United Bank Limited

Jinnah Town Branch Harappa, Sahiwal

A REPORT SUBMITTED TO DEPARTMENT OF BUSINESS ADMINSTRATION, BZU
SUB CAMPUS SAHIWAL, IN PARTIAL FULLFILLMENT AND REQUIREMENTS
FOR THE DEGREE OF MASTER IN BUSINESS ADMINSRATION

Submitted By

Islam Fazal
MBA-12-33

Department of Business Administration

BZU SUB CAMPUS SAHIWAL

1
2
 PREFACE

In Masters of Business Administration, Internship Program is an important part to give

students an opportunity to have experience of practical field. Unless and until the students
experience the novelty of practical work, their knowledge of what they study in theoretical
courses remains incomplete. The most important point in an Internship Program is that the
student should spend their time in a true manner and with the spirit to learn practical orientation
of theoretical study framework.

This internship report is on my six weeks practical training at United Bank Limited
Jinnah Town Branch, Harappa. In this internship report I have tried to give details about the
United Band Limited, working and the functions of different departments of the bank.

3
 DEDICATION

By The Grace Of Allah Al-Mighty And Due To The Prayers Of My Beloved Parents, I
Completed This Report In A Successful And Timely Manner. I Dedicate This Report To My
Loving Parents And Teachers Who Contributed A Lot For My Success.

4
 ACKNOWLEDGEMENT

All praise to ALMIGHTY ALLAH alone, the Omnipresent and the most Merciful and
compassionate. The words are bound, knowledge is limited and time is short to express His
dignity. It is one of infinite blessings of ALLAH that he best owed me with the potential and
ability to contribution towards the deep oceans of knowledge already existing. I pay hum-age to
greatest personality of the universe; HOLY PROPHET HAZARAT MUHAMMAD (PBUH) Who
is forever torch bearer and spring of guidance in every sphere of life. I am deeply indebted and
also express my gratitude to my respected teachers at BZU SUB COMPUS SAHIWAL for their
support.

At the very outset, I am very thankful to Mr. Javed (Branch Manager) for providing me
the opportunity to have an excellent learning experience during my internship at United Bank ltd
Jinnah Town Harappa Station Dist Sahiwal. The person to whom I would like to give my regards
is the Mr. Tariq Niaz (Operational Manager) at UBL, Jinnah Town Harappa who gave me very
useful tips and information. I might not be able to complete my internship without his
cooperation and his kind behavior. I am thankful to all my teachers of BZU Campus Sahiwal.

I also take this opportunity to express a deep sense of gratitude to all the staff members of
UBL for their cordial support, valuable information and guidance, which helped me in
completing this task through various stages specially

Mr. Javed Ahmad Branch Manger

Mr. Tariq Niaz Operational Manger

Mr. Mudasar Chief Cashier

Mr. Tariq Mehmood Cashier

Lastly, I thank almighty, my parents and friends for their constant encouragement without
which this internship would not be possible.

5
 EXECUTIVE SUMMARY

Banking operations and services are one of the basic needs of an economy. These include
acceptance of deposits and disbursement of advances to individuals and others at higher rates.
Banks perform various fundamental factions, which are directly or indirectly contributory
towards economic and social development of countries.

The purpose of this report is to study operations and analyze performance of UBL to see
whether the bank is successful in its operational performance or not, and recommending possible
solutions for problems. For meeting the purpose both secondary and primary data have been
used.

United Bank Limited (UBL) is the second largest bank of Pakistan with assets of over Rs.
1009739 million and a solid track record of fifty six years - in addition to the convenience of
over 1400 branches serving its customers throughout the country and also at several overseas
locations. In this six weeks internship program I have learned about banking from experienced
managers running these sections.

This report contains the information and learning about UBL that I learnt during the 06
weeks internship period in United Bank limited. This report deals with History & Nature
(Business) of the UBL, its Products and Services, information about main offices and also the
review of various departments of the Bank. This report also contains Finance & Accounting
operations of the UBL, role of Financial Manager (Branch Manager), Use of Electronic Data in
core decision making and the Sources, Generation and Allocation of funds used in the banking
operations of the UBL.

Recognizing the need of Islamic banking, UBL also provided number of Islamic banking
services like Islamic Deposit Schemes and Islamic Fund Based Facilities.

At the end of this report, on basis of my observation during internship, financial analysis
and SWOT analysis of UBL is provided. Suggestions are also recommended as per learning from
analysis. This report will provide a better and brief learning about United Bank Limited.

6
Sr. No. Content Page No.

1 PREFACE

2 DEDICATION

3 ACKNOWLEDGEMENT

4 EXECUTIVE SUMMARY

5 1. INTRODUCTION 2

6 2. ORGANIZATIONAL STRUCTURE 15

7 3. MY LEARNING’S 23

8 4. FINANCIAL STATEMENTS, VERTICAL and TREND 32

ANALYSIS

9 5. RATIO ANALYSIS 39

10 6. SWOT ANALYSIS 52

11 7. PEST ANALYSIS 55

12 8. RECOMMENDATIONS 56

13 9. ANNAXURE 62

14 10. REFERENCES 63

7
1
 1. INTRODUCTION

1.1 Brief history of the organization:

About UBL:

The history of UBL can be divided into four main

Phases:

 Formulation
 Nationalization
 Privatization
 UBL Today

1.1.1. FORMULATION:

In June 1957, Mr. Agha Hassan Abidi decided to open a Bank different from others, to
provide modern facilities to trade and industry and to promote thrift and habit of saving amount
common thereby stimulating the economy as a whole. Necessary formalities completed for
obtaining registration certificate from State Bank of Pakistan to perform business activities. After
passing through all these formalities on 7th November, 1959 United Bank Ltd came into
existence as a Schedule bank.

The Head office of the Bank was established in the New Jubilee Insurance House, 1.1
Chundrigar Road Karachi. It was registered as a joint stock company. The bank was incorporated
with an Authorized Capital of Rs 20,000,000 and issued and subscribed and paid up capital of RS
10, 00,000. Saigol family owned it and Agha Hassan Abedi was its first managing Director.

2
1.1.2. NATIONALIZATION:

As a policy of nationalization fourteen commercial banks was merged into five big banks
. So consequently on 21st December 1974 Commerce Bank and Union bank was merged with the
UBL. Mr. Mushtaq Ahmed khan Yousafi took over the charge of UBL. Now, there are six
directors, a secretary and a president.

1.1.3. PRIVATIZATION OF UBL:

UBL was the largest privatization attempted by the government of Pakistan, launched in
June 2001, with 21 interested parties. It was impacted by the adverse developments of the
September 11, 2001 and was finally concluded in October 2002, which left stage only three
bidders. The consortium comprising Best way Group (BG), out of the U.K. and Abu Dhabi
Group (ADG) from the U.A.E. were finally the winners at a record price. Sale proceed was Rs
12350 million. This signaled the strong confidence reposed by these investor groups, in the
improved governance of the country, the economic potential, the banking opportunity and the
existing management of the bank.

1.1.4. UBL TODAY:

Today the bank has taken progressive steps. The United Bank Limited (UBL)
management has launched its new corporate identity and changed its 44 year-old-logo following
its privatization. UBL has started the Online Banking & Click n Remit services.

CHAIRMAN:

 His Highness Shaikh Nahayan Mabarak Al Nahayan.

DEPUTY CHAIRMAN:

 Sir Mohammed Anwar Pervez OBE.

PRESIDENT & CEO:

3
BRANCHES:

 1079 Domestic, 17 Overseas Branches.

REPRESENTATIVE OFFICES:

 Tehran
 Kazakhstan
 China

SUBSIDIARY:

 United Bank AG Zurich, Switzerland.

 United National Bank Limited, UK (Joint venture with NBP).
 UBL Fund Managers Limited.
 ASSOCIATED COMPANIES:
 Oman United Exchange Company, Muscat.
 UBL Insurers Limited.

OFFSHORE BANKING UNIT:

 Export Processing Zone, EPZ Branch, and Karachi, Pakistan.

HEAD OFFICE:

 State Life Insurance Corp. Building #1,

 I.I. Chundrigar Road, Karachi, Pakistan
 P.O. Box No.: 4306
 Phone: (92-21) 111-825-111
 Gram: "UNITED"
 Fax: (92-21) 2413492.

4
1.2 NATURE OF THE ORGANIZATION

UBL is a Banking Company, which is engaged in Commercial & Retail Banking and
related services domestically and overseas. UBL was set up in 1959 by Agha Hasan Abedi and is
today one of Pakistan's major banks in terms of deposits and advances. The Group's principal
activities are to provide commercial banking and other financial services. The Group offers
personal banking, cash management, retail loans and other financial services. These services
include deposits, savings/current bank account, vehicle loans, personal loans, retail trade finance,
global banking, lending to priority sector and small scale sector, foreign exchange and export
finance, corporate loans and equipment loans.

In 1971 the Government of Pakistan nationalized it. In 2002, the Government of Pakistan
sold it in an open auction to a consortium of Abu Dhabi Group and Best way Group. Since its
privatization the bank has been successfully turned around and remains a robust and strong
performer in all major segments of its operations. In 2002 it merged its operations in the UK with
those belonging to National Bank of Pakistan to form United National Bank Limited, of which it
owns 55%, with National Bank of Pakistan owning the remainder.

The Bank is making every effort to meet the up-coming challenges through strategic
planning and making the best use of the resources at its command. A professional team was
appointed in mid 1997 to restructure the bank and to commence rightsizing. The management is
also in the process of rationalizing the branch network and identifying and recovering its
doubtful and classified portfolio. It has planned to institute major improvements in customer
services and internal systems to improve efficiency. It also intends to launch innovative products.
The bank is increasing resource mobilization through regular deposit campaigns and accelerating
the process of recovery of outstanding advances and non-performing assets.

5
1.2.1. VISION STATEMENT:

“To be a world class bank dedicated to excellence, and to surpass the highest expectations
of our customers and all other stakeholders”.

1.2.2. MISSION STATEMENT:

 Set the highest industry standard for quality across all areas of operation,
on a sustained basis;
 Optimize people, processes and technology to deliver the best possible
financial solutions to our customers;
 Become the most sought after investment;
 Be recognized as the employer of choice.

1.2.3 Core Values:

 Honesty and Integrity

 Commitment and Dedication
 Fairness and meritocracy
 Team work and collaborative spirit
 Humility and Mutual respect
 Caring and socially responsible

6
1.3. NUMBER OF EMPLOYEES

1.3.1. BOARD OF DIRECTORS:

Name Designation
His Highness Shaikh Nahayan Mabarak Al Nahayan Chairman
Sir Mohammed Anwar Pervez, OBE, HPK Deputy Chairman

Mr. Atif R. Bokhari President & CEO

Mr. Omar Ziad Jaafar Al Askari Director

Mr. Zameer Mohammed Choudrey Director

Dr. Ashfaque Hasan Khan Director

Mr. Muhammad Sami Saeed Director

Mr. Aqeel Ahmed Nasir Company Secretary

7
1.3.2. MANAGEMENT HIERARCHY:

 President
 Board of directors
 Members executive board
 Regional chiefs
 Zonal chiefs
 Branch managers

1.4. PRODUCT LINES

1.4.1. DEPOSIT PRODUCTS:

UBL has taken progressive steps and has introduced innovative products and services to
provide you a variety of banking and financing services including Current and BB Accounts.

8
UBL UNIFLEX ACCOUNT:

UBL has introduced a new checking account ideal for small investors, traders,
businessmen and customers from middle income group. They can now afford an amazing rate of
return plus value added benefits only available from the UBL UniFlex PLS Savings Account.

UBL PROFIT COD:

Customer can earn a higher income on their surplus cash by investing it in UBL Profit
Certificate of Deposit. UBL Profit helps them earn extra income with their hard earned money,
while providing absolute trust and security.

PLS REGULAR TERM DEPOSITS RECEIPTS:

If customer wish to make a secured long term investment, UBL’s Term Deposit Receipts
the smart choice. UBL Term Deposit Receipts provides an attractive rate of return. The profit is
credited to the customer account every six months. Customer has the flexibility to choose from a
wide range of tenors. Customer can avail the Rollover or Renewed option at any time before
encashment. Customer can get TDR en-cashed at any time before maturity period.

FOREIGN CURRENCY SAVINGS & FOREIGN CURRENCY TERM DEPOSITS

RECEIPTS:

United Bank offers the best rates of return on Foreign Currency Deposits in the market.
Accounts can be opened in US Dollar, Pound Sterling, Euro, and Japanese Yen at designated
branches. All Pakistani nationals residing in Pakistan and outside Pakistan can also open Foreign
Currency Accounts. Resident Firms and companies including Investment Banks can open
Accounts.

9
UBL E-TRANSACTION ACCOUNT:

When it comes to electronic financial services www.ubl.com.pk is Pakistan’s favorite

Internet destination and why not! With years of experience in innovation United Bank offers a
wide spectrum of world-class of electronic services and banking products for trailblazers like
you.

1.4.2. LOANS & CARDS

UBL MONEY:

UBL Money, the Personal Installment Loan from UBL provides you with power, control,
convenience and the flexibility to manage your financial requirements and realize your dreams.

UBL Money is a fixed installment loan. It gives you access to funds starting from Rs.
50,000/- up to a maximum of Rs. 500,000/- without any collateral. UBL Money provides you the
flexibility to manage your monthly installments according to your income stream. You can select
any tenor from 1 to 5 years in a multiple of 12 months.

UBL BUSINESSLINE:

UBL Businessline is a running Finance facility that not only provides funds for growth
but also enables you to capitalize on profitable opportunities.

UBL CASHLINE:

UBL Cashline is a flexible loan that provides you cash up to Rs.500, 000 without any

10
 security requirements. It empowers you to take control of your finances. UBL Cashline is
aimed to make your life easier .Whether you are a salaried individual or a businessman.

UBL DRIVE:

UBL Drive allows you to drive away in

your own car by making a down payment of just 15% and to top that with low monthly
installments. With UBL Drive you can buy your favorite used car (up to 5 years old) at the most
affordable rates. UBL Drive is not just a car loan; it’s a financing facility that gives you Cash on
your car.

UBL ADDRESS:

UBL Address empowers you to become the proud owner of a home by offering a variety
of product and pricing options that are flexible yet affordable. So choose the best product option
and pricing to suit your needs

UBL PAYPLUS:

If you are a permanent employee of a company (Government, Semi-Government, MNC

or Local Corporate Entity/Private/Public Limited), which disburses salary through UBL, then
UBL PayPlus (loan against salary) is the right product for you. Through UBL PayPlus, you can
now easily avail a loan based on your salary level.

UBL CRDIT CARD:

UBL Credit Card provides the following facilities:

11
  To share the value, excitement and benefits
 Each time UBL Card members use their UBL Credit Card to purchase
airline, train or bus tickets, they are automatically covered against any sort of accident
that might befall them while traveling. The coverage amounts are:

1.4.3. AGRICULTURAL PRODUCTS

PRODUCTION LOAN:

Financing is available for Major and Minor crops across Pakistan. Main purpose of
financing is to facilitate farmers to purchase Agriculture Inputs such as Seeds, Fertilizers,
Pesticides, Sprayers, hired labor etc.

NIACF (REVOLVING CREDIT SCHEME):

 Loan Tenure 3 years.

 Documentation once for 3 years.
 Cleanup once a year.
 Option for the farmer to use limit as per requirement.
 Markup is charged on amount used or withdrawn.
 Minimum Amount PKR 30,000.

12
NIADF (DEMAND FINANCE PRODUCTION):

 Loan Tenure 3 months to 1 year.

 18 months for Sugar cane only.
 Lump sum disbursement of the limit for a specified period.
 Repayment of loan in bullet payment on maturity (Principal and markup).
 Minimum Amount PKR 30,000.

DEVELOPMENT LOAN:

LAND DEVELOPMENT, EQUIPMENTS AND MACHINERY:

Financing for Land Improvement, Water course improvement, Tube wells, Lift pumps,
Deep turbine pumps, Cotton pickers, Godown, Cold Storage, Harvester, Thresher, etc

TRACTOR & VEHICLE FINANCE:

To purchase Tractors, Delivery Vans, Mini Trucks, Motor Cycle and other vehicles used
for marketing Agri Products. Loan Tenure: 1 to 3 years for Motor Cycle, 1 to 7 years for Tractor,
and 1 to 5 years for other 4 wheel vehicles. Other features are:

1.4.4. OTHER SERVICES

UBL E-STATEMENT:

UBL has launched the UBL e-statement facility which makes it easier for customers to
get their statement of accounts and automated transactional debit/ credit alerts right into their
inbox. It is available for all Rupee and Foreign Currency Account holders. UBL statement facility
is:

 Absolutely free of cost.

 Accessible when you need it.
 Security.
 Automated transactional debit/ credit alerts.
13
UBL WALLET:

UBL offers ATM and Debit Card facility to all account holders at all UBL branches
anywhere in Pakistan, regardless of whether their branch is online or offline.

UBL Wallet VISA ATM & Debit Card has the entire convenience and security account
holder’s desire and the quality they deserve. This Wallet holds all the cash in customer’s bank
account. UBL Wallet VISA also gives the facility of having up to 9 supplementary cards issued
against one primary card. All supplementary cardholders will be able to conduct ATM/Debit
transactions within the limits of the primary card account.

UBL WIZ:

UBL Wiz is Pakistan’s first ever Prepaid VISA Debit Card that provides the convenience,
security and benefits of an ATM and Debit Card, locally and internationally. More than just an
ATM card, you can use your UBL Wiz everywhere VISA cards are accepted. Whether you are
using it online, paying for petrol, shopping or dining, you are accessing money directly from
your prepaid card, without having to visit the bank.

UBL NETBANKING:

UBL net banking is an Internet Banking portal offering a simple, convenient and secure
method of accessing bank accounts on the Internet.

Using UBL net banking, the customers have access to their bank accounts 24 hours a day,
7 days a week and can keep a close eye on their account balances, print account statements, pay
bills, transfer funds, track purchases and schedule their recurring payments at the touch of a
button and much more Receive customized alerts.

14
 2. ORGANIZATIONAL STRUCTURE
Head Office

Provisional Head Quarters

Zonal Office

Hub Branches

Branches

2.1. Main Offices:

2.1.1. HEAD OFFICE:

The Bank's registered office and principal office is situated at State Life Building No. 1,
I. I. Chundrigar Road, Karachi.

15
2.1.2. BRANCHES:

Domestic Branches 1079

Overseas Branches 17

2.1.3. DOMESTIC NETWORK:

Domestic Network Branches

Azad Kashmir 71
Baluchistan 41

N.W.F.P 163

Punjab 584

Sindh 220

Total 1079

2.1.4. PROVISIONAL HEADQUARTERS:

Province Region (City)

Balucihstan Quetta
N.W.F.P Peshawar

Punjab Lahore

Sindh Karachi

16
2.1.5. OVERSEAS NETWORK:

HUB Name Branches

United Arab Emirates 9
Bahrain 3

Yemen 2

``````````Qatar 1

United States of America 1

Export Processing Zone, Karachi 1

Total Branches 17

2.2. Departments of the UBL

CORPORATE BANKING & CASH MANAGEMENT GROUP: (CBG):

The Corporate Banking Group has endeavored to be the market leader in their area and
builds market share through offering superior service, competitive pricing, and a wide product
range to valued corporate clients. The group caters to the needs of multinational companies and
medium to large corporate clients, which include private and public sector entities. This group
will continue to remain a major contributor to UBL’s earnings by taking advantage of tremendous
growth potential of corporate accounts. The group requires talented, qualified, and proactive
human resources. Front line relationship managers require a complete grasp of UBL’s credit
policies and procedures as they directly affect existing and future credit portfolio handling.

17
 The Corporate Banking Group focuses on attracting and servicing large portfolio
customers. Our forte is providing exemplary customer service using the "Single Window"
concept and product superiority. The Relationship Management team manned by highly qualified
individuals from the industry has steadily expanded UBL customer base and continues to
enhance their cordial relations with our esteemed clients. Despite the sluggish economic growth
in recent years, UBL outperformed all the other local banks in the corporate banking sector
primarily due to CBG's emphasis on establishing and enhancing relationships with foreign/local
blue chip and middle market customer’s thereby capturing significant market share.

COMMERCIAL BANKING/SME (CB):

The Commercial Banking Group caters to the needs of commercial entities and small and
medium enterprises, as defined in the State Bank of Pakistan’s Prudential Guidelines. This group
deals with commercial clients of small to medium size in both private and public sectors. It
operates in almost every city of the country with qualified and dedicated staff.

This group aims to fulfill necessary business needs of its customers, which are more
numerous than corporate clients. However, their individual requirements are relatively much
smaller than those demanded by corporate clients. In view of the peculiar nature of this business
segment, which involves a higher turnover, a much wider network is needed.

CONSUMER BANKING GROUP:

The Consumer Banking Group provides financial facilities to individuals through a

diverse product line. Its success depends on the design of versatile and effective products and
comprehensive communication and marketing strategies. Agility in monitoring the portfolio and
following up with its customer base, which is wholly comprised of individuals, is also an
essential requirement.

This group operates in nearly all major cities of Pakistan, and also in some international
locations through UBL’s network of branches and trained sales force. This group offers products
such as home loans, personal loans, auto loans, business loans, and credit card facilities, etc.

18
INVESTMENT BANKING GROUP (IBG):

The Investment Banking Group specializes in providing innovative and unique advice to
its clients, assisting them in meeting challenges in an ever-changing market. The group is
equipped with adequately experienced professionals.

This group will either lead or participate in major Term Finance Certificates in the
market. It offers a full spectrum of services, including Term Finance Certificates, Syndicated
Loans, Structured Finance, Leveraged Buyouts, Project Finance, Quasi Equity Products,
Independent Advice, Equity Placements, IPO’s, Equity Underwriting, Mergers, Corporate
Restructuring, Acquisitions and other products.

Although the Corporate Banking Group supports the product line of the Investment
Banking Group, the special nature of these products demands a more active involvement of risk
management. Transactions such as Project Finance offer limited recourse and such transactions
need to be structured in a way as to mitigate inherent risks. Risk management is to be proactively
involved in Investment Banking Group transactions, right from the time of initiation until the
time of execution.

TREASURY & CAPITAL MARKETS GROUP:

The major roles of the Treasury and Capital Markets Group include:

 Managing the bank’s liquidity and balance sheet requirements as per UBL
and State Bank of Pakistan guidelines,
 Dealing in foreign currencies on behalf of its customers, and
 Providing treasury and foreign exchange related financial services to its
clients.

This Group consists of highly qualified and experienced human resources who are
actively involved in dealing with other banks and financial institutions to execute transactions in
various currencies.

19
INTERNATIONAL DIVISION:

The International Division manages overseas operations including credits handled by the
network of overseas branches. With careful planning and detailed surveys of the market, the
International Division will explore better quality businesses and products and manage them
efficiently to enhance UBL’s profitability and turn the overseas branch network into a highly
profitable unit of the Bank.

The Global Credit Risk Management Division monitors and manages the risk, credit
process and procedures at overseas branches.

FINANCIAL INSTITUTIONS DIVISION (FI):

This is an independent division operating as a profit center and is responsible for catering
to all financial business requirements of banking and non-banking financial institutions. This
division caters to the financing needs of all local banks, foreign banks, and other financial
institutions including leasing companies, investment banks, DFIs, insurance companies, mutual
funds, etc.

Like the Corporate Banking Group, the Financial Institutions Division also operates with
a structure of relationship managers, providing comprehensive solutions to its clients. In order to
strengthen the division’s credit analytic capabilities, the Financial Institutions Risk Management
Unit oversees the risk related to financial institution related transactions. The Financial
Institutions Risk Management Unit is part of the Risk Group.

ISLAMIC BANKING GROUP (IB):

The roles and functions of the Islamic Banking Group shall be:

 To manage and be responsible for the operations of Islamic Banking

Business (IBB), including policy and procedural matters;

20
  To ensure that all funds pooled into the Islamic Banking Fund (IBF) are
channeled into Shariah-compliant financing and investment activities;
 To arrange training of staff of Islamic banking;
 To arrange for compilation and submission of such returns, as may be
required to be submitted to the State Bank of Pakistan from time to time;
 To ensure that all directives and guidelines, particularly those applicable to
Islamic banking, issued by the State Bank of Pakistan are strictly complied with;
 To maintain the Statutory Cash Reserve and Liquidity Requirements with
the State Bank as prescribed from time to time by the State Bank of Pakistan; and
 To assume other roles and responsibilities as determined by the bank or
the State Bank of Pakistan from time to time.

HUMAN RESOURCE DEPARTMENT: (HR)

UBL is the place for you if you are willing to materialize all your deliverables in
alignment with the organization’s holistic vision to grow and excel. Committed and competent
work force is the primary asset in providing value addition to stakeholders of a business
organization.

HR Division is responsible for attracting, selecting and recruiting the right people from
the market. UBL is proud of its highly professional, transparent and objective approach in its
recruitment and selection processes. After applying the eligibility criteria, which depends on the
Job grade, a series of selection procedures are applied before hiring employees. Normally the
candidates go through the process of test, group discussion and interview. The Interview is
conducted by a team of internal as well as external professionals of the related area.
Sophisticated recruitment and selection tools like oracle based data management system; online
application and behavioral based interviewing techniques have been introduced.

21
 Consolidation of Bank's budgets, its monitoring and constant review of various financial
indicators. Finance Division works as the back bone for all Banks’ operations.

The Division, which reports directly to the President and Chief Executive of the Bank,
has been instrumental in preparation of Bank's business plans and future strategies.

INFORMATION TECHNOLOGY DEPARTMENT:

Operations of UBL have been significantly streamlined post-privatization, however

further plans for improving operational efficiency are under-way. Currently the bank is using
internally developed distributed database software called UNIBANK. This software is utilizing
Oracle Financials at the back end. As all daily banking transactions are stored at the respective
branches, consolidation at the head office takes place at day end.

The bank has specialized software to support its various functions and the focus for some
time has now been on enterprise application integration (middleware). The management
launched a transformation program in 2006 which aims to accomplish bank-wide business and
technology reengineering.

AUDIT DEPARTMENT:

The Board Audit Committee (BAC) comprising three members meets every quarter and
is responsible, among other things, for ensuring the effectiveness of the internal audit function
and systems for monitoring compliance.

Internal audit procedures include routine branch and business function audit as well as
special surprise audits. There is also a dedicated compliance division mainly to follow up on the
recommendations advised by the audit team. The deliberations of BAC however reflect concern
regarding the overall control environment. The audit and inspection department has been
highlighting issues with regard to operational control weaknesses at the branch level.

22
 3. MY LEARNING’S
Standing on the second floor in my home, I heard the good news of me having a six week
opportunity to interact with a world class bank. All these six weeks were full of events, full of
learning and most importantly full of professional working. Here 'professional' regards in all
from clerical to managerial work. In these six weeks period, the best thing to me was the
authority and dependency of customers upon me, when they come with a hope that I'm there to
guide them. Knowing all is not learning, the real learning is to convey right. I tried to learn real,
see real UBL, and tried to comprehend the difference between what we look from outside and
what is going on inside.

UBL is full of experienced and professional traditional bankers. As it perfectly suit the
environment we are operating in, you attitude has helped UBL in capturing masses. In the private
sector, no doubt its a fast growing bank, but here's something that's still unrealistic to the policy
makers. The line of unsatisfied customers is increasing, not because we are not serving well, it's
because customers are not understanding the YOU attitude right. Every customer wants to make
sure his work is done at the first convenience, but they are not concerned about the responsibility
with which every employee is workingBack to my real learning’s in my six week internship, I
worked in customer service department, as well as in clearing department. Because of some work
load, I was unable to learn much about other cash and accounting department. Here is my
countdown learning of six weeks.

3.1 Account Opening:

Penning down information and keying it into the system does seem a simple and tedious
job but it is not. My initial five days at customer service department was the liveliest experience
of my internship. Though physically I was there just to assist the account opening officer, but it
turned

23
 Out to be much more for me. That is when I first actually imitated as a presenter of UBL
to customers, when to many people, I'm their hope.

UBL offers a variety of options for anyone; to everyone. You are an investor, regular
businessman, middle man, salaried person or a house wife; UBL serve you in every way it can
through its commendable and reliable services, because at UBL, YOU come first.

Working at Customer Service Department, I did counter with different types of Customer
and opened their accounts under the supervision of the officer. When you have the sole
responsibility to open the accounts, it's always very important to understand the needs of your
customer. Understanding the psyche of customer is very important. Until and unless you're
completely satisfied that the customer has genuine reason and need to open the account, don't do
so.

Account Opening Form:

In all the documentation within the bank, clearness and tidiness are the major features.
Over writing and cutting should always be avoided as it may lead to any misinterpretation.
Account Opening Form is the most important documentation when a customer walks in for
commercial banking and wants to develop a relationship with us.

In AOF, all the necessary information should be completely scrutinized before the
customer walks back. Now let’s look at some of the salient requirements of AOF and their
importance.

Currency and Type of Account

It offers you all the eight different types of accounts mentioned before. First understand
why the customer is here and what type of account suits him a lot. Scale down all the options
suiting his investment or requirement and help him choose what is best for him. Outline all the
salient features of that particular account to him and make him tick the best box. Mark the
currency box if the customer wishes to deposit in currency, in case, other than PKR.

24
 Nature of Account:

Understand and choose the desired nature of account.

3.1.1 Individual Account (Single/Joint):

Individual Account determines if the account is personal or joint. Once again understand
your customer here. Illiterate and gullible customers should better opt for joint account for their
own security.

3.1.1.1 Particulars of Account:

First of all the title of account is entered by which it will be called off. Following is the
Key/Secret Word of six characters which is mostly preferred to be mother’s name because it’s
simple unforgettable. Key word is used to verify the customer on phone or while other
subsequent inquiries. Next comes the mailing address; where the bank should mail anything it
has to. Next is the permanent address of the customer which should be copied from the CNIC of
the customer. E-mail address is mandatory for Net banking and e-statement facility whereas
Mobile number for mobile banking. Lastly it’s your choice to hold your statements for collection
or mail it to you.

3.1.1.2 Personal Information:

Following portion summarizes social with standing of a person.

Applicant’s name, Father’s or husband’s name, gender, marital status, Date of birth,
nationality, country of residence and identification source and its number should be enter. Make
sure the source of identification is not expired. Enter NTN if available. Know the occupation of
the applicant and check the respected box. In case there is more than one account applicant, fill in
all the above mentioned information for other applicant as well.

*It’s a good practice to ask for the original identification source of the customer and pen
down the number and expiry date directly from it.

25
3.1.1.3 Next of Kin:

In case if the account holder is somehow not contacted, this portion provides information
of the person who should be contacted instead. Person’s name, relationship, address and
Telephone number should be provided.

3.1.2 Business Account:

Business Account determines that the party has its own entity under which the
accountwill be supervised. Match the respected category and check the box.

3.1.2.1 Particulars of Account:

Here the information about the business is filled in. Title of account, company/business
name, and nature of business, office/mailing address, head office /registered address, office email
and NTN are mandatory information required for business account. CNIC is required in case of
sole proprietor ship and information of few persons are required who can be contacted in case of
companies. Here we need to know that who will be operating the company accounts.

3.1.2.2 Additional Information:

Existing relationship with UBL:

In case if the customer already has some relationship with UBL, it should be mentioned
here. This is just in case to formally know and cross check the customer’s provided information.

Existing relationship with other banks:

This is to know what relationship the customer has with other banks, if any.

UBL Wallet ATM/Debit Card:

Here first define your customer what ATM card is, what are its features and what is the
difference between its different options. Enter the name of the customer in ‘Name on card’
field. Then is the option of supplementary ATM card.

26
 A customer can issue up to 9 supplementary cards. If supplementary card is required, a
UBL Wallet VISA card requisition form is filled in which details about supplementary card
holders is penned.

Zakat Deduction (only on PLS A/C):

PLS account holders can directly pay Zakat from their accounts, if they are willing to.

Other UBL Products:

Account holders can opt for UBL Net banking, UBL Orion, Credit card, Personal loan,
Car Financing, Mortgage and Business Finance.

Operating Instructions:

This identifies the signing authority of the account. It can be operated singly, either or
survivor, jointly, mandate or by any other in special cases.

Statement of Accounts:

This specifies how early the account statement is required. It can be daily, weekly,
monthly, quarterly or semi annually. Customers can choose Mail or e Statement or both.

Special Instructions:

Special instructions, if any, are registered here. It usually certifies further the operating
instructions of the account.

Account referred by:

Detail of person referring the customer is entered here.

27
3.1.3 For Bank Use Only

Special Category of Account:

If the account is of minor, UBL staff, Illiterate, Blind or Registered Alien, it should be
checked respectively. Passport size Photographs are required in this case and customer can only
make the transaction personally. Make sure signatures are not too simple or shaky. If so, again
passport size photographs may be required and transactions can only be made personally for
customer's own security.

Service Charges:

This is the minimum balance penalty which is applicable to all except students and
government employees' salary or pension purpose accounts.

Know You Customer:

Here's an assessment that the account opening officer do in order to understand some
aspects of the new customer relationship.

Individual Account:

The customer is marked as walk in, marketed or a referral; he/she is a public figure or not.
Moreover what will be the customer's sources of funds? What would be the usual mode of
transaction and what would be the intentions of account with UBL. Who will be the ultimate
beneficiary and what the approximate value of transaction per month is.

28
3.2 Clearing of Cheques:

3.2.1 Outward Clearing:

My experience at C.C S. Town branch started from the clearing department. Right in the
morning cheques collected from the drop box simply flood over my table. According to all I
learnt through listening, viewing and questioning is summarized below.

3.2.2 Documentation of Consumer Cheques:

All the cheques collected are first categorized into

 Credit Cards
 Auto Loans
 Personal Loans
 Cash Line

Verified cheques are then validated before being documented into the drop box collection
sheet for our daily drop box collections record. To anticipate the approval of cheques, we need to
validate some important specifications of all the cheques. They are:

 Date: Cheque should not be post dated or out of date.

 Figures: Amount in words and figures should match.
 Signature: Drawers signature must be clear.
 Intercity: Cheques must not be of other cities. Intercity clearing cheques
for consumer departments are not entertained
 Payee’s Name: Payee’s name should be written, and endorsement should
be as per the beneficiary of the cheque.
 There should be no over writing in everything penned.

29
 All the filtered cheques are then entered into the collection sheet in which following
information is entered.

 Cheque No.
 Name of bank
 Name of Customer
 Loan No.
 Amount
 Document No.

All the documented consumer cheques are then posted into the system. Which I can not
learn due to there security reasons.

3.2.3 Cleared Cheques:

Now the next day when clearing is confirmed by NIFT, respected accounts are debited.
We go into the banking option and in transfer, we debit all the respected accounts. Same is the
case with intercity and OBC cheques.

In documentation, debit and credit vouchers are made, which show total amount of
clearing as per day.

3.2.4 Returned Cheques:

All the cheques which are returned, due to any reason, are then reversed. They are
debited back in the clearing schedule. All the returned cheques are documented in the cheque
return registers and all the account holders of returned cheques are charged with service penalty.

*All the vouchers are signed by the designated officer and all the entries over 50,000 are
supervised.

30
3.3 Remittances:

3.3.1 Demand Draft:

DDs are always a secure way of paying remittances in other cities. Both account holders
and walk in customers can avail the facility of DDs. Charges tend to differ for both customers but
the advantage tend to be same. DDs are made in the favor of beneficiary and remitter either pays
in cash or through cheque.

Charges for DDs are

0.10%, Min Rs. 100 for A/C holders

Up to Rs. 100,000/- 0.20%, Min Rs. 200 for Non A/C

holders

0.05%, Min Rs. 150 for A/C holders

Over Rs. 100,000/- 0.15%, Min Rs. 250 for Non A/.C

holders

Rs. 150 for A/C holders

Issuance of duplicate DD
Rs. 250 for Non A/.C holders

When DDs are issued, head office account is debited and remitters account is credited, on
presentation, head office account is credited and beneficiary’s account is debited.

31
4. FINSNCIAL STATEMENTS, VERTICAL AND TREND ANALYSIS

32
As s ets 2013 2012 2011 2010 2009
(Millions) (Millions) (Millions) (Millions) (Millions)
Cash and balances with treasury and other banks 114,389 109,398 100,600 86,104 66,878
Lending to financial institutions 28,835 21,953 11,890 11,935 23,162
investments-gross 425,253 351,002 297,137 227,237 138,398
Advances-gross 436,749 409,090 366,307 368,692 382,478
Operating fixed assets 24,608 24,431 22,982 22,424 21,926
Other assets 27,317 26,800 23,976 21,044 17,851
Total assets – gross 1,057,151 942,674 822,892 737,436 650,693
Provisions against non-performing advances (45,936) (44,727) (40,959) (34,960) (28,387)
Provisions against diminution in value of (1,476) (1,412) (2,726) (2,658) (2,253)
investment
Total assets -net of provision 1,009,739 896,535 779,207 699,818 620,053

Liabilities & Equity

Deposits & other Accounts 827,848 698,430 612,980 550,646 492,036
Borrowing from financial institutions 40,574 68,720 49,953 45,105 34,145
Sub-ordinate loans 665 9,319 11,317 11,986 11,990
Bills payable 16,591 7,601 5,879 5,046 5,147
Other liabilities 23,147 20,226 18,650 18,620 14,799
Total Liabilities 908,825 804,296 698,779 631,403 558,117

Net Assets / Liabilities 100,914 92,239 80,428 68,415 61,936

Share capital 12,242 12,242 12,242 12,242 11,129

Reserves 33,681 29,044 24,847 21,689 18,960
Inappropriate profit 42,635 37,416 34,809 26,250 22,188
Equity -Tier 1 88,558 78,702 71,898 60,181 52,276
Surplus on revaluation of assets 12,356 13,537 8,530 8,234 8,660
Equity 100,914 92,239 80,428 68,415 60,936
Total liabilities & equity 1,009,739 896,535 779,207 699,818 619,053
33
Profitability 2013 2012 2011 2010 2009
(Millions) (Millions) (Millions) (Millions) (Millions)
Markup/return/interest earned 72,846 73,507 70,453 59,277 61,107

Less: Markup/return/interest expensed (34,910) (34,948) (31,026) (24,997) (28,164)

Net Markup/Interest income 37,936 38,560 39,427 34,280 32,943

Fee, commission, brokerage and 12,205 10,025 9,027 7,992 7,139

exchange income
Capital gain & dividend income 4,845 3,131 1,261 712 1,233

Other income 1,064 3,975 2,429 1,387 3,048

Noninterest income 18,114 17,131 12,717 10,091 11,420

Gross income 56,050 55,691 52,144 44,371 44,363

Less: Administrative expenses and other (26,718) (24,306) (20,349) (18,476) (17,015)
charges
Profit before provisions 29,332 31,385 31,795 25,895 27,348

Less: Donations (77) (35) (54) (84) (56)

Less: Provisions (1,448) (4,499) (7,518) (8,068) (13,258)

Profit before taxation 27,807 26,851 24,223 17,743 14,034

Less: Taxation (9,193) (8,960) (8,723) (6,582) (4,842)

Profit after taxation 18,614 17,891 15,500 11,161 9,192

Total Income 90,960 90,638 83,170 69,368 72,527

Total Expense 72,346 72,748 67,670 58,207 63,335

34
Assets 2013 2012 2011 2010 2009
% % % % %
Cash and balances with treasury and other banks 11.3 12.2 12.9 12.3 10.8
Lending to financial institutions 2.9 2.4 1.5 1.7 3.7
lnvestments- gross 42.1 39.2 38.1 32.5 22.3
Advances-gross 43.3 45.6 47.0 52.7 61.7
Operating fixed assets 2.4 2.7 2.9 3.2 3.5
Other assets 2.7 3.0 3.1 3.0 2.9
Total assets – gross 104.7 105.1 105.6 105.4 104.9
Provisions against non-performing advances 4.5 5.0 5.3 5.0 4.6
Provisions against diminution in value of 0.1 0.2 0.3 0.4 0.4
investment
Total assets -net of provision 100.0 100.0 100.0 100.0 100.0

Liabilities & Equity

Deposits & other Accounts 82.0 77.9 78.7 78.7 79.5
Borrowing frome financial institutions 4.0 7.7 6.4 6.4 5.5
Sub-ordinated loans 0.1 1.0 1.5 1.7 1.9
Bills payable 1.6 0.8 0.8 0.7 0.8
Other liabilities 2.3 2.3 2.4 2.7 2.4
Total Liabilities 90.0 89.7 89.7 90.2 90.2

Equity Section
Share capital 1.2 1.4 1.6 1.7 1.8
Reserves 3.3 3.2 3.2 3.1 3.1
Unappropriated profit 4.2 4.2 4.5 3.8 3.6
Equity -Tier 1 8.8 8.8 9.2 8.6 8.4
Surplus on revaluation of assets 1.2 1.5 1.1 1.2 1.4
Equity 10.0 10.3 10.3 9.8 9.8
Total liabilities & equity 100.0 100.0 100.0 100.0 100.0

35
Assets 12 Vs 13 11 Vs 12 10 Vs 11 9 Vs 10
% % % %
Cash and balances with treasury and other 4.6 8.7 16.8 28.7
banks
Lending to financial institutions 31.3 84.6 -0.4 -48.5
lnvestments- gross 21.2 18.1 30.8 64.2
Advances-gross 6.8 11.7 -0.6 -3.6
Operating fixed assets 0.7 6.3 2.5 2.3
Other assets 1.9 11.8 13.9 17.9
Total assets – gross 12.1 14.6 11.6 13.3
Provisions against non-performing advances 2.7 9.2 17.2 23.2
Provisions against diminution in value of 4.5 -48.2 2.6 18.0
investment
Total assets -net of provision 12.6 15.1 11.3 12.9

Liabilities & Equity

Deposits & other Accounts 18.5 13.9 11.3 11.9
Borrowing frome financial institutions -41.0 37.6 10.7 32.1
Sub-ordinated loans -92.9 -17.7 -5.6 0.0
Bills payable 118.3 29.3 16.5 -2.0
Other liabilities 14.4 8.5 0.2 25.8
Total Liabilities 13.0 15.1 10.7 13.1

Net Assets / Liabilities 9.4 14.7 17.6 10.5

Share capital 0.0 0.0 0.0 10.0

Reserves 16.0 16.9 14.6 14.4
Unappropriated profit 13.9 7.5 32.6 18.3
Equity -Tier 1 12.5 9.5 19.5 15.1
Surplus on revaluation of assets -8.7 58.7 3.6 -4.9
Equity 9.4 14.7 17.6 12.3
Total liabilities & equity 12.6 15.1 11.3 13.0

36
Profitability 2013 2012 2011 2010 2009
% % % % %
Markup/return/interest earned 80.09 81.10 84.71 85.45 84.25

Markup/return/interest expensed 48.25 48.04 45.85 42.95 44.47

Net Markup/Interest income 32 33 39 43 40

Fee, commision, brokerage and exchange 13.42 11.06 10.85 11.52 9.84
income
Capital gain & dividend income 5.33 3.45 1.52 1.03 1.70

Other income 1.17 4.39 2.92 2.00 4.20

Noninterest income 20 19 15 15 16

Gross income 52 52 54 57 56

Administrative expenses and other charges 36.93 33.41 30.07 31.74 26.87

Profit before provisions 15 19 24 25 29

Donations 0.11 0.05 0.08 0.14 0.09

Provisions 2.00 6.18 11.11 13.86 20.93

Profit before taxation 13 12 13 11 8

Taxtation 12.71 12.32 12.89 11.31 7.65

Profit after taxation 26 25 23 19 15

Total Income 100 100 100 100 100

Total Expense 100 100 100 100 100

37
Profitability 12 Vs 13 11 Vs 12 10 Vs 11 09 Vs 10
% % % %
Markup/return/interest earned -0.9 4.3 18.9 -3.0

Markup/return/interest expensed -0.1 12.6 24.1 -11.2

Net Markup/Interest income -1.6 -2.2 15.0 4.1

Fee, commision, brokerage and exchange 21.7 11.1 13.0 11.9

income
Capital gain & dividend income 54.7 148.3 77.1 -42.3

Other income -73.2 63.6 75.1 -54.5

Noninterest income 5.7 34.7 26.0 -11.6

Gross income 0.6 6.8 17.5 0.0

Administrative expenses and other charges 9.9 19.4 10.1 8.6

Profit before provisions -6.5 -1.3 22.8 -5.3

Donations 120.0 -35.2 -35.7 50.0

Provisions -67.8 -40.2 -6.8 -39.1

Profit before taxation 3.6 10.8 36.5 26.4

Taxtation 2.6 2.7 32.5 35.9

Profit after taxation 4.0 15.4 38.9 21.4

Total Income 0.4 9.0 19.9 -4.4

Total Expense -0.6 7.5 16.3 -8.1

38
 5. RATIO ANALYSIS
Ratio analysis is very helpful to the management of the organization as well as for the
investors and creditors. Investors keep an eye on the bank’s financial statement and make
decisions whether to invest funds in that bank or not. Similarly a creditor also analysis the
financial statements and makes decisions whether to grant loan or not.

Financial statements for the last three years from 2011 to 2013 are given above:

5.1. Liquidity Ratios:

Liquidity ratios means to measure short term solvency of the company. Ability of the
company to pay off its short term debt. Following ratios are calculated in order to measure the
short term solvency of the company

 Current Ratio
 Acid Test Ratio
 Working Capital

5.1.1Current Ratio:
Current Assets: Cash and balances with treasury and other banks + lending to financial
institutions + Investment + Advances

Current Liabilities: Deposits & other Accounts + Borrowings from financial institutions
+ Sub-ordinate loans + Bills Payable

Current Ratio = Current Assets / Current liabilities

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
610,916 / 543,318 693,968 / 612,783 775,934 / 680,129 891,443 / 784,070 1005,226 / 885,678
= 1.12% = 1.13% = 1.14% = 1.14% = 1.13%
Graphical Representation

Current Ratio

1.15
1.14
1.14
1.13 Current Ratio
1.13
1.12
1.12 39
2009 2010 2011 2012 2013
Interpretation:

As the current ratio in the year 2009 is 1.12, and in the year 2013 it is 1.13. This shows
the constant increase in the current assets and liability of the United Bank. The current ratio of
1.0 is considered acceptable for a public utility.

Acid test Ratio of the Allied Bank can’t be calculated because inventory is required, so
bank is a service organization.

5.1.2Working capital:

Current Assets: Cash and balances with treasury and other banks + lending to financial
institutions + Investment + Advances

Current Liabilities: Deposits & other Accounts + Borrowings from financial institutions
+ Sub-ordinate loans + Bills Payable

Working Capital = Current Assets – Current Liabilities

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
610,916 - 543,318 693,968 - 612,783 775,934 - 680,129 891,443 - 784,070 1005,226 - 885,678
= 67,598 = 81,185 = 95,805 = 107,373 = 119,548

Graphical Representation

Working Capital

120,000
100,000
80,000
60,000 Working Capital
40,000

20,000
-
2009 2010 2011 2012 2013

40
Interpretation:

Working Capital in the year 2009 is 67,595, and in 2010 is 81,185, 2011 is Rs. 95,805.
Working capital in the years 2012 is Rs. 107,373 which indicates that in the year 2012 working
capital is to reasonable extent because of 12% increase in current assets. And again in the year
2013 working capital is Rs. 119,548 has been increased, which shows increasing trend in the
working capital of the United Bank limited.

5.2 Leverage Ratios

Any ratio used to calculate the financial leverage of a company to get an idea of the
company’s methods of financing or to measure its ability to meet financial obligations.
Following ratios are calculated in order to measure the long term solvency of the firm:

 Debt Ratio
 Debt / Equity Ratio
9.2.1 Debt Ratio

Debt Ratio= ( Total Debt/ Total Assets )

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
558,117 / 620,053 631,403 / 699,818 698,779 / 779,207 804,296 / 896,535 908,825 / 1,009,739
× 100 × 100 × 100 × 100 × 100
= 90.01% = 90.22% = 89.68% = 89.71% = 90.01%

Graphical Representation

Debt Ratio

90.40

90.20

90.00
Debt Ratio
89.80

89.60

89.40
2009 2010 2011 2012 2013

41
Interpretation:

Bank’s Debt ratio in the years 2009, 2010, 2011, 2012 and 2013 is 90.01%, 90.22%,
84.92%, 85.32% and 85.97%. Debt Ratio indicates that bank’s Debt is on higher side in all the
five years as compare to its assets which indicates that the bank is highly levered and its fixed
financial cost is much higher which may decrease the operating profit of the company with the
result of decrease in earnings per share.

5.2.2 Debt / equity Ratio

Debt to Equity Ratio = Total liabilities / Total Equity

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
558,117 / 60,936 631,403/ 68,415 698,779 / 80,428 804,296/ 92,239 908,825 / 100,914
= 9.16 = 9.23 = 8.69 = 8.72 = 9.01

Graphical Representation

Debt to Equity Ratio

9.30
9.20
9.10
9.00
8.90
Debt to Equity Ratio
8.80
8.70
8.60
8.50
8.40
2009 2010 2011 2012 2013

Interpretation:

United Bank Limited in all the five years debt ratio is 9.16, 9.23, 8.69, 8.72 and 9.01
respectively which indicates that the creditors were providing Rs.9.16, Rs. 9.23, Rs.8.69,
Rs,8.72, and Rs.9.01 respectively each year of financing for each Rs.100 being provided by
shareholders. Debt portion in the total financing is much higher, that means lower the level of the
bank financing that is being provided by the shareholders.

42
5.3 Profitability Ratios
Profitability ratios measure the earning ability of the firm. Following ratios are calculated:

 Net Profit Margin

 Return on Assets
 DuPont Return on Assets
 Return on Total Equity
 Operating Income Margin
 Gross Profit Margin

5.3.1 Net Profit Margin

Net Profit Margin = Net Profit / Total Revenue × 100
Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
9,192 / 61,107 11,161 / 59,277 × 15,500 / 70,453 17,891 / 73,507 18,614 / 72,846
× 100 = 15.04% 100 = 18.83% × 100 = 22.00% × 100 = 24.34% × 100 = 25.55%

 Net Profit = profit after taxation

 Total Revenue = Markup/Return/interest earned

Graphical Representation

Net Profit Margin

30.00

25.00

20.00

15.00 Net Profit Margin

10.00

5.00

0.00
2009 2010 2011 2012 2013

43
Interpretation:

Net Profit margin in the Year 2009 is 15.04% and 2013 is 25.55% respectively which
shows 41% increases in Net Profit margin in the following five year. Net Profit Margin is to a
reasonable extent i.e. return on sales after payment of tax.

5.3.2 Return on Assets:

Return on Assets =Earnings Available for shareholders / Total Assets × 100

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
9,192 / 620,053 11,161 / 699,818 15,500 / 779,207 17,891 / 896,535 18,614 / 1,009,739
× 100 = 0.91% × 100 = 1.11% × 100 = 1.54% × 100 = 1.77% × 100 = 1.84%

Graphical Representation

Return on Assets

2.00
1.80
1.60
1.40
1.20
1.00 Return on Assets
0.80
0.60
0.40
0.20
-
2009 2010 2011 2012 2013

Interpretation:

In the year 2009 it is 0.91%, and in the year 2013 is 1.76% which indicates United Bank
was earned Rs.0.91, and Rs.1.76 respectively in past year on each Rs.100 of assets investment,
which return on total assets is increasing year by year. It is hope based on previous year progress
in future united bank will get greater return on their assets.

44
 5.3.3 Du Pont Return on Assets
Du-Pont ROA= (Net Income ÷ Total Revenue) x (Total Revenue ÷ Total Assets )
Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
(9,192 / 61,107) x (11,161 / 59,277) x (15,500 / 70,453) x (17,891/ 73,507) x (18,614 / 72,846) x
(61,107 / 620,053) (59,277 / 699,818) (70,453 / 779,207) (73,507 / 896,535) (72,846 / 1,009,739)
= 0.91% = 1.11% = 1.54% = 1.77% = 1.84%
Graphical Representation

Du Pont Return on Assets

2.00

1.50

1.00 Du Pont Return on

Assets
0.50

-
2009 2010 2011 2012 2013

Interpretation:

As for as Return on total Assets is concerned, in the year 2009 it is 0.91%, and in the year
2013 is 1.76% which depicts that return on total assets is much lesser as compare to banking
standard. Although it has an increasing trend in the year but in 2012 it is pertinent to mention
here that assets of the bank are not used properly.

5.3.4 Return on Total Equity

Return on total Equity = (Net Income / Total Equity ) × 100
Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
(9,192 / 60,936) (11,161 / 68,415) (15,500 /80,428 ) (17,891 / 92,239) (18,614 / 100,914)
× 100 × 100 × 100 × 100 × 100
= 15.08% = 16.31% = 19.27% = 19.40% = 18.45%

45
Graphical Representation

Return on Total Equity

20.00
18.00
16.00
14.00
12.00
10.00 Return on Total

8.00 Equity
6.00
4.00
2.00
0.00
2009 2010 2011 2012 2013

Interpretation:

Return on Equity mean’s how much earn on Equity in the year 2009 is 15.08%, and in the
year 2013 is 18.45% which shows an increasing trend in previous year but unlucky in 2013
despite increase in Net income and Equity, return on Equity is lesser than previous years.

5.3.5 Operating Income Margin

Operating Income Margin
= Earnings Before interest and tax (EBIT)(EBT) / Total Revenue
Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
14,034 / 61,107 17,743 / 59,277 24,223 / 70,453 26,851 / 73,507 27,807 / 72,846
= 22.97% = 29.93% =34.38% = 36.53% = 38.17%

46
Graphical Representation:

Operating Income Margin

40.00
35.00
30.00
25.00
20.00 Operating Income
15.00 Margin

10.00
5.00
0.00
2009 2010 2011 2012 2013

Interpretation:

Operating income means income from operation i.e. earnings before Tax (EBT). Income from
operation in the year 2009 is 22.97% and in the year 2013 is 38.17% which is showing that
Operating income of the Bank is increasing on the year to year bases.

5.3.6 Gross Profit Margin

Gross Profit Margin = (Gross income / Total Revenue ) × 100
Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
(44,363 / 61,107) (44,371 / 59,277) (52,144 / 70,453) (55,691/ 73,507) (56,050 / 72,846)
× 100 = 72.60% × 100 = 74.85% × 100 = 74.01% × 100 = 75.76% × 100 = 76.94%

Interpretation:

Gross profit margin on year to year basis is increasing, but in the year 2011 there is little bit
fluctuation in gross profit margin, and very next year it show increasing trend. It also shows that
United Bank also expending his business that’s why its gross income is increases.

47
Graphical Representation

Gross Profit Margin

77.00
76.00
75.00
74.00
73.00 Gross Profit Margin
72.00
71.00
70.00
2009 2010 2011 2012 2013

5.4 Activity Ratios

Activity ratios measure a firm’s ability to convert different accounts within their balance
sheets into cash or sales.

 Total Assets Turnover

 Fixed Assets Turnover

9.4.1 Total Assets Turnover

Total Assets Turnover = Total Revenue / Total Assets

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
61,107 / 620,053 59,277 / 699,818 70,453/ 779,209 73,507/ 896,535 72,846/ 1,00,9739
= 0.12 Times = 0.10Times = 0.09 Times = 0.08 Times = 0.07Times

Interpretation:

Turnover means how many times we make the sales during the year as compare to our total
assets. This trend of decreasing is in the year 2009 up to 2013 .These ratios determine that
revenue is lowdown the turnover their assets year by year.

48
 Graphical Representation

Total Assets Turnover

0.12

0.10

0.08

0.06 Total Assets

Turnover
0.04
0.02

0.00

2009 2010 2011 2012 2013

5.4.2 Fixed Assets Turnover

Fixed Assets Turnover = Total Revenue / Fixed Assets
Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
61,107 / 21,926 59,277 / 22,424 70,453 / 22,982 73,507/ 24,431 72,848 / 24,608
= 3.32 Times = 3.25 Times = 3.17 Times = 2.98 Times = 2.96 Times
Interpretation:

From year on year basis fixed assets turnover has been a decreasing trend in the year
2009 up to 2013. As the total assets turnover having decreasing trend in that year that’s why
fixed assets show decreasing trend.

Graphical Representation:

Fixed Assets Turnover

3.40
3.30
3.20
3.10 Fixed Assets
3.00 Turnover
2.90
2.80
2.70
2009 2010 2011 2012 2013 49
5.5. Market Ratios
Market ratios are commonly used by the investors to access the performance of a business as an
investment and also the cost of issuing stock.

 Earning per Share

 Book Value per Share

6.5.1 Earnings Per Share

Earning Per Share = Net income after tax / No. of Shares Outstanding(Million)
Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
9,192 / 1,113 = 11,161 / 1,224 = 15,500 / 1,224 = 17,891 / 12,24 = 18,614 / 1,224 =
8.26 EPS 9.12EPS 12.66 EPS 14.62 EPS 15.21 EPS
Graphical Representation

Earnings Per Share

16.00
14.00
12.00
10.00
8.00 Earnings Per Share
6.00
4.00
2.00
-
2009 2010 2011 2012 2013

Interpretation:

Earning per Share from the year 2009 to 2013 is increasing that show the expending
business of the United Bank. On year to year basis earning per share is increasing; this is healthy
sign for bank to progress. It is also good for bank shareholders.

50
5.5.2 Book Value Per Share

Book Value per share= Total Shareholder Equity / Number of Share Outstanding
Year 2009 Year 2010 Year 2011 Year 2012 Year 2013
60,936 / 1,113 68,415 / 1,224 80,428 / 1,224 92,239 / 1,224 100,914 / 1,224
= 54.75 = 55.89 = 65.71 = 75.36 = 82.45

Interpretation:

Book Value means how much the value of the share in the record of the Bank, in the year
2009 to 2013 the book value of the United Bank share is increasing, that show the strength of
United Bank share in the share market. That is also beneficial for shareholder.

Graphical Representation

Book Vaule Per Share

90.00
80.00
70.00
60.00
50.00 Book Vaule Per
40.00 Share
30.00
20.00
10.00
0.00
2009 2010 2011 2012 2013

NOTE:

All the ratios are calculated on the basis of data published in United Bank annual reports 2009 to
2013. Balance sheet, profit & loss account (Income statement) are taken as it is as published in
annual reports. All the amounts of these statements are taken into Millions. Errors and omissions
can be omitted.

51
 6. SWOT ANALYSIS:
SWOT is useful tool for providing a framework for analysis of an organization. SWOT
stands for Strengths, Weaknesses, Opportunities and Threats. It is a common approach to make
assessments in terms of internal and external environment of the organization, and to formulate
strategies analyzing its internal strengths and weaknesses, external opportunities and threats,
coming up is the SWOT analysis for the UBL.

6.1 STRENGTHS:
 It is one of the largest private banks with a deposit base of Rs. 94883/- millions showing
constant growth over the period from 1999 till the day.
 It has a well-knitted and adequately equipped branch networking system that efficiently
covers both the domestic and international markets.
 It is involved in both corporate and retail banking.
 The bank is actively emerging and is engaged in international trade and foreign exchange
transactions. Foreign trade volume showed an increase of 17% over the previous year.
 Advances investment of the bank shows a constant growth pattern. The current year’s
growth rate is 32%.
 The overall efficiency of the bank operations and management ability can be noticed by
looking at to its income pattern and provisions/write off practices.

Net revenue from funds increased by 18% for the current period.

Provisions decreased by 14%.

Total income increased by 16%.

 UBL is actively participating in international markets and has recently introduced credit
cards in UAE, Bahrain, and Qatar, being backed up by 24 hours call center out of UAE.
 The bank is owned by parties of financial repute and credit worthiness like, SBP with
48.69% interest, Best Way group and Abu Dubai group with 25.50% of interest each.
Others are GOP, NBP Trustee Department, State Life Insurance Corporation etc.

52
  The bank is run by highly professional recruited from and trained by foreign banks like
City Bank.

6.2 WEAKNESSES:
 Due to risks such as political, economic and legal etc the bank has suffered losses the
main reason was that of piling up of large amount of unrecoverable loans and debts which
have adversely affected the image of the UBL.
 Accumulated losses pushed the bank to cut down its promotional activities in order to
reduce expenses for last few years.
 During the nationalization life span of the bank political lords used influence in bank
business and selection of employee at each level and thus adversely affected the bank’s
efficiency and effectiveness.
 Administrative expenses are 51% of the mark up revenue.
 Promotions are carried out on annual basis ignoring the importance of capabilities and
performance outputs.
 The bank has large number of employees who are simple graduates with no banking
knowledge.
 Ineffective system of recruiting and selection.
 Lengthy credit processing and documentation procedures.
 Unsatisfactory working conditions.

6.3 OPPERTUNITIES:
 Growing policies of the GOP on business and economic sectors provide UBL an
opportunity to efficiently meet with the business people requirements of instant cash
facilities e.g. the government intentions of developing housing and agriculture sectors.
 The efficiency of stock market and sound exchange reserve level is providing a good
opportunity for effective investment decisions.

53
  Foreign remittances are another area as present worldwide control systems over transfer
of currencies through illegal channels has facilitated the area for the banks.
 Reconstruction of Afghanistan is a golden opportunity where the bank can effectively
participate.
 Interest of businesses in leasing facilities provides a healthy opportunity for banks.
 There is a large pool of unemployed MBAs who can be hired to achieve professionalism
on its organizational culture.
 Outsourcing of promotional companies or use of available excellent promotional
facilities.
 Entering new market segments.
 Increase the product range to meet the broader range of customers’ needs.

6.4 THREATS:
 Increase in competition due to increasing number of foreign and domestic private banks
offering highly specialized and attractive services.
 Growing global technological advancements and adaptation of modern style of
management in banking sectors.
 Extensive promotion campaigns run by competitors.
 Unemployment, lower level of income and prices like problems in the motherland
coupled with low rate of industrialization, geo political adverse conditions, religious
factor, lack of consistency in policies due to political instability are some of the other
major threats.

This SWOT analysis is a mirror image of the bank’s present conditions. Some efforts are
made and others are still required to be made in order to improve the situation. The
management can develop elaborate strategic plans for capitalizing the available opportunities.
The bank should maintain principal of professional management and adhere to sound and
sophisticated banking rules and regulations so that confidence and trust of the public in the
institutions could be re earned.

54
 7. PEST ANALYSIS

7.1 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 and17% 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.

7.2 ECONOMICAL
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.

7.3 SOCIAL
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 UBL always tried to provide the needy
people loans on soft terms and helped also to decrease unemployment by providing job
opportunities.

7.4 TECHNOLOGY
The Banking sector in Pakistan has experienced a rapid transformation. Just about a
decade back this sector was limited to the Sarkari (nationalized) and co-operative banks. Then

55
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 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.

8. RECOMMENDATIONS
Recommendations are considered to be the most important part of an internship report,
without which no report is considered complete and meaningful. This part of the report is based
on the previous sections i.e. review and analysis. Moreover, for bringing suggestions, discussions
have been conducted with the staff of UBL officers, who not only provided the basis for
recommendations but also pointed out some areas, where the change for the development is
utmost important. Realizing the importance of this section, efforts have been made to give
feasible recommendations, which are categorized under the following headings.

8.1 HUMAN RESOURCE DEPARTMENT:

The importance of manpower cannot be denied in any organization. In case of banks it is
the most valuable asset, because the bank is very sensitive organization and to be in harmony
with this sensitivity, need for proper human resource is felt badly. Critical analysis of UBL
necessities recommending suggestions that would increase bank’s efficiency and effectiveness.
Development of Managerial Leadership:

In services industries like banks the need of managerial skill is much more important. It
makes positive contribution towards higher effective results. Without development of managerial
leadership, the effective utilization of the human resource will be impossible. UBL should also
focus on this area and should avoid deficiencies in managerial leadership, by applying the
modern styles of management.
Political interference:

56
 The political intervention in the bank needs to be stopped so that the top hierarchy as well as
the personnel placed at other important levels of the institution is not changed Just on political
grounds and the ongoing developmental work is not obstructed. It will enable the management to
formulate long term strategies and their proper implementation because the long term policies,
accurately based on calculated risk, have proved the pivotal role players for organizational
sustainable development.

Basis for Promotion:

A sizeable portion of the officers of UBL, are promoted in without test and interviews to
officers cadre. The promotion policy must be too tight and transparent that no one may have the
chance to be promoted on criteria other than the required qualification, experience and
performance. As for the present excess staff, those not found up to the required criteria, may be
given GHS etc .

Management Changes on Merit:

In UBL, though vary rare fresh recruitments are made, and the bank faces saturation in
personnel, now clipping will be more helpful. This downsizing will leave the bank with the
staff, to be retained on the basis of ultimate meritocracy with zero tolerance of incompetence.
Now in this remaining workforce, a cultural change right from the top management down to the
front line, that better suits to the present day needs of banking environment could be included
through proper discipline and training.

Needs of change in Recruitment Policy:

It is important to say that the external level market is full of the required talent like MBA, M.
Com etc,. But on the country only graduation with simple subjects is still the requisite
qualification for officer’s cadre, which has already worked amply in the devastation of UBL.
Therefore the recruitment qualification to the officer’s framework should be enhanced for simple
graduation, to professionally qualify preferably Masters in their respective fields.

57
Refresher Courses:
The Human of the bank should frequently conduct meaningful refresher courses, seminars
and workshops with a view to improve the knowledge of the staff. Due to severe competition and
technological developments, the banking business is experiencing rapid changes therefore the
HRD should have arrangements for staff trainings to cope with the new changes that may
become threats for the interest of the bank.

Computer Trainings:
The present conventional and orthodox training programmes need to be made more
comprehensive and reinforced with inclusion of computer training courses.

Training for Credit Management:

Special trainings on credit management should be imparted to the finance dealing staff.
Financing is main fountain bank’s income. Sound finance is extremely necessary for opening of
springs of the smooth inflow of the income.

Training with Clear Objectives:

Training needs assessment is necessary so that only the relevant staff is sent for the training
courses.

Change in Appraisal System:

The present performance appraisal system is good. However, it needs to be implemented in
true sense. The drawbacks that are obvious like nepotism and favoritism etc. need to rooted out
and the culture of ultimate meritocracy in appraising needs be inculcated.

Introduction of New Courses:

The human recourses division of the bank should focus on the restoration of the corporate
image of the bank by floating programmes such as, marketing excellence, courses on corporate
culture and others. Usually in businesses the wholesalers, retailers and other intermediaries are
finished by opening a network of the business own outlets. It works as profit maximization

58
devise. In my opinion the above two programmes marketing excellence and corporate culture,
added with the best counter service and outdoor informal relationship with the potential
customers by the line managers will save the sum of money spent on various media of
advertisement.

Cheaper means for Postings etc.

The culture of attachment of hopes with the elements outside UBL, for promotion, transfers,
postings, and other benefits requires eradication from the roots.

Customers Orientation:
Every entrepreneur if concerned about the success of his business has to understand,
recognize, carefully and appropriately that his customer is “The King” of the business system and
the original spring of the business revenue. UBL should recognize its customers as the
mainstream of the bank’s revenue. They need to be provided the deserved respect, quality and in
time service and to be politely dealt with.

Career Development:
As a matter of personnel policy HRD of UBL should prepare a plan showing the future
growth potential of employees on the job performance and evaluation and it should be made
known to the employees. In this regard, employees should be given opportunities to show their
performances, which would help in their career development.

8.2 CREDITS AND ADVANCES DEPARTMENT:

The defaulted loans have showered the process of development of banking sectors in Pakistan
and have reduced the lending capacities of banks. In result of which economic growth has
reduced and rate of industrialization has become lowered. Defaulted loans being the major cause
for this depression, various suggestions and recommendations have been given with focus on
UBL to overcome the drawbacks of this department.
Fake financial presentation:

59
 The bank should confirm that the provided figures by the borrowing organization are
fairly audited and that the auditors are on the approved list of the bank and they have clear
opinion about the affairs of company and nothing has been made secret. The bank should have
expert to examine various changes and developments for years in areas of the borrowing
corporation like;

i. Financial condition

ii. Cash generation

iii. Ability to pay back

iv. Operational performance

The focus should be on identifying and explaining significant changes and developments in
payback of loans, profit maximization, capital flow and operating expenses etc. the bank should
take critical view of the financial and should assess changes occurred during the favorable and
slack reason for the company.

Poor Management:
A large number of industrial units and projects become sick because of poor management.
When a business becomes sick or fails it is unable to return the loans, it has taken, and as a result
such loans become bad debts, to avoid this, it is the responsibility of UBL, to ensure that the
company to which loan is sanctioned enjoys good management skills and reputation.
Proper Documentation:

Loans become irrecoverable through court of law in case of default when the bank fails to
prove their claims against the delinquent borrower. If documents are obtained properly as per
terms of the loan it is not difficult for the counsel of the bank to get decree against the defaulter.
For proper and valid documentation the following aspects must be kept in mind.

60
 I. The bank should confirm that standard loan documentation is in place for each credit
facility prior to disbursement. If the documents required are different from the bank’s
standard approved format, arrangement for vetting of the legal counsel.
II. Bank should ensure that the documentation are correct, complete and correspond with the
approved facilities. Also to ensure that blank spaces are filled, documents are dated,
signed and stamped, the signer is authorized to execute such documents and signatures
are verified.
III. Maintain documentation checklist, updating it properly each time new documentation
received.
IV. Maintaining computerized record of documentation.
V. Division of documentation on the basis of sector, to which loan is given.

61
9. ANNAXURE

62
 10. REFERENCES

Annual Report of the United Bank, limited 2012.

Annual Report of the United Bank, limited 2013.

www.ubl.com.pk
James C. Van Horne, 2000. Financial Management

63