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.

UBL, a commercial bank was established in 1959 as result of reckless efforts made by

Agha Hassan Abidi. The UBL has shown the fastest growth pattern and in a period of just 27

years became the second largest bank of Pakistan. The bank image however adversely

destroyed when it suffered heavy losses during its nationalization period due to political and

other factors. The bank is showing re-emerging indications as is evident from its financial

statements. UBL on October 19, 2002 was privatized and bought by two financially sound

parties of international repute i.e. best way group and Abu Dhabi group holding 51% of the

banks share and thus has emerged as the largest private bank surpassing MCB.

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.

Firstly is the introduction to the report and briefly describes the scope, purpose,

methodology and limitations faced during the preparation of the report.

Next is the review portion and contains five chapters. First chapter is introducing the

organization, UBL which came in to being in 1959. Remaining four chapter are explaining

operations and relevant broader but comprehensive set of information of the functional

departments of the bank. An attempt has been made so that readers of this report should be

able to gain sufficient knowledge of the processing and procedures of the operations carried

out by these departments. Next is the analysis part of the report and is comprising of two

chapters. Chapter 5 is the critical analysis of the departments and its functions. SWOT

analysis is an integral part of this chapter that I did. As an internee I was deeply concerned

about the performance level of the UBL and therefore tried to analyze the bank financial

performance that is included in chapter 4.Then I did marketing analysis of UBL. This chapter

reveals that the bank is trying to regain its position in the present more dynamic and

competitive environment. Major findings are included in this summary which is the outcome

of this analysis. In the last is the recommendation part and is derived from the previous

section. Major findings are stated in the later part of this summary.

1

INTRODUCTION TO REPORT

Introduction

Students of BBA studying courses leading to bachelor’s degree in Commerce are

required to undergo an internship programme of two months duration. This is an essential

academic requirement. The internship is followed by comprehensive report writing, required

to submit it. This report is properly evaluated on the basis of its description and analytical

capabilities by internal and external examiners. I did my internship in United Bank Limited

(mission chowk sahiwal).

Purpose of Study

The purpose of the study is to work in real life situation and learn banking practice by

doing. In this context its objectives are:

To analyze banking operations i.e. operational analysis, financial analysis.

To develop concrete and feasible recommendations.

To improve report writing skills.

Scope of Study

The study is confined to banking operations. An attempt, along with all its limitations,

to collect financial data and general statistics of the bank has been made. Keeping in view the

purpose of the study, which is to make an acquaintance with practical doings in the bank, this

seems a comprehensive effort.

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METHODOLOGY OF STUDY

Both primary and secondary data were used in compilation of the report.

Methodological tools used were:

Primary Data

Personal Observations

Discussion with Bank Personnel

Secondary Data

Brochures/ Manuals of the bank.

Annual Report

State Bank Foreign Exchange Manual

Journals, newspapers and books

Internet

INTRODUCTION OF THE BANKING SECTOR

Banking History

Consensus on the origination of word “Bank” is not yet reached at. Some authors’

opinion is that this word is derived from the words “Bancus” or “Banque”, which mean a

bench and they further relate banking business inception to Jews in Lombardy. Other

authorities state that the word “Bank” is derived from the German word “Back” which means

“Joint Stock fund” and later on due to German occupation of Italy, this word was italianated

into “Bank. Authors quote Babylonians (few quotes Chinese) who developed banking system

as early as 2000 B.C.

Banking in Pakistan

Banking started in Pakistan after the bold and emergent decision of formulation of

SBP on July 30, 1948. Thereafter this sector has witnessed enormous growth. In 1974 banks

were nationalized, in the hope that new era of growth could be achieved through it. However,

the process is reverse since 1991, up till now MCB, ABL, and UBL have been privatized and

HBL is in the process of its privatization.

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INTRODUCTION TO UBL

Profile: United Bank LimitedTicker: UBL

Exchanges: KAR2009 Sales: 73,819,000,000

Major Industry: FinancialSub Industry: Commercial Banks

Country: PAKISTANEmployees: 8738

On November 9, 1959, UBL was notified and included as a private schedule bank with

authorized capital of Rs. 20 million; issued and paid up capital of Rs. 10 million divided into

1 million shares of Rs. 10/ each. Currently BOD and president/ CEO Mr. Amar Zafar Khan

being a member of this newly formed set up manage UBL. Chairman His Highness Shaikh

Nahayan Mabarak Al Nahayan and Deputy Chairman Sir Mohammed Anwar Pervez are the

two supreme controllers of the bank’s affairs. Another development is the appointment of

director operation, Nauman Hussain by the newly privatized bank. Senior management of the

bank is shown in the chart given at the end of chapter.

The Group's principal activities are to provide commercial banking and other financial

services. The Group offers personal banking, cash management, retail loans and other

financial services. These services include deposits, savings/current bank account, vehicle

loans, personal loans, retail trade finance, global banking, lending to priority sector and small

scale sector, foreign exchange and export finance, corporate loans and equipment loans. The

Group operates through 1078 branches within Pakistan and 17 branches outside Pakistan.

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VISION

To be the first choice investment solution provider. Renowned for quality, added

value and innovative service at an affordable cost to our investors

MISSION

Offer value added products & services while adhering to the highest level of ethical

standards

Attract, develop & retain exceptional talent that shapes our passion for excellence and

our commitment to teamwork

Listen carefully to all our stakeholders and deliver winning solutions

Be a responsible corporate citizen

CORE VALUES

Respect

Excellence

Customer Focus

Quality

Honesty

5

UBL Network

UBL has a large network of branches, which extends to the remotest areas of the

country. In December 1983, there were 1623 branches whereas in 1974 it had only 1238

branches and in October 2003 these figures show total number of 1007 branches.

UBL has been very active in increasing its overseas branches network. The first

foreign branches were established in London in 1963. Now UBL has branches in Bahrain,

Qatar, Saudi Arabia, United Arab Emirates, Yemen Arab Republic, UK Switzerland, Egypt,

Oman and The United States. The Group operates through 1078 branches within Pakistan and

17 branches outside Pakistan. These branches are playing a significant role in channeling

home remittances and foreign trade of Pakistan.

Profile of UBL Mission Chowk Sahiwal

The branch started its operations on 9th November 1962. It had the staff of 32

employees. Due to its excellent position, it received a warm welcome from the masses in a

very short period it achieved a pre-eminent position.

Currently this branch is working with five officers of deposits and vaults department,

account department, cash department, bills and remittance department, and advances

department.

Functions of UBL

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

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

prescribed form of business.

In the light of this section UBL’s functions can be categorized as under:

Agency services

General Utility Services

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

Providing specialized services to customers, and

Hajj-related services

Accepting various types of deposits

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Role of UBL Banking Sector

The impressive growth and development, which UBL achieve, present it undoubtedly

the most dynamic and progressive. In a very shorter period of time it became one of the

leading bank overtaking several other older and its competitor banks4. The major

contributions the bank has made are enlisted below:

Record setting performance and commitment to serve the customers

Personalized service and dynamic approach

Catalyst of changes

Professional management

Modern banking policy

Human resource development

Small loans (or) micro credits

Utility bills collection

Credit cards (unicard-1970)

Travelers Cheques (Humarah-1971)

Diaries and calendars – received prizes too

Promotion of sports

Computerization of UBL

UBL has taken leading start in the introduction of computers in (1966- 1968) in

important cities. Its three computers centers Rawalpindi, Lahore and Karachi are equipped

with the modern mainframe computers of various capacities. Every branch has been

decorated with microcomputers.

United bank limited was computerized in July 2003.

UBL motto is:

“Where you come first”

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The use of computers has enabled the bank to save time and efforts raise efficiency

and deliver the goods speedily to its customers. This has also allowed the bank to maintain its

leadership within the industry.

SERVICES

UBL has taken progressive steps and has introduced innovative products and services

to provide you a variety of banking and financing services.

i) UBL - Online System

Themes of this service is

“Access anytime, anywhere, any device”

Which symbolizes comfort, convince and connectivity

UB-Online a web based service that can be accessed through multiple media link like,

(i) PC via internet (ii) Mobile phone with WAP or free SMS) (iii) Personal Digital (iv)

assistants and (v) Plain telephone;

Following are some of the exciting features:

i) Accounts statement & electronic data interchange

ii) Graphical analysis

iii) Alerts service /facility

iv) Search facility and activity long

The banks as another computer-based system known as “UNIBANK”, which is a well-

develop on-line branch-banking package. The system automatically prepares various report,

central bank returns, and statement of accounts for customers.

ii) Money Gram Facility

The bank has recently employed money gram service system, which can affect money

transfers within minutes. Similarly the system used for local transfer of money transactions is

called uni-remote.

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iii) Hajj Services

In order to meet the customers’ needs. UBL offers HAJJ scheme.

The salient features of this scheme are:

Interest free

Loan up to 25000

Personal guarantee of a person acceptable to the branch manager

Payment of the loan is in 45 days before departure of HAJJ

iv) UBL Wallet

This scheme offers debit card / ATM to the customers for withdrawal of money.

V) UBL Drive

UBL offer car finance loan to its clients and has made it very easy to get cars for its

clients.

vi) UBL First

This service offers saving account for children with minimum of deduction.

“Pehli Bachat, pahla Account”

vii) UBL Business Line

A complete solution to your business financing needs.

With UBL business line, now you will surely say:

“Ab Hui..... Kamyabi Mari Manzil”

It is a credit line facility ‘against residential property’.

It has the following criteria,

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Monthly income Rs.25000

Age 23-65

Resident of Pakistan

Self employed businessman

viii) UBL Tez Raftaar

UBL's new remittance service, TezRaftaar offers all overseas Pakistani people the

fastest and the most convenient delivery of their money to their beneficiaries in Pakistan.

Best of all, TezRaftaar is completely cost free and is available at all UBL branches along the

Bank's Network in the Middle East,UK and US.

TezRaftaar has following features:

Guaranteed delivery within 24 hours to your given address in Pakistan.

Door step delivery by authorized courier or credited to the recipient's account.

Free of charge transfer service.

ix) Hamrah

UBL has always been adding the forefront in identifying and meeting the financial

needs of its valued customers. UBL was a pioneer an introducing Rupee Travelers Cheque

facility in Pakistan, as early as 1971. In continuation of the same tradition, UBL in the shape

of, “HAMRAH” Rupee Travellers Cheque enhances this facility for the convenience of its

valued customers by offering denomination up to Rupees 10,000.

UBL "Hamrah" has been designed keeping in mind, both convenience and security -

be it business, property, trade or personal needs. "Hamrah" Rupee Traveller Cheques are the

ideal and safest way of carrying cash when travelling anywhere in Pakistan.

UBL has a 24 hours customer’s help-line, providing its customers with round the

clock tele-verification of HAMRAH Rupee Travellers Cheques.

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Salient Features

Absolutely FREE - No Bank Commission, No Excise Duty

Whatever the value of "Hamrah" purchased, no Bank Commission or Excise Duty

will be charged.

Special Facility of Refund

Indicate choice of designated UBL Branch for refund which will be within days only.

Most convenient while in transit anywhere in Pakistan

Exclusive Security

Secured with specially "Coded" printing and” RAIN BOW Effect" for added security.

x) 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.

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MANAGEMENT OF UBL

Senior Management of UBL

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ACCOUNT OPENING DEPARTMENT

To open an account in UBL the customer will have to fill an account opening form in

front of bank officer. He has to sign in all required places in front of the officer.

Documents Required in Account Opening

N.I.C Copy.

Account opening form (provided by bank)

Two photograph (in case of illiterate person)

Specimen Signature card (Provided By Bank)

Cheque Requisition Form

Introduction of Account

Nature of Account

According to nature there are two types of accounts.

Individual account

Business account

1-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.

2-Business Account

The customer is marked as a walk in, marketed or referred customer. Name of parent and

other companies are entered. Geographical area of activity is mentioned. How the business

earns is mentioned to know the business type. Then similarly mode of transaction, ultimate

beneficiary, initial deposit and approximate maximum value of transaction per month is

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recorded. Finally after fulfilling all the necessary requirements, the officer here by

recommends to open the account of the customer.

Types of Business Account

Sole proprietorships

Partnership

Joint stock company

Documentation to be obtained

Individuals

Photocopy of CNIC/Alien Registration No./ passport

Photocopy of service card/employment card/student card

Sole Proprietorship

NTN/Sales Tax Registration Certificate

Application to open account on sole proprietorship letter head

Partnership

Photocopy of CNIC of all partners

Application to open account on partnership letter head signed by all partners

Attested copy of Partnership deed

Copy of Registration certificate with Registrar of Firms

Authority letter in favour of person responsible to operate the account.

Joint Stock Companies

Certified copies of:

Resolution of BODs for opening of account and certifying the person responsible to

operate it

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Memorandum and Article of Association

Certificate of Incorporation and Commencement of business

CNIC of all the directors

NATURE OF ACCOUNTS IN UBL

i) Current Account

These are non-profitable demand accounts. The account can be opened with minimum

amount of rupees 1000/-. These accounts are usually maintained for business purpose. Due to

enormous competition UBL has introduced daily profit current account for corporate clients

called (UNISEVER) minimum balance required is Rs. 100,000/-. If minimum balance

requirement is not met, bank is authorized to recover predetermined charges.

ii) PLS Saving Account

These accounts were intended with the aim of encouraging thrift among people. These

accounts can be opened either in Pakistani rupees or in few major currencies of the world.

Bank offers (4%- 6%) return on these accounts. The basic feature is the profit and loss

sharing as according to non-interest based banking system. These accounts can be opened in

the name of; individuals, joint names, trust accounts, charitable organizations.

Unlike current accounts, Zakat is applicable on local currency saving accounts. Minor’s

accounts can be opened on the condition that their guardians shall operate these accounts.

iii) Term Deposits

Term deposits are also called fixed deposits. These can be withdrawn after a specified

period of time. Interest is paid to the depositor on all fixed or term deposits. The rate of return

varies with the duration for which the amount is kept with bank.

There are two types of term deposits.

STDR’S – Special Term Deposit Receipt (local currency)

Special Term Deposit Receipts are issued for different periods of maturity ranging

from one month to 5 years, having attractive returns. There is no limit on denominations.

NTDR’s – Notice Term Deposit Receipt (local currency)

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These are term deposit with special features that these can be withdrawn any time but

after giving a predetermined and pre agreed early notice.

REMITTANCE DEPARTMENT

Current business trends demand fast movement from one geo-graphic end to another.

Latest technology and telecom data transmission has made it possible to make such

transactions within minutes. UBL Mission chowk Remittances Department performs

following functions.

i) Demand Draft (D.D)

D.D is a negotiable instrument issued by branch of the bank drawn on other branch of

the same bank.

Procedure for D.D.

Purchaser is asked to fill in an application form duly singed by applicant. Three things

should be maintained in the form.

Name of Payee

Place of payment

Amount of D.D

Commission is charged on D.D as bank income. The applicant is asked to deposit the

cash specified on the application form to the teller. After depositing cash the remittances

incharge prepare a D.D. That is signed by two officers must having power of attorney. Bank

also provides this facility to general public who don’t have account in UBL. They will have

to submit a N.I.C copy along with D.D application form.

ii) Telegraphic Transfer (T.T)

Transfer of funds to another branch of the same bank with the help of test numbers. If

the test number agrees the bank make payment to the party.

Procedure for T.T

The procedure for T.T is same as D.D. But in D.D it is given on a printed-paper and

signed by two officers but, in T.T, only test number is given to the customer.

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iii) Mail Transfer

When the money is not required immediately, the remittances can also be made by

MT. Here the selling officer of the bank sends instructions in writing by mail to the paying

bank for the payment of a specified amount of money. The payment under transfer is made

by debiting the buyer’s account at the sending office and crediting it the recipient’s account at

the paying bank. UBL takes mail charges from the applicant where no excise duty is charged.

iv) Pay Orders

Pay order is banker cheque issued favoring a named beneficiary. The issuance bank is

discharged by payment in due course. Application for the PO stamped and the customer’s

account balance is checked or cash received for the amount PO and other charges. Pay Order

leaf is typed and crossed if required and signed by two authorized persons. Thereafter it is

delivered to the customer. PO can be cancelled at original purchaser’s request in writing and

surrender the instrument, which then marked canceled along with other documents and prior

entries.

v) Rupee Traveler Cheques

UBL has launched R.T.C Brand named “Hamrah” in November 1996. These are

issued to applicants with varied denominations without excise duty and commission. When

issued HO account is credited and on encashment the same account is debited. RTC’s lost

cases are communicated to HO and client is either repaid or new RTC’s are issued to him/her.

Vi)Uni-Remote

This is a new tool for the transfer of money. This is a step towards the online banking

taken by UBL. This tool transfers money from one branch of UBL to other through electronic

transfer. The customer will have to fill the deposit slip. On the slip he will write the name and

account number of the person to whom the money will transfer, the name of the branch is

also written. The amount is deposited with teller and the receipt is shown to remittance

inchraged. One I.D copy is also attached with slip. The remittances incharge will transfer if

by using device (computer) through online service. The fund transfer is must be supervised

by another authorized officer. Every time for this is five minutes.

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Account Department

Introduction

It is the most important of a bank. One can have a complete view of the functions and

performance of bank from the accounts. The department is responsible for;

Keeping record of each and every transaction.

Maintenance accounts.

Preparation of several daily, monthly, quarterly, half yearly. And yearly reports.

Analysis of the report.

Efficient management of funds.

Giving recommendations for improvement in the functions and methods.

Record Keeping

For every transaction a supporting voucher is prepared. From all the departments

vouchers are transferred to the accounting department. In the department voucher are sorted

out and are maintained under 37 heads. Vouchers are matched with the activity report. A

voucher is printed slip and for matching purpose the account number and the account title

printed on the slip are used. The activity report shoes every transaction that takes place as

well as the name of the operator carrying out the transaction.

The activity report shows the final balance of every account. Daily a sheet showing

the total number of voucher is transferred to the Voucher Register. Microfilm of each

voucher is made and if there is any mistake it is also pointed out and relevant changes are

made in the records of accounting department. Vouchers are kept in records for particular

period of time and then destroyed. After that if any of the voucher is to be checked, microfilm

is used for reference.

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CREDIT DEPARTMENT

General Credit extension is the principal function of a bank, through which pace of

activity is accelerated in the various sectors of economy. Also the indicators, which mainly

reflect the high quality of bank’s management, are its prudent financing decisions, proper

control of finance and prompt recovery. In this regard the credit policy of a bank play a very

important role as it provides the overall framework, responsibilities, authorities and facilitate

decision-making. Credit department performance is subject to a defined policy on credit

control exercised by the SBP. SBP affect credit decisions through the weapons of bank rate,

open market operations, variable reserve requirements, selective credit restrictions and

prudential regulations.

UBL Credit Policy

Credits operations are undertaken in accordance to bank’s credit policy. The policy

strictly prohibits violation of SBP/Local central bank’s rules and suggests financing of self

liquidating, cash flow supported and well collateralized transactions, which equate the

principle of lending (safety, liquidity, dispersal, remunerations and suitability).

Credit department Facilities

Facilities offered by UBL SAHIWAL

Running Finance (for one year)

Demand Finance (3to 5 years)

Procedure for Financing from UBL

When a party comes for financing, banker will ask the following questions.

Purpose: In this the party mentions the purpose; they want to apply for the finances. No

lending is done without purpose.

Business: The party must have some specific running business i.e. general

merchandise, construction business etc. The second question arises of the cash flow that how

much flow is generated by the party from the current business.

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Security

The bank will secure itself against the lending. There can be two type of security.

Commercial

Residential

The bank prefers commercial security. Relationship Manager (RM) is mainly responsible

for the relationship between the banks and party. He acts like a bridge between the two.

In the first instance the party would prepare the following property documents.

AKS Shajarah

Naqsha Tasveeri

Approved Building Plan

Tresh fard

Intaqal Naqal

The party is asked to contact any valuator on the panel of UBL. ICM&L and Tajak

Builder are on the panel of UBL. The valuator will visit the site and set market value and

FSV of the said property. He prepares report of at least three pages. This document sent for

one page legal opinion to any layer on the panel of UBL. Having clear legal opinion RM start

preparing credit Approval (CA). The documents are signed by the RM & AM and then

forwarded to UBL RHQ in Peshawar. Here SRM examines the CA if he found some

exception he will send it back to the respective Rm.

RM rectifies the acceptation and sends it back to SRM. SRM studied and pass it to credit

officer. He has three hours of time to study the CA and if found correct then he pass it to

another credit officer. After his examination the CA is passed on to the credit risk manager.

He checks the CA and after signing it sent to CAD. He forwards the CA to SCO. Whose

office is at UBL RUCO at Lahore, after his signature the C.A is sent back to RCAD.

RCAD make a check less list and asked the RM to contact the party to complete

The said documents they are.

Letter of continuity

Personal Guarantee

Letter of hypothecation of stock

D.P Note

Mortgage Deed

NIC of executants and witness

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Stock report

Insurance policy

Party profile

After completion of charge document RM send it to RCAD when they found it correct,

they issues DAC. A copy of DAC is sent to RM and NICF account is opened and debit

transaction starts.

CLEARING DEPARTMENT

Clearing of Bills

Bank can make payments of only open Cheques on the counter payment. Payment of

cross Cheques cannot be made on counter its payment is possible through collecting bankers.

The functions of clearing department are divided into two main classes.

Inter Branch Transaction

Inter Bank Transaction

Procedure of Clearance of Cross (Cheques)

Whenever bank receives a cheque of other bank from the client he cannot make

payment on the counter. The first job banker has to perform is to put a special crossing across

the face of cheque. By special crossing cheque is secured. If it is stolen the paying banker

would not suffer because of non-endorsement. On the back of the cheque the stamp is made

of payee account will be credited on realization. It is signed by authorized person. Along with

the cross cheque the customer has to fill the deposit slip. The half part of slip is given back to

the customer. after the special crossing and is necessary endorsement the banker write the

amount along with cheque number on paper and attach with each slip. Then again on the

smile paper the amount of all the Cheques along with the bank names are added and attached

to cheque presented for clearing, and advice is also attached with the cheque presented for

clearing. The following entry is passed on sending the cheque for clearing.

Bill lodged for clearing ……. Dr

Bill for collection ………. Cr

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The Cheques are sent on the same day for clearing. The bank receives it on other day.

The paying bank receives the receipt and the amount is credited in the respective account.

The paying banker passed the following.

Inter Branch Transaction (IBC)

It means “Inter Branch Transaction” when UBL received a cheque a drawn on the

customers of his branch; first they will cheque the amount in the account on which cheque is

drawn. Of the required amount is available in the account they will match the signature on the

cheque along with their SS card. If all the requirement are completed the bank will send an

IBCA to the bank from which cheque is sent.

Local Branch Cheques (LBC)

LBC means local branch cheques received for collection. UBL, received cheques

from their spoke braches as well as from other UBL branches, drawn of any other bank in

sahiwal. They send the cheque to responding bank and after clearing the cheque through

clearing houses (which is NBP) in Sahiwal. They send LBC advised to the bank from which

the cheque was received.

Other Branch Cheques (OBC)

When the bank receives the cheque from its customer or from any other spoke branch

drawn on any other bank of any other city. They sent the cheque to the UBL main branch of

that city, after receiving OBCA the bank will pass the following entry. In case of his own

customers.

COLLECTION

It is facility given to customers for collection of their outstation checks.

The checks undergo a process of clearing. Collection involves;

Outward Bill for Collection

Inward Bill For Collection

1-Outward Bill for Collection

The process is as follows:

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All of the outstation checks become a part of OBC.

These checks are given OBC numbers which is a serial number) from “OBC

Register”

Information relating to the check is entered in the register such as Date, Check

Number, Bank on which is drawn, and amount of check.

These checks along with “OBC FORWARD SCHEDULE” are sent to the cities where

the banks are forwarded to the MAIN BRANCHES of BAL in respective cities.

If a check is meant for a city where BAL has no branch then it is directly forwarded to

the branch on which it is drawn.

2-Inward Bill for Collection

The process is as follows

All of the checks that are received from other cities become a part of “inward Bill for

Collection”

Each check is given “IBC Number” (which is a serial number) from” IBC Registeer”.

Information of a check received is entered in the register such Date,CheckNo.,

Presented By, Amount, Date of Payment, Reason of Return, Other Remarks, Name of

Bank on which check is drawn.

A credit voucher is printed for each check.

Record in the register are regularly updated and on realization after posting in the

computer the outstanding amounts are encircled in the register

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FINANCIAL ANALYSIS

Introduction

These section efforts have been made to cover all relevant aspects of the financial

performance of UBL. Overtime horizontal and vertical analysis and ratio analysis are carried

out with the view to extract concrete conclusion to describe financial standing and

performance of the bank.

Basis of Presentation

The purchase and sales of UBL are restricted to the amount of facility actually utilized

and the appropriate portion of mark up there on. They strictly observe the rules and

regulations as applicable and promulgated by the GOP and or SBP handled over Rs. 96

billion of import and export business during the year, an increase of 24.7% as compared to

last year.

Analysis

Financial statements are the principal means of reporting the financial condition and

results of operations of a business entity. These statements are meant to assist various parties

in decision making who are interested in the activities of the business. These statements are

means to an end of helping stakeholders in decision-making. To improve the quality of

decision making proper analysis of these statements helps a lot. Financial statements analysis

helps in determining the financial conditions at any particular points in time and effectiveness

of operations of a firm during a specific period.

The various stakeholders of business are interested in the analysis of financial

statements. But the focus of interest of all is not the same. For example, creditors and credit

reporting agencies are interested in finding out the credit worthiness of the firm to which they

have extended credit or intend to extend credit. Short term creditors are interested in short

term liquidity of the business and long term creditors are interested in the long term cash flow

which the firm can generate over the long period of time. Investors are interested in the firm’s

ability to sustain profitability over a period of time. Government agencies analyze financial

data for tax purposes. The internal users of financial statements like management also analyze

financial data for planning and control.

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UNITED BANK LIMITED

BALANCE SHEET

AS AT DECEMBER 31, 2007

2007 2006

Rupees in (000)

ASSETS

Cash and other balances with treasury banks 57,526,451 48,939,840

Balances with the other banks 4,191,128 14,034,476

Lending to financial institution 24,781,723 29,572,070

Investments 115,585,646 67,260,338

Advances

Performing 293,373,007 243,237,819

Non-Performing 5,981,729 4,072,074

299,354,736 247,309,893

Fixed assets 16,918,844 5,234,463

Deferred tax assets – net - 906,661

Other assets 11,925,428 10,008,132

Total Assets 530,283,956 423,265,873

Liabilities

Bills payable 6,079,341 4,560,649

Borrowings from financial institutions 59,103,350 38,490,586

Deposits and other accounts 401,637,816 335,077,873

Sub-ordinates loans 5,996,696 5,998,344

Deferred liabilities 2,232,344 -

Other liabilities 12,813,005 9,275,034

Total Liabilities 487,862,552 393,402,486

Net Assets 42,421,404 29,863,387

Share capital 8,093,750 6,475,000

Reserves 10,261,958 8,298,873

Inappropriate profit 15,653,703 12,429,853

Share holders equity 34,009,411 27,203,726

Surplus on revaluation of assets 8,411,993 2,659,661

42,421,404 29,863,387

25

UNITED BANK LIMITED

BALANCE SHEET

AS AT DECEMBER 31, 2009

2009 2008

Rupees in (000)

ASSETS

Cash and other balances with treasury banks 61,160,678 50,069,965

Balances with the other banks 5,407,470 7,497,174

Lending to financial institution 23,162,130 22,805,341

Investments 136,145,524 116,328,288

Advances

Performing 342,663,339 361,863,689

Non-Performing 11,428,374 9,275,986

354,091,713 371,139,675

Fixed assets 21,925,669 18,021,445

Deferred tax assets – net 608,876 2,005609

Other assets 17,241,991 17,621,844

Total Assets 619,744,051 605,539,341

Liabilities

Bills payable 5,147,259 5,194,449

Borrowings from financial institutions 35,144,823 44,195,886

Deposits and other accounts 492,036,103 483,560,062

Sub-ordinates loans 11,989,800 11,993,848

Other liabilities 14,489,343 16,732,337

Total Liabilities 558,807,328

561,676,528

Net Assets 60,936,723 43,862,759

Share capital 11,128,907 10,117,118

Reserves 18,959,537 15,501,513

Inappropriate profit 22,187,802 16,604,076

Share holders equity 52,276,246 42,222,777

Surplus on revaluation of assets 8,660,477 1,639,982

60,936,723 43,862,759

26

UNITED BANK LIMITED

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31, 2007

2007 2006

(Rupees in 000)

Mark up/return/interest earned 41,045,543 32,991,603

Mark up/return/interest expense 16,936,187 12,126,809

Net mark up/interest income 24,109,356 20,864,794

Provisions against loans and advances-net 1,689,467 1.972,936

Provision/(reversal)for diminution in

Value of investments-net (6,303) 74,573

Bad debts written off directly 935,123 269,349

6,422,046 2,316,858

Net mark up/return/interest income

After provisions 17,687,310 18,547,936

Non-mark up / interest income

Fee, commission and brokerage income 5,165,066 4,435,465

Dividend income/gain on sale 548,782 837,338

Of investment

Income from dealing in foreign currencies 827,328 659,726

Gain on sale of securities 849,367 280,864

Unrealized loss on revaluation of investments

Classified as held for trading (15,755) (3,335)

Other income 1,617,563 738,330

Total mark up/return/interest income 8,992,351 6,948,388

Non-mark up / interest expenses 26,679,661 25,496,324

Administrative expenses 13,420,977 10,952,275

Other provisions/write offs/ (reversals) 236,281 226,313

Other charges 17,430 25,980

Total non-mark up/interest expenses 13,674,688 11,204,568

Profit before taxation 13,004,973 14,291,756

27

Taxation – current 5,075,600 3,412,791

-prior year 442,667 45,225

- Deferred (915,884) 1,365,508

4,602,383 4,823,524

Profit after taxation 8,402,590 9,468,232

Inappropriate profit brought forward 12,429,853 7,350,813

20,832,443 16,819,045

Transfer from surplus on revaluation

Of fixed assets – net of tax 63,028 94,454

Profit before appropriations

Appropriations 20,895,471 16,913,499

28

UNITED BANK LIMITED

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31, 2009

2009 2008

(Rupees in 000)

Mark up/return/interest earned 60,857,035 51,919,229

Mark up/return/interest expense 28,163,787 24,061,790

Net mark up/interest income 32,693,248 27,857,439

Provisions against loans and advances-net 9,623,204 4,509,956

Provision against lending to financial institution 560,852 -

Provision/(reversal)for diminution in

Value of investments-net 945,342 2,219,815

Bad debts written off directly 1,485,976 1,367.514

12,615,374 8,097,285

Net mark up/return/interest income 20,077,874 19,760,154

After provisions

Non-mark up / interest income

Fee, commission and brokerage income 5,925,082 6,249,015

Dividend income/gain on sale 606,347 587,989

Of investment

Income from dealing in foreign currencies 1,213881 1,795,319

Gain on sale of securities 629,418 200,804

Unrealized loss on revaluation of investments (3,006) (19,547)

Other income 3,297,839 1,866,034

Total mark up/return/interest income 11,669,561 10,679,614

31,747,435 30,439,768

Non-mark up / interest expenses

Administrative expenses 16,608,561 15,519,634

Other provisions/write offs/ (reversals) 642,274 450,390

Workers welfare fund 397,547 336,999

Other charges 64,552 258,321

Total non-mark up/interest expenses 17,712,934 16,565,344

29

Extraordinary items - -

Profit before taxation 14,034,501 13,874,424

Taxation – current 6,930,585 6,090,351

-Prior years 76,328 435,072

- Deferred (2,165,099) (984,119)

4,841,814 5,541,304

Profit after taxation 9,192,687 8,333,102

Inappropriate profit brought forward 16,604,076 15,653,703

25,796,763 23,986,823

Transfer from surplus on revaluation

Of fixed assets – net of tax 253,014 253,018

Profit available for appropriations 26,049,777 24,239,841

Basic and diluted earnings/share 8.26 7.49

30

UNITED BANK LIMITED

VERTICAL ANALYSIS

OF BALANCE SHEET

In percentages

2007 2008 2009

ASSETS

Cash 10.84 8.3 10

Balances with the other banks 0.794 1.24 0.87

Lending to financial institution 4.67 3.75 3.74

Investments 21.79 19.21 22

Advances

PERFORMING 55.32 59.75 55

NON-PERFORMING 1.128 1.53 2

Operating Fixed assets 3.19 3 3.5

Deferred tax assets – net - 0.33 0.098

Other assets 2.24 2.91 2.78

Total assets 100 100 100

Liabilities

Bills payable 1.14 0.92 0.92

Borrowings 11.14 7.87 6.3

Deposits and other accounts 75.74 86 88

Sub-ordinates loans 0.11 2.14 2.15

Other liabilities 0.42 2.92 3

Total liabilities 100 100 100

Net Assets 7.99 7.88 10.9

Share capital 23.79 23.96 21.28

Reserves 30.17 36.7 36.28

Inappropriate profit 46.02 39.32 42.4

Surplus on revaluation of assets 19.82 3.74 14.21

Total equity 100 100 100

31

UNITED BANK LIMITED

VERTICAL ANALYSIS

OF INCOME STATEMENT

2007 2008 2009

Mark up/interest earned 100% 100% 100%

Mark up/interest expense 41.26 46 46.3

Net mark up/interest income 58.73 53.6 54

Provisions against loans and advances 4.11 9 16

Provision against diminution in

Value of investments-net 9.26 4.3 0.92

Bad debts written off directly 0.01 2.63 2

Net mark up/return/interest income

after provisions 43 38.1 33

Non-mark up interest income

Fee, commission and brokerage income 12 12 10

Dividend income/gain on sale of investment 1.33 1.13 0.99

Income from dealing in foreign currencies 2.01 3.46 1.99

Gain on sale of securities 2.06 0.39 1.03

Unrealized loss on revaluation on investments 0.03 0.04 0.0005

Other income 3.94 3.6 5.42

Total mark up/return/interest income 21.9 20.5 19.17

Non mark up/interest expense

Administrative expenses 65 59 52.16

Other provisions/write offs/ (reversals) 32.6 29.9 27.3

Workers welfare fund 5.75 0.86 1.05

Other charges 0.04 0.64 0.65

Total non-mark up/interest expenses 33.3 31.9 23.1

Profit before taxation

Taxation – current 12.3 11.73 11.38

32

-Prior years 1.07 0.84 0.13

- Deferred 2.23 1.89 3.56

Profit after taxation 20.4 16.05 15.1

Inappropriate profit brought forward 30.2 30.15 42.4

Transfer from surplus from revaluation of 0.15 0.48 0.42

Fixed assets

Profit available for appropriation 50.9 46.68 43

COMMENTS

Vertical analysis is a technique for evaluating financial statement data that

expresses each item in a financial statement as a percentage of the base amount.

Assets

The advances and the loans constitute the major portion of the total assets. This is

typical for a bank, as banks don’t have considerable fixed assets.

The investments have been decreased in 2009 as compared to 2008.

The portion of cash has increased by the year.

Liabilities

On the liability side, a deposit is the major account.

The percentage of deposits and bills payable is decreasing.

Borrowings and the other liabilities are increasing.

As a whole liabilities are decreasing.

Since the bank is on its way to expansion and for the purpose of expansion it needs to have

borrowings.

33

Equities

There is a decreasing trend in the share capital, reserves.

Inappropriate profit in the year 2009 has an increasing trend which indicates a good

sign for the growth of UBL.

Interest Income

There is a decreasing trend in the net mark up/interest income after provisions.

Total non-mark up/interest income is decreasing.

Interest Expense

Total non-mark up/interest expense also showed decreasing trend.

Profit

Profit before taxation is decreasing.

Profit after taxation is also decreasing.

34

UNITED BANK LIMITED

HORIZONTAL ANALYSIS

OF BALANCE SHEET

In percentages

2007 2008 2009

ASSETS

Cash 17.54 -12.96 22.15

Balances with the other banks -70.13 78.88 -27.87

Lending to financial institution -16.19 7.98 1.56

Investments 71.84 0.64 17.04

Advances-

PERFORMING 20.61 23.35 5.31

NON-PERFORMING 46.89 55.07 23.20

Operating Fixed assets 223 6.52 21.66

Deferred tax assets – net - - -70.38

Other assets 19.16 47.77 -0.0002

Total assets -2.15 14.19 -25

Liabilities

Bills payable 33.29 -14.55 -0.091

Borrowings 53.55 -25.22 -20.48

Deposits and other accounts 19.86 20.39 1.75

Sub-ordinates loans -0.03 100 -0.034

Other liabilities 38.14 30.59 -13.41

Total liabilities -0.51 15.13 24

Share capital 25 25 10

Reserves 23.65 51.05 22.30

Inappropriate profit 25.94 6.07 33.63

Surplus on revaluation of assets 261 -80.51 428

35

UNITED BANK LIMITED

HORIZONTAL ANALYSIS

OF INCOME STATEMENT

2007 2008 2009

Mark up/interest earned 24.4 26.49 17.21

Mark up/interest expense 39.6 42.07 17.04

Net mark up/interest income 15.55 15.54 17.77

Provisions against loans and

Advances -14.36 166.9 113

Provision against diminution in

Value of investments-net -91.54 -35318 -57.41

Bad debts written off directly 247.17 46.23 8.66

Net mark up/return/interest

Income after provisions -4.64 11.72 1.6

Non-mark up interest income

Fee, commission and brokerage

Income 16.45 20.98 -5.18

Dividend income/gain on sale

Of investment -34.46 7.14 3.12

Income from dealing in foreign

Currencies 25.40 117 57.61

Gain on sale of securities 202.4 -76.35 213

Unrealized loss on revaluation of investments 372.41 24.06 -84.62

Other income 119.11 15.3 76.73

Total mark up/return/interest

Income 29.4 18.76 9.27

Non mark up/interest expense

Administrative expenses 22.54 15.63 7.10

Other provisions/write offs/ (reversals) 4.40 90.61 42.60

Other charges -32.90 1833 17.97

36

Total non-mark up/interest expenses 22.04 21.13 75

Profit before taxation

Taxation – current 48.72 19.99 13.80

-Prior years 878.81 -1.71 -82.45

- Deferred -32.92 7.45 120

Profit after taxation -11.25 -0.83 10.32

Inappropriate profit brought forward 69.09 116 6.07

Transfer from surplus on revaluation of

Fixed assets -33.27 301 -0.0016

Profit available for appropriation 23.54 16 7.46

37

COMMENTS

Interest Income

There is an increasing trend in the net mark up/interest income after provisions.

Total non mark up/interest income is increasing.

Interest Expense

Total non-mark up interest expense also showed an increasing trend.

Profit

Profit before taxation is increasing.

Profit after taxation is also increasing.

Assets

The level of cash has also increased in 2009 as compared to 2008.

Balances with the other banks have increased in 2009.

Investments have increased in 2009.

Advances have an increasing trend in 2009 as compared to 2008.

Operating fixed assets have showed down growth in 2009.

Other assets are also getting more in 2009 as compared to last year.

Liabilities

Deposits have increased in 2009 as compared to last year.

Borrowings from the other banks are increasing. Although the bank is on its

way to expansion and for the purpose of expansion it needs to have

borrowings.

Bills payable are increasing.

Sub-ordinate loans are also increasing.

Deferred tax liabilities are increasing.

Other liabilities are also increasing.

Equities

There is an increasing trend in share capital, reserves, inappropriate profits and

surplus on revaluation of fixed assets in the year of 2009 which indicates a good sign

for the growth of UBL.

38

FINANCIAL RATIOS ANALYSIS

The user of financial statements finds it helpful to calculate ratios when they interpret

company’s financial statements. A financial ratio is simply one quantity divided by another.

Ratios focus on special relationship between two items of balance sheet, income statement or

one from each. Ratios make it easier to understand a specific relationship between various

items of financial statements then looking simply at the raw numbers themselves. The

number of financial ratios that might be created is virtually limitless, but there are certain

basic ratios that are frequently used, these ratios can be placed into six different classes.

Liquidity Ratio

Asset Turnover Ratio

Leverage Ratios

Coverage Ratios

Profitability Ratios

Market Value Ratios

The calculation and interpretation of these ratios of financial statements of UBL are as

follows.

LIQUIDITY RATIOS

It tells the firm’s ability to satisfy its short term obligations as they come due.

a. Working capital

Working capital=current assets – current liabilities

For 2009:

Working capital=418,085,744 – 387,458,476

=30,627,268

Year 2007 2008 2009

Working capital 16,895,025 21,218,138 30,627,268

39

b. Current Ratio

Current ratio= current assets/current liabilities

Higher the current ratio, the more liquid the firm is considered.

For 2009:

Current ratio=418,085,744/387,458,476

=1.08

2007 2008 20091.04

1.05

1.06

1.07

1.08

1.09

1.06

1.08

1.09Current ratio

40

Year 2007 2008 2009

Current ratio 1.06 1.07 1.08

ACTIVITY RATIO

Measure the speed with which various accounts are converted into sales or cash

inflows or outflows. It is also called Efficiency Ratio.

The activity ratios are of following types:

a. Inventory turnover

b. Average collection period

c. Total assets turnover

d. Average payment period

e. Fixed assets turnover ratio

a. Total Assets Turnover

It indicates the efficiency with which the firm uses its assets to generate sales. The

higher a firm’s total assets turnover, the more efficiently its assets has been used.

Total Assets Turnover = Sales/Total assets

For 2009:

Total Assets Turnover = 32,991,603/423,320,207

= 7.7

Year 2007 2008 2009

Total Assets Turnover 3.38 5.8 7.7

2007 2008 200902468

3.38

5.87.7

Total assets turnover

41

Findings

We analyze that the current total assets turnover of the firm is very strong as compared to the

previous years. It shows that bank generates Rs. 7.7 of sales against each rupee of the asset.

DEBT RATIO

It measures the proportion of total assets financed by the firm’s creditors. The higher

the ratio, the greater the firm’s degree of indebtedness and more the financial leverage it has.

Debt Ratio = Total liabilities/ Total assets

For 2009:

Debt Ratio = 393,456,820/423,320,207

= 92%

Year 2007 2008 2009

Debt Ratio 93.6% 93% 92%

2007 2008 200992%

93%

94% 93.60%

93.00% 93.00%

Debt ratio

42

Findings

The ratio indicates, more than half of the assets are financed by debts. The ratio is greater in

2007. Debt ratio indicate the greater the risk and more financial leverage it has. It also shows

that firm has paid some portion of the debt during the year 2008 and 2009.

PROFITABILITY RATIOS

Profitability ratios enable us to evaluate the firm’s profit with respect to a given level

of sales, a certain level of assets or the owner’s investment.

The profitability ratios are of following types:

a. Gross Profit Margin

It measures the percentage of each sales dollar remaining after the firm has paid for its goods.

Gross Profit Margin = Gross profit / Sales

For 2009:

Gross Profit Margin = 20,864,794 / 32,991,603

= 63.2%

Year 2007 2008 2009

Gross Profit Margin 81% 70% 63.2%

2007 2008 20090%20%40%60%80%100% 81%

70% 63%

Gross profit margin

43

Findings

In 2009 gross profit margin of the bank is 63.2%. It is greater in the previous years. The firm

needs to cut its cost of goods sold in order to increase its gross profit margin.

b. Net Profit Margin

It measures the percentage of each sale dollar remaining after all costs and expenses

including interest, taxes and preferred stock dividends have been deducted.

Net Profit Margin = Earnings available for common stock / Sales

For 2009:

Net Profit Margin = 9,468,232 / 32,991, 603

= 28.6%

Year 2007 2008 2009

Net Profit Margin 40% 29.5% 28.6%

2007 2008 20090%

10%

20%

30%

40%40%

30% 29%

Net profit margin

Finding

Net profit margin is 28.6% in 2009 that is less than the previous years.

44

c. Earnings per Share

It represents the number of dollars earned during the period on the behalf of each outstanding

shares of common stock.

Earnings per Share = Earnings available for common stock / no. of shares of common stock

outstanding

For 2009:

Earnings per Share = 9,468,232 / 647, 500,000

= 14.62

Year 2007 2008 2009

EPS 7.15 9.19 14.62

2007 2008 20090

5

10

15

7.159.19

14.62EPS

Findings

The EPS is more in the 2009 as compared to previous years. It is quite satisfactory. It means

that Rs. 14.62 is earned on each share.

45

d. Return on Common Equity

It measures the return earned on the common stockholder’s investment.

Return on Common Equity = Earnings available for common stock / Common stock equity

For 2009:

Return on Common Equity = 9,468,232 / 27, 203, 726

= 35%

Year 2007 2008 2009

Return on common equity 21.3% 32% 35%

2007 2008 20090.00%

10.00%

20.00%

30.00%

40.00%

21.30%

32.00% 35.00%

Return on common equity

Findings

The findings on equity are 35% in 2009 which is greater than that of previous years. It is

quite satisfactory. This ratio is used for measuring the over efficiency and performance of the

firm as the primary objective of firm is to maximize its profits.

46

e. Return on Total Assets

It measures the overall effectiveness of management in generating profits with its available

assets.

Return on Total Assets = Earnings available for common stock / Total Assets

For 2009:

Return on Total Assets = 9,468,232 / 423,320,207

= 2.24%

Year 2007 2008 2009

Return on total assets 1.35% 1.7% 2.24%

2007 2008 20090.00%0.50%1.00%1.50%2.00%2.50%

1.35%1.70%

2.24%

Return on total assets

Findings

The return on investment of the bank is 2.24% in 2009. It is greater than the previous years. It

shows that the firm generates Rs. 2.24% for each Rs. 100 of the investment.

47

MARKET RATIOS

Inventory turnover relates a firm’s market value as measured by its certain accounting values.

a. Price/Earnings Ratio

Inventory turnover measures the amount that investors are willing to pay for each dollar of a

firm’s earnings. Higher the P/E ratio, greater will be the investors’ confidence.

P/E Ratio = Market Price per share of common stock/ earnings per share

P/E Ratio = 15.47/14.62

= 1.06

Findings

This figure indicates that investors are willing to pay Rs.1.06 of each Rs. 1.00 of banks

earnings.

b. Market/Book Ratio

It provides an assessment of how investors view the firm’s performance.

Book value per share of common stock=Common stock equity/no. Of shares of common

stock outstanding

Market/Book ratio= Market price per share of common stock/book value per share of

common stock

For 2009:

Book value per Share= 27,203,726/ 647,500,000

=4.2

Market/Book Ratio=65/4.2

=15.47

Findings

48

The ratio indicates that the investors are currently paying Rs. 15.47 for each Rs. 1.00 of book

value of the company’s stocks.

c. Cash Ratio

Cash Ratio= cash and cash equivalents + marketable securities / current liabilities

For 2009:

Cash Ratio=48,939,840+0 / 387,458,467

=0.126

Year 2007 2008 2009

Cash ratio 0.094 0.106 0.126

Findings

The cash ratio indicates the immediate liquidity of the firm. A high cash ratio indicates that

the firm is not using its cash to its best advantage. In 2008, the cash ratio was 0.106% while

in 2009 it has increased to 0.126%.

CONCLUSION

The revenue has increased to Rs. 32,991,603,000 from Rs. 20,158,860,000 of the last

year showing an increase. The higher volumes enabled the company to earn a pre-tax profit

of Rs. 14,291,756,000 greater as compared to previous year which was Rs. 9,481,648,000.

Gross profit ratio was 63.2%.

The earnings per share increased to Rs. 14.62 from Rs. 9.19 of previous period.

Moreover its market ratios like M/b ratio is 15.47 and P/E ratio is 1.06. Its stock price

provides capital gain to its share holders due to high market prices.

So after analyzing all ratios I have decided to purchase the shares of UBL because there is a

continuous increase in earnings per share.

49

SWOT ANALYSIS

SWOT is useful tool for providing a framework for analysis of an organization in

strategic planning process. 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.

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.

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.

50

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.

The bank is run by highly professional recruited form and trained by foreign banks

like Citi Bank.

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.

Unsatisfactory working conditions.

Lengthy credit processing and documentation procedures.

Administrative expenses are 51% of the mark up revenue.

Ineffective system of recruiting and selection.

The bank has a large number of employees who are simple graduates with no banking

knowledge.

Promotions are carried out on annual basis ignoring the importance of capabilities and

performance outputs.

Opportunities

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.

Foreign remittances are another area as present worldwide control systems over

transfer of currencies through illegal channels has facilitated the area for the banks.

Expansion of IT platform and internet based banking system.

Interest of businesses in leasing facilities provides a healthy opportunity for banks.

51

There is a large pool of unemployed MBAs who can be hired to achieve

professionalism on its organizational culture.

Entering new markets segments.

Increase the product range to meet the broader range of customers needs.

Outsourcing of promotional companies or use of available excellent promotional

facilities.

Threats

Increase in competition due to increasing number of foreign and domestic private

banks offering highly specialized and attractive services. Although it is ahead of many

banks like HBL is a constant threat to UBL.

Growing global technological advancements and adaptation of modern style of

management in banking sectors.

Extensive promotion campaigns run by competitors.

Mostly banks have threat of mergers and acquisitions due to capital less than Rs. 1

billion.

Unemployment, lower level of income and prices like problems in the motherland

coupled with low rate of industrialization, geo political adverse conditions, religious

factor, and lack of consistency in policies due to political instability are some of the

other major threats.

CONCLUSION

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.

52

PEST ANALYSIS

In analyzing the macro-environment, it is important to identify the factors that might

in turn affect a number of vital variables that are likely to influence the organization’s supply

and demand levels and its costs .The "radical and ongoing changes occurring in society create

an uncertain environment and have an impact on the function of the whole organization". A

number of checklists have been developed as ways of cataloguing the vast number of possible

issues that might affect an industry.

A PEST Analysis is one of them that are merely a framework that categorizes

environmental influences as political, economic, social and technological forces. Sometimes

two additional factors, environmental and legal, will be added to make a PESTEL analysis,

but these themes can easily be subsumed in the others. The analysis examines the impact of

each of these factors (and their interplay with each other) on the business. The results can

then be used to take advantage of opportunities and to make contingency plans for threats

when preparing business and strategic plans.

1- Political Environment

Militancy operation in FATA, NWFP and Swat its impact on other parts of the

country

The return of Benazir Bhutto’s and her subsequent assassination

Unstable political situation affect bank’s policies

Talibinization affected our repute in the world

Investors hesitate investing in Pakistan

Violence in Karachi

2- Economic Indicators

Gross Domestic Product (GDP)

Inflation Increased

Balance of payment

Debt of the government increased

Decrease in FDI (Foreign direct investment)

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Financial crisis made it BAL management difficult to survive

3- Socio Cultural Environment

Low saving culture

Religious culture and people hesitate to accept interest on deposits

70% rural population and very low literacy rate

4- Technological Factors

Banks turning to heavy IT investments which differentiate their products

Provide response times

improve customer satisfaction

products and services are gaining faster acceptance like ATM, Master cards,

Telebanking, Internet banking and mobile banking

MARKET ANALYSIS

Four P’s of Market

The marketing analysis of the bank focuses the promotional campaign, the four P’s of

marketing are also in vision of the bank that it uses for its marketing (called 4 pillars) i.e.,

product, price, place (distribution) and promotion. For more lucidity they shall be explained

briefly here.

Product

Service Provided by Bank

Price

Commission and Bank Charges Received

Place

Placement of Services i.e. Network of its Branches

Promotion

Promotion of Services

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1- Product

The products at UBL include various banking services, which are its Deposits (PLS and Non-

PLS), Remittances, and ATM & VISA Cards, Lockers etc. Bank also provides Credit

Extension service.

2- Price

“The amount of money the customers pay for the product of a company”.

BAL provides different products and services to its customers. Pricing of products/services

means the commission to be paid by the customer in of services provided by the bank. The

commission paid for the services mainly includes:

Mark up/ interest

Bank charges Fees and bank commission etc.

The prices for various services of Bank are given in the booklet "the Schedule of Bank

Charges". The prices at the bank are quite competitive with those of other banks working

nationally.

3- Place

“The activities a bank undertakes to make products and services easily available or

accessible to the customers”.

UBL’s objective has been to expand its branch network to meet clients’ needs.

Bank is well positioned and geographically poised, to cater for increasing business demands,

from its existing potential clientele. During last year under review, UBL opened 8 new

branches and presently it has 1148 branches, spread all over Pakistan covering major business

centers and cities. Bank plans to add more branches to its growing network.

4- Promotion

“All activities that a company undertakes to communicate and promote its products”.

This is an age of competition. Numerous organizations are providing financial services to

customers. In this world of growing competition, the only way to prosper for a bank is to

adopt proper marketing and promotional techniques.

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Various promotional techniques such as advertising, personal selling (BDO) etc. are used by

bank. The promotional strategies of the Bank vary according to the market conditions.

However, the following techniques are mostly used:

Advertising

Various Information / Marketing Broachers

Personal Selling

These are some of the marketing techniques that the bank adopts in order to capture market

and attract clients.

Market Shares

As such no financial organization in Pakistan is unable to determine the correct

market share of the banking industry. Also banks do not disclose certain confidential

information to the general public and internees. Still generally foreign banks in Pakistan

contribute to about 35% to the whole banking industry. Out of which Askari, Citi, Standard

Chartered, Muslim Commercial, ABN-AMRO banks share the major market.

My LEARNING IN ORGANIZATION

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The field of banking has always been a source of inspiration for me during my entire

academic career. To work in a bank, to acquaint with its working mechanism was always a

point of interest for me and ALLAHA gave me a golden opportunity to complete my

internship at UBL, one of the leading bank in Pakistan and well known in world due to its

appearance in the international markets.

People there I found are really very supportive and helps me a lot in learning new

things and also how to tackle with work activities.To adjust myself in such a large

commercial organization was not an easy task, but by the grace of Almighty Allah aids my

internship in a befitting manner and I learned a lot about the overall banking arena. This

expanded my vision about the banking sector, which in turn enabled me to make an appraisal

of the economic situation of our country.

I have exclusively studied and observed the operations/ functioning of the bank and

tried my best to abreast myself with all the dimensions of the banks.

In my 6 weeks Internship, I learned about the all basic operations of the bank. The

services and the product it offers to its customer like UBL Drive, Wallet, and First and UBL

Business line. And the basic function of all departments of bank.

Like in accounts department the type and nature of account, how to open an account

what are its requirement and procedure. In remittance department, the procedure for demand

draft, telegraphic transfer and uni-remote.UBL provides online transfer of money from one

branch to another branch and also to other banks via uni-remote service. In clearing

department, the procedure of clearing of checks and deposit slips, afterwards ledgers are

checked. In that department, yesterday checks and deposits and all other slips are cleared next

day.

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 it’s 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 working. We need to put in

some guidelines for our customers, as they walk in. This will not only save their time but will

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also motivate staff members to work more promptly, because if customer and employee

engage into some unhealthy quarrel, the whole environment will be disturbed. Back to my

real learning. In my eight 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 eight weeks.

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 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.

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.

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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. 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.

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SUGGESTIONS & 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.

Human Resource Management

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

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.

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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.

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.

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Computer Trainings

The present conventional and orthodox training programmers 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 programmers 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 devise. In my opinion the above two programmers 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

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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.

Credits and Advances Departments

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.

Training for RM’s

Exclusive mandatory training concerning all possible aspects like, financial

management and organizational management etc is required to be developed and designed to

achieve

Risk assessment ability

Understanding of all legal matters

Early detection ability Skill of any loans becoming bad

Ability to develop and suggest sound strategies when needed

Fake Financial Presentation

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;

Financial condition

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Cash generation

Ability to pay back

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.

Limitation of Study

It is to admit that the study attempts only those aspects, which are closely relevant to

the purpose of the study, facts and figures, which otherwise might be equally important, but

not having a direct bearing on the conclusions arrived at this study, have been ignored.

The most important limitation from which the study suffers is the non- availability of

information in a manner required for analysis and the secrecy of the bank. Another important

limitation of the study is time and space constraint.

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AS I MANAGER IN UBL

As UBL is a multinational organisation and is working many countries. As far as, my

steps concerned if I become the manager in this company I would take the following

steps.There are certain things which I observed during my internship. If I were the manager

there I decide to take some steps for its prosperity.

There should be training programmes for employees for better performance skills.

The banking environment is decentralized that’s good but on the other hand this is

creating a bad impact because the employees are taking its negative advantage. So

there should be a control on employees and strictness.

They come late and sometimes go back before time. There is no break time so

employees go and come late after lunch. A proper system of break has to make.

There should be R&D department properly held.

Many of them like to chat with other employees and spend their time in gossiping.

There are no proper systems of hiring new employees there are simple graduates.

They must be replaced with fresh business master or bachelors for a proper system to

run.

These were some defaults that I felt during my internship and if I were the manager I

will correct them.

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BIBLIOGRAPHY

Area Manager- Mr. Tariq-03018690098

Operation Manager-Mr. Usman, usman405@hotmail.com

UBL Annual Report 2007-06

UBL Annual Report 2008-07

UBL Annual Report 2009-08

http/. www.ubl.com.pk

http/ . www.google.com

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