Arbaz Final Report II ABL 2013

7/28/2019 Arbaz Final Report II ABL 2013

1/118

P a g e | 1

1. EXECUTIVE SUMMARY:

The aim of an internship was to have the practical knowledge about the organizational working.

The organization I selected to me for an internship was ABL Branch. Departments working in

this building are Operations department, Credit department, Retail department, I accepted this

task as a challenge and tried my best to explore & cover each and every aspect of ABL with in

my 6 weeks internship. This internship report covers many important aspects which are basically

related with the operations and financial aspects of the bank.

In this study, first of all, I have discussed about the United Bank, its history, nature and productlines. I have also discussed the functional and departmental organization of the bank that Allied

Bank Limited providing the general banking services. Allied Bank Limited Pakistan currently

has a wide network of branches inside the country and in all commercial centers of the world as

well. The Bank is providing deposits facilities to more than five hundred thousand customers in

the country and which is increasing day by the time.

In the deposits area the bank is providing special accounts such as PLS Term

Deposit (Monthly Income account), which provides a monthly withdraw able return on the

account The bank is trying to revolutionize the services. In the advances side the bank has been

successful in deploying its resources in the best way in all commercial, industrial and agricultural

sectors of the country.

Financial statements from year 2007 to 2011 were analyzed. Ratio analysis gave the overall view

of the financial condition of the bank. The ratio analysis helps in planning and forecasting.

Ratios of return on equity, return on asset, return on deposits, net profit margin, average profit

per branch, loan to deposit ratio, debt to equity, total asset turn over, debt ratio, gross profit

margin, loan to asset and earning per share were analyzed. Both horizontal and vertical analyses

were done. In the light of these analyses, positive indicators were described. In the end of my

Internship report. Weaknesses were also stated and recommendations were given for the

improvement of the organizational performance.


2/118

P a g e | 2

2. OBJECTIVESOF STUDYINGTHE ORGANIZATION

The primary purpose of this study is to fulfillment of the requirements for the degree of MBA

(Banking & Finance).For this connection each student of this particular course is required to

undertake training in a relevant organization selected by them, for a period of 6-8 weeks.

The secondary purpose of this internship is to understand how the theoretical knowledge can be

applied to the practical situations and examine an organizations financial issues and identify its

opportunities/ problems and also suggest corrective measures. This internship is also very

necessary to gain confidence and become aware of the mechanism of an organization.

PURPOSE OF THE STUDY

Purpose of the study was two pronged.

General Purpose

To get acquaintance to the banking operations.

To know what sort of changes IT brings in managerial activities.

To see the application of our Professional studies especially.

Specific Purpose

Specific purpose of the study includes.

A partial fulfillment as a requirement for the completion of MBA degree in Banking and

Finance Sector.

To objectively observe the operations of Allied Bank of Ltd in general and the operations

of ABL, Shah Ruke ne Alam Branch, Multan in specific.

To make recommendations or implementation plans for the improvement of the

operations of ABL, in the Shah Ruke ne Alam Branch, Multan light of our professional

studies.


3/118

P a g e | 3

NATURE OF THE STUDY

The study is critical in nature. It was conducted to investigate critically into theoperations of Allied Bank Ltd and it also explains that how ABL provides facilities of online

banking to its customers. The annual reports or the consolidation data of the Bank has not been

focused in specific because it does not reflect on the operational performance of branches.

However, they have been referred to as when and where required.

SCOPE OF THE STUDY

The study covers two areas with its variables, which affects the operations of the branch

directly, or indirectly. These two areas of variables are:

Branch specific variable.

Bank specific variable.

The branch specific variables are the variables under the control of the branch management and

directly affect its operations e.g.

Layout of the branch.

Customers relations.

Departments in the branch

ATM

Online banking.

The bank specific variables are those variables, which are not in control of the branch

management e.g.

History of ABL

Services provided by ABL Role of ABL

Data Sources

Both primary and secondary have been used in the compilation of this report. The

methodology used is as under:


4/118

P a g e | 4

During the compilation of this report, I relied mainly on the primary data. The tools used for the

collection of primary data are interviews and observation. To get primary data I also performed

some practical work. The secondary data was mainly used for as a background material and for

purpose of references. The major sources of secondary data were the annual report 2007; otherprinted material of the Bank and internet played a vital role as a source of secondary data.

LIMITATIONS

The Study was subject to the following limitations, the absence of which could have

made this report more accurate, systematic and factual:

Lake of published financial data.

Lack of ATMs back hand information with stuff. Access to data.

The non cooperative behavior of some managers and staff members.


5/118

P a g e | 5

3. OVERVIEWOFTHEORGANIZATION

3.1 BRIEF HISTORYOF ALLIED BANKLIMITED

ABL is the first Muslim Bank established on territory that later on became Pakistan. It wasestablished on December 3, 1942 as Australasia Bank at Lahore with capital of 0.12 million. At

that time the chairman was Kh. Bashir Baksh. ABLs story was one of the dedication,

commitment to professionalism and adaptation to changing environmental changes.

The bank's history is divided into many phases. During 25 years of united Pakistan the bankadvanced forward in all areas of its activities. 1970s were a difficult decade for all Banks of

Pakistan. In 1971 East Pakistan was separated and Australasia Bank lost its 50 branches and a lot

of capital as well. Nevertheless the growth remained steady.

In 1974 all the Banks were nationalized including Australasia Bank. The small provincial Bankswere merged into Australasia Bank. On 1st July 1974 the new entity was renamed as ABL of

Pakistan Limited. Then it started its operations as Public sector financial institution.

Different Phases of the Bank Are as Follows:

THE PRE INDEPENDENCE PERIOD (1942-47)

Australasia Bank had the unique distinction of being closely identified with some of thecountrys most Prominent leaders of the freedom moment. Such as Mian Mumtaz Daultana

(Board of directors), Mian Iftikhar Hussain and Maulana Zafar Ali Khan.

The bank originally started its operation in the garage of Khawaja Bashir Bakshs bungalow

(who was the chairman) near the Lahore Railway Station. But the success of Bank enforced thedirectors to open its another branch in Anarkali on 1st March 1944. Kh. Bashir was first chief

executive. He was the person who was really working in its development. His sincerity of

purpose can be judged from his great moments.

Another branch was opened at Amaratsar in 1945. In June 1946, the bank earned the status ofscheduled bank. During 1946-47 many other branches were opened at Mcleod Road Lahore,

Jallandhar, Ludhiana, Agra and Delhi.

At independence the industrial and commercial sectors were underdeveloped but ABLcontributed a lot in the development of these sectors.


6/118

P a g e | 6

AUSTRALASIA BANK IN PRIVATE SECTOR (1947-74)

It was the only full functional Muslim Bank on the land of Pakistan. On August 14, 1947 bank

was identified with Pakistan moment. Many of its Board of Directors were prominent Muslim

League leaders. Jallandhar and Ludhiana branches were attacked by rioters because of Muslimstaff appointed in these branches of bank. But when the Pakistan flags wee hoisted on the

branches then all the banks in India were closed down. With this, the bank lost a lot of capital

and its deposits and almost 6 branches. During 1948 new branches were opened at Karachi,Rawalpindi, Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and Kasur. But later on its

branches were spread to Multan and Quetta. At that time, the bank financed trade in cloth and

food grains and thus maintained consumers supplies during the riot effected early months of1948. Australasia Bank made a profit of

50,000/= in 1947-48.

In August 1948, Australasia Bank became the first Pakistani Bank to successfully negotiate and

open L/C for a Sialkot based importer of books. So it also made correspondence relations with

Midland (UK), Chase Manhattan (USA) and Lloyds (India).

During the treasury functions of Federal Govt. of Pakistan and it also acted as Banker to several

local Govt. Bodies and to the Punjab University during this period. Treasury functions were

taken by National Bank of Pakistan in 1949. In 1950-51, Chairman was replaced with his own

brother Kh. Sharif Baksh.

During 1955-56, Mr. Naseer A. Sh. became the Chairman of Board and close working

relationship was forged between the new Chairman and Managing Director. This partnership

proved in modernizing its operations and consolidating its financial position.

In 1963, Bank had 29 branches in various cities. And deposits were 89 million and advanceswere 66 million. Bank was mainly concerned with general banking and trade financing

(including foreign exchange transactions). It helped a lot in development of small and medium

sized business houses. These were Nishat, Crescent, Pak Cement, Haroon traders, Takht BhaiSugar, Insaf, Punjab soap, Pak fruit and Saboor Oil Mills etc.

In 1964, 13 new branches were opened including 3 in East Pakistan. In 1965, 17 new branches

were opened and over 83 % of gross profit for the year was earmarked for development

expenditure in connection with opening of new branches.

In 1966 bank opened 26 new branches and doubled its reserved funds. For the first time inhistory, its advances were increased to Rs. 160 million and deposits raised by almost 58 %

exceeding Rs. 232 million mark. In 1966, Central Office was built in Karachi but Head Office

remaining at Shah Chiragh Building, Lahore.


7/118

P a g e | 7

16 new branches were opened in 1967 and 20 in 1968. Respectively their funds were increased

gradually. 21 new branches were opened in 1971. But separation time the 51 branches were lost

by the bank which was a big loss.

ALLIED BANK: PUBLIC SECTOR YEARS (1974-91)

Under the Nationalization Act of 1974, 14 scheduled banks were taken over by the Government.

Australasia Banks Board of Directors was dissolved and the bank was renamed as Allied Bank

of Pakistan Limited. Sarhad Bank, Lahore Commercial Bank and Pakistan Bank Limited were

merged into Australasia Bank. At time of merge, ABL was second highest among all the banksNationalized in 1974.

Allied Banks first Executive Board was constituted of Mr. Iqbal A. Rizvi as President, Mr.

Ajmal Khalil as Joint President and Mr. Khadim Hussain Siddique as member. In 1974 Mr. I.D.Junejo and Mr. Safdar Abbas Zaidi joined the Board later. 116 new branches were opened in

1974 and it started participation in commodity Operation program of Government.

In 1970s Bank played an important part of agricultural area loans and other loans. In 1976 Mr.

Ajmal replaced Mr. Rizvi as Chief Executive and President. During 1974-77, 361 new brancheswere opened and 230 of these were located in villages and small towns. It also opened its foreign

branch in London, near the Bank of England. In 1980 the Bank of England granted Allied Bank

recognition as a full fledge Bank under the U.K. Banking Act.

In 1981, President was changed. In 1984, again new president was come to know. He tries toincrease the international business. It also initiated a major counter program. In 1985, mainframe

computer was installed and effective management system was developed. During this period

profitability was increased. New President Mr. Maqbool introduced different schemes in 1987-88. In 1989, new 13 branches were installed.

Over 1991, 745 branches were there in all over the Pakistan.

A NEW BEGINNING

In November/ December 1990, the Government announced its commitments to the rapid

privatization of the Banking sector. Allied Banks management under the leadership of Mr.Khalid Latif decided to react positively to this challenge. In September 1991, ABL entered in a

new era of its history as worlds first bank to be owned and managed by its employees. The 850

executives and 7200 staff members spread over 750 branches throughout the Pakistan establisheda high degree of cooperation and family feelings

After this, it grows more and more, even at present in Year 2012 it has near about 1900 domestic

branches throughout the country and 4 foreign branches in U.K.


8/118

P a g e | 8

Allied bank Objectives:

Allied bank has following objectives:

i) Main objective of Allied bank is to earn profit.

ii) To provide services to their customers and assistance in the development of commerce and

trade.

Allied bank also have another responsibility to give service to their communities. It watches the

growth and development of his community especially the commerce and business of the area.


9/118

P a g e | 9

3.2 Nature of Allied Bank Limited

The Bank was incorporated in Pakistan and is engaged in commercial banking and related

services. The Bank is listed on all the three stock exchanges of Pakistan. The Bank operates 1078

branches inside Pakistan including the Karachi Export Processing Zone branch and 17 branches

outside Pakistan. The domestic branch network includes 5 Islamic Banking Branches.

The Banks principal activities are to provide commercial banking and other financial services.

The Bank 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, foreignexchange and export finance, corporate loans and equipment loans.

ABL is a commercial bank, which transacts the business of banking in accordance withthe

provisions of BCO, 1962. Section 7 of the Act authorizes banks to engage in the prescribed form

of business. In the light of this section ABLs functions can be categorized as under:

Agency services

General Utility Services

Underwriting of loans raised by the Government or public bodies and trading by

corporations etc.

Providing specialized services to customers, and

Hajj-related services


10/118

P a g e | 10

3.3 BUSINESS VOLUMEOF ALLIED BANKLIMITED

Rupees in

Millions

Year 2008 2009 2010 2011 2012

Total Assets 553,231,467 577,719,114 645,132,711 762,193,593 817,758,326

Deposits 465,571,717 463,426,602 501,872,243 591,907,435 624,939,016

Advances 220,794,075 268,838,779 316,110,406 340,677,100 412,986,865

Reserves 10,813,914 13,536,041 13,879,260 15,772,124 19,941,047

Investments 149,350,096 156,985,686 139,946,995 210,787,868 170,822,491

Table 3.1 UBL Annual Report

Horizontal

Analysis (%)

Year 2008 2009 2010 2011 2012

Total Assets 100 104 117 138 148

Deposits 100 100 108 127 134

Advances 100 122 143 154 187

Reserves 100 125 128 146 184

Investments 100 105 94 141 114

Table 3.2 Source: ABL Annual Report


11/118

P a g e | 11

Total customers 4,605,000

Total branches 735

Utility booths 34

Airport booths 1

Total clients in Multan region 145,000

Table 3.3 Source: ABL Annual Report

BRANCH NETWORKOF ALLIED BANKLIMITEDAllied Bank has been divided into 16 regions, each under the control of a regional General

Manger (RGM). The RGM is not any fixed designation in the organizational hierarchy. The

person appointed for its position can be a SEVP and EVP.

The details of these regions are given below:

Region Email

Abbottabad [email protected]

Bahawalpur [email protected]

Faisalabad [email protected]

Gujranwala [email protected]

Hyderabad [email protected]

Islamabad [email protected]

Karachi [email protected]

Lahore [email protected]

Mardan [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://var/www/apps/conversion/tmp/scratch_2/[email protected]://var/www/apps/conversion/tmp/scratch_2/[email protected]://var/www/apps/conversion/tmp/scratch_2/[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://var/www/apps/conversion/tmp/scratch_2/[email protected]://var/www/apps/conversion/tmp/scratch_2/[email protected]://var/www/apps/conversion/tmp/scratch_2/[email protected]:[email protected]


12/118


13/118

P a g e | 13

Outsourced 5522

Total Staff Strength 15054

Table 3.3 Source : ABL Annual Report

An employee may be defined as: "A person in the service of another under any contract of hire,

express or implied, oral or written, where the employer has the power or right to control and

direct the employee in the material details of how the work is to be performed." 1An employee

contributes labor and expertise to an endeavor. Employees perform the discrete activity of

economic production. Of the three factors of production, employees usually provide the labour.

Specifically, an employee is any person hired by an employer to do a specific "job". In most

modern economies, the term employee refers to a specific defined relationship between an

individual and a corporation, which differs from those of customer, or client. The relationship

between ABL and its employees is usually handled through the Human Resource Management &

Administration Group & Employees benefit disbursement & trustee division. These groups

handle the incorporation of new hires, and the disbursement of any benefits which the employee

may be entitled, or any grievances that employee may have.

There are differing classifications of workers within Allied Bank Limited, these are:

Permanent

Temporary / On Contractual

Outsourced


14/118


15/118


16/118


17/118


18/118


19/118


20/118

P a g e | 20

ABL Income Fund (ABL-IF) is an open end, fixed income fund with no direct exposure to the

stock market.

The objective of ABL Income Fund is to earn superior risk adjusted rate of return by investing in

a blend of short, medium, and long-term instruments, both within and outside Pakistan.

ABL-IF would benefit Investors who want to earn a competitive return and avail tax benefits

also having the ease of withdrawing money at their convenience

ABL STOCK FUND

ABL Stock Fund (ABL-SF) is an open end equity fund.

The objective of ABL-SF is to provide higher risk adjusted returns to the investors by investing

in diversified portfolio of equity instruments offering capital gains and dividends.

It would benefit Investors seeking higher growth on capital with high risk exposure and availing

tax benefits with the ease of withdrawing money at their convenience.

ABL CASH FUND

ABL Cash Fund (ABL-CF) is an open end, money market fund with no direct or indirect

exposure to shares, TFCs and long term debt instruments.

The objective of ABL-CF is to provide investors, consistent returns with a high level of liquidity,

through a blend of money market and sovereign debt instruments.

It benefits Investors seeking low risk investments and consistent returns with

ready access to funds. Given its highly liquid profile, the fund can be used by retail

and institutional investors for efficient cash management.

Flexible Income Plan

IfCustomer would like to receive income based on the performance of ABL-CF on

monthly, quarterly, half yearly or annual intervals then Flexible Income Plan is whatCustomer should opt for. Customer return will vary with funds performance during

that period.

Fixed Income Plan


21/118


22/118


23/118


24/118


25/118


26/118


27/118


28/118

P a g e | 28

First level managers are the lowest level of management and manage the work of non-managerial

individuals who are involved with the production or creation of the organizations products. The

branch managers of ABL fall under this category. These managers are responsible for planning,

organizing, leading and controlling the staff and all affairs of the branch.

NON MANAGERIAL EMPLOYEES

Non managerial employees are not concerned with any decision making. They are normally

specialized in their work. The nature of their job is repetitive & clerical as they do same work

again & again. The non managerial employees of ABL consist of OG-II, OG III and clerical

staff.

HIERARCHYOF ALLIED BANKLIMITED

The Hierarchy (An arrangement of objects, people, elements, values, grades, orders, classes etc.,

any system of persons or things ranked one above another) of ABL is shown as Annexed at the

end of this report. The hierarchy may include:

Categorization of a group of people according to ability or status.

A body of clergy organized into successive ranks or grades with each level subordinate to

the one above.

A series in which each element is graded or ranked

A body of officials disposed organically in ranks and orders each subordinate to the one

above it; a body of ecclesiastical rulers.

An organization with few things, or one thing, at the top and with several things below

each other thing.


29/118


30/118


31/118


32/118


33/118


34/118

P a g e | 34

WORKINGOFTHE CLEARING PROCESS

Under the clearing arrangements, the State Bank of Pakistan (SBP) offers a Clearing House or a

centralized exchange facility, which works on the following general lines:

All the banks operating in a city who are members of the Clearing House maintain an

account with the SBPs Clearing House.

Every day representatives of all the banks in every city meet the Clearing House, first

meeting in the morning, at an appointed time, for the purpose of depositing their own

customers , cheques/instruments to be collected from other banks and receiving

cheques/instrument drawn on their account holders from the others banks.

At the Clearing House accounts of all the banks are debited by the total amount of

cheques/instruments drawn on their customers accounts and credited with the amount of

their customers cheques/instruments drawn on other banks, as per the list of cheques

submitted by each bank.

The cheques/instruments received, also called Inward Clearing, and are taking back by

each bank to its bank/branch. The amounts of each cheques/instrument is debited or

recovered from each drawee customers account and credited to the Clearing House

account. Similarly, against the amount credited by the Clearing House as Outward

Clearing, the appropriate customers accounts are credited and clearing House account is

debited.

Any cheques/instruments received by a bank that cannot be paid, due to insufficient

balance in its customers account or for any other reason, are returned back to the

Clearing House and a credit is claimed and obtained there against.

RULES & REGULATIONSOF CLEARING HOUSE

Timing:(Monday to Saturday)


35/118


36/118


37/118

P a g e | 37

6. The house page is prepared from schedules in triplicate.

7. The schedules and house pages are signed by the house in charge with branch stamp.

8. The grand total of the house page is taken and agreed with that of the outward clearing

register.

9. The instrument along with duplicate schedule and house page are sent to the main office.

10. The entry of the instrument returned unpaid is made in Cheques returned Register. If the

instrument is not to be presented again in clearing then a covering memo is prepared. The

covering memo along with returned instrument and objection memo is sent to the

customer who sent the same to his account.

INWARD CLEARINGOFTHE BRANCH

1. The particulars of the instruments are compared with the list.

2. The instruments are detached and sort out department wise.

3. The entry is made in the inward clearing register (serial no. Instrument no. Account No)

4. The instruments are sent top the respective departments

5. The instruments are scrutinized in each respect before honoring the same.

SPECIAL CLEARING

In addition to the normal clearing function at Clearing house it is mutually agreed to hold an

extra clearing at the clearing house on the particular day and time which is known as specialclearing it is arranged due to the rush of work arising out of say, more Holidays declared by the

Central Govt. at a time, but normally special clearing is held on last working day of half yearly

and yearly closing i.e. 30th June and 31st Dec. every year.

2. REMITTANCE DEPARTMENT


38/118


39/118


40/118


41/118


42/118


43/118


44/118


45/118

P a g e | 45

The bank is profit seeking institution. It attracts surplus balance from the customer at low rate of

interest and makes advances at a higher rate of interest to the individuals and business firms.

Credit extensions are the most important activity of all the financial institutions, because it is the

main source of earnings. Advances department is one of the most sensitive and important

department of the bank. The major portion of the profit is usually earned through this

department. The job of this department is to make proposals about the loans; the credit

management division of head office directly controls all the advances.

The advances Department receive application from intending borrowers. After receiving

application the advance department processes it further. After analyzing and detailed

investigation, they decide whether to approve the loan or not. Some loan approvals are made bythe Manager of the branch within his powers as prescribed by the banks higher authorities,

while some loan applications are submit to higher authorities for their approval. Some advances

are of the following nature

Agriculture advance to farmers

Medium term advance for working capital

Long term advance for setting industry

Short term advance to businessman

The Advances department deals in following transactions:

1. Preparation and submission of proposals of Running finance, Cash finance, Demand

finance, Export finance, Staff finance, Finance against imported merchandise etc for

sanction of finance limit from the hire authority.

2. Preparation and posting of vouchering of all type of finance.

3. Accruals & recovering of Markup on finances on periodical basis.


46/118

P a g e | 46

4. Approval of transfer of funds through DD-TT, PO, MT, IBCO etc to various branches by

debiting the limits.

5. Preparation of weekly, monthly, quarterly, and annually statement to the hire authority.

6. Transfer of funds from one account to another account of the party taking the authority

letter.

7. Preparation of advances record.

8. Timely submission of returns/reports, daily, weekly, monthly & quarterly.

9. Checking of computer outputs of the department on daily basis.

10. Balancing of all financing heads.

7. COMPUTERDEPARTMENT

This department is playing a very important role in making the banking procedures faster and

helping the bank for providing better services to its customers. The ABL has three types of

branches in all over Pakistan, these included

A) ONLINEBRANCHES

The branches, which are directly, link with central computer AS-400, through wide area

networking through fiber optics. These branches have dumb terminal directly linked with central

computer.

B) BATCH BRANCHES

The branches where all transactions are carried out with the computer base system but these

branches are not connected to the central computer with wide area net working. Batch branches

are using three type of system, Branch Back Office (BBO) based on FoxPro, Branch Automated

System based (BAS) on UNIX, Branch Integrated System (BIS) based on FoxPro in Karachi

mostly branches are facing this problem. BAS was establish in the beginning while BBO is


47/118

P a g e | 47

currently implemented now efforts are under way to convert all branches into Electronic Banking

System (EBS) which is used by online branches as this system does not require a person to

remain sitting till the branch closed its daily operation but the system automatically close it self

when the branch timing is over. The database in head office is also based on this system.

C) MANUAL BRANCHES

The branches where all transactions are carried out manually and records are maintained on

registers usually stored in big wardrobes. Manual branches reports Regional head office

regarding their daily transactions. In Regional head office through On Line, terminal data goes to

head office central computer; Except for branches those are On Line as they transfer there dailydata directly through there own terminal. As day-to-day, activities of all branches are recorded in

a central computer.

EVENINGDATARECEIVINGCENTER

Data form batch branches reach the main branch in floppy diskettes while form manual branches

it is in form of hard copy. Data comprises of transactions in profit loss account, current account,

advances etc termed as Daily Transaction Report. Clerk in charge register all diskettes and

manual in registers called job booking register one for each of two type of data. These floppies

and manual are bring in by riders. There are fourteen riders in total who bring information form

all branches located in Karachi region.

DATAENTRY DEPARTMENT

The next task after receiving the data is to enter that data in to a computer. The floppy disk is

directly inserted in the computer. The program in used is based on COBOL language. This

program is designed in away that it demand Hash Value value before opening the floppy for

further action this value serve the purpose of password or pin code send by the branch on

entering that value the data enter in to the computer. This computer is attached with the terminal

of central computer. The operator of that terminal takes the data from the computer and

converted it in to a text file through that terminal the data finally goes to the central computer.


48/118


49/118

P a g e | 49

Western Union payments Register

Demand Notices

Miscellaneous Book

Bank Transfer scroll

General Ledger- Head wise

Hash Value Register

End of Day register

Monthly return register

Charges A/c register

P-L-S Profit list

Weekly Telegram

Mail Transfer Register

Provident file

Transfer Responding Advice Dispatched Register-F15

Cash Remittance IN

Cash Remittance OUT

ABL General Account

Utilities register


50/118


51/118


52/118

P a g e | 52

Ensuring the integrity and reliability of the information system, and preventing fraud

from inside and outside the branch.

Preparing financial statements that are reported to Regional Management of ABL.

Preparing financial statements and accounting reports for distribution to the branch

Manager for their planning, control, and decision-making needs.

The Chief Accountant with the help of branchs clerical staff is preparing following

reports:

o Monthly Profit & Loss account- F48

o Daily Statement- F21

o General Ledger

o General Ledger Abstract

o General Ledger head wise

o Bank transfer Scroll

o Misc Book

o Monthly return file

o Charger List

o PLS Profit list

o Weekly Telegram

o Transfer Responding Advice Dispatched Register- F15


53/118

P a g e | 53

o Cash Remittance In

o Cash Remittance Out

o ABL General Account

o Clearing register

o Debit & Credit supplementary

Debit supplementary is used for debit voucher and credit supplementary is used for credit

voucher books and register maintained by bank are as fallows

General ledger included:

Statement of daily affairs

Cash book or cash cum day book

Transfer book

Income & expenditure ledger

Income& expenditure includes:

1. Discount

2. Service charges

3. Commission from utility services

4. Salaries allowances & provident fund

5. Rent taxes insurance lighting

6. Profit paid on deposits and borrowings


54/118


55/118


56/118


57/118


58/118


59/118


60/118


61/118


62/118


63/118

P a g e | 63

7 2 3 5

Other Liabilities 23,068,314 24,974,450 26,596,300 30,869,154 39,656,831

Horizontal Analysis (%)

Share Capital 100 120 144 166 182

Reserves 100 125 128 146 184

Borrowings 100 79 106 98 365

Deposits 100 100 108 127 134

Other Liabilities 100 108 115 134 172

Table 5.1 Sources: ABL Annual Report

GENERATIONOFFUNDS

Rupees in

Millions

Year 2008 2009 2010 2011 2012

Markup/return/interest earned

20,947,33

3

33,692,66

5

44,100,93

4

50,569,48

1 60,942,798

Net markup/interest income

14,387,93

5

23,370,89

7

30,153,71

6

33,629,47

0 37,058,030

Net markup/interest income after provisions 12,639,77 21,146,97 27,782,17 28,906,73 26,087,216


64/118

P a g e | 64

0 0 0 5

Total non-markup/ Interest income 8,304,716 9,392,351

12,162,89

2

13,544,84

5 16,415,862

Total income ( Interest + non-Interest)

20,944,48

6

30,539,32

1

39,945,06

2

42,451,58

0 42,503,078

PROFIT BEFORE TAXATION11,977,60

119,056,02

826,310,57

728,060,50

1 23,000,998

Horizontal Analysis (%)

Markup/return/interest earned 100 161 211 241 291

Net markup/interest income 100 162 210 234 258

Net markup/interest income after provisions 100 167 220 229 206

Total non-markup/ Interest income 100 113 146 163 198

Total income ( Interest + non-Interest) 100 146 191 203 203

PROFIT BEFORE TAXATION 100 159 220 234 192

Table 5.2 Sources: ABL Annual Report

5.7 ALLOCATIONOF FUNDS

Rupees in

Millions

Year 2008 2009 2010 2011 2012

Lendings to Financial Institutions 10,511,322 16,282,942 23,012,732 21,464,600 17,128,032


65/118


66/118


67/118


68/118


69/118


70/118

P a g e | 70

RATIO ANALYSIS FOR LAST FIVE YEARS:

A ratioexpresses the mathematical relationship between one quantity and

another as a percentage, rate, or proportion.

A ratio can be computed from any pair of numbers. Given the large

quantity of variables included in financial statements, a very long list of

meaningful ratios can be Ratio presentation includes ratios that are most

often used when evaluating the credit worthiness of a customer.

Return on stockholders equity:

= 11160 /(60181+52276/2)

=11160 / 56228.5

=19.8%

2012 2011 2010 2009 2008

Profit / loss after

tax 11160 9193 8333 8403 9468

Total

stockholders'

equity 60181 52,276 42,223 34,009 27,204

Average

stockholders'

equity

(60181+52276 /

2)

56228.

5 47249.5 38116 30606.5 22980

Return on

stockholders'

equity (%)

19.847

59 19.45629 21.86221 27.45495 41.20104


71/118

P a g e | 71

Interpretation:

This ratio is more meaningful for share holders who are interested to know

the profit earned by the company because the dividend paid from available

profit higher ratio means factor of production fully utilized and good position.

ROEs between 15% and 20% are considered desirable. The ratio of 2011 is

high as compare to previous year, but in 2007 that was very favourable.

RETURN ON ASSETS ROA:

The formula:

= 11160 / (698785+619716)/2

= 11160 / 659250.5 =1.7%

2012 2011 2010 2009 2008

Profit / loss after

tax 11,160 9,193 8,333 8,403 9,468

Assets 698,785 619,716 605,539 530,124 423,266


72/118


73/118


74/118

P a g e | 74

amounts)

Deposits 550,646 492,036 483,560 400,975

335,07

8

Advances to Deposit

(Net) Ratio= Advances -

Provisions/ Deposits

60.6073

6

71.9644

5

76.7515

9

74.6565

2

73.806

4

Interpretation:

In 2011 the deposits are high as compare to previous year but advances are low, which

shows that organization did not availing its resources properly.

GROSS INCOME:

The formula:

= 44229- 44363 / 44363 = -.3%

2012 2011 2010 2009 2008

Gross Income of this Year 44,229 44,363 38,537 33,102 27,813

Growth In Gross Income(%)=

Gross Income of this year -

Gross Income of last Year /

Gross Income of last year

-

0.3020

5

15.1179

4

16.4189

5

19.0162

9

45.4198

5

Interpretation:

There is a decreasing trend in the ratio mentioned above which is not favourable because

there is no growth.

GROWTH IN NET PROFIT AFTER TAX:


75/118


76/118

P a g e | 76

This ratio shows the relationship between total assets and shareholders equity. Higher ratio

will be favourable.

NONPERFORMING LOAN NPL:What Does Nonperforming Loan - NPLMean?

A sum of borrowed money upon which the debtor has not made his or her scheduled

payments for at least 90 days. A nonperforming loan is either in default or close to being in

default. Once a loan is nonperforming, the odds that it will be repaid in full are considered to

be substantially lower. If the debtor starts making payments again on a nonperforming loan,

it becomes a reperforming loan, even if the debtor has not caught up on all the missed

payments.

Nonperforming Loan - NPL

Institutions holding nonperforming loans in their portfolios may choose to sell them to other

investors in order to get rid of risky assets and clean up their balance sheets. Sales of

nonperforming loans must be carefully considered since they can have numerous financial

implications, including affecting the company's profit and loss, and tax situations.

2012 2011 2010 2009 2008

Non Performing

Advances 48,593 39,101 27,839 22,012 16,255

Advances 368,692 382,478 390,903 316,737 260,909

NPL Ratio = Non

Performing Loans /

Advances (%)

13.1798

4

10.2230

7

7.12171

6 6.949614

6.23014

2

HORIZONTAL ANALYSIS:

2012 2011 2010 2009 2008


77/118


78/118


79/118


80/118


81/118


82/118


83/118

P a g e | 83

VERTICAL ANALYSIS:

2012 2011 2010 2009 2008

Cash and Balances with

treasury and other

banks 85654 66878 57567 61718 62974

Total Assets 698785 619716 605539 530121 423266

Cash and Balances with

treasury and other

banks (%)

12.2575

6

10.7917

2

9.50673

7

11.6422

5

14.8781

1

2012 2011 2010 2009 2008

Lending to Financial

Institution 12385 23162 22805 24782

2957

2

Total Assets 698785

61971

6 605539

53012

1

4232

66

Lending to Financial

Institution (%)

1.77236

2

3.7375

18

3.76606

6

4.6747

82

6.986

623

Interpretation:

Ratio shows the proportion of lending to financial institution in the total assets and there isdecreasing trend in the ratio mentioned above.

Investment - Net

Investment - Net

Total Assets 2011

= 227237 / 698785 = 32.5%

2012 2011 2010 2009 2008

Investment Net 227237 138398 118865 115937 67661

Total Assets 698785 619716 605539 530121 423266Investment - Net

(%) 32.51887

22.3324

9 19.62962

21.8699

1 15.98546


84/118

P a g e | 84

Interpretation:

This ratio show the proportion of investment in total assets which is comparatively high from

last years and it is positive indicator.

Advances - Net

Advances - Net

Total Assets 2011

= 368692-34960 / 698785 =47.8%

2012 2011 2010 2009 2008

Advances- gross 368692 382478 390903 316737 260909

Provisions against non

performing advances 34960 28387 19763 17383 13600

Advances Net 333732 354091 371140 299354 247309

Total Assets 698785 619716 605539 530121 423266

Advances- Net (%)

47.758

9

57.1376

2

61.2908

5

56.4689

9

58.4287

4

Interpretation:

This ratio show the percentage of net advances in the total assets, which has decreased

from 2008.

Operating fixed Assets

Operating fixed Assets

Total Assets

= 22424 / 698785 = 3.2%

2012 2011 2010 2009 2008


85/118

P a g e | 85

Operating

Fixed Assets 22424 21926 18021 16941 5234

Total Assets 698785 619716 605539 530121 423266

Operating

Fixed Assets

(%) 3.208998 3.538072 2.976026 3.195686 1.236575

Interpretation:

Ratio shows the proportion of operating fixed assets in the total assets. There is mutual

trend in the ratio mentioned above.

Un-Appropriate Profit And Loss:

Un-Appropriated Profit / (Loss)

Un-Appropriated Profit / (Loss) =

Total Assets

2012 2011 2010 2009 2008

Un-Appropriated

Profit / (Loss) 26250 22188 16604 15654 12430

Total Assets 698785 619716 605539 530121 423266

Un-Appropriated

Profit / (Loss) (%)

3.7565

2

3.5803

5

2.7420

2

2.95291

1

2.93668

8

Surplus on Revaluation of assets:

Surplus on Revaluation of assets

Surplus on Revaluation of assets =

Total Assets

2012 2011 2010 2009 2008

Surplus on Revaluation

of assets 8234 8660 1640 8412 2660


86/118


87/118


88/118


89/118

P a g e | 89

Bank Analysis with reference to commercial Banks listed

on stock exchange

Financial Position of Commercial Banks

Registered in Pakistan

Name

of As of June 2010

Commercial Paid up Reserves Assets Deposits Advances Profit Earnings Branch Credit

Bank Capital (Rs. Bn)

(Rs.

Bn) (Rs. Bn) (Rs. Bn)

After

Tax

Per

share Network Rating

(Rs.Bn)

(Rs.Bn) (Rs) (Nos)

Habib Bank 7.59 23.6 735.71 584.85 411.36 7.5 9.75 1400 AA+

ABL 8.97 18.54 788.12 621.53 173.42 8.1 9.03 1249 AAA

Allied Bank 6.46 5.48 344.7 293.97 168.45 2.51 3.88 757 AA

MCB 6.28 35.88 450.34 350.72 228.98 7.68 12.22 1038 AA+

United Bank 10.12 12.82 576.02 465.54 328.55 5.59 5.53 1100 AA+

First Women 0.28 0.22 8.04 6.4 3.09 0.05 1.67 38 BBB+

Bank of Punjab 5.29 7.43 217.85 180.82 142.85 -2.63 -4.97 272 AA-

Soneri Bank 4.11 1.88 81.61 64.73 45.83 0.47 1.13 90 AA-

Askari Bank 4.06 7.59 194.21 153.32 114.04 0.05 1.01 155 AA

Bank Al- Habib 4.79 2.8 167.36 136.75 93.25 1.25 2.61 203 AA

Bank of Khyber 4 1.34 34.43 24.4 11.14 0.11 0.27 34 BBB+

Bank Al- Falah 8 2.95 333.02 287.77 180.02 1.69 2.12 231 AA

Saudi Pak 5 0.22 50.83 42.35 27.62 -0.81 -1.54 55 A-


90/118


91/118

P a g e | 91

Deposits

Advances

Profit after tax

Earnings per share

Credit rating

The best way to analyze these commercial banks is to analyze their credit ratings. The ABL

enjoys the highest credit rating amongst Pakistani banks; JCR- VIS Credit rating Co. Limitedawarded highest standalone credit rating of AAA to ABL. The JCRVIS Credit rating Co.

comments about ABL say a lot about the bank:

JCR-VIS believes that the current economic situation puts certain leading industrial sectors and

the general consumer under financial stress. Therefore, the second half of 2008 and 2009 are

likely to be challenging for the banking sector as a whole, in terms of maintaining growth, asset

quality and profitability.

The JCR-VIS Rating Process include following steps:

1. Signs agreement for an initial rating

2. Submits preliminary information materials

3. Conducts a preliminary study

4. Submits a detailed questionnaire to the issuer/client

5. Provides detailed information in response to detailed questionnaire

6. Conducts pre due diligence meeting analysis

7. Conducts due diligence meetings


92/118


93/118


94/118


95/118


96/118


97/118


98/118


99/118

P a g e | 99

OVERALL POINTS OF CONCERN FOR THE ORGANIZATION:

Weakness are the internal attributes of the bank to decrease in comparison with

competing bank.

Most of employers are not well qualified and dont have right professional

attitude that may hinder ABL to perform up to the mark and to satisfy their

sophisticated clients. most of them are graduates and under graduates

The management of the bank offered low profit on profit and loss account

approximately 6% before deducting the tax. The other banks offer morethen this.

employees are involved in internal politics which is creating ghastly

effects over the banks environment

Very few employees are honest to the banking repute as well as to the

banks management, while others are by nature very hypocrite and

diplomat.

Favoring some customers and neglecting and even treating them verybadly is a very common practice by staff, I myself noticed this behavior

during my internship.

Facilities like e-mail fax and link through net is not available at every

desk, it should be provided in every department.

HRM is not much effective and active in the bank. Every branch must

have one HR counter

They are not using modern techniques like prizes scheme of other banks

Most of the loans have been converted in to bad debts.

All the branches are not computerized.


100/118

P a g e | 100

FINDINGS AND SUGGESTIONS:

The critical analysis ABL in the previous section is the representation of its past, mirror

of its present, and an insight into its future. The past data of ABL Shah Ruk-ne-Alam Branch

Multan enabled me to study the organization in a historical perspective and understand the

nuisances in the banking operations. Study of he present of ABL helped me evaluate the

organization in comparison to its future and competitors. The data obtained from the analysis of

its present and future in combination with my professional studies resulted in some suggestions

and implementation plans, which can help to increase the profitability and operational success of

the ABL Shah Ruk-ne-Alam Branch Multan..

Some of the major findings suggestions are discussed.

PHYSICAL FACILITIES.

The physical facilities or the layout are the most fundamental features in an organization,

which the customers observe in forming an opinion, perception or idea about the organization.

Therefore, every organization tries to make a good first impression on customers through the

presentation of its physical facilities or layout. The physical facilities in the branch are not up to

the mark, which requires timely changes to provide good environment to customers. The

suggested changes and corrective actions are gives below:

The lighting system must be improved and all the out of use lights must be replaced.

There is always a stinking smell in the Bank due to the out of order condition of

washroom. Therefore the washroom must be brought into order to remover thisunpleasant smell.

Generators should be made available to the branch to minimize the disruptions due to

power failure.

Newspaper should be provided to the customers to avoid the pain of waiting long.

A cash counting machine can help reduce the time spent in counting cash.


101/118

P a g e | 101

AVAILABILITY OF STAFF

The existing staff in the Bank is overburdened due to the non-availability of more staff.

Staff in the branch must be in proportion to the customer has so as to expedite the workflow,

avoid overloading of staff and remove the customers grievances arising mainly due to delay in

workflow.

The additional staff required is in the fallowing categories.

More technically trained staff should be added to the existing staff

strength

One staff assistant or grade 2 officers properly trained in computer and sufficiently

trained in foreign currency accounts.

One employee of grade 4 should be hire on daily wages or contract, to maintain filing.

COMMITMENT OF EMPLOYEES

The decreasing commitment of employees can be increased by introducing an effective

performance appraisal system, which can reward and recognize the achievements and services of

employees for the Bank.

The appraisal system must have the following features.

Feed Back:

Periodically provided to employees and recognizing their efforts through reward

(bonuses) and publicly appreciation.

Uniform:

The appraisal system must be uniform in evaluating all the employees without any

discrimination.

Objectivity:

The appraisal system must be based on facts and figures and objective evaluation of the

facts on grounds.


102/118


103/118


104/118


105/118

P a g e | 105

REFERENCES:

Internet

www.google.com

www.Abl.com

Bank Staff

Fundamental of Financial Management (James C. Van Horne, John M.

Wachowicz,Jr.13th Edition )

Advance Accounting (Simons and Karrenbrock 4th Edition)

Murphy, H. A., Hildebrandt, H. W., & Thomas, J. P. (2007). Effective

Business Communication (7th Edition) NBF Islamabad.

Robbins, S.P., & Coulter, M. (2007) Management (8th Edition) NBF

Islamabad.

The Bank, Financials. Retrieved January 20, 2010 from http://www.abl.com.pk.

Kotler, P. & Armstrong, (2006) Principles of Marketing (10th Edition)

Pearson New Jersey.

In Corporate Governance By Abdul Naeem KhanProfessional I ICMAP
http://www.google.com/http://www.abl.com/http://www.abl.com.pk/http://www.google.com/http://www.abl.com/http://www.abl.com.pk/


106/118


107/118


108/118


109/118


110/118

P a g e | 110


111/118


112/118


113/118

P a g e | 113


114/118


115/118


116/118


117/118

P a g e | 117

REFERENCES


118/118

Arbaz Final Report II ABL 2013

Documents

Transcript of Arbaz Final Report II ABL 2013