Internship Report On
Allied Bank of Pakistan
Internship report submitted to the National Universty of Modern Languages and Sciences to full fill the requirements of
Faisal Pervaiz RajaMBA (Finance)
NATIONAL UNIVERSTY OF MODERN
LANGUAGES AND SCIENCES
In the Name of
Most Merciful and Compassionate the Most Gracious and
Beneficent whose help and guidance I always
NATIONAL UNIVERSITY OF MODERN LANGUAGES
Faculty of Management Sciences
It is hereby certified that the report has been thoroughly and carefully read and recommended to the Faculty of Management Sciences for acceptance of Final Internship Report. by Faisal Pervaiz Raja, Roll No. 8341, (Jan 2007 to Dec 2009) Mor, in partial fulfillment of the
requirements for the degree of Master of Business Administration of National University of Modern Languages Islamabad.
Dated: Feb 27, 2010
Supervisor Name: _________________________
Supervisor Signature: __________________________
Panel Member Name: ___________________________
Panel Member Signature: ___________________________
All praise to Almighty Allah, the most merciful and compassionate, who give me skills and abilities to complete this report successfully
I am grateful to my parents who are always been a source of encouragement for me throughout my life and from start to the end of this report
I am greatful to all my staff members so Allied Bank Of Pakistan Limited Tench Bazaar branch Rawalpindi.
I found every one very co-operative and helpful for providing me the Theoretical as well as practical knowledge about the function and operation of the bank.
I express my greatest gratitude to my kindhearted Supervisor MISS AFSHEEN who was the Person who made me able to write this report, His enthusiasm shows the way forward to me to achieve this success and who kept me in high spirit through his appreciation. He helped me a lot each time I went up to him.
I would like to dedicate this
to my beloved and caring parents,
and to my teachers with
the support of whom I
am standing at this step of
This documents provided details of my achievements in term of practical implementation and understanding of working environment in banks. ALLIED BANK is almost the leading commercial banks in the country and has always played pioneering role in introducing innovative. technology based banking services.
Allied bank limitedwas the first bank to be established in Pakistan.it started out in Lshore by the name Australasia bank before independence in 1942, waas renamed Allied bank of Pakistan ltd 1974 and then Allied bank ltd in 2005.
. My Internship at Allied Bank Limited tench bhatta Branch started from 2oth dec 2009 to 31jan 2010. During my stay at the bank I learnt a lot as the practical
knowledge of the banking sector is concerned. I was rotated in different departments including clearing, online transfer, and customers’ services foreign exchange and advances departments
. I learnt the basics of operations performed in each department. I undertook some assignments that helped me apply the learnt techniques. I faced some problems during this course, but I got full attention from the concerned persons and they always encouraged me for asking any kind of question that rose during the course of my work.
I have been sending the reports of my progress on weekly basis to my internship advisor. On the last day, the manager gave his comments and evaluation of my work on the prescribed form provided by the institute and also certificate of internship.
TABLE OF CONTENTS
ACKNOWLEDGEMENT ...ERROR! BOOKMARK NOT DEFINED.
DEDICATION ...ERROR! BOOKMARK NOT DEFINED.
EXECUTIVE SUMMERY ...ERROR! BOOKMARK NOT DEFINED.
TABLE OF CONTENTS...ERROR! BOOKMARK NOT DEFINED.I CHAPTER – I
1 INTRODUCTION ... 1
1.1 PURPOSE OF STUDY... 2
1.2 INFORMATION ABOUT THE ORGANIZATION... 6
1.2.1 VISION... 6
1.2.2 MISSOIN... 6
1.2.3 VALUES... 7
1.2.4 MAIN OBJECTIVE ... 7
1.2.5 SERVICES/PRODUCTS OF ALLIED BANK LTD... 7
1.3 DEPARTMENT INFORMATION ... 13
1.3.1 CURRENT SAVING DEPARTMENT ... 13
1.3.2 ACCOUNT DEPARTMENT... 14 1.3.3 ADVANCES DEPARTMENT... 14 CHAPTER – II 2.1 SWOT ANALYSIS ... 18 2.1.1 STRENGTHS... 18 2.1.2 WEAKNESSES... 18 2.1.3 OPPORTUNITIES... 21 2.1.4 THREATS ... 21 2.2 PEST ANALYSIS:-... 22 2.2.1 POLITICAL... 22 2.2.2 ECONOMICAL ... 22 2.2.3 SOCIAL... 22 2.2.4 TECHNOLOGY ... 23 CHAPTER – III 3.1 INTERNSHIP EXPERIENCE ... 24
3.2 CONCERN DEPARTMENT , DUTIES & LEARNING ... 25
CHAPTER – IV 4.1 VERTICAL ANALYSIS ... 32
4.2 HORIZONTAL ANALYSIS ... 33
vii CHAPTER – V 5.1 RECOMENDATION... 41 5.2 CONCULSIONS ... 42 ANNEXURE:... 48 REFERENCE:...51
Faisal Pervaiz-03315597157 1
Chapter – I
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The study is about the general operations and management of Allied Bank Limited TENCH BHATTA BRANCH RWP,
Every student of MBA has to under go an internship program of SIX weeks in any organization to get exposure to the real time business environment and to know what sort of changes Information Technology brings in management activities.. The real purpose of this internship program is to provide an opportunity to the students to see the practical applications of their background professional studies.
The repot is a reflection on my experience when I was internee in ABL, . Since its inception in 1942, ABL has maintained a steady growth over the sixty years span of its operations. After its nationalization in 1974, it was denationalized in 1991 and the employees became the owners of ABL, through the unique concept of ESOP (Employees Stock Ownership Scheme).
1.1 PURPOSE OF THE STUDY
Purpose of the study was two pronged.
• 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 of the study includes.
• A partial fulfillment as a requirement for the completion of degree.
• To objectively observe the operations of Allied Bank of Ltd in general and the operations of ABL, Tench Bazaar branch Rawalpindi in specific.
• To make recommendations or implementation plans for the improvement of the operations of ABL, Tench Bazaar branch Rawalpindi in the light of our professional studies.
NATURE OF THE STUDY
The study is critical in nature. It was conducted to investigate critically into the operations of Allied Bank Ltd and it also explains that how ABL provides facility 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.
Faisal Pervaiz-03315597157 3 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
• 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
HISTORY OF ABL
Established in December 1942 as the Australasia Bank at Lahore with a paid-up share capital of PKR 0.12 million under the Chairmanship of Khawaja Bashir Bux, and his business associates, including Abdul Rahman Malik who was amongst the original Board of Directors, the bank had attracted deposits, equivalent to PKR 0.431 million in its first eighteen months of business.
Total assets then amounted to PKR 0.572 million. Today Allied Bank's paid up Capital & Reserves amount to Rs. 10.5 billion, deposit exceeded Rs. 143 billion and total assets equal Rs. 170 billion. The Allied Bank's story is one of dedication, commitment to professionalism, adaptation to changing environmental challenges resulting into all round growth and stability, envied and aspired by many.
1942 - 1947: Pre Independence
In the early 1940s the Muslim community was beginning to realize the need for the active participation in the field of trade and industry. The Hindus had since the late
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1880s established a commanding presence in these areas and industry, trade and commerce in the undivided Sub-continent was completely dominated by them. Banking, in particular, was an exclusive enclave of the Hindus and it was widely believed, and wrongly so, that Muslims were temperamentally unsuited for this profession.
It was particularly galling for Khawaja Bashir Bux and Abdul Rahman Malik to hear the gibe that Muslims could not be successful bankers. They decided to respond to the challenge and took lead in establishing this first Muslim bank on the soil of Punjab that was to become Pakistan in December 1942; by the name of Australasia Bank Limited. The initial equity of the Bank amounted to Rs 0.12 million, which was raised to Rs 0.5 million by the end of first full year of operation, and by the end of 30th June 1947 capital increased to Rs. 0.673 million and deposits raised to Rs 7.728 million.
1947 to 1974: Australasia Bank
Australasia Bank was the only fully functional Muslim Bank on Pakistan territory on August the 14th, 1947.
It had been severely hit by the riots in East Punjab. The bank was identified with the Pakistan Movement. At the time of independence all the branches in India, (Amritsar, Batala, Jalandhar, Ludhaina, Delhi and Angra (Agra)) were closed down. New Branches were opened in Karachi, Rawalpindi, Rawalpindi, Sialkot, Sargodha, Jhang, Gujranwala and Kasur. Later it network spread to Multan & Quetta.
The Bank financed trade in cloth and food grains and thus played an important role in maintaining consumer supplies during riot affected early months of 1948. Despite the difficult conditions prevailing and the substantial set back in the Bank’s business in India, Australasia Bank made a profit of Rs 50,000 during 1947-48.
By the end of 1970 it had 101 branches. Unfortunately it lost 51 branches in the separation of East Pakistan which became Bengladesh. The bank did well in despite losing lot of its assets. By the end of 1973 the bank had 186 branches in West Pakistan.
1974 to 1991: Allied Bank
I 1974, the Board of Directors of Australasia Bank was dissolved and the bank was
renamed as Allied Bank. The first year was highly successful one: profit exceeded the Rs 10 million mark; deposits rose by over 50 percent and approached Rs 1460 million. Investments rose by 72 percent and advances exceeded Rs 1080 million for the first time in bank history. 116 new branches were opened during 1974 and the Bank started participation in the spot procurement agriculture program of the Government. Those seventeen years of the Bank saw a rapid growth. Branches increased from 353 in 1974 to 748 in 1991. Deposits rose from Rs 1.46 billion, and Advances and investments from Rs 1.34 billion to Rs 22 billion during this period. It also opened three branches in the UK.
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(Employee stock ownership plan)
Under the philosophy of ESOP ownership of an enterprise is transferred to its employees who are in an advantageous position in running the enterprise. The added advantage of ESOP that it strengthens the workers stake in the free enterprise system, in job securities, better profitability & unique corporate culture symbolizing family feelings & professional fraternity.
September 10,1991 is the historical date as on this date the bank became the country’s 1st bank to be reconstituted as an institution jointly owned by its employees through the unique concept of Employees Stock Ownership plan [ESOP] developed by the Allied Management Group headed by Mr. Khalid Latif enabled the bank staff to react creatively to the privatization challenge. More that 7500 staff members acquired a share in the bank . The articulation of the ESOP is a landmark in the financial history of Pakistan-indeed of the entire world .It is a practical step ensuring an increase in workers participation and in productivity a means for enhancing an equitable redistribution of financial assets & an effective strategy for achieving the cherished goal of national self-reliance.
1991 to 2004: Privatization
As a result of privatization in September 1991, Allied Bank entered in a new phase of its history, as the world’s first bank to be owned and managed by its employees. In 1993 the First Allied Bank Modaraba (FABM) was floated.
After privatization, Allied Bank registered an unprecedented growth to become one of the premier financial institutions of Pakistan. Allied Bank’s capital and reserves were Rs. 1.525 (Billion) and assets amounted to Rs. 87.536 (Billion) and deposits were Rs. 76.038 (Billion). Allied Bank enjoyed an enviable position in the financial sector of Pakistan and was recognized as one of the best amongst the major banks of the country.
In August 2004 as a result of capital reconstruction, the Bank’s ownership was transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group.
Today the Bank stands on a solid foundation of over 63 years of its existence having a strong equity, assets and deposits base offering universal banking services with higher focus on retail banking. The bank has the largest network of on-line branches in Pakistan and offers various technology based products and services to its diversified clientele through its network of more than 700 branches.
In May 2005 Ibrahim Leasing Limited was amalgamated by transfer to and vested in with and into Allied Bank Limited. ILL shareholders were issued ABL shares in lieu of
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the ILL shares held by them. Application for the listing of ABL shares in all the Stock Exchange Companies of Pakistan was made. ABL was formally listed and trading of the shares of the Bank commenced w.e.f. the following dates.
• Islamabad Stock Exchange - 8th August 2005
• Lahore Stock Exchange - 10th August 2005
• Karachi Stock Exchange - 17th August 2005
Mohammad Aftab Manzoor has taken charge as CEO and President of the Bank on August 13 2007. He is an ex-president of MCB Bank Ltd.
Today, with its existence of over 60 years, the Bank has built itself a foundation with a strong equity, assets and deposit base. It offers universal banking services, while placing major emphasis on retail banking. The Bank also has the largest network of over 700 online branches in Pakistan and offers various technology-based products and services to its diverse clientele
1.2 INFORMATION ABOUT THE ORGANIZATION
ABL is one of the largest banks in Pakistan, serving the Country for over 60 years in all spheres at banking and financial Services
To become a dynamic and efficient bank providing integrated solutions and the first choice of bank for all customers.
• To provide value-added services to our customers
• To provide high-tech innovative solutions to meet customer requirements
• To create sustainable value through growth, efficiency and diversity for all stakeholders
• To provide a challenging work environment, and reward dedicated team members
Faisal Pervaiz-03315597157 7 1.2.3 VALUES
• Excellence in Service
• High Performance
• Innovation and Growth
ABL has emerged as one of the foremost-privatized financial institutions in Pakistan endeavoring to gear up its operations to meet the demands of the future.
1.2.4 MAIN OBJECTIVE
The main objective of the bank is to accept deposits and provide loans to its customers and also to be more efficient in providing services. The bank maintained its commitment to most efficient and personalized services to its customers. Allied Bank of Pakistan introduces many remunerative schemes for its depositors and introduce computer services for the first time in the banking history of Pakistan. Allied bank gives advances to small, medium and Big industries, commercial establishment, agriculture, construction companies and other needy persons.
Allied bank collects electricity gas and telephone bills from public and over hundred branches of Allied Bank Ltd. deal in foreign exchange were facilities are given to financial and commercial so its ultimate objective is to receive funds from the depositors and provides loans\credit facilities to different sector including trade, industry and agriculture in its most branches.
1.2.5 SERVICES/PRODUCTS OF ALLIED BANK Ltd
Allied Bank has introduced the Allied Cash last year also referred to as ATM card. The customer will now have the convenience of withdrawing cash from any of ABL’s ATMs (Auto Taller Machine) conveniently located in major cities at any time of the day or night even on closed days/holidays. Other services include customer being able to inquire about the balance of his/her account or printing an abbreviated (mini) statement showing the most recent eight transactions up to the previous working day.
In order to obtain Allied Cash+ Card, the customers simply have to fill out prescribed Application form available at selected Allied Bank Branches in Karachi and Lahore. The dully-filled form should be handed over the Manager of the Branch where the customer is maintaining his account. Non-account holders would first have to open an account with Allied Bank to have access to this facility. The Customer can feel absolutely safe his Allied Cash + Card because it can only be used with the Personal identification Number
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(PIN), which is given to him by the bank. Graphical representations have been employed, where appropriate, for ease of understanding.
This topic is further explained in chapter 4.
Allied Umrah Aasan
This unique scheme facilities those persons, who cannot afford to incur the lump sum expenses for Umrah. It allows the intending pilgrims (Aazmeen) to make payment of Umrah charges in monthly installments. Its salient features are:
• It is free of interest and markup.
• Using this scheme family, relatives and household servants can be sent for Umrah.
• Around 2500 Aazmeen are to be sent for Umrah every month.
• Lucky winners of the draw are duly informed by their respective branches.
• Total package for Aazmeen from Karachi is being Rs. 45,000. Aazmeen from
Lahore and Islamabad will have to pay an extra Rs. 3,000/- for Airline fare.
• Umrah packages are of 10 days duration. The charges include Airline return
• Fee Visa, family accommodation and traveling within Saudi Arabia (Jeddah to
Makka, Makka to Madina and Median to Jeddah).
• Application for whole Family/Group can be filed through a single Application Form. All applicants of a family/group are sent for Umrah even if only one member of that family/group is declared successful in the draw.
• Due to any reason if Umrah Applicant needs to withdraw his/her application, he/she will given a refund of all money deposited through installments till that time.
• At the time of submitting the application Aazmeen has to deposit Rs. 2,000 per person as first installment. Rest of the money is to be deposited through monthly installments of Rs. 2,000/- person on every 5th day of the month.
• If an Applicant wins in the draw he/she is required to pay the balance amount through monthly installments on returning from Umrah.
• Aazmeen have to submit a copy of their NI Cards and Passports with the application.
• Applicants have to deposit the monthly installment using deposit slips still 5th of every month. Defaulters will not be included in the draw.
The customer can now become the holder of a true Credit Card here in Pakistan. Allied Bank under license from Master Card International, U.S.A. issues its Master Card to anyone meeting the eligibility criteria. With the Allied Bank Master Card the customer
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is assured of a service meeting the highest international standards maintained by Master Card.
The Allied Bank Master Card helps the customer pay without the complications of cash or checks. It doesn’t cost the customer anything if he pays in full within the due date, but if he decides to spread the payments over several months a service charge @ 2.50% per month is charged. Allied Bank – Master Card is safer than cash and simpler than checks.
The customer has been an account holder with the Allied Bank to apply for the Allied Bank – Master Card that is available to the customer for an initial fee of Rs. 2,000/- (Rs. 500/- membership fee + Rs. 1,500/- annual fee). Once the customer obtains his card, he simply presents it at Shops, Supermarkets, Hotels, Pharmacies, Nursing Homes, restaurants, Petrol Pumps and hundreds of other establishments which display the familiar Master Card sign throughout Pakistan and abroad.
Once purchases are made, the customer signs a voucher and that’s it he is not required to take extra troubles. Every month the customer receives a statement showing details of transactions, outstanding and the minimum amount due. The statements also give the last date for payment so the customer can avoid paying service charges.
In order to avoid disruption in use of the card, it is essential that a least minimum payable amount of the bill be paid regularly. In case the required payment is not received the operation of the Master Card is automatically, suspended by the system. In such case, the card is activated after receipt of overdue payment only.
Allied Tahafuz Deposit Scheme
Brings the customer unparalleled life insurance covers along with attractive monthly profit. Minimum Deposit amount – Rs. 50,000/- or multiples thereof. Insurance cover up to - Rs. 5,000,000/. As Competitive rate profit. The features of this scheme are:
• Prospective client who will maintain a return free deposit for at least 3 months shall eligible to avail interest free/mark-up free finance.
• Payment of profit on monthly basis, automatic renewal on face value.
• Life insurance up to 5 times of the customer’s deposit amount with no extra cost.
• Premium shall be paid by the bank.
• Full payment of claim in case of – Death – Permanent total Disability.
• Eligibility Age – 18 to 64 years.
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Allied Karzas Scheme(No Interest/Markup)
Allied Bank moves a step forwards by introducing interest free banking through Allied Karzas Scheme. The aim of this scheme is to provide an opportunity to the depositors to take advantage of a real Riba Free economic environment and avail
• Prospective client will maintain a return free deposit for at least 3 months shall be eligible to avail interest free/mark-up free finance.
• Deposit amount Rs. 100,000/- and multiples thereof.
• Minimum deposit period, 3 months with automatic rollover facility.
• Premature encashment allowed, without any penalty/charge.
• Minimum deposit period for eligibility of finance, 3 months.
• Maximum period of finance, 6 months.
• Maximum period to avail finance, 12 months from the maturity of deposit.
• Every month (30 days) completed by the deposit shall be taken into account for calculation of entitlement of finance.
• Finance proposal processing fee Rs. 100/- (non-refundable) plus documentation cost on actual basis.
• In case of default/delay in repayment @ 0.055% per day (20.075% p.a._ to be placed in charity A/C.
• Formula for calculation of entitlement of finance.
- Same amount of finance for half the period of deposit or - Same period of finance for half the amount of deposit.
The Bank having a network of 755 branches all over Pakistan, undertakes to provide safe and instant payment of remittance from expatriates, routed through designated foreign exchange companies and correspondent banks with whom special arrangements have been made in this regard. Through the Allied Express Services, ABL
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ensures that beneficiaries’ Accounts in ABL branches are credited with in 48 hours of receiving home remittance information from overseas.
The Bank serves the intending pilgrims by helping them in performing this religious obligation. The Hajj forms and other related services are provided by the bank. However, the terms and conditions for accepting the Hajj forms from intending pilgrims are in accordance with the Hajj Policy announced by the government, each year. Hajj applications are available with all branches during Hajj season, immediately after the Hajj policy is announced by the Government of Pakistan.
All branches of the Bank collect utility bills of electricity, gas and telephones. For convenience of the customers, Utility Bills are collected by the branches during banking hours and also in he evening banking on all working days. Bills can be paid through cash or checks. Consumers may drop bills with crossed checks into a drop box available at the branches under “Checks Drop-in” system.
Bank under Agricultural Financing Schemes envisaged by he State Bank of Pakistan extend short, medium and long term, farm and non-farm credits. The farm credits are extended for production (inputs) and development purposes. Non-farm credits are allowed for livestock (goats, sheep and cattle), poultry, factory including social forestry and fisheries (inland and marine excluding deep sea fishing).
Allied Bank Lockers are available in three different sizes Small, Medium and Large on a yearly fee. Locker holders need not have an account in the Bank.
Import Export Business/Trade Finance
ABL Provides highly efficient trade finance services for import/export business for our clients/customers through large number of authorized branches where trained and motivated staff is available to handle the business on behalf of customer.
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Allied Bank Rupee Travelers Checks
Carrying cash to strange alien location can prove to be risky as a single incident can render one without monetary backup of any sort. Hence banks introduce traveler’s checks in order to protect against any contingency.
v Running Finance is a short-term loan allowed by the bank for a period of one year. The running finance account can be operated and daily sale proceeds can be deposited into the account. The markup is recovered on the products of daily outstanding balance. The running finance is suitable for meeting day-to-day financial needs of the business.
v Cash Finance is allowed against pledge of goods. The delivery of goods is made against payment.
v Demand Finance is disbursed in lump sum or in accordance with the agreed disbursements schedule and it is repayable as per the agreed installments, which could be monthly, quarterly, biannual or annual.
Both primary and secondary have been used in the compilation of this report. The methodology used is as under:
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; other printed material of the Bank and internet played a vital role as a source of secondary data.
Keeping in view my limitations during and the nature of the study, two research approaches were adopted. These research approaches are:
• Observation as.
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Ø Non-participant observation.
Details of the sampling plan used during this report are given below.
The sampling unit constitutes of the following.
• Manager of ABL Tench Bazaar branch.
• Staff of ABL Tench Bazaar branch.
• Personnel from Regional operations department.
• ATM coordinator
The sampling size constituted of
• All the customers coming into the Bank.
• Five bank managers.
• Fifteen staff members.
• Two personnel from operation department.
• Three ATM coordinator of different branches
The sampling procedure used was non-probability judgmental and convenience procedure.
Personal contact method was used as a contact method, which included:
• Structured interviews with managers and personnel from operations department.
• Unstructured interviews with staff members.
• Structured interviews with stuff related to ATM
1.3 DEPARTMENT INFORMATION1.3.1 CURRENT SAVING DEPARTMENT
In ABL Tench bazaar Branch current saving department mainly deals with
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to the person responsible for issuing the tokens. . Then cheque is passed on to the computer operator to entry it in computer. Afterward it will go for signature verification after which it will be given to cashier for payment.
1.3.2 ACCOUNT DEPARTMENT
Deposits the Life Blood of a Bank
Bank borrowing funds from outside parties is more important because the entire banking system is based on it. Receiving of deposits is a basic function of all commercial banks. Commercial banks do not receive these deposited for safekeeping purpose only. When the bank receives the amount of deposited as a depositor, it become the owner of it. The bank may therefore use these deposits, as it deems appropriate. But there is an implicit agreement that the amount owned by the bank will be paid back to the depositors on demand or after a specified period of time.
The borrowed capital of the bank is than the bank own capital. Bank’s borrowing is mostly in the form of deposits. These deposits are lend-out to different parties. Larger the difference between the rate at which these deposits are borrowed and the rate at which they lend-out the greater will be the profit margin of the bank. Larger the funds lend-out the greater will be the return earned on them and greater the amount of return on these deposits earned greater will be the profit for the bank. It is because of this interrelated relationship. Deposits are referred to as the “life blood small” for any banking sector.
1.3.3 ADVANCES DEPARTMENT
The basis function of the bank is to accept deposit and lend money to the borrowers against a spread so to be able to give some profit to the depositors as well as to earn profit for the bank.
While lending the money to the borrowers the bank should observe the following lending principals:
Function of Credit Department.
The main function of the credit department is to lend money to the customer. Allied Bank Ltd. Lends money in the form of clean advances against promissory notes as well as secured advances against tangible and marketable securities. Beside these ABL also lend money against life policies and immovable property..
Faisal Pervaiz-03315597157 15 REMITTANCES DEPARTMENT
Another important department in ABL Tench bazar Branch is Remittances Department. The remittances department transfers the funds from one bank to other bank and from one place to another place.
In remittances department the collection take place. The ABL made payment of only open cheques on the counter and prohibits the payment of crossed cheques.ABL transfers money from one place to another by the following means:
This is the most important and critical department in a Bank. There are two basic functions performed by the cash department. These are
FOREIGN CURRENCY DEPARTMENT
Like Pak rupees account the foreign currency has many accounts like § Saving account
§ Current account § Term deposit account.
The bank deal in three type of foreign currency account 1. Dollar
2. Euro 3. Pound
In clearing process, if the account holder of ABL receives the cheque of other bank like City Bank, Habib Bank Limited etc, and he submits it in ABL branch to be cashed. At the same time the clearing process starts. First the bank name. Cheque number and the amount are written in the register. After this three kind of stamps are required
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first bank name stamp, secondly clearing stamp of next date and If the cheque is not local then the inter city clearing stamp is required.
Some cheques are local and some are outstation. The institution N.I.F.T. provides the services in clearing the cheque. They send the different cheque to different banks. The N.I.F.T service is only in few cities, like Karachi, Lahore, Rawalpindi. The cheque of inter city is send through N.I.F.T. And where, the N.I.F.T service is not available so the cheque is sent through T.C.S.
The clearance of cheque is informed through advice. Some cheque is not passed so they should return so Rs. 100 is deducted and if the cheque is inter city then the postage charges is deducted. For this purpose the Debit & Credit voucher is used. When the cheque is cleared the today stamp is required. Some cheque is drawn on ABL. This is called outward clearing. These cheques will be entered in the outward clearing register. And the advice is sent for the clearance of cheques. The account holder account is credited.
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Chapter – II
SWOT & PEST
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2.1 SWOT ANALYSIS
SWOT analysis is an acronym that stands for Strengths, Weaknesses, Opportunity and Threats. This is a careful evaluation of an organization’s strengths to avail an opportunity by overcoming its weaknesses and phasing out all he threats to its survival in order to grow and survive.
• This branch is provided with 3 fax machines, more than 7 telephone connections, which makes communication easier with different branches
• The branch is linked through a online network of 755 BRANCHES, thus enabling them to serve customer in better way.
• This branch is provided with latest computer which increases the speed of computer work.
• The branch is situated in the commercial hub of Rawalpindi. This location provides a competitive edge to the Branch.
• The branch is situated in commercial area were business activities perform greater as compare to residential area. Thus it increases the number of customers.
• The Branch has the most experienced and the least experienced staff, which is a good combination of experienced heads and exuberance of youth.
• The branch is the main branch in the areas, which is another plus point for the Branch.
• It holds the Hundi Accounts, where the payments are made through checks. This process provides an opportunity to the Branch to have more of the Hundi customers as the Bank customers.
• The Branch has a good staff combination on the basis of experience, but their training capabilities are not up to the requirements of the fast changing banking environment.
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• The technical training of the staff is negligible e.g. in case of the absence of computer there is no alternate trained personal who can record the daily transactions.
• The organization is very much mechanistic and provides no flexibility to encourage creativity.
• The lower staff is non cooperative as compared the lower staff of other branches.
• The control of manager is not effective.
• The discretionary powers of manger are very low to offer more incentives and value added services to its customers.
• There is a lack of commitment and professionalism on part of the employees. The
staff is always in a hurry to leave the bank as soon as possible. They were also observed to starting their operations comparatively late.
• The organizational culture is not cooperative
• Nepotism was observed on part of the manger as well as the top management towards some staff members.
• The branch has no industrial accounts.
• The level of technology management in the branch is very low. The technology available is not maintained well mainly because of the lack of technically trained staff. For instance the scanner, in spite of its availability has not been used for scanning the specimen signature cares.
• In spite of the presence of technology many jobs are done manually such as the letters, drafts for fax messages and other calculations, which could be easily, done in MS Word and Ms Excel.
• The branch lacks some physical facilities such as clean washrooms which can affect employee’s performance
• The layout of the branch is such that it is hindering the flow of work on one hand and the documents are lying exposed which can be easily taken away by any person entering the branch.
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• The job distribution is not up to the mark. The immediate result of this immediate result of which is:
Ø The filing system is not up-to-date. Much time is wasted while searching for even a week old document.
Ø The staff spent ore time in collections than required.
• Delays were observed because the prescribed procedures are not followed.
• Though ABL, Tench Bazaar branch in the area it lack specialized counters or facilities such as:
Ø Investment advisory counters;
Ø Leasing or leasing arrangements;
Ø Credit services.
• The four branches of Allied bank in Rawalpindi are closely located where most of
the services offered are not at all differentiated.
• No efforts are made to recover the outstanding debts.
• There is no facility for receiving and satisfying complaints and inviting suggestions.
• Foreign currency accounts are not entertained. The main reason for these negative responses that the staff is not trained in dealing foreign currency accounts.
• Customers’ coming to the Bank for TTs TCs etc. are not received with open hearts
and thus deprives the bank of revenues.
• Some shortcomings on part of Allied Bank of Pakistan, which affects the operations of the bank Tench Bazaar branch:
Ø There is a lack of functional and proper research and development, which could scan the micro and macro environmental data for future planning and strategy.
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Ø Financial audits are conducted but operational audits have not received proper attention as much as it should get.
Ø There is no procedure, which could encourage the middle and lower level management to initiate creativity.
• The biggest opportunity for the ABL, Tench Bazaar branch Rawalpindi is the greater number of Christine customers who get their payments through ABL, Bank Tench Bazaar branch. These customers can be easily convinced to open their accounts with ABL.
• A considerable portion of the labor force of the area is serving overseas. Their families can be encouraged to use ABL as channel for remittances.
• The Internet facility in the area provides an opportunity to ABL to get Online.
• The Bank has the basic infrastructure, which can facilitate the online process.
• The location of the ABL, Tench Bazaar branch itself provides an opportunity to ABL to get more and less cost deposits.
• The group from its survey and analysis of IT companies have found out that there are many companies which are not satisfied with its current bank, so Tench branch with its superior service quality and long working hours can capture those customers
• The biggest threat to the operational success of the branch is the better competitor’s services. Many private sector banks are offering higher rates of return to customers than Allied Bank of Pakistan.
• Cannibalization of profits is yet another threat to the success of Bank Tench Bazaar branch. The branche of Allied Bank are located very close to the Soneri Bank Tench Bazaar branch. All these branches are taking away each other’s customers.
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• One of the biggest to the ABL, Tench Bazaar branch is the increasing rate of dissatisfies customers. Most of these customers were observed to be dissatisfied with the delays in their servicing.
• The greatest threats to the performance of ABL, Tench Bazaar branch are the decreasing morale of employees. They feel that they are not provided with bonuses. They are not given proper attention to have a say in the annual meetings. The proxy forms are signed on their behalf without letting them know.
• High-pressure interest groups are developing which poses a constant threat to Allied Bank.
2.2 PEST ANALYSIS:-2.2.1 POLITICAL
Pakistan despite all international and public perceptions, today is a functioning democracy and gradually there is a change in complexion and composition of legislatures with more educated people and women (27% of National Assembly and 17% of Senate) entering into politics Similarly it helps in designing best strategies to implement that could support the revival of bank industry. Like in the era of nationalization banks had to suffer as other industries that’s why that impact is still found in the performance of this industry.
Although banking sector development is important at the early stage of economic growth, general liberalization presuming a homogeneous bank role may not necessarily promote growth. The estimated cost structure indicates that state-owned commercial banks are large enough, while development financial institutions and private banks can expect to obtain cost-saving advantages by expanding their operations. Since scope economies are significant, portfolio diversification generally increases bank profits. In addition, privatized banks are the most efficient, followed by foreign and private banks. Public banks are the least efficient.
Banks always helped people in improvement of living condition of poor people in various forms like giving loans to poor for starting business or directly providing them the instruments that could enhance their living conditions. Similarly Allied Bank always tried to provide the needy people loans on soft terms and also helped to
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eradicate unemployment by providing job opportunities Recent high growth trends coupled with enhanced spending on social and
005/2006 has together begun to pay some dividends as evident from the reversal in poverty incidence trends and social indicators.
The Banking sector in Pakistan has experienced a rapid transformation. Just about a decade back this sector was limited to the Sarkari (read nationalized) and co-operative banks. Then came the multi-national banks, but these were confined to serving an elite few. One could regard the past as the 'medieval ages' in the banking industry, wherein every branch of the same bank acted as an independent information silo and multi-channel banking (ATMs, Net banking, Tele-banking, etc) was almost non-existent. Today banks have to look much beyond just providing a multi-channel service platform for its customers. There are other pressing issues that banks need to address in order to chalk-out a roadmap for the future. Here are the top three concerns in the mind of every bank's CEO. The customer is interested in how he/she can benefit from the bank and its products. That's why it becomes necessary for a bank to differentiate its products from the others. Some of the ways in which differentiation can be introduced are through specialization, new products, and increasing the added value
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Chapter – III
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3.1 CONCERN DEPARTMENT , DUTIES & LEARNING
My duties at the bank during my internship were of the diversified nature. I was rotated in the different departments of the bank. I was also assigned with some responsibilities of the minor level. They gave me some assignments as well to give me the true exposure of practical work environment. So my duties can be categorized department wise as under:
In this department I spent about 3-4 days. I observed the procedure carried down here. Based on my observation and briefing from the staff I was asked to prepare advices for collection of demand draft amount, Outward Bill for Collection (OBC), fill in the deposit slips presented by the customers, enter the proceedings in concerned registers.
ONLINE FACILITY PROVIDER DEPARTMENT
Online banking is a wide spreading concept in banking sector. This department mainly performs the basic operation of fund transfer and other functions facilitating the transfer and enquiries. I observed the basics of the department. I didn’t have the opportunity to seek the details because the online department is a sensitive area and also electronic based.
I prepared online transfer slips foe the customers. I also informed the customers of their account balance, account status and about other queries available online.
CUSTOMER CARE DEPARTMENT
This department serves as the front representative of the bank. Multiple tasks are executed in this department. I was asked to observe different complaints received by the bank by its customers. I maintained the sundry account register, suspense account register. I put the applications received for the ATM cards in the register. I also had to maintain the register maintained to record the receipt of new account opening forms along with the register kept for recording those ATM cards, which have been delivered
FOREIGN EXCHANGE DEPARTMENT
This is the department with a very vast scope and a variety of dimensions. There, I had to maintain the record of some Letters of Credit (LCs). I was liable for making drafts of outgoing SWIFT messages. I also made the entries of incoming SWIFT messages in the register. I was asked to enter the particulars of I-form (Import form) and E-form (Export form) in their respective registers.
Faisal Pervaiz-03315597157 26 ADVANCES AND CREDIT DEPARTMENT
In this department I was given some files to study, which were about the applications of credit to be approved. The person in charge of there briefed me about the term and conditions on which the bank accepts or rejects an application foe the credit. In this department, like the online department, I didn’t have an opportunity to practically handle the work due to the sensitive nature of the work.
Apart from the duties mentioned above, I had to perform some other duties as well. The prominent amongst them is called “Calling” in the banking jargon. It’s manual checking of the record produced by the computer pertaining encashment, transfer and collection of cheques and other instruments like deposit slips and online slips. I had to work with the person responsible of keeping the record of DD payable. I was assigned with the duty of keeping the record of DD payable of a given period.
NEW KNOWLEDGE ACQUIRED
CHEQUE BOOK ISSUING PROCESS
If some one opens a new account and become the client of the Allied bank of certain branch then he gets the requisition slip on which cheque book is issued Normally people use two types of accounts
2)Profit and loss account or PLS Account
3)Term Deposit Account
Current account cheque book has 50 leaves and it cost RS.100
Profit and loss account or PLS account cheque book has 25 leaves and it cost RS.125
Term deposit account cheque book has also 25 leaves and it also cost RS.50
In every cheque book there is also a requisition slip available for the purpose of reissue of a cheque book, if the first cheque book has no more leaves. There is written the title of account holder, his account number, the stamp of Allied bank and the signatures of the authorized person on every page of cheque book and also on the requisition slip.
Faisal Pervaiz-03315597157 27 CLEARING AND COLLECTION
There are two types of clearing/collection cheques
1 Inward clearing/collection 2 Outward clearing/collection
This department receives negotiable instruments drawn on local branches of other banks.
NIFT clearing house, in which cheques and other negotiable instruments are brought by each local bank representative and the claims of each bank on other is offset and a settlement is made by the payment of difference. Clearing system is helpful for both the customers and bank in saving money, time and labour.
The cheques and drafts come to branch from different BANKS. They enter the particulars of the cheques on a register. After this process the balance with total drafts and total amount are given to the representative. ABL works under the rules and regulations prescribed byf State Bank of Pakistan (SBP) and has an account with SBP. The clearinghouse of SBP (NIFT), through whom brnches forward/receive-clearing cheques along with a schedule conducts clearing.
The clerk of forwarding branch prepares the schedule and vouchers of all the claearing cheques, which he receives by the clerk on that day and sends these cheques to the checking officer. Checking officer passes these cheques and vouchers by his initials, endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of these vouchers in the clearing register. Representatives’ banks collect these cheques. Next day at 8:30 A.M. representatives of all local banks and foreign banks exch The cheques and drafts come to branch from different banks.
They enter the particulars of the cheques on a register. After this process the balance with total drafts and total amount are given to the representative. ABL works under the rules and regulations prescribed byf State Bank of Pakistan (SBP) and has an account with SBP. The clearinghouse of SBP (NIFT), through whom branches forward/receive-clearing cheques along with a schedule conducts forward/receive-clearing.
The clerk of forwarding branch prepares the schedule and vouchers of all the clearing cheques, which he receives by the clerk on that day and sends these cheques to the checking officer. Checking officer passes these cheques and vouchers by his initials, endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of these vouchers in the clearing register. Representatives’ banks collect these cheques. Next day at 8:30 A.M. representatives of all local banks and foreign banks exchange their cheques, which are drawn on their banks.
The clearinghouse debits/credits the payee/receipt branch with the total amount of the cheques paid on their behalf. The settlement of book entries e.g., if ABL is to give Rs. 2
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Million to UBL and UBL has to give Rs.1 million to ABL then ABL will draw a cheque of 1 Million in favour of UBL. SBP will debit this amount from ABL account and credit of UBL account. In this way mutual cross debiting and crediting in the books of SBP settle obligation of banks
All the inter-bank adjustments will be affected through head office account called Pak account. It will be essential for the branch to advise pak account of each transaction so that they may also pass the necessary entries in their books. The NIFT will send a consolidated debit/credit advice to the branches in respect of clearing cheques delivered to or received from the branches. The amount of the advice will agree with the total be office. amount appearing in the schedule of cheque delivered/received. The head office will similarly send advice to the branches of the returns, if any. Copies of all advices will sent to the head office
INTER-BRANCH CLEARING AND COLLECTION
transfer and delivery of cheques. The same clearing cheque procedure will be adopted in the transfer deliveries except in case when the facility of SBP is not availed. In case of cheques drawn on one branch and collected by an other branch for the credit of its constituents, the branch delivering the cheques will send a consolidated debit advice. If any cheque is returned unpaid, aBranch receives the cheques and other negotiable instrument drawn on other branches of the same bank. Main branch of ABL handles the credit advice will be sent to the branch returning the cheque
COLLECTION CHEQUES OR OBC
The collection cheques/OBCs are the cheques, which we have cleared for our customers when some of our customers receive the cheque that is of some other city. These types of cheques are known as collection cheques or the other name we gave them is OBC
PROCEDURE OF COLLECTION
On the cheque there is written that the person to whom it may concern can cash it from the certain branch of the bank in favour of which it’s drawn. The customer presents the cheque to his branch, which send a document called “OBC” to the bank that has to make the payment. The clearing department of the receiving bank follows a prescribed procedure and credits the amount to sending bank through a central account
maintained by each bank with SBP. ABL sends the cheque to it’s own branch if available for collection from the payer’s bank otherwise the OBC is directly sent to other bank.
Faisal Pervaiz-03315597157 29 MAINTAINING REGISTER for OBCs
We have a register in which we have the serial no for OBCs with other details like amount, date, sending and receiving branches’ codes. Every OBC is entered in tha register on daily basis. If OBC is not cleared due to what ever fault, we take it back as a return but after that we call the concerned person and we also write name of the perso
I learnt how to open a new account. The person willing to open an account has o complete the account opening forms, which has several particulars pertaining to personal information of the person.
The bank makes sure that all the information provided by the person is authentic. Along with the information given by the person himself, bank requires introduction of an already existing account holder of the same bank but preferably of the same branch.
The bank also requires account no. and copy of the introducer’s NIC.
Bank also requires a copy of the NIC from account opening person. He will also have to provide two samples of his specimen signatures for any withdrawal of amount. In case of illiterate person, he will provide the bank with his left thumb impression along with two photographs. In case of a Pardah Observing lady, the bank prefers not to open an account but if so, it will require her to provide impressions of her both thumbs.
After all this formality, the bank after a few days sends a letter of thanks to the address of the person disclosed in the AOF. When the letter is received, the person may come to bank and collect his cheque book
The bank also informs its head office about the new accounts and also charges nominal amount at first time.
MATTER OF ZAKAT
The deductions of Zakaat from the account of Muslims are made on the 1st
Ramadan according to the Islamic rate. But the people who do not want the bank to deduct Zakaat and want to disburse it at their own, they have to provide an affidavit on a prescribed format provided by the bank.
The department providing online facility to the customers, I liked the most. I learnt different procedures regarding this department. I learnt the process of online transfer. The whole this process need is filling of a slip, and cheque or cash. In the slip the name of remote branch and account number of the remote person must be entered. If the person is not an account holder of the bank then he has to attach his NIC copy with the slip for his identification. The person availing this facility submits the cash on the cash counter and
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then gives the slip to the host person at the department, who then enters the data in the computer. In this way the money is transferred to an account through PAK account, which is the central account of the bank and all the inter branch transactions has to go through this process.
LEARNINGS IN FOREIGNEXCHANGE & ADVANCES DEPTT
As an internee I learnt many things some of which I have described above. The remaining few include the processes involved in the foreign exchange and advances department. Now a day, both of these departments are considered to be the backbone of any bank. Foreign exchange department brings foreign reserves. Mostly import and export business takes place through foreign exchange department.
Advances/Credit department is equally important. This department gives the bank a real business. The bank gives money to the borrowers on interest and earns a lot in this way. The bank lends money against some guarantee or pledges some property for this purpose. So that in case the customer cannot pay back money, the bank can meet over come its expenditures.
HOW EXPERIENCE IMPACTS MY CAREER
My internship experience has given me a realistic preview of practical life. Now I feel that I am better prepared to enter the world of professional work. I have come to know and been appreciated by a number of professionals who are lending their services to the banking sector for more than a decade.
I feel honored that I have worked with such experienced professionals. I must admit that such interaction in this respectable professional community will help me in seeking out good job opportunities in the near future.Each task I performed was a different experience in itself. By the end of it, I must say I realize my potentials, I have realized that practical life is not so easy after all, it takes alot of hard work and devotion, and not to forget time
. And I now know that if I want I can make things possible, and I also know how good it feels to having accomplished something and being appreciated for it. I definitely have learnt things, which will impact my career and my character.The overall experience of my internship was very good; I have learnt the sense of responsibility in its literal meaning. I am now capable of dealing with different sort of customers, and how to be patient while doing so. Besides this I also gained knowledge about banking which I previously lacked and many more products being offered by the bank. So in a nutshell, this internship gave me the experience, which would no doubt boost my confidence to work in future.
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Chapter – IV
Faisal Pervaiz-03315597157 32 4.1 VERTICAL ANALYSIS
(AMOUNT IN RS) 2006 2007 2008
RS %AGE RS %AGE RS %AGE
cash 24745023 9.28% 30408306 9.5% 25750533 7.02 Lending to Financial institutions 19050239 7.56 18419241 5.75% 15793183 4.31% investments 46953241 18.63% 83958463 26.23% 82631118 22..53% Ad net 144033634 57.15% 168407280 52.61% 212972008 58.08% Fixed asset 6445111 2.56% 7548628 2.36% 11134436 3.04% Asset 638168 0.25% 662431 0.21% 1029223 0.28% Other asset 10161361 4.03% 10705374 3.34% 17369961 4.74% Total asset 252026776 100% 320109723 100% 366680192 100% Liabilities Customer dept 206031324 87.92% 263972382 100% 366680192 86.39% Inter bank borrowing 18410428 7.86% 22933656 7.64% 27778151 8.07% B/P 2278007 0.97% 3494384 1.17% 2952490 0.86% Other liabilities 5119267 2.18% 7332059 2.4% 13620616 3.96% Sub-ordinate loans 2500000 1.07% 2499000 0.84% 2498000 0.72% Total liabilities 243339023 100% 300231481 100% 344324578 100% Net assets 17687753 7.55% 1987242 6.62% 22355614 6.49%
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4.2 HORIZONTAL ANALYSIS( Amount in rupees)
2008Cash balance 24745023 100% 30408306 122.88% 25750533 104.06% Lending to institutions 19050239 100% 18419241 96.68% 15793183 82.901% investment s 46953241 100% 83958463 178.814 % 82631118 175.98% Advance net 144033634 100% 168407280 116.92% 212972008 147.86% Op fixed asset 6445111 100% 7548628 117.12% 11134436 172.75% Deferred tax Assets 638168 100% 662431 104.95% 1029223 161.27% Other assets 10161361 100% 10705374 105.35% 17369961 170.93%
liabilitiesCustomer debt 206031324 100% 263972382 128.12% 297475321 144.38% Inter bank borrowing 18410428 100% 22933656 124.59% 27778151 150.88% B/P 2278007 1005 3494384 153.39% 2952490 129.60% Other liabilities 5119267 100% 7332059 143.22% 13620616 266.08% Sub-ordinate loans 2500000 100% 2499000 99.96% 2498000 99.92%
146.9%NET ASSETS 17687753 100% 19878242 112.38% 22355614 126.3%
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4.3 RATIO ANALYSIS
LOAN TO DEPOSIT RATIOFORMULA
(TOTAL LOANS/TOTAL DEPOSITS)*100
(RS IN MILLION)
2006 2007 2008
Total loans advance 144033 168407 212972 Total deposits 206031 263972 297475
69.90% 63.79% 71.59%
This ratios shows a r/s between loans and advances and reveals how much Productively the deposits are used. Analysis shows an increase in loan to Deposit ratio, because advances are also increasing sharply with the increase Of deposits. This condition is favorable or the bank. If deposits increase by Higher rate than an increase in loan than bank has to face difficulty
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LOAN TO ASSET RATIO
(TOTAL LOANS/TOTAL ASSETS)*100
RUPEES IN MILLION
2006 2007 2008
Total loans advances 144033 168407 212972 Total ASSETS 252026 320109 366680 57.00% 52.60% 58.06%
Total advances of the bank increased from 2006 to 2008 and total asset Also increase from in 2006 to in2008. This parallel increase in advances Provide us gradually increasing ratio.
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NET PROFIT RATIO
(NET PROFIT/RETURN ON FINANCING)*100
RUPEES IN MILLIONS 2006 2007 2008 Net profit 4156 4076 4397 Return on financing 15006 12387 12166 27.69% 32.90% 36.14 GRAPHICAL REPRESENTATION ANALYSIS
The net profitability of the company is increasing from 2006 to 2008 as Shone above. The increasing net profit trend shows the managements Efficiency to control the operating cost and to maximize the profit
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RATE OF RETURN AT LOANFORMULA
(INTEREST INCOME/TOTAL LOAN)*100
(RUPEES IN MILLION) 2006 2007 2008 Interest income 9.717 8.467 10.854 Total loan 144.033 168.407 212.972 6.74% 5.02% 5.09% GRAPHICAL REPRESENTATION ANALYSIS
The rate of return at loans of the company is increasing. This show that the bank is in good position. When we compare the interest income of the company with the loan. The rate of return is increasing with the amount of total loan. This shows that the bank Is earning favorable interest income on the loans.