Internship Report

(United Bank Limited)

BBA Program

Summer 2007

Submitted To

Mr. Siddiq Ahmad Khan

Submitted By

Executive Summary:

Interest spread of the Pakistan’s banking industry had been on the rise for the

last two years. The persistent increase in spread discourages savings and

investments besides this casts doubt on the effectiveness of bank lending

channel of monetary policy. Given the implications of raise in spread, this study

examines the determinants of interest spread. Inelasticity of deposit supply is the

main driving force behind the rising interest spread however industry

concentration does not exercise influence upon the spread. The on-going merger

wave in the banking industry will further limit the options for the savers.

UBL is one of Pakistan's three leading commercial banks, having a countrywide

and international branch network. UBL has full service license covering

commercial, retail banking, consumer and investment banking activities in

Pakistan and most of the other countries where it is present. The Government of

Pakistan, acting through the Privatization Commission ("PC"), is proceeding with

the privatization of United Bank Limited ("UBL"), by the intended sale of a

minimum stake of 26% of UBL's share capital to a strategic investor.

UBL's privatization represents an attractive investment opportunity for investors

interested in leveraging UBL's extensive presence and market share.

UBL has an extensive domestic network consisting of 1,370 branches with a

market share of 9%.

UBL operates a focused international network of 20 branches in UK, USA, UAE,

Yemen, Bahrain, Qatar and in the Export Processing Zone of Karachi.

It operates a joint venture - Oman United Exchange Co., Oman Muscat and a

subsidiary - United Bank A.G. Zurich, Switzerland.

UBL also has representative offices in Cairo Egypt and Tehran-Iran.

Banking Industry Profile:

Bank Industry History

The name bank derives from the Italian word banco "desk/bench", used during

the Renaissance by Florentines bankers, who used to make their transactions

above a desk covered by a green tablecloth.[1] However, there are traces of

banking activity even in ancient times. A banker or bank is a financial institution

that acts as a payment agent for customers, and borrows and lends money. In

some countries such as Germany and Japan banks are the primary owners of

industrial corporations while in other countries such as the United States banks

are prohibited from owning non-financial companies.

The definition of a bank varies from country to country.

Under English law, bank is defined as a person who carries on the business of

banking, which is:

conducting current accounts for customers

paying cheques drawn on a given person, and

collecting cheques for their customers.

(United Dominions Trust Ltd v Kirkwood, 1966, English Court of Appeal, 2 QB

431).

However, in many cases the statutory definition closely mirrors the common law

one. Examples of statutory definitions:

' "banking business" means the business of receiving money on current or

deposit account, paying and collecting cheques drawn by or paid in by

customers, the making of advances to customers, and includes such other

business as the Authority may prescribe for the purposes of this Act;'

(Banking Act (Singapore), Section 2, Interpretation).

"banking business" means the business of either or both of the following-

1. receiving from the general public money on current, deposit,

savings or other similar account repayable on demand or within

less than [3 months] ... or with a period of call or notice of less than

that period;

2. paying or collecting cheques drawn by or paid in by customers;

(Banking Ordinance, Section 2, Interpretation, Hong Kong) Note

that in this case the definition is extended to include accepting any

deposits repayable in less than 3 months, companies that accept

deposits of greater than HK$100 000 for periods of greater than 3

months are regulated as deposit taking companies rather than as

banks in Hong Kong).

Banks act as payment agents by conducting current accounts for customers,

paying cheques drawn by customers on the bank, and collecting cheques

deposited to customers' current accounts. Banks also enable customer payments

via other payment methods such as telegraphic transfer, EFTPOS, and ATM.

Banking is one of the most sensitive businesses all over the world. Banks play

very important role in the economy of a country and Pakistan is no exemption.

Banks are custodian to the assets of the general masses. The banking sector

plays a significant role in a contemporary world of money and economy. It

influences and facilitates many different but integrated economic activities like

resources mobilization, poverty elimination, production and distribution of public

finance. It is purchase of car or building of a home banks are always there to

serve you better. It is play ground or any educational or healthy societal activity

the money of banks nurture them. It is an industrial project or agricultural

development of the country the sponsor-ship of banks is very much involved.

Banks play very positive and important role in the overall economic development

of the country.

Pakistan has a well-developed banking system, which consists of a wide variety

of institutions ranging from a central bank to commercial banks and to

specialized agencies to cater for special requirements of specific sectors. The

country started without any worthwhile banking network in 1947 but witnessed

phenomenal growth in the first two decades. By 1970, it had acquired a

flourishing banking sector.

Wider Commercial Role of Banks

However the commercial role of banks is wider than banking, and includes:

issue of banknotes (promissory notes issued by a banker and payable to

bearer on demand)

processing of payments by way of telegraphic transfer, EFTPOS, internet

banking or other means

issuing bank drafts and bank cheques

accepting money on term deposit

lending money by way of overdraft, installment loan or otherwise

providing documentary and standby letters of credit, guarantees,

performance bonds, securities underwriting commitments and other forms

of off balance sheet exposures

safekeeping of documents and other items in safe deposit boxes

currency exchange

sale, distribution or brokerage, with or without advice, of insurance, unit

trusts and similar financial products as a 'financial supermarket'

Pakistan’s Banking Industry Profile

Pakistan banking industry growing very rapidly on the fast track. Every bank

going to be globalize to enhance its profitability. These are all done by the

introduction of new, innovative and attractive offers for customers, with all these

enhancements we can compare our banking industry with developed banking

industry in Asia like China and India. Establishment primarily engaged in

accepting time deposits, making loans (mortgage, real estate, commercial,

industrial and consumer), and investing in high-grade securities. Saving and loan

associations, saving banks and commercial banks are included in this industry.

Pakistani authorities even require all newly established commercial banks to

have at least one foreign investor. The paradigm shift in commercial banking,

resulting from freezing of foreign currency accounts (FCAs) in May 1998, has

affected the foreign banks operating in Pakistan significantly — to a large extent

adversely. The recovery process, through changed strategy, has started yielding

positive results. Foreign banks are expected to emerge stronger in the near

future as Pakistan moves towards Internet based banking. Still, the competition

with domestic banks is expected to remain ferocious.

Over the last many years, foreign banks have continued to command nearly

three-quarters of the overall profitability of the banking sector in Pakistan, in spite

of the tight manacles on their expansion. Foreign banks chiefly thrived on

business from top-tier multinational corporations and blue chip companies. The

business of foreign banks operating in Pakistan, in the past, also flourished due

to FCAs and swap dollar funds — which are no longer there.

During the post May 1998 scenario, domestic banks have emerged to be

ferocious competitors. Even the policies of central bank aimed at strengthening

commercial banks in general helped domestic banks more while supporting

foreign banks marginally. Some of these policies were: reduction in SLR,

recovery of non-performing loans, exemption of accrued income at the time of

calculating tax liability and rules governing provisions against doubtful loans. The

reduction in return on deposits and lending rates also improved the spread for

domestic banks.

Half of the foreign local banks virtually reversed the provisions made in the past

or made no provision for the year 1999. The amount on account of provisions

came down Rs 0.1 billion for foreign banks and by Rs 1.82 billion in the case of

domestic private banks for the year 1999.

But, lottery schemes of Habib Bank, United Bank and Muslim Commercial Bank

was a major reason for movement of deposits from foreign banks to these banks.

Some analysts say, "It may not be wrong to say that foreign banks were the

biggest opponents of such schemes and ultimately the central bank succumbed

to their pressure." However, some of the foreign banks which came out with

innovative financial products rather than complaining about the changed

scenario, witnessed slow but gradual increase in deposits. One of the areas

where foreign banks have been investing heavily is technology to overcome the

handicap of limited branch network. Almost all the foreign banks are working

actively on plans to introduce internet-based banking within the year 2000. They

have the advantage of global experience. However, despite their edge they will

face a tough competition from listed commercial banks.

Introduction of internet-based banking will largely depend on the policies of GoP.

However, the government cannot afford to delay its introduction in the country for

a long time. In the meantime foreign banks have consolidated their edge in

phone-banking, ATM network and on-line banking. Offer of these services has

become a norm at almost all the large-size foreign banks. While some of the

banks have installed their own ATMs, others have entered or are entering into

strategic alliance with other domestic and foreign banks.

Offering such facilities is capital intensive. However, helps in reducing human

resource cost, improving quality of services and above all bringing a bank outside

the four walls of conventional branch network. As foreign banks largely cater to

multinational companies and blue chip corporations they would be able to offer

better services and also cater to larger number of clients.

Another important development, over the years, is that small foreign banks have

developed their own niche market. The foreign banks of Middle East origin

concentrate more on handling remittance and international trade. Even the large-

size banks have added other services. Standard Chartered Bank, Citibank and

Deutsche Bank provide custodian service to foreign investors in capital markets.

Citibank and Standard Chartered Bank have started financing of cars and other

durable. Earlier, Citibank had established two separate entities, a housing

finance company and an investment bank. However, later on it sold its stake in

investment bank to Jahangir Siddiqui and Company. Citibank has also became a

little more selective in distributing credit cards.

The credit card experience in Pakistan was like a nightmare. Therefore, the new

strategy being worked out is to replace credit cards with charged cards. On the

one hand it will help in bringing default to almost zero level and, on the other

hand, improve the cash flow of banks. A cardholder would be allowed to

purchase to the extent of amount available in his/her account only. The banks will

be able to issue more cards, as they will be exposed to hardly any loss. It will

also be beneficial for the outlets because the transfer against purchases can be

almost instant.

According to some analysts foreign banks share about a quarter of deposits and

total advances within the banking system. Traditionally, the foreign banks have

focused on short-term trade finance, targeting mainly low risk blue chip

corporations and high net worth individuals. A couple of years back, these banks

began making foray into merchant banking, capital market operations and

consumer/retail banking. The resources and expertise of their global operations

proved a valuable asset in these areas and many of them were able to quickly

capture large share in the capital market operations and consumer/retail banking.

United Bank Ltd Profile

Background

Apr 97 asked by recently elected Prime Minister Nawaz Sharif to take over UBL,

help restructure & ultimately privatize the bank. Part of financial sector

restructuring program – two professionals already brought in to head the other

two big banks (together 60% of banking system). Several key laws already

amended to facilitate process

Autonomy given to Boards of Government Banks

Expediting recovery of bad debts

Tightening labor laws

UBL Profile

United Bank Limited (UBL) is one of the largest commercial banks in Pakistan

having more than 1,000 branches inside the country and 15 branches outside the

country. Founded originally in 1959 by Agha Hasan Abedi, the bank was

nationalized by the government of Pakistan in 1971. In 2002, it was privatised by

the Government of Pakistan in an open auction to a consortium of Abu Dhabi

Group and Bestway Group. Since its privatisation the bank has been successfully

turned around and remains a robust and strong performer in all major segments

of its operations.

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. The Group

operates through 1044 branches within Pakistan and 15 branches outside

Pakistan.

UBL has assets of over Rs.300 billion and a solid track record of forty-six years -

in addition to the convenience of over 1000 branches serving you throughout the

country and also at several overseas locations.

Functions

Services

Consumer Banking

Commercial Banking

Corporate Banking

Investment

Treasury

UBL Ameen Islamic Banking

Branches

United Bank is very diverse with over 1056 Domestically in Pakistan as well as

15 Overseas Branches. Oversea branches include; United States of America,

Qatar, UAE, Bahrain, Republic of Yemen.

Overseas

UBL, with an integrated network of over 1000 branches globally, with 15

overseas locations, gives you direct access to a comprehensive range of better

banking facilities to help you monitor your business internationally.

We have branches in:

Bahrain

Qatar

Other offices

Off Shore Banking Unit

Republic of Yemen

UAE

United States of America

and subsidiaries in:

United Kingdom

Zurich

Location

WITH an integrated network of over 1000 branches in Pakistan as well as

Overseas, UBL gives you direct access to a comprehensive range of better

banking facilities to help you monitor your business locally as well as

internationally.

Improving branch operations and outlook is another focus area within UBL’s

future strategy. In addition to automation, branches will be renovated to standard

that reflects the communities and environment in which they operate.

Board of Directors

The management team comprises experienced banking professionals well

positioned to meet UBL’s business objectives. Senior bankers have been

inducted to head various divisions organized around core businesses, such as

foreign trade, credit, structured finance and treasury activates. The Bank has

also hired qualified middle and lower management personnel to create a team of

professionals at all levels. The Bank’s affairs are governed by a Board of

Directors, which currently consists of the President and Chief Executive Officer

and seven Directors. The President and Chief Executive Officer has an overall

responsibility for the strategic direction, government relations and to manage the

portfolio of business and its functions.

Name Designation

His Highness Shaikh NahayanMabarak 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

Mr. Ahmad Waqar Director

Mr. Muhammad Javed Malik Director

Dr. Ashfaque Hasan Khan Director

Mr. Aqeel Ahmed Nasir Company Secretary & Chief Legal

Mr. Aameer Karachiwalla SEVP/Group Chief Financial Officer

Online banking

UBL’s state of the art online banking, customers were able to access their

account from more than 350 branches located in 71 cities across Pakistan.

Transactions such as Cash Deposit, Cheque Encashment, Stop Payment,

Account Statement, Funds Transfer were done online without the need to travel

to the local branch.

Subsidiaries

United Bank AG Zurich, Switzerland

United National Bank Limited, UK (Joint venture with NBP)

UBL Fund Managers Limited

Associated company Oman United Exchange Company, Muscat.

Financial Highlights of UBL as on December 31, 1998, 1999 & 2000 (PKR &

USD in Millions)

1998 (PKR)

1998 (USD)

1999 (PKR)

1999 (USD)

2000 (PKR)

2000 (USD)

Shareholders Equity 7,715 133 8,050 139 8,803 152Total Assets 139,992 2,416 154,450 2,665 155,211 2,678Deposits 117,718 2,031 127,133 2,194 128,679 2,220Loans and Advances 48,468 836 61,714 1,065 74.156 1,280Investments 47,955 827 44,954 776 33,102 571Operating Profit / (Loss)

78 1 760 13 2,013 35

                Exchange Rate Dec. 31, 2000,  PKR 57.9522/1USD 

1998 1999 2000Number of Staff 14,885 13,984 11,873Number of Branches 1,494 1,417 1,390

Share Holding

UBL was a nationalized bank between 1974 through 2002. However, in 2002, the

Bank was privatized with 51% of its shares sold to the Abu Dhabi Group, UAE

and the Bestway group, U.K. (the “Consortium”). Furthermore, SBP holds

48.69% of the total share capital while the remaining 0.34% stake is divided

amongst the GoP, National Bank of Pakistan (“NBP”)- Trustee Department, State

Life Insurance Corporation of Pakistan (“SLIC”), Sui Southern Gas Company

Limited (“SSGC”), Investment Corporation of Pakistan (“ICP”), Metropolitan Steel

Corporation, PC, Pakistan Reinsurance Company Limited (“PRCL”) and the

SECP.

Shareholders Number of Shares

The State Bank of Pakistan 2,521,943,230

Bestway Holding Limited 660,425,000

Bestway Cement Limited 396,270,000

H.H. Shaikh Nahayan Mabarak Al Nahayan, HPk 264,180,000

Sir Mohammad Anwar Pervez, OBE, HPk 264,180,000

H.H. Shaikh Suroor Bin Mohammad Al Nahayan 264,180,000

H.E. Dr. Mana’a Saeed Al Otaiba 264,180,000

Mr. Omar Ziad Jaafar Al Askari 264,180,000

Mr. Abdullah Nasser Bin Huwaileel Al Mansouri 264,180,000

Government of Pakistan 14,194,470

National Bank of Pakistan, Trustee Department 707,020

State Life Insurance Corporation of Pakistan 532,620

Sui Southern Gas Company Limited 501,970

Investment Corporation of Pakistan 292,600

Mr. Zameer Mohammed Choudrey 25,000

Metropolitan Steel Corporation 16,460

Privatisation Commission 7,270

Pakistan Reinsurance Company Limited 4,350

Securities and Exchange Commission of Pakistan 10

TOTAL 5,180,000,000

The Sponsors

The Consortium comprises the Abu Dhabi Group and the Bestway Group holding

51% stake in the Bank while the State Bank of Pakistan holds 48.69% share in

the Bank.

Future Prospects

UBL expects its strong customer focus to drive the Bank’s future business

strategy. On the domestic front, the Bank has already launched its consumer

banking business. Increased investment is targeted in developing human

resources, infrastructure and internal systems to support the aggressive

consumer initiative and exploration of new avenues of revenue generation. The

first step under this initiative is the launch of the Bank’s ATM / Debit Card,

branded as UBL Wallet. Furthermore, UBL has introduced a full suite of

innovative consumer finance products designed to capture a significant share of

the local consumer financing market and tap into the current growth in demand

for such financing.

UBL Consumer Bank And Its Products

UBL Consumer Bank was established in 2004 with the ambitious aim of taking

consumer banking in Pakistan to the next level and introducing a full suite of

differentiated, flexible and attractive consumer finance products in the market.

a) UBL Credit Card

UBL is Pakistan’s 1st Smart Chip Credit card issuer and acquirer. It is also the

1st credit card in Pakistan to be launched simultaneously in the nine largest

urban centers of the country.

By launching a Chip based Credit Card, UBL aimed to enter the market with a

fresh differentiated product in line with the rest of its consumer bank product

offerings to create customer preference over other competing market

propositions. Chip based credit cards have proven to be the most secure way of

conducting credit card transactions globally.

The UBL Card proposition aims to enhance the quality of life of Pakistani

consumers by making Credit Cards the dominant payment and loan instrument

for any financial transaction and purchase in Pakistan. This will be achieved by

building market share through

Innovation,

Brand Dominance and

Targeting untapped areas, users and uses

The beauty of UBL’s Credit Card proposition is that it offers superior value for the

customer. While the primary function of a Chip Credit Card is security, it has built

in it a special feature ‘UBL Chip Rewards’ to increase both value and excitement

for the customers.

b) UBL Cashline

UBL Cashline is a running finance facility that was launched in November 2004

with the commitment to provide full-scale banking solutions to multiple segments

in the market. This product is targeted towards both the salaried segment as well

as the self-employed businessmen/ persons with the specific goal to provide

them with their desired financial freedom for personal and business purposes.

Cashline aims to be a flexible, personal financing solution for the mass market.

This is an evergreen revolving facility, where the customer only pays the interest

accumulated on the daily outstanding balance at the end of each month.

Cashline’s innovative utilization based tiered pricing strategy re-enforced UBL’s

vision of launching consumer products with unique features. Another valuable

feature includes the Balance Transfer Facility (“BTF”) option, which allows

individuals to pay off their debts at an attractive, lower mark-up. Cashline also

offers net banking features with unlimited, unmatchable features to help manage

accounts. Its tiered pricing strategy was a pioneer in the market and proved to be

the distinguishing factor that has contributed to Cashline’s overwhelming

success.

c) Electronic Banking

UBL aims to provide customers with a world-class multi-channel experience by

leveraging UBL’s products, customer insight and technology. The objectives

behind the Bank’s efforts to introduce E-banking products include improved

customer service & customer retention, new revenue generation as well as cost

reduction. UBL offers it’s customers a wide variety of services including ATMs,

Online banking, Phone Banking, Internet Banking and electronic remittances. A

growing number of ATMs and partnership with 1-Link Network ensures that

customers have 24x7 access to cash. Extensive network of online branches is

empowering the customers by offering them remote access to their accounts

from any online branch. UBL’s website and phone banking services offer up-to-

date product information. Full service Internet Banking offers fund transfers,

check writing, bill payments, view of balance/statement and security &

informational alerts. In 2004, UBL also launched Click N Remit, a much needed,

highly successful and pioneering Internet-based homeward remittances product

for US Residents.

d) Mortgages

Presently UBL has two products in its mortgage portfolio, namely UBL Address

and UBL Businessline. These products offer innovative financing solutions aimed

at the emerging middle-income segments. The continuous product innovations

and process improvement has made UBL’s mortgage business a dominant force

in the consumer market.

e) UBL Drive

UBL Drive has emerged as a strong competitor in Auto Loan business since it

was first launched in May 2004. Innovations like Pay As You Select, Free

Tracker Option, Zero Pre-Payment Penalty played a key role in positioning the

product as a key player in Auto Finance. UBL Drive is the most flexible and

innovative product available in the Auto Loan market today, as can be seen by

the many product variants available and unique processes of UBL Drive. Today,

UBL Drive offers more options for its customers than any other competitive

offering in the Auto Financing market. Financing for both new and used vehicles

together with the Cash Your Car product is offered for auto loan customers.

f) Personal Loan

UBL is poised to launch its Personal Installment Loan (“PIL”) product in May

2005. It is a fixed installment loan starting from Rs.50,000/- to a maximum of

Rs.500,000/- based on a fixed tenor of 1-5 years. Its unique and exciting features

will include:

Zero Prepayment option

Tenor in the multiple of six months

Complimentary credit insurance

Which are designed to offer the consumer tremendous flexibility and

differentiation. The launch of PIL will see the completion of UBL’s aim of offering

a complete suite of consumer finance products to its customers.

SWOT Analysis Of The Banking Industry

Strengths

Large Market Size and attractive location for exports to South Asia,

Central Asia and Middle East.

Per Capita Income of PPP $ 2000 and 40 years’ record of 6 percent GDP

growth annually

Abundance of Water Resources, Natural Gas.

Easy Sea Port, Airport Connections with Europe, Asia and Middle East.

A large emerging middle class with growing demand for consumer

durables, autos, services

English speaking educated and trainable manpower with aptitude for fast

learning

Self-sufficiency in food production and a buoyant agriculture.

A liberal foreign exchange regime, which allows un-restricted repatriation

of profits, dividends and remittances.

Quantitative restrictions on imports have largely been removed and tariff

rates being brought down to maximum rate of 25% with average incidence

of 14-15%.

Financial Sector is open to foreign investors is diversified and has been

strengthened in the last three years.

Capital markets offer a range of instruments for raising domestic finance.

A fibre optic backbone infrastructure up and running for Information

Technology enabled services.

Weaknesses

Poor governance record in the nineties with serious adverse

consequences for efficiency and equitable distribution of growth.

Failed democratic regimes with frequent changes in government in the last

decade have nurtured political uncertainty, discontinuity and inconsistency

in policy implementation.

Lingering dispute with the Hubco and freezing of foreign currency

accounts in May 1998 has shaken foreign investor confidence.

Key economic institutions have been in a state of financial and

management disarray creating strains on public finances as well as

banking system.

Bureaucratic procedures and enforcement of contracts are slow, time

consuming and cumbersome encouraging lobbying and rent-seeking

opportunities.

Public service delivery of essential services is poor and inefficient and

under investment has led to congestion, shortages and access limited to

the privileged far.

Non-governmental Organizations (NGOs) have not so far played a major

role in social development and Micro Credit allocation to the poor.

Opportunities

Oil and Gas resources: To be further explored, developed and

distributed.

Investment in Physical Infrastructure Development: Open to private

sector to meet the growing demand in the areas of power, highways,

ports, airports etc.

Information Technology: Relatively low cost manpower available with

ample scope for investing in Information Technology Education.

Agriculture: Productivity still behind production possibility frontier and

requires technical and financial inputs.

Agro-based Processing and Industries: Highly Competitive and

oriented towards Exports but still in state of infancy and need to be

upscaled.

Value added exports in textile sector: Has plans to modernize its textile

industry for capturing world market share and positioning in post MFA

period through technology, marketing and design improvements and

investment in machinery.

Financial Sector: Deepening to improve the mobilization and allocation of

financial resources.

Exports in non-traditional commodities: Fisheries, Gems and jewellery,

Fruits and Vegetables, Information Technology, are still under utilized.

Privatization: Public Sector assets worth $ 3-4 billion are available for

sale to strategic investors including foreign investors.

Non-Resident Pakistanis: Offer a large and rich reservation of talent,

skills and capital for joint venture partnerships.

Threats

External and Domestic Debt burden is quite high relative to the capacity to

service and need to be reduced to manageable levels.

Tax-GDP ratio is one of the lowest among the developing countries and

resource mobilization effort has to be stepped up.

Fiscal deficits have been traditionally high and need to be gradually

narrowed down.

Public Sector Corporations riddled with excess manpower, poor

management and weak financial base have to be restructured and

strengthened.

Incidence of poverty has risen during the last decade and poverty targeted

interventions need to be accelerated.

Stagnation in Domestic and foreign investment during the last several

years has increased and given rise to educated unemployment

High degree of centralization had eroded provincial autonomy and local

government capacity both of which need to be enhanced and

strengthened.

SWOT Analysis Of United Bank Limited Pakistan

Strengths

2nd largest bank of Pakistan in term of deposits after state bank of

Pakistan

UBL product positioning is very effective. UBL targets the segments like

salaried person, business people and self-employed person with the age

limit of 21-65. UBL product positioning affects the life style of people. UBL

products help to improve standards of living of people.

UBL’s existing infrastructure and a wide network of branches throughout

the country give it a competitive edge over its market competitors.

Most profitable bank in Pakistan.

Largest number of corporate deals by any bank in Pakistan.

Overseas branches.

Employees are very happy in terms of salary and incentives.

The Bank has hired qualified middle and lower management personnel to

create a team of professionals at all levels.

UBL’s website and phone banking services offer up-to-date product

information.

UBL offers it’s customers a wide variety of services including ATMs,

Online banking, Phone Banking, Internet Banking and electronic

remittances.

Extensive network of online branches is empowering the customers by

offering them remote access to their accounts from any online branch.

Cooperative, effective and supportive working environment in bank.

Weaknesses

There is no standardization in terms of branches.

Being a governmental bank 3 years back the old network is used up till

now.

The service of UBL in some urban areas of Pakistan is not that effective.

It is a step behind in introducing new and innovative technology in the

bank.

Most of the employees are overloaded with the work.

No separate training center to train new employees.

Opportunities

Bank can extend its network in other cities of Pakistan.

UBL had the history of more than 45 years, the new management tries to

change the inherent weak set up and automated the branch and

consumer banking system.

New technology brings the new change and increases their profitability.

It can remunerate its all branches that all branches would seem to be

same.

Threats

With the privatization of Habib Bank Limited (“HBL”), restructuring of Allied

Bank of Pakistan Limited (“ABL”), emergence of strong private

commercial banks and increased competition in the banking industry due

to increased liquidity and limited investment opportunities, UBL is

expected to face intense competition.

The investors face the possible risk of not being able to sell the shares in

the secondary market without adversely affecting the price.

This risk is mitigated by the fact that the shares are proposed to be listed

on the three Stock Exchanges, which will provide a venue for granting

liquidity for the shares by facilitating secondary market trades.

This risk arises from the fluctuation in the value of a financial instrument

consequent to the changes in market interest rates. The risks are inherent

in deposits, liabilities, loans/advances and investments of the Bank. Most

of the loans and advances comprise working capital which is repriced on a

periodical basis, whereas the majority of deposits are repriced

retrospectively on a six monthly basis due to the profit and loss sharing

system for determining deposit rates.

The shares of UBL will be listed on the KSE, the LSE and the ISE and the

shareholders of the Bank will be able to sell or buy shares only through

the Members of the KSE, the LSE, and the ISE subsequent to the Offer for

Sale. Price of shares will depend on the stock market behavior and

performance of the Bank. Hence, price may rise or fall and result in

increase or decrease in the value of shares to any extent. The investors

may like to consult their legal advisors, financial advisors or stockbrokers

to understand the nature of investment, if they desire so, before making

the investment.

Changes in the regulatory framework may have an effect on the

profitability of UBL. Given UBL’s extensive investment in government

securities and cash holdings, it is unlikely that this will impact UBL’s

profitability.

Marketing Mix of United Bank Limited

Marketing is a societal process that is needed to discern consumers' wants;

focusing on a product/service to those wants, and to mould the consumers

towards the products/services. Marketing is fundamental to any businesses

growth. The marketing teams (Marketers) have the task to create the consumer

awareness of the products/services through marketing techniques; if a business

does not pay attention to their products/services and their consumers'

demographics, the business would not be able to endure longevity.

The marketing mix is generally accepted as the use and specification of the 4 Ps

describing the strategic position of a product in the marketplace. the marketing

mix is the primary responsibility of marketing. By offering the product with the

right combination of the four Ps marketers can improve their results and

marketing effectiveness. Making small changes in the marketing mix is typically

considered to be a tactical change. Making large changes in any of the four Ps

can be considered strategic.

United Bank Limited (UBL) is one of the largest commercial banks in Pakistan

having more than 1,000 branches inside the country and 15 branches outside the

country. 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. The Group

operates through 1044 branches within Pakistan and 15 branches outside

Pakistan.

Product

Defines the characteristics of your product or service that meets the needs of

your customers.

A bank is an organization rather a financial institution that provides products such

as different types of deposits and services like d ifferent financing facilities to its

customers. United Bank offers a diversified line of products and services to its

customers. The products and services offered by United Bank are:

UBL Profit

Business Partner

Term Deposit

Special Notice Deposit

PLS Saving Account

FC Savings

FC Term Deposit

Uni Saving

UBL Address

UBL Money

UBL Business Line

UBL Cash Line

Credit Card Facility

Agriculture

Small Business

Product

s

Deposits Loans

UBL products are classified under two main heads:

Deposits

Our mission is to serve all your corporate needs and ensure your full satisfaction

through product innovation, personalized banking, and top notch service.

The CBG department of UBL defines corporate banking in Pakistan. Amongst the

local banks UBL CBG is the pioneer in providing innovative solutions to its

diversified and satisfied customer base. UBL CBG is considered to be a major

player in the financial market of Pakistan.

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

our customer base and continues to enhance our 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 customers 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 today's competitive

and a demanding environment.

The success of CBG has been established from the fact that UBL received the

'No.1 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.

Loans

You as an individual can gain and benefit the most through UBL Consumer

Banking. In UBL you get friendly, efficient and attentive personalized banking

services - a unique banking relationship experienced by each UBL client. You

can utilize the following services

UBL Address

UBL Businessline

UBL Cashline

UBL Credit Card

UBL Drive

UBL Money

Price

Decide on a pricing strategy - do not let it just happen! Even if you decide not to

charge for a service (a loss leader), you must realize that this is a conscious

decision and forms part of the pricing strategy. It is the only marketing tool that

results into revenue. The bank offer advances to their clients by charging a

certain rate of mark up or interest. This mark up or interest charged is the price.

The customer makes a comparison between the prices offered by other financial

institutions and United Bank and then selects the most suited offer.

Promotion

This includes all the weapons in the marketing armory - advertising, selling, sales

promotions, Public Relations, etc.

United Bank activiely participate in promotion of its products and services

through advertisement and other promotional schemes. The strategy has been

changed and the bank is now targeting the middle market also. The product

offered is of diverse nature to cater the need of maximum number of people.

United Bank only advertises about the opening of its new branch is being made

to general public through newspaper.

Most of the promotional activities are done through:

Direct Marketing

Public Relation

Place (or route of distribution)

Some of the revolutions in marketing have come about by changing this P. Think

of telephone insurance and the Internet! A bit of lateral thinking here might reap

rewards for your business.

WITH an integrated network of over 1000 branches in Pakistan as well as

Overseas, UBL gives you direct access to a comprehensive range of better

banking facilities to help you monitor your business locally as well as

internationally.

BRANCHES ALL OVER PAKISTAN