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INTERNSHIP REPORT ON ALLIED BANK LTD

Prepared By



Shahid Iqbal
BSc Accounting & Finance
Bahauddin Zakariya University Multan
2009-2013





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DEDICATION













All My Words Dedicated With Respect, Reverence Love and Affection to
My Loving Grand Parents, Parents, Sisters &My Loving Brother Mr.
OMAIR HASSAN who taught and hold my hands on several occasions
and help me to reach this stage.





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AKNOWLEDGMENTS


I wish to praise almighty Allah, the most Merciful, who gave courage and enable me in
accomplishment and submission of this report.
Many people have contributed in the successful completion of this internship report. My great
appreciation goes to the whole team of ALLIED BANK LTD MULTAN who provided me every
kind of help in completion of my report. Last but not least I would like to thank my respected
teachers especially Mr. ALLAH BAKSH KHAN who taught me all core concepts of Financial
Management and Islamic Finance Mr. SAIF-UL-LAH QURESHI who brief me with all concepts
of Financial & Managerial Accounting.











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Table of Contents

1. Introduction..5
1.1 Executive Summary.5
2. Overview of an Organization..6
2.1 Vision Statement.6
2.1.1 MissionStatement....6
2.1.2 Values...7
2.1.3 Historical Review.8
3. Organizational Structure.10
3.1 Management Hierarchy10
3.2 Functional Hierarchy11
3.3 Board Of Directors...12
3.4 Management Team13
4. Products......14
4.1 Consumer Products14
4.2 Finance Products17
6. Structure and Functions of various Department..18
6.1 Current saving Department.18
6.2 Accounts Department.19
6.3 Remittance Department22
6.4 Cash Department..24
6.5 Clearing Department25
7. Critical Analysis...26
7.1 Financial Analysis...26
7.2 Common Size Analysis...26
7.3 Industrial Analysis...27
7.4 Ratio Analysis.34
8. Organizational Analysis.........35
8.1 SWOT Analysis.35
9. Recommendations and Suggestions.39
10. References.45
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EXECUTIVE SUMMARY

This report is about my internship whey I learnt from my internship at Allied bank limited.
It also includes how it makes or deals with its employees and Internship programs are
designed to make students known to the practical work and to give them proper experience
that would help them in their future endeavors. For my MSc course requirement I got an
opportunity to work as an internee in any organization.
I decided to take up Allied Bank Limited for my internship because it's competing bank
now days and gives a good training to the internees. So in order to learn more this was my
choice.
This report is about my internship that I have undergone at Allied Bank Limited Multan
Branch from 05-07-2012 to 15-08-2012. During my internship I am able to learn practical
aspect of business, and get good working experience. On the very first day of my
internship I reported to Customer service manager Mr. WAheed. He gave me small
introduction of the bank and introduced me to some staff of the bank. Every internee is
rotated among the banks departments and so was I. This rotation is done in order to have
general concept regarding banks functions, operations and policies. In this rotation the
stay in department is usually a week or fifteen (15) days. I worked in the operations
department that has clearing, account opening funds transfer and remittances have given
below the caption of activities I was involved in during the period of six weeks.
The working environment in Allied bank is something that can be found only in a
challenging and in a reputed multinational corporation. The senior staff is always open for
any kind of suggestions and help for the junior staff and the internees. Apart of completing
a course requirement, I learnt a lot from this internship in terms of how to deal with people
while you are on a job.









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Objectives of Studying the Organization

Purpose of studying this organization is that, I have my own interest in this bank, because of my
friend and good repute of this bank. My friend is doing job in this bank and I think this bank
provide better jobs opportunity as compare to other organizations, thats why I choose this
organization for internship.
Another reason for studying this organization is that, the bank manager was my father friend,
therefore my father recommend this bank for internship program and here I gained practical
experience related with my course and I come to know how bank use the policies and strategies
and how evaluate its performance.
I feel pleasure and honor that I got the opportunity to work in such a privileged and reputable
bank of the country. During my internship program I tried my every best to equip myself with all
important knowledge. In this report, I have tried to humble endeavor to cover various aspects of
bank like, introduction, its history, main departments, culture, objectives and working financial
analysis.


INTRODUCTION TO 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

2.1 VISION

To become a dynamic and efficient bank providing integrated solutions and the first choice of
bank for all customers.

2.2 MISSOIN

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
To play a proactive role in contributing towards the society



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VALUES

Integrity
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.

2.4. MEANING OF BANK

Some authors write that the word bank is derived from Italian word bancus OR
banque which means a bench. Because in the old days the Jews were used to make banking
settlements by sitting on the benches & to deal the exchange of money in the market place. When
any one of them becomes insolvent means that he is unable to fulfill his requirements. Then his
bench was destroyed by the customer & this practice given birth to the word BANKRUPT.

Some other Authors are of the opinion that the word bank is derived from a German word
back, which means Joint Stock Fund. & when the major part of Italy was occupied by the
German then this word back was Italianized in to the word Bank.

However, no confident record is available to believe upon. Therefore, we are not in a position to
give any bounded meanings to bank inspire of all these we can define bank as follow.

1 The imperial dictionary defined a bank as An establishment for deposits & issue
of money & also for granting loans discounting bills & facilitating the transaction from
one place to another place.
1 It is an institution, which deals with money.
2 It buys & sells the uses of money.

In other words, we can say A bank is an institution for exchange of money, sanctioning credit,
transferring funds by domestic & foreign bills of exchange.

We can also say that it is a pipeline through which money moves into & on of circulation.
Shortly & conclusively we can say that the Bank is an institution that facilitates the matters in
which the money is involved.


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2.5 MEANING OF BANKING
he Banking companies Ordinance, 1962 defines Banking as Banking means accepting
for the purpose of lending or investment, of deposits of money from public, repayable on
demand or otherwise and withdrawal by checks, drafts, order, or otherwise

PROGRESS THROUGH THE COURSE OF HISTORY
(1880) commanding presence of the Hindus in Industry Commerce/Trade.
Founder Khawaja Bashir Bux.
Australasia bank ltd first Muslim bank in Pakistan, December 1942.
Only fully Operational Muslim bank on 14
th
August, 1947.
1970 it had 101 branches.
Renamed Allied bank in 1974 after nationalization.
Branches increased from 353 in 1974 to 748 in 1991.
Privatization in September 1991.
August 2004 ownership transferred to Ibrahim Group.
BRANCH NTWORK
Online banking has been started and there are 834 CRBG (customer retail banking
group) and 4 CIBG (corporate and investment banking group) in 300+ cities. There
are total 601+ ATMs working only from ABL ltd. There are 4 groups which are
divided into 30 regions. The groups are as follows;
Central group 1 241 branches
Central group 2 118 branches
North group 259 branches
South group 215 branches
BRANCH BANKING JOB ASSIGNMENT
BRM (relationship branch manager)
CSM (customer service manager )
GBO (general banking officer )
o CD In-charge
o Credit In-charge/Officer
o Trade In-charge/Officer
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o Lockers In-charge/Officer
o Clearing In-charge/Officer
o Remittance In-charge/Officer
BUSINESS GROUPS
CRBG (customer retail banking group)
CIBG (corporate & Investment banking group}
TG (treasury group)
OG (operations group)
A&RRG(audit & risk review group)
CG (compliance group, SQG )
RMG (risk management group )
SAMG (special asset management group )
HRG (human resource group )
ITG (information technology group )
CAG (corporate affairs group )
BSIG (business system implementation group )
FG (finance group )
PERFORMANCE & ACHIEVEMENTS
Years Profit Deposits Advances Total
Assets
Equity NPLS
2010 8.2 371.3 267.78 449.9 35.98 18.7
2011 10.2 399.6 262.14 515.7 43.35 20.5
In 2011, ABL ltd achieved two prestigious awards;
o Bank of the year in Pakistan in The bankers magazines
o Best retail bank in Pakistan Asian banker



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President

Senior Vice President
Vice President
Executive Vice President
Senior Executive Vice
President[rosodmemtPresident
Regional General
ManagerManagerxecutive
Vice President
Branch Manager
MANAGEMENT HIERARCHY

The management hierarchy represents the different positions and designations in the
hierarchy of the ABL. However, this is not the reporting hierarchy but merely represents the
positions and grades on the basis of seniority and grades.


























Figure 2.1 Management hierarchy







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2.11 FUNCTIONAL HIERARCHY
The functional hierarchy represents the reporting order in the hierarchy of ABL. The
hierarchy has president and directors at top management level and officers Grade I, II and Grade
III at the lower level management of ABL. The middle level management consists of regional
general Manager and Regional Controller of Operations. These positions are not fixed. Any
person in the hierarchy above the branch manager can be appointed as RGM and controller
operations.






















Figure 2.2 Functional hierarch





President and CEO
Board of Director
Head of Departments
Regional General Manager Controllers of Operation
Branch Manager
Office G-I, II and other lower Staff
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2.12 BOARD OF DIRECTORS



Pervaiz Iqbal Butt
(Director)

Mohammad
WaseemMukhtar
(Director)


FarrakhQayyum
(Director)

Sheikh Mukhtar Ahmed
(Director)


Abdul Aziz Khan
(Director)

Tasneem M. Noorani
(Director)


Sheikh Jalees Ahmed
(Director)

Nazrat Bashir
(Director)


Mohammad AftabManzoor\
(CEO)

Mubashir A. Akhtar
(Director)


Mohammad NaeemMukhtar
(Chairman)














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2.13 MANAGEMENT TEAM


AsimTufail
(Group Chief, Consumer & Personal
Banking)
FareedVardag
(Chief Risk Officer)
Iqbal Zaidi
(Group Chief, Compliance)
Mohammad Abbas Sheikh
(Group Chief, Special Assets
Management)
Mohammad AftabManzoor
(Chief Executive Officer)
Muhammad Jawaid Iqbal
(Group Chief, Coprate& Investment
Banking)
Muhammad Yaseen
(Group Chief, Treasury)
Mujahid Ali
(Group Chief, Information
Technology)
Shafique Ahmed Uqaili
(Group Chief, Human Resources)
Syed Shahid Raza
(Head, Business Transformation
Team)
Tahir Hassan Qureshi
(Chief Financial Officer)
Tariq Mehmood
(Group Chief, Operations)
WaheedurRehman
(Company Secretary)
Zia Ijaz
(Group Chief, Commercial & Retail
Banking)






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PRODUCTS & SERVICES

ALLIED BUSINESS ACCOUNT

ALLIED RISING STAR ACCOUNT

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ALLIED PAY ANYONE FACILITY






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ALLIED PHONE BANKING (call center) 0800-22522


ALLIED CASH SHOP+VISA DEBIT CARD


ALLIED e-banking
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2.8 MAI N OBJ ECTI VE

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 introduces 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.

FINANCIAL PRODUCTS
Types of finance
Short Term Finance

Allied Bank Ltd. receives the saving of the people and lends it for short term to its
customers. Short-term finance is generally given for a period of one year or less in duration.
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Medium Term Finance

The duration range of the intermediate term finance is from one year to three years. It is
also called term loan. Intermediate term finance is usually given for the expansion of an existing
business or for the purchase of new equipments.
Long Term Finance

This type of finance is required for the period of more than five years. Long term finance
is generally given for the compilation of big projects, for the construction of building and for the
purchase of machineries.

Producer of Applying for Loan

Any customer who applies for loan should have an account (usually current account) with
ABL branch concerned. That account must be in running position. When approval from head
office is given, branch gives tern & condition to the party. Bank does not advance 100% loan
against a security, rather the profit margin is different in different type of loan.

DEPARTEMENT

SHAH RUKN-E-ALAM BRANCH
(Branch code = 0249)ADDRESS: T-CHOWK SHAH RUKN-E-ALAM MULTAN

I did my internship of six weeks in ABL SHAH RUKN-E-ALAM BRANCH (0249) from
05-07-12 to 15-08-07. It is one of the small branches of ABL, which is yet to be renovated. I
selected this branch because of two reasons. First, its the a retail branch and have a large volume
so more opportunities to learn and Secondly its near to my residence and is using TEMENOS
software.

In the same branch different departments of ABL are working. So I got the opportunity to know
briefly about every department

CURRENT SAVING DEPARTMENT

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In ABL Branch current saving department mainly deals with cheques, vouchers and
advices. First of all a cheque holder have to present his/her cheque 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.

COMPUTER OPERATIONS

In ABL Shah rukn-e-alam branch the computer section performs several duties that are as
under;

1. Daily Transactions

To record all the transactions in case of deposits made by the people and also to
record all the withdrawals made by the people or customers. Each transaction has to be
recorded in its appropriate head of account with the help of prescribed codes.

2. Vouchers

To record all the vouchers made by the remittance department. Remittance
department have to prepare debit and credit vouchers for about every transaction recorded
in their department. Then these vouchers are sent to computer operator to record those in
computer.
3. Advices

To record all advices received from other branches. Most of the-inter branch or
intra branch- remittances are subject to ultimate receipt of advices from the
corresponding branch to materialize the transactions. These advices also have to be
recorded in computer.

4. Statements

To close the daily record a number of statements have to be printed out.
Statements like:
Days transactions (sequence)
Overdrawn facilitated a/c statement
Markup sheet
Inter branch transactions
Detail of PLS and Current a/c
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Days transactions (a/c wise)
Operative, Dormant, Inoperative and Unclaimed a/c
All ATM transactions
Detail of GL entries (official & non customer transactions)
Summary of all a/c (debits, credits & balances)
Profit due, transferred, disbursed, etc.
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. Banks 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.

KINDS OF ACCOUNT

There are numbers of account that ABL offers to its customer keeping in mind their
needs and dealing
1. SAVING BANK ACCOUNT P & LOSS ACCOUNT
.
In Pakistan the saving Bank accounts are known as profit and profit and loss sharing
accounts (PLS A/C) fowling the illumination of bank. The owners of such account are not
allowed to withdraw money more than once are twice a week. In case of withdrawal of large
sum, the depositor is required to give to prior notices a week or two. Thus the bankers are not
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required is always available to bank for giving to loans to their customers. Thus these deposits
also serves as source of credit certain by the commercial banks.

The rate or profit on this type of account varies from time to time. All the commercial
banks declare the rate of profit every year that is paid on these accounts on the basis of their
monthly credit balance. The bank will determine the proportion of profit & its decision will be
final. Profit will be determined on daily product basis while it will be paid on monthly basis &
will be paid on the minimum balance between the first day & last day of the month. Zakat will be
deducted on the exceeding amount as exempted from the Zakat deduction. Taxes will be
imposed according to the rules & regulation.In Pakistan post offices & national saving centers
also maintain this savings bank account to encourage saving habits among the people.

At the time of opening this account, a minimum amount of Rs.500 is to be deposited.
Subsequently the account is opened & account number is located. The depositor is given a
cheque book.

The depositors who are wishing to close his account are required to present his cheques
to the bank in order to draw the credit balance and to close the account.

In this type of account you can open joint account also which can be operated by anyone.




2. CURRENT ACCOUNT

There is no limit of withdraw of money from these accounts. In practice the bankers do
not allow any profit to such deposits in Pakistan. The customers are required maintaining the
minimum credit balance in their account in case of failing incidental charges are recovered from
defaulters. This is because the depositors may withdraw current deposits at any time and as such
the bank is not entirely free to employ such deposits. In general, the bank allows the overdraft
facilities to current account holders & the prevailing rate of markup is charged from these
customers.

In ABL the minimum amount required to open the current account is
Rs. 500. No profit is paid to account beside this that the account holder has the facility to taking s
much money as he wants.

Individual account is opened in the name of the single personal one person on whose
name it is opened only conduct it. While two opens joint account and partnership account are
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more person and the bank fallow their instructions for the conduct of the account. Similarly
limited companies can also open their current account.

3. FIXED DEPOSIT ACCOUNT/TERM DEPOSITS

These deposits are also called as time deposits because these deposits are based on the
fixed duration. The period for which these deposits are kept with bank are ranged from seven
days to ten years in light of the agreement between the customer and the banker. The profit
allowed on these account depend on the duration longer the duration of the deposits the higher
will be the rate of profit.

The operation of fixed account is different from saving & current accounts. Every time
money is deposited with the bank an application from filled and the bank issue a fixed deposit
receipt for amount deposited along with specific period. Fixed deposit receipt is given to the
depositor and the bank retains the counterfoil of the same receipt.

Fixed term deposits may be in the joint names of two or more person. The payment to
one of those people will not discharge by the bank without the authority of others.

OPENING AND OPERATION OF BANK ACCOUNT

As discuss earlier there is a prescribed procedure for opening different types of account.
Following steps re followed while opening a new account.
1. Application from for Opening of Accounting

A person who wishes to open a bank account is required to complete this from the
personal information is to be furnished. The application signs the declaration to effect that he
has understood the rules and regulation of the bank.
2. Introduction

As required by the banking law the new customer needs to be introduced by the account
holder of the same branch where the account is being opened. The manager or any other
bank officer may introduce the new customer if they know them personally.

I. Signature card

At the time of opening an account a specimen signature card containing two signature
of the customer is required which the manager of the branch attaches with application
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form. During the operation of account the signature is verified when the cheque is presented
for payment.
II. Cheque Book

After completing formalities for opening saving and current a cheque books issued to the
customer for withdrawing cash from his or her account at the time of need. The cheque contains
minimum 25 pages & maximum 100 pages. The bank also charges excise duty on cheque
book.

REMITTANCES DEPARTMENT

Another important department in ABL Shah Rukn-e Alam 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:
Mail Transfer

When a customer requests the bank to transfer his money from this bank to any other
bank or the branch of some other bank, the first thing he has to do is to fill an application form.
In which he states that he/she wants to transfer the money from this bank to that bank by mail. If
the customer is the account holder of the bank, operating personal will proceed further with steps
like:
Writing a debit voucher for a/c holders a/c
Preparing an advice in favor of stated bank/branch
Writing credit voucher for GL
Mail the advice
If the customer is not the account holder of this bank, then firstly, he has to deposit the
money and then above procedure will be adopted to transfer his money.

Telegraphic Transfer

With the changing requirements of the customer, ABL has introduced the fastest transfer
of money. The sender is required to apply through a form in which he will give all the necessary
details about the sender and beneficiary. The sender deposits the money to be transferred plus
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bank charges at the bank counter. The remittances officials send a telegram to concerned branch
with specified code words and the receiving branch makes payment to the beneficiary. Vouchers
are sent by ordinary mail to keep the record. On TT, no excise duty is charged only commission
and telegram charges are charged.

Pay Order

Pay order is the most convenient simple and secure way of transfer of money. It is issued
by, drawn upon and payable by the same branch of the bank. It is neither transferable nor
negotiable and as such it is payable to the payee named there in. The following are the parties to
a pay order.
Purchaser is a person, firm, company or local authority.
Issuing/paying branch is one which issues/pays on presentation.
Payee is a person named there in.
Demand Draft

Demand Draft is another way of transfer of money from one bank to another bank.
Unlike pay order, a form is required to be filled for the issuance of the demand draft in which
necessary particulars about the beneficiary and sender are given. The sender deposits the amount
of DD plus commission and other charges on the bank counter, from where he is given a receipt
and in accordance with this receipt he is issued

The following are the main essential of draft:
It is a Negotiable Instrument.
Filling a form and depositing the amount written on it prepare 2} Draft.
It is a written order to its branches or to another bank to pay the stated amount on draft.

CASH DEPARTMENT

This is the most important and critical department in a Bank. There are two basic
functions performed by the cash department. These are
Receipts

An individual who has account in the Bank can deposit money in his account. For deposit
of the money the individual has to fill the deposit slip in which the account holder writes his
name, Account number, amount of the money both in figures and in words.
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After filling the deposit slip the Cash amount along with the deposit slip is submitted with the
cashier. The cashier collects the cash and counts it and after verification the cashier stamps the
deposit slip. One part of the deposit slip is given back to the customer and the other part of the
deposit slip remains with the bank for the record purposes
.
The cashier also record the deposits made by the customers in credit sheets daily. The
deposits of all customers of the bank are controlled by mean of ledger account. Every customer
has its own ledger account and has separate ledger cards in which his / her total record is kept.

Bill collection is also one of the main functions of bank. Cashier has to prepare a list of
bills serial number, a copy of which is to be sent to the corresponding organization.



Payments

The procedure of clearance of a cheque or payments is as following. First of all the
customer presents his cheque to the cashier the cashier records the account number and the
amount, which is to be drawn. Then the cashier check the cheque number in the computer for the
verification whether the account holder has such amount in his account which he is demanding
or not. If the computer passes the cheque, the Passing officer signs the cheque and sent it to the
cash counter then cashier pays the written amount to the customer and then in the end cashier
records the amount paid in computer.



3.8 CLEARING DEPARTMENT

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 first bank name stamp, secondly
clearing stamp of next date and If the cheque is not local then the intercity 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, and Rawalpindi. The cheque of inter city is
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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 intercity 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.

OUT WARD BILL FOR COLLECTION

OBC means the cheque of other banks. When they sent OBC the OBC is credit & OBR is
debited and the advice is made on that time, one copy is remain in the bank and the other copy is
sent to the related branch. When they realized the opposite entry is made. It is entered in the
OBC register. The income A\c commission is credited, and postage

FINANCIAL ANALYSIS

RECENT RESULTS - 1H10

During the 1H10, the profit after tax grew by 18.26% reaching the level of Rs 3,260
million. The mark-up income grew by 9.2% mainly attributing to the increase in volume growth.
On the other hand Mark-up expense, declined by 0. 4% due to improvement in deposit mix.

The non-mark-up income showed a decline in 1H10 compared to 1H09, as the income
decreased from Rs 3,363,444 to Rs 2,620,649. On the contrary, the non-mark-up expense has
shown an increase of 11.8% in 1H10. The increase is due to inflationary pressures and up-
gradation of technology.

Moving towards the asset side, ABL s gross advances as at June 30, 2010 were higher by
Rs 24,466 million or 10.9% from June 30, 2009 level. Gross investments too have increased to
Rs 112,655 million as at June 30, 2010, a growth of 27. 4% over June 30, 2009. The increase
was attributed to marginal increase in lending to financial institutions and investments, which
tend to be the earning assets of all the banks.

Advances amounting to Rs 17,269.455 million is placed under NPLs, where majority of
NPLs considered as loss. The majority of banks also fall in the same category in case of loss of
non-performing loans.
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The liabilities side of ABL, the borrowing from financial institutions has declined in
1H10. It is reduced from Rs 39,818,532 to Rs 29,333,042 whereas deposits and other accounts
have marginally increased. The main reason for this increase is the consumers have kept their
deposits in mainly current accounts, could be the reason of the liquidity condition in the
economy.

Some comparable results of top 5 banks along with ABL is done.

We see HBL on the top list in the case of after-tax profit growth for 1H10 of 29%,
followed by NBP of 24.5% and then by UBL of 21%. ABL has also performed well in
consideration to the profit growth as it amounted to 18. 26%. MCB remains the lowest in terms
of growth in After-tax profit as it marginally increased by 1. 5%. MCB was not able to gain a
higher mark-up return in 1H10 of only 2. 11%, which led to a trickledown effect resulting in a
lower profitability growth.

On the asset side, the leading earning asset tends to remain investments and lending to
financial institutions. In terms of gross investments, UBL posted a healthy growth of 24%, along
with ABL with 16%. Most of the investments tend to remain at short-term securities as the
buying and selling of T-bills and MTBs remain high for the majority of banks.


On the liabilities side MCB stood at top with the highest growth in Deposits of 14% in
1H10. Followed by NBP with 12% and then ABL with 7%. A general trend was observed in
Deposits, as the deposit base increased mainly on account of Current Accounts and Saving
Deposits.

OUTLOOK FOR THE REMAINING QUARTERS OF FINANCIAL YEAR 2010

Higher inflation, liquidity crunch and inevitable rupee depreciation may pose pressure on
the countrys operating environment, unless flows from IMF and other multilateral agencies start
pouring in and international oil prices come down. Under these circumstances tightening of
monetary policy by SBP in upcoming review started gaining weight. Hence ABL, being
cautious of the prevailing economic conditions would continue with its strategy of achieving
steady growth by taking exposure in selected avenues following stringent risk management
policies, proactive monitoring of the credit portfolio, focusing on further improving the deposit
mix and optimizing cost efficiencies.

INDUSTRY REVIEW CY09

28

During the period under review Banking Sector has shown signals of improvement and
growth. The total asset base of the sector has increased from Rs 5,627 billion in CY08 to Rs
6,529 billion by the end of quarter December 09. The net investments of the sector have also
shown improvement. They stood at Rs 1,753 billion on the quarter ended December 09, from
levels of Rs 1,080 billion. Even the deposit base of the sector has shown improvement. They
have increased from levels of Rs 4,217 billion in CY08 to Rs 4,787 billion in CY09.










Table 1. 1: Highlights of the Banking System
(Billion Rupees)


Items 2004 2005 2006 2007 2008 Sep 09 Dec 09
Total Assets 3043 3660 4353 5172 5627 6105 6529
Investment
(net)
679 800 833 1276 1080 1593 1753
Advances
(net)
1574 1991 2428 2688 3183 3119 3248
Deposits 2393 2832 3255 3854 4217 4483 4787
Equity 202 292 402 544 563 641 662
Profit before
tax
52 94 124 107 63 70 91
Profit after
tax
35 63 84 73 43 42 54
Provisioning
changes
11 19 22 60 106 64 85
29

NPL 200 177 177 218 359 422 432
NPL (net) 59 41 39 30 109 128 125

Another major change that has been identified in the overall banking sector of Pakistan is
change in the asset structure of the system. There has been a decline in the proportion of
advances by the sector but a slight increase in the investments over the years. The private sector
slow demand for bank credit has been reinforced by banks risk aversion due to heightened credit
risk. In this scenario the public sector has emerged as a major consumer of bank credit.


The year 2009 was an extraordinary year for the global economy and the financial
markets. Impact of the financial crisis was reflected in the performance of the real economy.
Although Pakistan did not have a direct impact of the global financial crisis, but law and order,
slow economic growth and lack of political stability had a lot of stress.
Another major change that has been identified in the overall banking sector of Pakistan is
change in the asset structure of the system. There has been a decline in the proportion of
advances by the sector but a slight increase in the investments over the years. The private sector
s low demand for bank credit has been reinforced by banks risk aversion due to heightened
credit risk. In this scenario the public sector has emerged as a major consumer of bank credit.

The year 2009 was an extraordinary year for the global economy and the financial
markets. Impact of the financial crisis was reflected in the performance of the real economy.
Although Pakistan did not have a direct impact of the global financial crisis, but law and order,
slow economic growth and lack of political stability had a lot of stress on many industries and in
turn the financial sector. Industry wide NPLS were on the rise.

The NPLs have increased from Rs 109 billion in CY08 to Rs 125 billion by the quarter
ended December 09. The reason for this growth has been the increase in the loans classified
under the loss category which required the full provisioning coverage, and so banks set aside
relatively higher amount of provisions.

During the year under review, SBP changed the policy discount rate thrice; it reduced it
by 100 bps each time - in April 2009, August 2009 and by 50 bps in November 2009.


30

FINANCIAL PERFORMANCE

During the year ended FY09, the profitability of Allied Bank Limited has improved. The
bank posted a profit after tax of Rs 7,122 million as compared to Rs 4,157 of FY08, showing a
growth of 71%. This improvement in the profits of the bank also translated into the
improvement in the ROA and ROE of ABL. The ROA in FY09 rose to 1.81% as compared t0 1.
21% of FY08. Also the ROE increased tremendously by 43. 86% in FY09 to reach 30.5% as
compared to 21.2% in FY08.
The net interest income of the bank increased by 40.6% to Rs 18,700 million in FY09 as
compared to Rs 13,298 million in FY08. The non-interest income also increased by 21.7% in
FY09 to reach a level of Rs 5,958 million. The gross income to expense ratio has improved to 2.
57 times during the year under review from 2.04 times in FY08. The mark-up earned on loans
has increased from Rs 21,942 million in FY08 to Rs 30,142 million in FY09, whereas that
earned on investments has also increased from Rs 6,618 million in FY08 to Rs 8,624 million in
FY09. On the non-interest income side, the income from fee, commission and brokerage has
increased from Rs 2,307 million in FY08 to Rs 2,708 million in FY09.
The interest income expensed by the bank has also increased mainly on deposits and call
money borrowing. The overall interest income expensed has increased from Rs 17,272 million
in FY08 to Rs 22,421 million in FY09. The major interest expense is that incurred in deposits
which have increased from Rs 13,978 million in FY08, to Rs 17,946 million in FY09. Also the
interest expensed in call money borrowings has increased from Rs 790 million in FY08 to Rs
1,158 million in FY09 showing an increase of 47%.

The net interest income of the bank increased mainly due to the growth in average
earning assets and improvement in deposit mix towards low cost core deposits.

The asset base of ABL has increased. The total assets of the company have increased to
Rs 418,374 million in FY09 as compared to Rs 366,696 million in FY08. There has been an
increase in the gross advances by the bank. The gross advances have increased from Rs 223,640
million to Rs 249,987 million in FY09. The loans in Pakistan have increased from Rs 215,733
million in FY08 to Rs 243,166 million in FY09. The net investments in finance leases in
Pakistan have also increased from Rs 768 million in FY08 to Rs 847 million in FY09. Even the
gross investments of the bank have increased. In commercial and retail banking steps were taken
to enhance focus on SMEs, commercial and agricultural sectors with a view to diversify and
increase its share in total loan book of the Bank. A team of well-experienced agricultural credit
officers were hired to further penetrate into the agricultural sector.
31


Another major component of the assets of the bank is the investments. The gross
investments by the bank have increased from levels of Rs 84,602 million in FY08 to Rs 96,975
million in FY09. The investments on an average basis grew by 12. 4%compared to 2008. Bank
decided to revisit its investment portfolio with a view to rationalize exposure in certain segments
with the intention to deploy resources into other profitable avenues. In this regard the exposure
in open-end mutual funds has been reduced from Rs 12,761 million (14. 7% of total investments)
in FY08 to Rs 4,348 million (4. 6% of total investments) in FY09. The exposure in TFCs has
increased by 98. 4% to Rs 36,312 million (38. 1% of total investments) inFY09 compared to Rs
18,302 million (21. 1% of total investments) FY08. This was mainly due to reclassification of
Banks existing lending exposure as an outcome to adjust the circular debt. The banks Sukuk
portfolio includes exposure of Rs 3,190 million to Maple Leaf Cement Factory Limited.

A major concern on ABL s balance sheet has been the increase in the non-performing
loans. The loans have increased to Rs 16,281 million FY09 as against Rs 13,772 million FY08,
thus showing a net increase of Rs 2,509 million. The infection ratio of 6. 5% in FY09 was
slightly above 6. 2% of the previous year; whereas coverage ratio remained at previous years
level of 77%. The bank has accounted for a provision of Rs 3,163 million against NPLs during
the year under review. No benefit of FSV has been taken while determining the provision
against NPLs as allowed under BSD Circular No 10 of 2009 dated October 20, 2009.

The deposit base of the bank has also increased.
The deposits of the bank have increased from Rs 297,475 million in FY08 to Rs 328,875
million in FY09. During the year stable and low cost deposits remained the major focus of the
business strategy. In order to accomplish the desired goal, new branches and existing branches
are being built or renovated to improve the ambience. Service standards are being improved.
Services like internet banking and online transfers are being launched to attract additional
deposits. The bank has been able to restrict the cost of deposits to 6. 1% in FY09 as against
5.1% during FY08.

The debt ratios of the bank have declined, indicating increasing equity portion of the bank
s assets.
Generally, this has been the trend in the entire banking industry perhaps due to higher
interest rates resulting in higher cost of borrowings and the MCR requirements as proposed by
the State Bank. The equity of the bank has increased from Rs 344349 million in FY08 to Rs
388414 million in Fy09. The debt to asset ratio has declined from 0. 98 in FY04 to 0.93 in
FY09. The debt to equity ratio has declined from 41. 82 in FY04 to 12.96 in FY09. Also the
deposits times capital has decreased from 37. 91 in FY04 to 10.98 in FY09.
32


The liquidity position of the bank looks favourable.
The ratio of earning assets to assets of the bank has remained almost consistent around
85%. The ratio of advances to deposits has increased from levels of 41% in FY 04 to 64% in
FY07 to 72% in FY09. The yield on earning assets has improved. The yield has increased from
5% in FY04 to 11% in FY09. The reason for these increases has been an increase in the interest
income earned on advances, investments and lending to the financial institutions.

Thesolvency ratios of the bank have persistently shown an upward trend throughout 2004-
2009.
This indicates bright prospects of long-term sustainability of the bank. The solvency
ratios of the bank for the last five years have been maintained in the vicinity of each other. The
increasing equity portion of the bank explains this. This may be regarded as a move against the
rise in deposits rates and a decrease in the banking spread of the banking sector. This healthy
trend in solvency may be predicted to continue in the future.
During FY09the bank gave a dividend of Rs 4 per share on cash basis and proposed 1
bonus issue per share as compared to Rs 2.5 per share in FY08 along with 1 bonus issue per
share. The pay-out ratio has however declined from 66% in FY07 to 54% in FY08 to 50%
inFY09. The EPS of the share has increased to Rs 10. 02 in FY09 as compared to Rs 5.85 per
share in FY08. The following graph depicts the trend related to DPS and EPS of ABL.

During the FY09 the price of ABL s stock has shown a fluctuating trend. The P/E ratio
declined in FY08 to 4. 9 from level of 17.2 in FY07. However it has improved to 5. 9 in Fy09.
The market value to book value ratio has also been declining. The ratio declined from 3. 09 in
FY07 to 1.01 in FY09.

A comparison of the stock price and the KSE 100 Index for the year FY09 for the stock
shows that the price has moved in almost the same fashion as the index. The highest price
reached by the stock was Rs 66. 3 and the lowest price was Rs 19. 85 during FY09.

COMPARISON WITH TOP PLAYERS

The banking sector is dominated by National Bank of Pakistan, Allied Bank Limited,
Habib Bank Limited, United Bank Limited and MCB Bank. The following graph indicates the
trend of growth of deposits for the players.

33

As can be witnessed from the above graph that the deposit growth rate has been
fluctuating over the last 5 years. A major decline was seen in the growth of deposits for ABL in
2008, when it fell from 28% to 13%. The reason for this slowdown was the slow growth of M2.

The advance growth rate for the top players has shown a similar trend, all the fluctuations
for all the banks have been witnessed in the same direction. As can be observed ABL s
performance in terms of advances growth rate has been better from the top players during the last
5 years. The advances of ABL grew by 11% in FY09 as compared to 5. 58% of NBP and -4% of
UBL and MCB each during the year under review.

Another major trend seen in the banking sector has been the growth in profits after tax for
the top players. It can be clearly seen that the growth in PAT of ABL has been much above the
other top players. During FY09 there was a growth of 71% in ABL s PAT, as compared to 14%
of UBL and 2% of MCB.
Another major comparison between ABL and the other top players is that in the growth
of the net interest income. Even in this area ABL has outperformed other major players. The
growth in the net interest income is 41% in FY09 as compared to 18% of UBL, 16% of MCB
and 3% of NBP.

In case of the non-interest income, the growth for ABL has been in line with that of its
peer except for NBP whose growth though has fluctuated but still is above the other players in
the market. The growth in non-interest income for ABL in FY09 is around 22%, as compared to
45% of NBP.

FUTURE OUTLOOK

The recent economic trends suggest the possibility of a modest recovery during 2010.
The major impetus for growth is expected to come from the services sector, while LSM has also
lately shown signs of recovery. The positive improvement in macroeconomic indicators, mainly
inflation and contraction in external imbalances bodes well for the revival of economic activity.
However, risks to these improvements remain as inflationary pressures have not completely
abated, the commodity prices may spur again to unmanageable levels and foreign inflows (for
instance from FoDP and other bilateral arrangements) may not materialize on time.

34

Meanwhile, the severe energy shortages and the sensitive security situation remain a
major threat to the potential output of the economy. The rising fiscal slippages, deficit of 1.5%
of GDP for Q1-FY10 as compared to 1. 1% in Q1-FY09 poses another challenge. A sizeable
portion of it also relates to increasing expenditure on defence and security. The continuing
pressure in the operation environment suggests that the challenges for the banking sector would
persist in 2010. ABL, while remaining prudent under the circumstances would continue to
emphasize on improving cost effective deposit mix, building risk weighted assets by ensuring
quality and optimizing costs to pursue the strategy of maintaining steady growth.





RATIO ANALYSIS

Return on Assets (%) 0. 1% 1. 8% 2. 0% 1. 4% 1. 2% 1. 81%
Return on Deposits (%) 0. 1% 2. 1% 2. 4% 1. 7% 1. 5% 2. 3%
Return on Equity (%) 8. 0% 28. 0% 30. 0% 23. 5% 21. 2% 30. 5%
Quality Ratios:
NPL to Advances 26% 11% 7% 7% 6% 7%
Provisions to NPLs 10% 3% 6% 24% 10% 19%
Non-Performing Loans 15,383 000 12,699,000 10,479,000 11,355. 00013. 772,000
16,28.
NPLs Growth -17% -17% 8% 21% 18%
Market Value Ratios:
Price to Earnings 0.00 12.56 9.54 17.20 4.90 5. 9
Market Value to Book Value 0.00 2.92 2.37 3.09 2.89 1. 01
Debt Management Ratios:
Debt to equity 41.82 13.83 13.46 15.10 15.40 12. 96
35

Deposit times capital 37. 91 12.34 11.98 13.28 13.31 10. 98
Debt to asset 0.98 0.93 0.93 0.94 0.94 0. 93
Liquidity Ratios:
Earning assets to assets 84% 85% 84% 85% 85% 86%
Advance to deposit 41% 59% 69% 64% 72% 72%
Yield on earning assets 5% 7% 9% 8% 10% 11%
Cost of funding earning assets 1% 1% 4% 4% 5% 6%
Solvency Ratios:
Equity to assets (%) 2% 7% 7% 6% 6% 7%
Equity to deposits (%) 2. 64 8. 10 8. 35 7. 53 7. 52 9. 110
Earning assets to deposits (%) 95. 17 101. 91 100. 99 102. 58 104. 68 109. 54
Dividend Pay-out Ratios:
Dividend yield 2. 90% 2.70% 2.30% 8.0% 6. 80% -
Dividends cover 2. 76 2.18 1.402 3.214 2. 505 -
Growth Rates:
Profits After Tax - 42% -7% 2% 71% -
Advances 87% 30% 17% 26% 11% -
Deposits 28% 28% 28% 13% 11% -
Investments -22% 5% 79% -2% 15% -

SWOT ANALYSIS

The SWOT analysis is a comprehensive and critical overview of the operations,
procedures, rules and regulations, services and other related activities, the analysis include the
analysis of ABL Bank Khyber Bazaar branches in the light of the entire branch and Bank
specific variables which directly or indirectly affect the operations of the branch. The tool
selected for the analysis of organization is SWOT analysis.

SWOT analysis
36

SWOT analysis is an acronym that stands for Strengths, Weaknesses, Opportunity and
Threats. This is a careful evaluation of an organizations strengths to avail an opportunity by
overcoming its weaknesses and phasing out all he threats to its survival in order to grow and
survive.

5.1 Strengths


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 Peshawar. 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.

5.2 Weaknesses

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.
The customers Long-term contacts are not maintained with customers.
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.
37

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
employees 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.
The job distribution is not up to the mark. The immediate result of this immediate result of
which is:

The filing system is not up-to-date. Much time is wasted while searching for even a
week old document.
The staff spent more time in collections than required.

Delays were observed because the prescribed procedures are not followed.
Though ABL, Khyber Bazaar branch in the area it lack specialized counters or facilities
such as:

Investment advisory counters;
Leasing or leasing arrangements;
Credit services.
The four branches of Allied bank in Peshawar 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.
38

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 Khyber Bazaar branch:

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.
Financial audits are conducted but operational audits have not received proper
attention as much as it should get.
There is no procedure, which could encourage the middle and lower level
management to initiate creativity.

5.3 Opportunities

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, Shah Rukn-e-Alam 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 Khyber branch with its
superior service quality and long working hours can capture those customers

5.4 Threats

The biggest threat to the operational success of the branch is the better competitors
services. Many private sector banks are offering higher rates of return to customers than
Allied Bank of Pakistan.

One of the biggest to the ABL, Shah Rukn-e-Alam 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, Shah Rukn-e-Alam 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.

39













FINDING AND RECOMMENDATIONS

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 rukn-e-Alam branch
enabled me to study the organization in a historical perspective and understand the nuisances in
the banking operations. Study of the 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 Rukn-e-Alam 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.
40

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 this
unpleasant 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.

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:
41

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


SIMPLIFICATION OF ADVANCES

The biggest source of the bank revenue is advances. The advances of ABL, Khyber
Bazaar branch are on him decreasing trend, causing a decrease in the revenue for the bank. The
bank should make the advance procedure simple and quick to meet the customers requirements.
The following steps are suggested for simplifying the advance procedure.

Increasing the discretion of manager for the amount of advance to Rs. 100,000.
Speeding up the process of investigation and verification.
Expanding its customer base.


MARKETING CONCEPT

The concept of marketing should be followed in every aspect of the organization.
Generally, the banks staff considers that marketing is to go to customers, beg them for opening
an account with the Bank and to abide by his every just and unjust action

They should be taught that marketing is not only to go to customers only. A customer can
also be attracted by provided customer oriented services, showing empathy to your customers
and attending him personally.

CUSTOMER ORIENTATION

Deposits are the main source of funds for commercial banks. Therefore, the priority of
every bank is to increase the number and amount of deposits. The key to successful business
does not lie in simply attracting new customers. The real success is to maintain in the old
customers and attract new customers at the same time because retaining a customer is more
difficult than attracting new customers.

Every depositor should be given equal importance and there should be no differentiation
between customers so that every customer feels himself as much important as the other
customer.
42

The attitude of the staff should be friendly to all the customers. The customers should be
taken to the concerned person or guided friendly if the concerned person is not available.
The attitude of thats not my job should not exist anymore.

MOBILIZATION OF LESS COST DEPOSITS

The analysis of expenses shows that 43% of expenses of the bank are the payments on
fixed deposits, which is a very high proportion. Apart from this the interest earned on advances
Rs. 0.265 million is smaller than the interest paid on different deposits Rs. 4.1 millions

The bank should launch a campaign to get less cost deposits much as high amount
current account as well as low cost PLS saving accounts.

INFORMATION ACCESS

The Bank should provide information to all the present and potential customers relating
to the new products, services, some services fee structure and other matters, which are likely to
affect the customers. It should be made sure that all the customers have access to this
information. Conveying information is of no use, unless, there is some feedback from the
customers. The following measures are suggested to implement this suggestion.

Brochures, handouts, pamphlets and other printed reports must be provided to customers,
which should provide all the information necessary to attract and retain customers and to
satisfy the customers need for more information.
Personal contacts with the customers can help in providing information to customers.
All the customers must be provided a chance to get the desired information by personal
contact with the Bank staff.
Complaint and suggestion box should be maintained at the door of the Bank where the
customers can point out drawbacks in the customers services and put forward their
suggestions on his improvement of the services quality of the Bank.

PERFORMANEC AUDIT

The financial audit of the bank is conducted on regular basis both as a surprise and
routine audit. However, the performance and system audits are completely ignored which,
otherwise, should have been a compulsory part of the auditing services of the Bank. The
immediate outcome of ignoring performance outcome is shortcoming in the non-financial
aspects of this organization such as customer relations, lack of necessary facilities, motivation of
employees, and the control of manager.
43


In the light of the above facts it is suggested that the performance audit of the bank must
be carried out on both regular and surprise basis to keep the Bank competitive in the run of for
more customers, more deposits and high profitability.

CAMPAIGN FOR INCREASING THE DEPOSITS.

The numbers of account holders in a bank make a significant contribution to the deposits
of the Bank and determine its business volume, profits and size of a bank. Therefore, ABL, Shah
Rukn-e-Alam branch must a clear plan for increasing the number of accounts. The details of plan
for increasing the number of accounts are given in the implementation plan.

INCREASES IN BUSINESS SHARE

Along with concentrating on increasing the customer base, the Bank must also emphasize
on securing the highest market share in other banking services such as issuance of letter of credit,
foreign exchange, remittances, bills identification of productive secure and easily realizable
advances etc. to achieve this strategy the Bank should have a clear plans with the consent of the
higher management. The plan must be divided into different periods weekly, monthly,
semiannual and annual. Every stage of the plan must be monitored and controlled on regular
basis.
ATM NETWORK PROBLEM

I have found some problems with ATM network. Many customers have complaints that
their requests placed on ATMs dont carry out. It is mainly because of bad PTCL lines.
Distortion in lines of PTCL restricts the execution of requests placed on ATM machines by
customers. Although there is a network of dedicated lines for ATM machines, a request may not
be successfully carried out because of complicated request processing. A successful execution of
a request needs to be approved from three places:
The branch (online) with which the customer (placing the request) have the account.
Main branch of that area (city).
The head office (in Karachi).
So connecting to all of these three places simultaneously and getting the request approved is
a complicated process. However management claims that there is nothing wrong with
processing. The only problem lies with PCL lines. So to solve this problem the bank should hire
technicians who can work during public holidays to make the ATM useable while it shows any
distortion.

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CASH DEPOSITES USING ATM

Now-a-days in foreign countries ATM machines are also used for deposits of money and
utility bills can b paid up through ATM. But in Pakistan these services have not been utilized yet.
So if ABL upgrades its ATM technology so definitely it will get the competitive advantage over
other banks.

NETWORKING AMONG BANKS

In allied bank the networking is only done with in the bank, means the customer cant
transfer his funds to other bank through online. The account holder who has the debit card can
transfer his money to other bank account through ATM. But the customer who doesnt have
account but someone gave him a Habib bank cheque to transfer it online through near situated
Allied bank. So the allied bank cant transfer it to Habib bank via online. So I recommend an
idea that there should be a networking among different banks so that they can transfer funds via
online.

6.17 ONLINE LOANS

I have found that there is no online facility to apply for a loan. Whereas, in other banks
especially in foreign banks the customer who has an account in the same bank, can apply for a
loan through internet. So that he can save his time from going physically to the bank.


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..

Lien

Lien is the bank right to withhold property until the claim on the property is paid. The bank looks
at their lien as a protection against loss or overdraft or any other credit facility. In ordinary lien
the borrower remains the owner of the property, but the actual or constructive possession
remains with the creditor or bank though the borrower has no right to sell it.

Cash Credit
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In this the bank lends money to the borrower against tangible security. The total amount
of the loan is not paid in one installment. The borrower has to pay markup on the amount
borrowed. Cash credit is favorite loan for large commercial & industrial concern.

By Overdraft

This the most common type of bank lending. When a borrower requires temporary
accommodation, ABL allows its customer to withdraw an excess of the balance form their
account which the borrowing customers have in credit and thus called overdraft. This facility is
given to regular reliable & well established customer. When it is against collateral securities, it is
called Secured Overdraft & when borrowing customer can not offer any collateral security
except his personal security then the accommodation is called Clean Overdraft



REFERENCES

References and source used:

http://www.abl.com.pk/
http://www.creditguru.com/ratios/ratiopg1.htm
http://www.crfonline.org/orc/cro/cro-16.html
http://beginnersinvest.about.com/od/financialratio/Financial_Ratios.htm
http://www.investopedia.com/
Revise Credit hand book of ABL internal document.
Data from credit approvals.




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