-
falls / weaknesses found in the bank.
� The profitability in 2007 was impacted by a change in the prudential Regulations
according to which the benefit of collateral was withdrawn while calculating the
provisioning requirements against non – performing loans. This resulted in an
incremental provisioning charge of Rs. 3.8 billion on UBL books in year 2007.
Had this charge not been taken, the increase in profit before tax would have been
18% higher from the same period last year. So it must be improved.
� Asset quality was impacted by an increase in non performing loans (consumer and
commercial business) which coupled with subjective classifications by the SBP
resulted gross NPL to gross loans amount increased. In this regard SAM (Special
Assets department) of UBL must take progressive steps with the collaboration of
CAD department to low down the NPL’s ratio by carrying effective management
of credit risk.
� In 2007 decrease in fixed asset turnover ratio shows the decrease in sales of the
bank. Bank must utilize its resources and fixed assets especially in proper manner
to generate higher sales in future. Healthy portfolio of fixed assets must be
maintained by the bank.
� Net profit after tax ratio decreased in 2007. In this regard bank must control its
interest expenses and administrative expenses because administrative expenses
grew by 23% to Rs. 13.4 billion in year 2007, mainly due to continued
investments in upgrading and expending UBL branch network domestically and
overseas, higher personnel cost on account of the bank’s Early Retirement
Scheme and ongoing costs in the consumer business. Although these steps are
taken by the bank to upgrade its branches and operations but it cause decrease in
the net profit after tax ratio in 2007 as comparing it with 2006 and respective
years. So a better control is required on the bank’s expenses.
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� Provisioning coverage of NPL Loans must be improved by both SAM and CAD
departments. The management of risks and uncertainties associated with problem
credits requires a different and more intense approach than normal management.
The unit must staff with experienced officers who possess the specialized
expertise required for managing problem credits.
� Consumer portfolios throughout the industry witnessed deterioration in 2007
because of monetary tightening conditions. So there must be close monitoring of
portfolios and enforcing appropriate controls to manage delinquencies and
mitigate the impact of structured fraud, which has been making subtle advances in
the industry.
� Management ensures the efficient and effective Internal Control System by risk
assessment, identifying control objectives, reviewing pertinent policies /
procedures, establishing relevant control procedures and monitoring. All policies
and procedures are monitored, reviewed and compared with existing requirements
and necessary amendments are made accordingly. Steps must taken to avoid non -
repetition of those in all possible manner. Management took steps to effectively
monitor control environment of the bank, resulted in improvement in the overall
working of the branches and departments.
� Earnings per share is generally considered to be the single most important
variable in determining a share's price. An important aspect of EPS that's often
ignored is the capital that is required to generate the earnings (net income) in the
calculation. Two companies could generate the same EPS number, but one could
do so with less equity (investment) - that company would be more efficient at
using its capital to generate income and, all other things being equal would be a
"better" company. Investors also need to be aware of earnings manipulation that
will affect the quality of the earnings number. It is important not to rely on any
one financial measure, but to use it in conjunction with statement analysis and
other measures. EPS can be increased by increasing the revenue and decreasing
the expenses of the bank. Cost also plays a major role in generating EPS. If
management focus to have good cost control on EPS.
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8. REFERENCES:
All of the references and sources from where the data gathered for this report are
mentioned herewith for your kind concern.
ORGANIZATION:
� Annual Reports of United Bank Limited.
� UBL Credit Policy.
� CARS and CREAMS Manual of UBL.
� http://www.ubl.com.pk.
� https://ublfunds.com/ubl/financial_reports.htm.
WEB PORTALS:
� http://www.sbp.com.pk.
� http://www.ibp.org.
� http://www.thebankers.com.
� http://www.pacra.com.pk.
� http://www.gulfeconomist.com.pk.
� http://www.privatisation.gov.pk.
� http://www.finance.gov.pk.
BOOKS:
� Practice and Law of Banking in Pakistan by Dr. Asrar H. Siddiqui.
� Fundamentals of Financial Management by James C. Van Horne & John M.
Wachowicz, JR.
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9. ANNEXES:
ORGANGRAMS:
MANAGEMENT AT HEAD OFFICE
Board of Directors
Chairman of the Board
Managing Director
Director
Credit
Division
Admin.
Division
Finance &
Int’l
Treasury
Division
Recovery
Division
I.T. &
Operations
Division
Audit &
Inspection
Division
Business
and
Marketing
Division
Regional Offices
Multan
Gujrawala
Faisalabad
Karachi
Lahore
Rawalpindi
Peshawar
Quetta
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
101
MANAGEMENT OF A TYPICAL BRANCH
Manager/ Chief Manager
Manager Credits Manager Operations Manager Foreign Exchange
Second Officer Second Officer
Second Officer
Procession officer Administration Officer Import Incharge/Officer
Distribution Officer Internal Working Officer Export Incharge/Officer
Correspondence Officer Internal Working Officer
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
102
LIST OF ILLUSTRATIONS
Words Abbreviation
Abu Dhabi Group ADG
Annual Program Budget APB
Auto Teller Machines ATM
Bestway Group BG
Branch Manager BM
CAD-Credit Administration Management System CCAMS
Capital Expenditures CAPEX
Certificate of Deposit COD
Chief Executive Officer CEO
Chief Financial Officer CFO
Commercial Banking CB
Continuous Funding System CFS
Corporate Banking Group CBG
Credit Administration Department CAD
Credit Analyst Reporting System CARS
Credit Application CA
Credit Information Bureau CIB
Credit Risk Environment’s Administration & Management
System
CREAMS
Customer Relationship Manager CRM
Development Financial Institution DFI
Disbursement Authorization Certificate DAC
End Service Benefits ESB
Financial Institution FI
Financial Manager FM
Global Address List GAL
Habib Bank Limited HBL
Head Office HO
Information Technology Group ITG
Investment Banking Group IBG
Islamic Banking IB
Karachi Interbank Offered Rate KIBOR
Management Information System MIS
Market Treasury Bills MTB
Muslim Commercial Bank MCB
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
103
Words Abbreviation
Net Take Home Salary NTHS
Officer For Financial and Assets Management Services OFAMS
Personal Digital Assistant PDA
Relationship Manager RM
Risk Management Department RMD
Rupee Travelers Cheque RTC
Self Employed Businessman SEB
Self Employed Professional SEP
State Bank of Pakistan SBP
Term Deposit Receipt TDR
Term Finance Certificates TFC’s
Total Branch Automation TBA
United Bank Limited UBL
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