wasim final(2)

8/8/2019 Wasim Final(2)

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Table of contents

Contents Page #

Introduction ------------------------------------------------------------------------------------------2

Advantages of banking system for economy------------------------------------------------4

History of banking in Pakistan-------------------------------------------------------------------5

History of UBL---------------------------------------------------------------------------------------6

Mission statement of UBL------------------------------------------------------------------------8

Management-----------------------------------------------------------------------------------------9

Organizational structure--------------------------------------------------------------------------17

Management structure----------------------------------------------------------------------------18

Branch network-------------------------------------------------------------------------------------19

Field of activities------------------------------------------------------------------------------------26

Products and services-----------------------------------------------------------------------------29

Business segmentation---------------------------------------------------------------------------37

Target market and products---------------------------------------------------------------------42Work done by me----------------------------------------------------------------------------------48

RCAD Function-------------------------------------------------------------------------------50

Income statement----------------------------------------------------------------------------------56

Balance sheet---------------------------------------------------------------------------------------57

Financial analysis----------------------------------------------------------------------------------58

Ratio analysis---------------------------------------------------------------------------------------63

SWOT Analysis-------------------------------------------------------------------------------------72Recommendations---------------------------------------------------------------------------------74

Conclusion-------------------------------------------------------------------------------------------76

References ------------------------------------------------------------------------------------------77

Internship Report on UBL1


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INTRODUCTION

Banking System

Banking services are extremely important for both economy developed and developingeconomy such as Pakistan. Banking services serve two primary purposes.

First, by supplying customers with the basic mediums-of-exchange (cash, currentaccounts, and credit cards), banks play a key role in the way goods and services arepurchased. Without these familiar methods of payment, goods could only be exchanged bybarter (trading one good for another), which is extremely time-consuming and inefficient.

Second, by accepting money deposits from savers and then lending the money toborrowers, banks encourage the flow of money to productive use and investments. This in turnallows the economy to grow. Without this flow, savings would sit idle in someones safe or pocket, money would not be available to borrow, people would not be able to purchase cars or houses, and businesses would not be able to build the new factories the economy needs toproduce more goods and grow. Enabling the flow of money from savers to investors is calledfinancial intermediation, and it is extremely important for the growth of economy.



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Advantages of banking system for economy

The deposit and loan services provided by banks benefit an economy in manyways.

First, Current account, because they act like cash, make it much easier to buy goodsand services and therefore help both consumers and businesses, who would find it inconvenientto carry or send through the mail huge amounts of cash.

Second, loans enable consumers to improve their standard of living by borrowing moneyto purchase cars, houses, and other expensive consumer goods that they otherwise could notafford.

Third, loans help businesses finance plant expansion and production of new goods, andtherefore increase employment and economic growth.

Finally, since banks want loans repaid, banks choose borrowers carefully and monitor performance of a companys managers very closely. This helps ensure that only the bestprojects get financed and that companies are run efficiently. This creates a healthy, efficienteconomy. In addition, since the owners (stockholders) of a company receiving a loan want their company to be profitable and managed efficiently, bankers act as surrogate monitors for stockholders who cannot be present on a regular basis to watch the companys managers.



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HISTORY OF BANKING IN PAKISTAN

After the emerging of Pakistan our entire Banking System collapsed becauseHindus who migrated to India owned most of the banks in Pakistan. Pakistan received only 631branches of scheduled Banks out of 3496. Immediately after the birth of Pakistan the numbersreduced to 231 branches due to shut down of banks in Pakistan by the Hindu owners. Realizingthe necessity of Banks, attention was soon given to this sector in Pakistan.

In 1947, in Pakistan there were only two Muslim Banks, namely, Habib Bank Limited andAustralasia. State Bank of Pakistan was set up in 1st July 1948.In 1948 other banks were madeby the Government to fulfill the needs of consumer banking. In 1957 PICIC was established. In1959-60 four banks were established namely, United Bank, Commerce Bank, Standard Bank,And Eastern Mercantile Bank. In late 1960s some foreign banks started financial services. In1971 local private banks were nationalized.

Till the end of 1980s, Pakistans banking sector was heavily regulated in most of theareas of activities. The regulated and nationalized banking system created an industry structurewhere competition was unknown to management of the banks. Forced by the structural reformsagenda and the desire to strengthen its financial system, Pakistan moved towards liberalizationand financial sector deregulation in 1990. It started with the privatization of state-ownedcommercial banks and induction of new ones from private sector to establish a market-basedbanking system. The government seems to be conscious about improving the efficiency of banking sector in Pakistan. Few considerable efforts have been made in this regard whichinclude enhanced capital adequacy, strengthening asset quality, improving management andincreasing earnings.

Furthermore, interest rate deregulation, abolition of credit controls and further

developments in capital market have also led towards a more competitive banking environment.The market for banks is diverse in Pakistan comprising of nationalized commercial banks(NCBs), Private banks and foreign banks. In 1993, there were 33 commercial banks in Pakistan14 being local and 19 foreign. By the end of 2001, the number of banks had increased to 43, 24being local and 19 as foreign. The deregulated and increasingly competitive environment posesa challenge in terms of efficiency, as the most efficient banks would survive while the lessefficient will be driven out of the market

During early 1990s government encouraged private sector to enter in the banking

sector. The Government including Muslim Commercial Bank (MCB), Allied Bank Limited (ABL),United Bank Limited (UBL), National Bank of Pakistan (NBP) and Habib Bank Limited (HBL) hasprivatized all nationalized commercial banks.



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History Of United Bank Limited (UBL)

The history of UBL can be divided into four main phases

1. Formulation2. Nationalization3. Privatization4. Today

1. Formulation

In June 1957, Mr. Agha Hassan Abedi decided to open a Bank different from others, toprovide modern facilities to trade and industry and to promote thrift and habit of saving amountcommon thereby stimulating the economy as a whole. Necessary were formalities completedfor 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, 1.1Chandrigar Road Karachi. It was registered as a joint stock company. The bank wasincorporated with an Authorized Capital of Rs. 20,000,000 and issued and subscribed and paidup capital of Rs 10,00,000. Saigol family owned it and Agha Hassan Abedi was its firstmanaging Director. It had posted a profit of 0.7 million in its first year of operation with just eightbranches at Karachi.

2. Nationalization

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

3. Privatization of UBL

UBL was the largest privatization attempted by the government of Pakistan, launched inJune 2001, and 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 threebidders. The consortium comprising Bestway Group (BG), out of the UK and Abu Dhabi Group(ADG) from the UAE were finally the winners at a record price.

Sale proceed was Rs 12350 million. This signaled the strong confidence reposed bythese investor groups, in the improved governance of the country, the economic potential, thebanking opportunity and the existing management of the bank.

4. UBL Today

Today they bank has taken progressive steps.



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Changed the logo

The United Bank Limited (UBL) management has launched its new corporate identityand changed its 44 year-old-logo following its privatization.

UBL online

Internet and mobile banking has been introduced.

Islamic banking UBL(Ameen)

UBLs has introduced (Ameen) Islamic banking in December 19, 2006

UBL wallet

UBL wallet has been introduced to facilitate users to get immediate cash.



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MISSION STATEMENT

United Bank is going on the road of progress very successfully. Assessment of theneeds and wants of consumers is an on going process at United Bank, which helps it tocontinually develop new products and services. At UBL, the philosophy is that the bank shouldgo to all possible limits to satisfy the customer needs. The bank is continuously formulating newproducts and services for the growing and diversified needs of its ever-expanding client base.The banks commitment to its customers is evident from its mission statement:

To provide innovative and high quality products to its customers at the

lowest possible rates. To achieve all set goals regarding service, performanceand goodwill.



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MANAGEMENT

Over view of UBL

UBL has assets of over Rs. 550 billion and a solid track record of forty eightyears- in addition to the convenience of over 1000 branches serving you throughout thecountry and also at several overseas locations .

Date EstablishedNovember 7, 1959

ChairmanHis Highness Sheikh Nahayan Mabarak Al Nahayan

Deputy Chairma nSir Mohammed Anwar Pervez OBE

President & CEOMr. Atif R. Bokhari

Branches1079 Domestic, 17 Overseas Branches

Representative OfficesTehran, Kazakhstan, China

SubsidiaryUnited Bank A.G. Zurich, Switzerland

United National Bank Limited, UK (Joint venture with NBP)

UBL Fund Managers Limited

Associated CompanyOman United Exchange Company, Muscat

Employees8,998

https://www.ubl.com.pk/locations/https://www.ubl.com.pk/overseas/https://www.ubl.com.pk/overseas/https://www.ubl.com.pk/overseas/https://www.ubl.com.pk/locations/


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BOARD OF DIRECTORS

Chairman

His Highness Sheikh Nahayan Mabarak Al Nahayan

H.H Sheikh Nahayan Mabarak Al-Nahayan is animportant and prominent member of the ruling family of Abu Dhabi. After theculmination of his studies at Oxford he returned to shoulder important responsibilities in the state administration. In 1988 he was appointed thePresident of the higher colleges of Technology comprising of eight collegesthroughout the UAE a responsibility he fulfilled with distinction. In 1990 he wasappointed Minister of Higher Education and Scientific Research. Presently healso holds the presidency of the Society of the Natural History and National Heritage. In 1992 he became the Chairman of the Union National Bank and hassince remained involved in strategic management of the institution.



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Deputy ChairmanSir Mohammed Anwar Pervez OBE

President & CEO Mr. Atif R. Bokhari

Directors

1. Directo r Mr. Omar Ziad Safari Al Askari

2. Director

Mr. Zameer Mohammed Choudrey

3. Director Mr. Ashfaq hassan khan

4. Director

Mr. Muhammad Sami Saeed

5. Director Mr. Aqeel Ahmed Nasir



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SENIOR MANAGEMENT

President and C.E.O Mr. Atif R. Bokhari

Others Mr. Nauman Hussain Director Operations & Utilities

Mrs. Rukhsana Asghar Global Head Human Resources

Mr. Aameer Karachiwalla

Chief Financial Officer / HCA

Mr. Muhammad EjazuddinAudit Chief

Mr. Mansoor M. KhanHead Corporate Banking Group

Mr.Ali Sameer Chief Special Assets Management

Risha Mohyeddin

Global Head, Treasury & Capital Markets

Tariq Mohar Global Head, Establishment & Branch Operation



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BRIEF PROFILE OF MANAGEMENT

Sir Mohammed Anwar Pervez, OBE, HPk

Deputy Chairman

Sir Mohammed Anwar Pervez, OBE, HPk first hit the headlines in 1992 when hebecame the proud recipient of the order of the British Empire. He was also awarded a KnightsBachelor in the Queen's Birthday Honours list for services to business and the world of charityin the UK and internationally. The president of Pakistan conferred the highest civil award Hilal-e-Pakistan on him in March 2000.

Mr.M.A. Mannan

Deputy C.E.OUBL has always adopted the policy to induct qualified people from different source

available from home or abroad. Mr.M.A. Mannan was inducted by UBL from Citibank New Yorkas the Dy. Chief Executive officer UBL.

An MBA from IBA Karachi. Mannan started his career from CitibankPakistan in 1991 where for the first nine years he worked in sales, distribution and marketinglaunching most of Citibanks new credit and depositor products during the nineties. He rose tobecome the Director of Marketing, Sales and Distribution at Citibank Consumer bank. He wasthen transferred to the U.S.A, the most matured and competitive consumer market in the worldand was promoted to Senior Vice President, Cross Self Division covering a comprehensivearray of customers and products.

With his reputatation as a great team- builder and achiever, UBLs management firmlybelieves that Mannan will prove to a great institutional and national asset.

Ms. Rukhsana Asghar

Global Head Human Resources

Ms. Rukhsana Asghar holds a BA (Hons) Degree in International Relation * a Bachelor of Law Degree from University of Karachi. She further enriched herself professionally byattending many senior level training courses seminars & conferences of Leadership, StrategicManagement, Career Counseling, Marketing of Financial Services & Human ResourceDevelopment in the U.S.A, Europe, Middle East & the Far East.

Till recently Director HR Citibank Pakistan, she was instrumental in developing the talentbase for Citibank, which led the institution to emerge as a major player on the financial scene.

She served as a Vice President HR Citibank, Assistant manager Personnel at Lever Brothers Pakistan Ltd.

Rated amongst the few HR specialists in the country the feather in the cap isRukhsanas selection as one of the twelve members out of 101 countries to work on a globalinitiative relating to the paradigm shift in the role of human resources. The result were appliedand implemented globally.



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Mr. Nauman Hussain

Director Operations & Utilities

Mr. Nauman Hussain did his Master in Economics from the Punjab University Lahore.

He possesses 24 years of International Banking (Retail & Corporate) experience in theMiddle East, Asia and the Far East. Prior to joining UBL he served as Vice President & Head of Operations at Mashreqbank UAE, Senior Director & Chief Administrative Officer, AmericanExpress Bank Ltd Karachi & Lahore included Assistant Vice President& Manager Operation,Assistant Treasurer & Financial Controller, Head Country Treasury/ Correspondent banking &relation Manager.



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MANAGEMENT STRUCTURE

President and Chairman of Board of Director

Executive vice President

General manager of

Deptt 1 Deptt 2 Deptt 3 Deptt 4 Deptt5

Zonal Incharge

Area Manager

Branch manager



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Branches by Region

Region BranchesKarachi 114Hyderabad 133Multan 170Lahore 90Faisalabad 165Quetta 45Peshawar 167Islamabad 161Azad Kashmir 81Total 1079

Branches by specific functions

Function Number of branchesMoney Gram Branches 93Uni bank branches 165Hub Branches 87Rupee Traveler cheque Branches (RTC) 143



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UBL DOMESTIC NETWORK AS ON DECEMBER 31, 2004

SR.NO. LOCATION

REGIONNAME

NO. OFBRANCHES

CorporateBanking

1 Gulberg market Lahore 1

2 Corporate Branch Karachi 1

Total 2

1 Napier Road Karachi Karachi 17

2 SITE Karachi 93 PECHS Karachi 16

4UBL Building NorthNaziamabad Karachi 15

5 City Branch Karachi 14

6 Airport Karachi 18

7 Clifton Karachi 14

Total Karachi 103

1 Farid Chamber Karachi (S.A.M.) 1

2 SAM Branch Lahore (S.A.M.) 1

Total (S.A.M.) 2

1 New Town Mirpur Khas Hyderabd 19

2 Masjid Road Nawab Shah 13

3 Raxa Shah Kabir Road Larkana 14

4 Minara Road, Sukkur 18

5 Naushero Feroze 9

6 Civic Centre Branch Hyderabad 30

7 Lashi Gate Shikarpur 14

Total Hyderabd 117



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Internship Report on UBL

Lahore Region REGION Branches

1 Bank Square Lahore Lahore 20

2 Depalpur Road, Okara 12

3 S.D Vault Lahore 14

4 Model Town Lahore 18

5 Liberty Market Lahore 16

Total Lahore 80

1 Mujahid Road, Sialkot Sialkot 21

2 Hafizabad 8

3Chamber of Commerce BuildingGujranwala 20

4 Narowal 9

5 Cirular Road Wazirabad 12

Total Sialkot 70

Faisalabad

1 Nankana Sahib Faisalabad 15

2 Jauharabad 9

3 Peoples Colony Faisalbad 14

4 Aziz Bhatti Road, Sheikhupura 11

5 Ballokhel, Mianwali 13

6 Toba Tek Singh 10

7 Ghalla Mandi Samundari 15

8 Bank Square Faisalbad 18

9 Main Bazar Bhalwal City 8

10 Railway Road Sargodha 24

11 Distt. Courts Jhang 14

Total Faisalabad 151

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Islamabad Region

1 Chakwal. Main Branch Islamabad 17

2 Gujar khan 11

3 Cantt Branch, Rawalpindi 17

4 Wah Cantt 17

5 Mangla Road Dina 86 Civil Lines jhelum 11

7 Kallar Saidan 15

8 Kotla 8

9 Mandi Bahauddin 7

10 Kharian City 1211 Jinnah Avenue,Islamabad 14

12 G.T Road Gujrat 11

Total Islamabad 148

1 Hassan Agahi Multan Multan 14

2 Multan Cantt 10

3 Akber Bazar Kahnewal 18

4 Azmat Road Dera Ghazi Khan 11

5 Fari Gate Bahawalpur 14

6 Vehari 13

7 Grain Market Khanpur 11

8 Imam Bare Road, Burewala 9

9 Main Bazar Branch , Muzaffar Garh 17

10 Shahi Road Rahim Yar Khan 12

11 High Street Sahiwal 13

12 Main Bazar Chishtian 9

Total Multan 151


Peshawar Region Region Branches

1 Cantt Branch Peshawar Peshawar 23

2 Cantt Branch Nowshera 14

3 Hangy Road Kohat 134 Bhatkehla 8

5 Bank Square Mingora 14

6 Cantt Branch Mardan 13

7 Parady Gate Bannu 6

8 Swabi 9

9 Main Bazar Branch Haripur 12

10 Timergara 11

11 Circular Road, D.I Khan 8

12 Hangu 9

13 Mansehra 8

14 UBL Building Lambi Dheri 8

Total Peshawar 156

1 UBL Complex Branch Quetta Quetta 13

2 Turbat 12

3 Virtual 17

Total Quetta 42

1 Dadyal Azad Kashmir 18

2 Kotli 14

3 Bhamber 8

4 Rahiyal 10

5 Commecial Centre Mirpur 15

6 Main Bazar Chattar 4

7Rawlakot

10

Total Azad Kashmir 79

Total Domestic Branches 1079

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UBL OVERSEAS NETWORK AS ON DECEMBER 31, 2004

OVERSEAS NETWORK

COUNTRIES

Name Of CountryBranches U.S.A"" Qatar "" U.A.E"" Bahrain"" Republic of Yeman"' ZurichRepresentative offices Iran"" EgyptAssociated companies Oman


Sr. No HUB Name RegionNo of

Branches

1 United Arab Emirate 8

2 Bahrain 3

3 Yeman 2

4 Qatar 1

5 United States of America 1

6Export Processing Zone,Karachi 1Total Branches 16

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FIELD OF ACTIVITIES Functions

In modern time commercial banks play a very important role and their functionsare manifold. Primary functions of the banks are to take deposit and lending. They takedeposits from different persons and lend to others. Beside this they undertake agencyservices and general utility functions.

Some of the important functions are listed below.

1. Transfer money from one place to another.2. Accepting bills of exchange on behalf of customers.3. Purchasing shares for the customers.4. Collecting cheques and bill of exchange for its customers.

5. Undertaking foreign exchange business6. Acting and executor, trustees or attorneys for the customers.7. Providing safe custody and facilities to keep jewellery, documents or securities.8. Furnishing trade information and tendering advice to customers9. Issuing of Travelers cheques and letters of credit to give credit facilities to

travelers.10. Collecting interests due, dividend pensions and other sums due to customers.



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Departments of UBL

The following are the main department of UBL:

1. Deposit Department2. Lending Department3. Clearing Department4. Cash Department5. Remittance Department6. Account Department7. Bills Collection Department8. Internal Audit Department (only in HUB Branches)

Types of Banking

UBL perform almost all types of banking.

1. Consumer Banking2. Commercial Banking3. Corporate Banking4. Investment Banking5. Relationship Banking6. Treasury



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PRODUCTS AND SERVICES

UBL offer wide range of products and services to all types of customers such as individual/

Consumer, Commercial, Corporate etc.Following are some of important products and services that UBL now offers to its Customers.

DepositDeposits are called the lifeblood of Banks. To generate more deposit the UBL has

offered the following attractive deposit Schemes.

1. Current Account2. PLS Saving3. PLS term Deposit (TDR)4. Notice Deposit5. Unisaver (daily Profit)6. Unizar (foreign Currency Deposit)

Lending1. Cash Credit2. Overdraft3. Loans (both short Term and long Term)4. Agricultural Loans5. Commercial Loan6. Corporate Financing7. Import Export Financing

Remittances1. Tez Raftar 2. Money Gram3. Click n Remit (sending money from USA)4. UBL Money Direct (Sending money from UK)



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Rupee Travelers Cheque

1. UBL Humrah Rupee Travelers Cheque

Lockers Facilities Utility Bills Collection TV/VCR Dish fee Collection Hajj and Umrah Services

Uni remote

(All the above products and facilities will be analyzed in the next Sections)



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2. UniCash

Like other banks UBL has also ATM card, which has been given the name of UNICASHCARD. Now the customer can withdraw money from any ATM machine installed by UBL atdifferent cash point.

You can avail the following self-service banking facilities

Balance Inquiry

Mini Statement

Cash Withdrawal

Features

1.Personal Identification Number (PIN) ensures that only you can use your ATM Card.2.The PIN protects you against misuse in case your card is lost.3.You can change your PIN anytime you want.4.You can specify flexible weekly withdrawal limits.5.You can withdraw your weekly limit in one go, or in multiple installments.

USAGEYou can use UNICASH Cards at UBL Cash Point located in the following cities

City Cashpointssssss

Islamabad 5

Rawalpindi 2

Karachi 1

UAE 8

Bahrain 3

Doha,Qatar 1

ATM BRANCHES For instant cash at any time of the day or night, without the hassle of queues and

tokens, use one UBL ATMs in Pakistan or Overseas.



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Regular Hajj Scheme.According to Policy for Hajj 1424 Hijri (2004 A.D.) Sponsorship Scheme has been

merged into the Regular Scheme. Intending Hajjis in this Scheme can opt for governmentaccommodation or for private accommodation. All the pilgrims under Regular Scheme will

deposit full amount of Hajj dues in Pak Rupees along with the Hajj Applications Forms. Thisyear 120,000 pilgrims will be allowed to perform Hajj under Regular Hajj Scheme.

Open Hajj SchemeThis year the Ministry of Religious Affairs has decided to provide Hajj passport

to those intending to perform Hajj under Open Hajj scheme also. There will be no need of anInternational Passport. 10,000 pilgrims will be allowed for Hajj under Open Hajj Scheme thisyear.

Balloting In case the number of applicants exceeds the prescribed quota, balloting will be heldto determine successful applicant.

ELIGIBILITYOnly Pakistani NATIONALS are eligible to apply for Hajj.

THE FOLLOWING ARE NOT ELIGIBLE

Ladies in an advanced stage of pregnancy.Medically unfit & handicapped people without a helper or assistantThose infected by contagious diseasesLadies without Mehram (other than Ahle Tashee)

6.Utility bills collection

UBL has over 1000 branches collecting electricity, gas, telephone and other utility bills duringbusiness hours.

Special bills collection counter in every bank Separate booths for utility bill collection are available at all major cities for the convenience of

the public. Branches in all major cities have electronic bill collection machines. For your convenience, UBL accepts cheques for payment of utility bills. Drop box facility.



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ACTIVITIES OF THE BANK

1.Receiving DepositsDeposit department has the responsibility to create deposit as much as possible. The officer of that department is given the target to take deposit, and then the officers induce the person toopen the account with the bank.

Deposit is also important because more the deposit of the bank the more the bank can lendand make money in the form of mark up.

All the deposit that UBL maintains can be covered under the following types of deposit. Themain difference is the period and customer convenience to withdraw the deposit. General roleis that the greater the period of deposit more the return and greater the customers convenienceto withdraw deposit lesser the return. Because of this golden rule bank pay no interest on

Current account, customer can withdraw money at any time.So the following are the main types of Deposits

Current Deposits:Current deposit account can be opened with the minimum amount of Rs.5000.

In this type of account the client is allowed to deposits or withdraw money as and when hi likes. Usually the businessmen open this type of account. Nointerest is allowed by the bank and no service charger is deducted by the bank on currentdeposits account.

Profit and Loss AccountUnder such types of accounts the bank allows no interest to the customers.

Profit of loss is declare every by the executive Board of the Bank.

Profit and loss account has two types

1. Profit and loss Sharing Term Deposit Account2. Profit and loss Sharing Saving Account

PLS Term Deposit is that type of deposit that is maintained for a fixed period of time. Minimum period is 3 months and maximum is 5 years.

PLS Saving Account can be opened with the minimum amount of RS 200. Minimum amount of Rs 10000 must be maintains in order to earn profit. No profit will be allowed below Rs 10000and bank will charge Rs 200 service charges below Rs. 10000.

Fixed Deposits



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In this type of account a certain amount is deposited for a certain period such as six months,two years or longer. It is also called time liabilities of a banker. They are called so because themoney is payable on expiry of a fixed

period of time only. The terms and condition of this deposit are regulated by central bank for this purpose.

Fixed deposits are two types

1. Notice Deposit Receipt2. Term Deposit Receipt

Foreign Currency Account

The UBL also maintain Foreign Currency account. But it can only opened in specificcurrency such as Dollar, pound sterling etc. In case of dollar the foreign currencyaccount can be opened with 1000 US$ and in case of Pound Sterling 750 pounds.

2. Lending The bank is an intermediate party between the borrower and the lender. It borrows from oneparty and lends to another. The difference between the rate of interest it borrows and lends iscalled the spread, and is the income of the bank. Lending is the main source of income.

Principles of LendingThe following are the principles, which the bank follows while advancing loans.

1. Safety2. Liquidity3. Dispersal4. Remuneration5. Suitability



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BUSINESS SEGMENTATION UBLs credit process is built around the following basic customer constituencies:

CorporateCommercial/Small & Medium Enterprise (SME)Consumer

Investment Banking Treasury and Capital Markets International Division Financial Institutions Division Islamic Banking Group

Business group heads will prepare their annual plans with projected financial results andstrategies, and manage actual transactions and portfolios consistent with their asset writingstrategies. These groups are also responsible for monitoring their performance for continualimprovement.

Corporate Banking & Cash Management Group (CBG)

The Corporate Banking Group has endeavored to be the market leader in their area and buildsmarket share through offering superior service, competitive pricing, and a wide product range tovalued corporate clients. The group caters to the needs of multinational companies and mediumto large corporate clients, which include private and public sector entities.

This group will continue to remain a major contributor to UBLs earnings by taking advantage of tremendous growth potential of corporate accounts. The group requires talented, qualified, andproactive human resources. Front line relationship managers require a complete grasp of UBLscredit policies and procedures as they directly affect existing and future credit portfolio handling.

The group is presently operating in major business centers and industrial cities of the countrywith specialized corporate centers to provide services and facilities to its clients and shall growin other geographical areas with the passage of time.

Commercial Banking/SME (CB)

The Commercial Banking Group caters to the needs of commercial entities and small andmedium enterprises, as defined in the State Bank of Pakistans Prudential Guidelines.

This group deals with commercial clients of small to medium size in both private and publicsectors. 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 numerousthan corporate clients. However, their individual requirements are relatively much smaller than



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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 diverseproduct line. Its success depends on the design of versatile and effective products andcomprehensive communication and marketing strategies. Agility in monitoring the portfolio andfollowing up with its customer base, which is wholly comprised of individuals, is also anessential requirement.

This group operates in nearly all major cities of Pakistan, and also in some internationallocations through UBLs network of branches and trained sales force. This group offers productssuch as home loans, personal loans, auto loans, business loans, and credit card facilities, etc.

Consumer Banking requires regular training of its workforce and the need for imparting basicproduct knowledge to sales staff is highly pronounced in this group as they are in direct contactwith the customer base. This group conducts business based on structured products that fit intothe needs of its target market. Product Process Manuals are developed for these products andare provided with the Credit Policy and Procedure guidelines.

Risk management for the consumer has to play a dominant role in formulation and revision of credit policies, monitoring of portfolio quality and devising effective strategies aimed atminimizing the inherent risks.

The Consumer Banking Group Credit Policy is in effect and has been approved by the Board of Directors (see Annexure II).

Investment Banking Group (IBG)

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

This group will either lead or participate in major Term Finance Certificates in the market. Itoffers a full spectrum of services, including Term Finance Certificates, Syndicated Loans,Structured Finance, Leveraged Buyouts, Project Finance, Quasi-Equity Products, IndependentAdvice, Equity Placements, IPOs, Equity Underwriting, Mergers, Corporate Restructuring,Acquisitions and other products.

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



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Treasury & Capital Markets Group

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

Managing the banks 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 activelyinvolved in dealing with other banks and financial institutions to execute transactions in variouscurrencies.

In performing these tasks, it undertakes credit risk, which is identified, monitored, and managedby the middle office.

International Division

The International Division manages overseas operations including credits handled by thenetwork of overseas branches. With careful planning and detailed surveys of the market, theInternational Division will explore better quality businesses and products and manage themefficiently to enhance UBLs profitability and turn the overseas branch network into a highlyprofitable unit of the Bank.

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

Financial Institutions Division (FI)

This is an independent division operating as a profit center and is responsible for catering to allfinancial business requirements of banking and non-banking financial institutions.

This division caters to the financing needs of all local banks, foreign banks, and other financialinstitutions including leasing companies, investment banks, DFIs, insurance companies, mutualfunds, etc.

Like the Corporate Banking Group, the Financial Institutions Division also operates with astructure of relationship managers, providing comprehensive solutions to its clients.

In order to strengthen the divisions credit analytic capabilities, the Financial Institutions RiskManagement Unit oversees the risk related to financial institution related transactions. TheFinancial Institutions Risk Management Unit is part of the Risk Group.



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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; To liaise with other departments in the bank and the Shariah Advisor to ensure smoothoperations of IBB(s); To ensure that all funds pooled into the Islamic Banking Fund (IBF) are channeled intoShariah-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 besubmitted to the State Bank of Pakistan from time to time; To ensure that all directives and guidelines, particularly those applicable to Islamicbanking, 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 StateBank of Pakistan from time to time.



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TARGET MARKET AND PRODUCTS

Objective Optimum utilization of available skills and resources will allow UBL to:

build strong customer relationships through a diversified product portfolio in targetedmarkets;

provide financial services to customers in an effective manner; and

achieve strong market position and adequate returns on capital

Understanding a target market involves business discipline and selectivity. The critical aspectsof this process include identifying business potential, defining desirable opportunities, andadhering to resultant marketing objectives and strategies. An unfocused approach to themarket may lead to unplanned asset concentration of uneven quality.

It is a continuous and evolutionary process involving the development and listing of alternativebusiness strategies. It focuses on:

Product identification Only through a comprehensive survey of the market, can apotential business opportunity be identified. The existence of earning opportunities withassociated risks is reviewed.

Screening A workable and appropriate Risk Acceptance Criteria is used to screenthe market in a structured manner. The Criteria defines the basic level of acceptability for a riskasset. Business should preferably be restricted to managing clients meeting the minimum score.For any industry sector where an appropriate Risk Acceptance Criteria has not been developed,Business Groups and Risk Management will decide how to assume additional risk in thatindustry sector. The responsibility for developing Risk Acceptance Criteria rests jointly with theResearch Department and Credit Policy Division.

Industry concentration while developing target markets and Risk AcceptanceCriteria, Business Group Heads and the Credit Policy Division must also review industryconcentrations in order to establish optimal exposure limits.

Policy



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Business groups will formulate target markets in coordination with the Credit Policy division for all business segments as well as for new products. Target market formulation will be conductedthrough utilization of industry studies. Product Process Manuals will be prepared to facilitate marketing and quick approvals for standard products.

Target market studies and Product Process Manuals are subject to continuing refinement asbusiness units mature, information accumulates on risks and/or products, and environmentschange. Therefore, they must be revised periodically. Target markets will be approved on aminimum of an annual basis. This will form part of Business Groups Plans. Credit presentation must clearly indicate that it conforms to the relevant target market plan,and is consistent with the relevant Risk Acceptance Criteria. Any exceptions to the target market plan and/or Product Process Manuals should bereasonable in amount and number, addressed logically, and adequately approved anddocumented.

Responsibilities

Each business group will prepare its own target market plan that applies to its own business.Guidelines will be submitted to the Credit Policy Division and approved on an annual basis.

Product Process Manuals will be originated and recommended by respective Business Unitsand will be approved by respective Group Heads including Group Executive (Risk & CreditPolicy). For matters relating to the Credit Administration Division, Operations, and Treasury,relative Division Heads and/or Group Heads will also be consulted.

Development of Product Process Manuals is an ongoing process, made all the more necessaryas more innovative products come on line. A list of currently approved Manuals is shown inAnnexure No. III.

Credit Proposals need to be in line with target market screens. Risk Acceptance Criteria screenscoring and respective hurdle scores become effective for those industries where industrystudies have been completed and Risk Acceptance Criteria are in place.

Products

Development of products at UBL is need based and is market dependent. Innovative productswill continue to be formulated as and when required.

Apart from the below, Policy Credits may be allowed in such cases where policy considerationsare preferred over normal credit standards. On the recommendations of Credit Committee, theapproval of such credits is allowed, on an exceptional basis, by the President. All politicallysensitive credits as well as credits linked with persons holding public offices, above Rs. 10million, shall be approved by the highest Credit Committee.

SHORT TERM CREDIT FACILITIES



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Short-term credit facilities will be used to meet identified short-term needs of clientshaving satisfactory relationship and will be defined as those credit facilities with a tenor or validity of one year or less. Included in this category are the following lines of credit with a viewthat orderly liquidation is likely to take place within one year.

Non Interest Cash Finance (NICF)

Under this type of financial accommodation, the borrower is allowed withdrawal in thecurrent account to the extent of the sanctioned limit. The facility is generally provided againstpledge or hypothecation of goods or any other tangible security acceptable to the Bank. Thecustomer would be required to adjust the advance periodically or within a specified period.

In the International Division, this facility is also known as Clean/Secured Overdraft(COD/SOD).

Export Finance (FAPE I,II,G / LAPC)

UBL may provide facility against pre-shipment exports at an agreed rate of return, as per guidelines established by the State Bank of Pakistan or respective Central Banks in the case of the International Division.

Foreign Bills Purchased on account (FBP A)

This is a post shipment facility, known as Finance against Foreign Bills. It is allowed toexporters against export bills drawn under usance letters of credit, on sight letters of credit andletters of credit not approved by the Financial Institutions Risk Management Unit and/or ExportSales Contracts. This facility remains on customer risk until realization of proceeds from the Billof Exchange.

Occasionally exporters prefer to avail post shipment financing against export bills drawnby them for exports made under usance letters of credit and/or Exports Sales Contracts. In suchcases, UBL may provide finance to its valued customers having a good track record. Whilefinancing against clean export documents under collection, a certain percentage of cushion ismaintained to allow for exchange cover, interest and other incidental expenses. For thesefinances, a letter of undertaking must be obtained from the client to indemnify the bank for non-receipt of funds against the accepted bill of exchange. Collateral securities should be held byUBL.

Foreign Bills Purchased against L/C (FBP) & FBP (Disc)

UBL may extend financial accommodation through negotiation and/or discounting at theprevailing exchange rate, of a foreign documentary bill accompanied by relevant documents of title to goods. For financing of export bills drawn under a letter of credit it should be ensuredthat:



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The document has been drawn strictly as per the terms of the letter of credit; All direct bank expenses i.e. foreign correspondents charges, claimed by theopening/reimbursing bank, if any, shall be recoverable from the exporters unless it is expressedin the letter of credit that the charges are on the openers account;

Due care and necessary precautions are exercised before negotiating/discounting of documents, as per instructions issued by the relevant authority from time to time. Reimbursement instructions in letters of credit shall be carefully studied beforenegotiating/discounting of documents; and If the bill of exchange is accepted by a Bank approved by the Financial Institutions RiskManagement Unit, the associated risk for discounting will be considered Bank Risk. A letter of indemnity is to be obtained from the client.

Payment Against Documents under sight L/C (PADs)

Import documents received under sight letters of credit are lodged in PAD, and arereleased upon payment from the party. Import documents shall be checked strictly in terms of the letter of credit to ensure that there is no discrepancy. In case of a discrepancy in thedocuments, the negotiating bank must be immediately advised by telex/cable regarding suchdiscrepancy and dealt with accordingly. In case of import documents received free of discrepancies, the amount of the bill plus charges, if any, claimed by the negotiating bank,would be converted into Pak Rupees at the exchange rate prevailing on the date of lodgment, or at the booked rate where exchange was booked at the time of opening of the letter of credit asadvised by the Treasury Division from time to time.

Inward Foreign Documentary Bills for Collection under usance

(DA) L/C (IFDBCs)Import documents received under DA letters of credit are lodged in IFDBC and released

against:

Acceptance of bill of exchange and execution of Trust Receipt.Pledge of imported goods.In case goods are pledged with the Bank, goods will be cleared through Banks

approved clearing & forwarding agent and delivery orders issued against cash receipts.Collateral security against mortgage of property, pledge of Government Bonds, Postal

Deposit Certificates, Banks own Deposit Certificates etc. duly assigned in Banks favor. For

relaxation in obtaining collateral security, approval of Credit Committee will be required prior toopening of DA letter of credit.

Finance / Loan against Trust Receipt (FTR / LTR)

UBL may at the request of its customers, at the time of opening of a letter of credit or ata later stage, release import documents of related goods received under the letter of credit or against bills under collection both inland or foreign, to enable the party to obtain delivery of the



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goods and arrange to retire the documents out of the sale proceeds of goods or from other sources. The documents of title are delivered against the customers signature on theprescribed Trust Receipt form or related security documents covering hypothecation of goods.

Finance / Loan against Imported Merchandise (FIM/LIM)Facility for financing imported goods against import letters of credit established through

UBL may be made available at a partys request on the basis of mark-up for a short period notexceeding ninety (90) days. The facility may be repaid within the validity period either in part or in lump sum.

RMs are required to inform their customers and Heads of TPC accordingly to ensure thatdocuments are released to C & F agents only after arrangement of funds for custom duty andother charges has been secured.



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WORK DONE BY ME At my first day in UBL M.M Alam road Lahore , Mr. Ahmad Fahim Malik Head

RCAD (Regional credit administration department) had introduced me with different

persons and department of the bank. After that I had personally visited everydepartment one by one and observed what was happening there. All the officialscooperated me very much and provided me information, which I needed.

They also provide me, various information about bank affairs, which I have not knownpreviously.

Some of my observations and experience are discussed below.

Types of financing Consumer financing

In consumer financing, funds will be provided for personal purpose up to limit of 500000

Commercial financing

In commercial financing, funds will be provided for business purpose up to limit of fiftymillion.

Corporate financingIn corporate financing, funds will be provided for meeting needs of large organizationsabove fifty million. Corporate financing is controlled by RCAD (Regional creditadministration department).



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Here are some functions of RCAD

REGIONAL CREDIT ADMINISTRATION

FUNCTIONS Composition of Credit Functions:

Credit & Marketing Credit Administration

Brief Job Description of Departments:

Credit & Marketing:

1. Market new relationships to increase banks asset based portfolio.2. Financial Analysis, Evaluation and Processing of Credit Line Proposals.3. Monitoring of Credit portfolio through Client visits, Factory visits, Inspections and prepare

Call Reports, Visit Reports in this regard.4. Responsible for the compliance of all Pre-approval instructions I regulations issued from

time to time by Head Office Credit Policy, SBP and other regulatory bodies includingobtaining CIB, Borrower Basic Fact Sheet, Compliance of ratios as required under Prudential Regulations, Per party limit etc.

Credit Administration:

1. Disbursement of Credit Facilities including Preparation of Security / Charge documents,perfection of collateral, Ensure compliance of SBP regulations I Credit Policy, HO Circulars& Issuance of Disbursement Authorization Certificate (DAC).

2. Regular Monitoring of Collateral & Asset based portfolio through Weekly Roosters / Diaries,CARS Reports, Credit Maintenance, Identify exceptions and follow for the rectification of thesame.

3. MIS related to Credit & Credit Admin. Department.4. Monitoring of Markup accruals, recoveries thereof.5. Liaison with various outside agencies (RCAD Head).6. Miscellaneous Jobs.

Disbursement of Credit Facilities1. Preparation / Filling of Charge / Security Documentation as per Credit Approval2. Perfection of Securities and identification of exceptions, if any. Scrutiny of Charge I Security Documents after Execution and identification of exceptions / observations, if any. Limit Feeding.



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Types of Collateral currently used

Readily Encashable Registered Securities

Defense Saving Certificates (DSC)Special Saving Certificates (SSC)Regular Income Certificates (RIC)Special U.S. Dollar Registered Bonds

Readily Encashable Bearer Securities

WAPDA Bearer BondsSpecial U.S. Dollar Bearer BondsForeign Exchange Bearer Certificates

Shares of Limited Companies

CDC Only

NIT Units Deposits held in any other Financial Institution Deposits held With United Bank Limited

Saving DepositCurrent DepositTerm Deposits

Deposits held With any other BankSaving DepositCurrent DepositTerm Deposits

Pledge of any Commodity

Financial Guarantee

Hypothecation of Assets

MovablesCurrent AssetsReceivablesPlant & Machinery

Mortgage of Properties



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Equitable MortgageEquitable Mortgage with Token Register MortgageRegistered Mortgage

Clean (SBP has allowed Clean financing upto Rs.500,000- )

Personal /Corporate Guarantee

Counter Guarantee



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Steps for Perfection of Collateral and its

Security Documents.

Bearer Securities such as U.S. Dollar Bearer Bonds /WAPDA Bearer Bonds / Foreign Exchange Bearer Certificates(FEBC)

Ensure that all blank fields of letter of Lien & Set Off and Schedule of Securities are properlyfilled in with all detail of the instruments including Sr. No., Denomination, No. of Pieces andTotal amount.

Make sure that amount of face value of the instruments be specified in the Schedule of Letter of Lien & Set Off.

Letter of Ownership should be obtained where the bearer securities are involved.

Genuineness of the Bearer Securities to be confirmed from the issuing bank in writing. It isadvisable to have a physical verification also from the issuing institution.

Shares

Ensure that all blank fields of Letter of Lien and Schedule of Securities are properly filled inwith all detail of the instruments including CDC Account

Ensure that shares are in marketable lots and is on CDC.

Obtain CDC Activity Report from Treasury Middle Office before disbursement.

Daily monitoring of share prices at Stock Exchange is the responsibility of Treasury

Middle Office, and margin calls to be generated as and when advised by the Treasury MiddleOffice in case of short fall arise.

NIT UnitsEnsure that all blank fields of Letter of Lien & Set Off and Schedule of Securities are properlyfilled in with all detail of the instruments including Sr. No., Denomination, No. of Pieces midTotal amount.

Amount of face value of the instruments be specified in the Schedule of Letter of Lien & SetOff.



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Ensure that shares are in marketable lots.

Blank transfer deeds I Surrender Deed duly executed by NIT Unit holder for each lot havebeen obtained.

Signature of NIT Unit holder must be verified by the company on each Transfer deed!Surrender Deed.

Saving Deposits / TDR

Ensure that all blank fields of Letter of Lien & Set-Off and Schedule of Accounts are properly filled in with complete account number(s) under lien.

Authority to mark lien in favour of the Bank is also be obtained and thesame should be kept in security bag.

Account must be blocked with the amount under lien and the proof of suchblocking be kept in security bag along with the letter of lien & set off.

Pledge of any marketable Commodity

Ensure that all blank fields of Letter of Pledge and Schedule thereof are properly filled in withcomplete description of the commodity.

In case the goods are pledged in godowns of third party, Letter of Access & Disclaimer dulyexecuted by the third party should also be obtained.

Visit the factory premises to ensure that stocks offered are in good condition, properly stacked,adequate fire fighting system available in the godowns area, Board mentioning Under Pledgewith United Bank Limited, Branch Address are properly nailed inside and outside of eachgodowns, Godowns are in good condition and our stocks can be kept under proper lock & keyetc.

In case of Open pledge, make sure that pledged stocks arc surrounded by barbed wire, fullycovered by tarpaulin and placed on wooden sleeper / Platform.

Stock report for the pledge stocks duly signed by the Muccadam Company and the Borrower must be obtained prior to disbursement and at the time of any transaction I movement in thepledge.

Adequate insurance policy in original with the risks specified under Credit Approval must beobtained prior to disbursement of the facility. Also ensure that the amount of insurance policyremain under per party exposure of Insurance companies as advised by Head Office fromtime to time.

Original Premium Payment Receipt should also be kept alongwith the policy and the amountof the same must correspond with the policy.



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Financing against Financial Guarantee

Text of the financial guarantee should be vetted from the approved lawyer / CLC.

Guarantee should be signed by at least two authorized signatories alongwith their PA. # of issuing institution and signature of the same personsbe verified by an officer of United Bank Limited.

Confirmation regarding genuineness of the guarantee must be obtainedfrom the issuing bank. It is also advisable that alongwith the genuinessconfirmation in writing, physical verification should also be obtained fromthe issuing bank.

Hypothecation of Movables & Receivables / Plant &Machinery:

Ensure that all blank fields of Letter of 1-Iypothecation are properly filled with completedescription of hypothecated assets and its location of storage etc.

List of Plant & Machinery (if any) duly signed by the customer should also be attached withLetter of hypothecation.

Obtain Search Report (in case of Limited Company) to determine the ranking of the existingbanks and Obtain necessary NOC from existing bank (if applicable).

Make sure that in case of Limited Companies, Hypothecation Charge alongwith NOC (if applicable) must be registered with the concerned office of SECP within 21 days from theexecution of the document.

In case of Joint Pari Passu Charge, text of the agreement should be vetted from the lawyer and also obtain approval from 1-10K.

Obtain Search report to verify that our charge has been duly registered and ranking correspondwith the terms of Credit Approval.

Adequate insurance policy in original with the risks specified under Credit Approval must beobtained prior to disbursement. Also ensure that the amount of insurance policy remain under per party exposure of Insurance companies as advised by HO from time to time.

Original Premium Payment Receipt should also be kept alongwith the policy and the amount of the same must correspond with the policy.



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Financial Analysis

VERTICAL ANALYSIS OF BALANCE SHEET

ASSETS 2007 2006Cash and balances with treasury banksBalances with other banksDue from financial institutionsInvestmentsFinancingsOperating fixed assetsDeferred tax assetsOther assets

10.532.004.53

20.8556.373.48

02.20

11.244.456.78

15.0858.431.4510.202.32

Total assets 100.00 100.00LIABILITIESBills payableBorrowingsDeposits and other accountsSub-ordinated loansLiabilities against assets subject to finance leaseDeferred TaxationOther liabilities

1.1110.8775.371.09

0.00060.382.39

1.068.86

78.881.37

0.0020

2.20Total liabilities

NET ASSETS

91.21

8.76

92.38

7.60


PRESENTED BY:Share capitalReservesAccumulated (loss) / profit

1.482.113.05

1.482.142.96

Minority interst 0.38 0.40

60


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VERTICAL ANALYSIS OF INCOME STATEMENT

Particulars 2006 2007Mark up/ return/ interest earnedMark up/ return/ interest expensed

149.9561.33

127.3146.42

Net mark up/ interest income 88.61 80.9Provision against loans and advancesProvision for diminution in the value of investment.Bad debts written off directly

19.63

(0.02)3.3417

7.17

0.281.019

22.95 8.48

Net mark up/interest income after provision 65.66 72.42NON MARK UP/ INTEREST INCOMEFee, commission and brokerage income

Dividend incomeIncome from dealing in foreign currenciesGain on sale of securitiesUnrealized Gain on revaluation of investmentOther income

21.08

1.303.193.04

(0.05)5.77

18.17

2.622.721.07

(0.01)3.00

Total Non mark up/ interest income 34.33 27.58

Total mark up and non mark up income 100 100NON MARK UP/ INTEREST EXPENSESAdministrative expensesOther provisions/write offsOther charges

50.950.840.06

44.060.850.09

Total Non mark up/ interest expense 51.85 45.01Share of profit of associatesExtraordinary/ unusual items

1.15-

(0.08)-

(Loss) / profit before taxation 49.3 54.89Taxation current

- Prior years- Deferred

18.411.58

(3.69)

12.960.175.16

16.29 18.3(Loss) / profit after taxation 33.01 36.59



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HORIZONTAL ANALYSIS OF BALANCE SHEET


ASSETS 2007 2006 CHANGEIN 2007

%AGECHANGE

Cash and balances with treasurybanksBalances with other banksDue from financial institutionsInvestmentsFinancingsOperating fixed assetsDeferred tax assets

Other assets

929393177132399705

18391334972118

3071030

19704

790702313198476969

10602444107589

10262114638

163642

138691(136066)

(77264)778889864529204482(14638)

31062

17.54(43.44)(16.19)

73.4621.04

199.25(100)

18.98Total assets 8819288 7029603 1789685 25.46

LIABILITIESBills payableBorrowingsDeposits and other accountsSub-ordinate loansLiabilities against assets subject tofinance lease

Deferred TaxationOther liabilities

98182959536

664739496721

53

34032210937

74641622992

554523996747

112

-154750

23541336544

1102155(26)

(59)

3403256187

31.5354.0219.87(0.02)

(52.68)

-36.31Total liabilities

NET ASSETS

8046854

772434

6494482

535121

1552372

237313

23.90

44.35

PRESENTED BY:Share capitalReservesAccumulated (loss) / profit

130544186731269812

104436150477208554

261083625461258

24.9924.0929.37

Share to be issued587087

34123463467

28583 5540 19.38

Deficit on revaluation of securities621210151224

49205043071 108153 25.1

772434 535121 237313 44.35

62


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HORIZOTAL ANALYSIS OF INCOME STATEMENT

Particulars 2007 2006 Changein 2007

%agechangein 2007

Mark up/ return/ interest earnedMark up/ return/ interest expensed

676809276820

542380197746

13442979074

24.7839.98

Net mark up/ interest income 399989 344634 55355 16.06Provision against loans and advancesProvision for diminution in the value of invest.Bad debts written off directly

88611(101)

15083

3057212064344

58039(1307)10739

189.84(108.4)247.21

103593 36123 67470 186.78

Net mark up/interest income after provision 296396 308511 (12115) (3.92)NON MARK UP/ INTEREST INCOMEFee, commission and brokerage incomeDividend incomeIncome from dealing in foreign currenciesGain on sale of securitiesUnrealized Gain on revaluation of investmentOther income

951555875

1441613735(254)

26035

774111118311618

4558(54)

12796

17744(5308)

27989177(200)

13239

22.92(47.46)

24.08201.34370.37103.46

Total Non mark up/ interest income 154962 117512 37450 31.87

Total mark up and non mark up income 451358 426023 25335 5.95NON MARK UP/ INTEREST EXPENSESAdministrative expensesOther provisions/write offsOther charges

2299553811

281

1877083650

419

42247161

(138)

22.504.41

(32.94)

Total Non mark up/ interest expense 234047 191777 42270 22.04Share of profit of associatesExtraordinary/ unusual items

5210-

(379)-

5589-

1475.2-

(Loss) / profit before taxation 222520 233867 (11347) (4.85)Taxation - Current

- Prior years- Deferred

830857140

(16688)

55214729

22007

278716411

(38695)

50.48879.42(175.8)

73536 77950 (4414) (5.66)(Loss) / profit after taxation 148984 155917 (6933) (4.45)



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Comments on Financial AnalysisIn vertical analysis the formula used is as following.

In balance sheet

= (value of an item/Total assets)*100

In income statement

= (value of an item/Total income)*100

While In horizontal analysis following formula is used

In balance sheet

= (difference of an item in two years/value of an item in base year)*100

Vertical analysis

In year 2007 there is a decrease in cash and bank balances ratio of the UBL with

other banks as compared in 2006. But its investment ratio is more in 2007 as

compared in the year 2006. On the other hand bills payable and borrowings ratio of

bank has increased and deposits ratios are reduced. Its total liabilities ratio is

reduced in 2007 as compared in 2006. And ultimately its net assets ratio is more in

2007.

In 2007 UBLs net markup income ratio is less as compared in year 2006. While its

administrative and other expenses ratio has been increased in 2007, whichultimately reduced its net profit ratio after tax as compared in the year 2006.

Horizontal analysis

In 2007 there is a positive change and cash. But there is negative change in cash

with other banks and due from financial institutions. Its investments have been

increased by 73.46%. Total assets have been increased by 25.46%. On the other

hand its liabilities have been also increased by 23.9%. But net assets have been

increased by 44.35%.In 2007 its net mark up interest income has been increased by 16.06% as

compared in 2006.Its total income is also increased by 5.95%. Its administrative

expenses have been increased by 22.5% and profit before taxation is decreased by

4.85% and after taxation is reduced by 4.45%.



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RATIO ANALYSIS

Current Ratio

= Current AssetsCurrent Liability

Particulars 2007 2006

Current Assets 1506830 1580869

CurrentLiabilities

7705112 6242872

Current ratio 0.20:1 0.25:1

Comments

The banks current ratio has decreased in year 2007 as compared in year2006. It means that current assets to pay current liabilities have decreasedthat is not a good sign.

Liquidity Ratio

= Liquid Assets

Current Liabilities


Liquid Assets 1106525 1103900

CurrentLiabilities

7705112 6242872

Liquidity ratio 0.14:1 0.17:1

Comments



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This ratio shows the most liquidity position of the bank. The banks liquidity position is not good at present. It is declining as compared to last year.

PROFITABILITY RATIOS

Gross Profit Ratio

= Gross profitx 100Interest received


Gross Profit 399989 344634

InterestReceived

678809 542380

Gross ProfitRatio

58.92 63.54

Comments

The gross profit ratio of the bank is improving year by year. In year 2006 it was51.18 and is improved in the year2007. This is a very favorable signal for the bank. Thespread of the bank (difference in the markup of deposits and advances) is increasing.This can be verified from the above-calculated ratio.



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Net Profit Ratio

= Net Profit after Tax x 100Interest Received

Particulars 2006 2007Net Profit AfterTax

148984 155917

InterestReceived678809 542380

Net Profit Ratio 21.94 28.7

Comments

In the year 2006 net profit ratio was less as compared to year 2007.It is improved in the year 2007 which shows high profitability in the

year 2007.

N.P Ratio

28.7

21.94

0

10

20

30

40

YEARS

P E R C E N T A G E S

2007

2006



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Return on Assets

= Net Profit after Tax x 100Total Assets


Net Profit After Tax 148984 155917

Total Assets 8819288 7029603

Return On Assets 1.68 2.21

Comments

In the year 2007 and 2006 the strength of the banks can be seenfrom the performance in year 2006 and 2007. That it had not only recovered the losses but also gone up from the relatively previousprofitability level.

Return on Assets Ratio

1.68

2.21

0

0.5

1

1.5

2

2.5

YEARS


2007

2006



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70/81

Return on Deposits

= Net Profit after Tax x 100Total Deposits


Net Profit After

Tax

148984 155917

Total Deposits 6647394 5539239

Return OnDeposits

2.24 2.81

Comments

The position was favorable in the first yearthen in 2007 the position became unfavorableas ratio of return on deposits has decreasedin2007.

Return on Deposits Ratio

2.24

2.81

0

1

2

3

YEARS

P E

R C E N T A G E S

2007

2006



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Earning Per Share

= Net Profit after Tax x 100No. Of Outstanding Shares


Net Profit After

Tax

148984 155917

No Of OutstandingShares

827688 820615

Earning PerShare

0.19 0.18

Comments

In the years 2007 and 2006 the banks earning per share was positive and was in a rising trend.

EPS Ratio

0.19

0.18

0.175

0.18

0.185

0.19

0.195

YEARS


2007

2006



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Rate of Return at Loans

= Interest Income x 100Total Loans

Particulars 2007 2006Interest Income 399989 344634

Total Loans 5371825 4584558

Rate Of ReturnAt Loans

7.44 7.36

Comments

Although the State Bank of Pakistan has decreased the mark-up rates and the trendof the mark-up in the country is also decreasing but the UBL has managed toincrease the mark-up rate. This shows the banks strength towards the negotiation

with the clients .



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Return on Loan Ratio

7.44

7.36

7.3

7.35

7.4

7.45

YEARS

P E R C E N T A

G E S

2007

2006

Operating Ratio= Operating Costs x 100

Interest Earned

Particulars 2007 2006Operating Costs 234047 191777

Interest Earned 399989 344634

Operating ratio 58.51 55.64

Comments

Operating costs were increasing in the year 2007. In year 2006 it was 55.64%of the interest earned. Increasing trend of the operating costs shows the deficiency of the management to control the operating costs. But the operating costs it, as apercentage of the interest earned is very heavy although the management is trying tocontrol these costs, there is still a very huge percentage of interest earned.



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Operating Ratio

58.51

55.64

54

55

56

57

58

59

YEARS

P E R C E N T A

G E S

2007

2006



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OPPORTUNITIES:

More innovative products and services The role of personal bankers and relationship managers may increase its market

share High salaries and bonus opportunities for attracting employees of other banks Global Expansion

Threats:

SBP prudential regulations for banks Market Saturation Slow industrial development Lack of Promotion and Advertisement Increased competition



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Recommendation

During my internship in United Bank Limited, I got some knowledge about banking

system. Here, I deeply observed the functioning of the branch. In the light of these

observations, I suggest the following recommendations for further progress .

1) Branch PremisesBranch working environment should be improved and renovated with latest furniture.

Sufficient car parking for customers is not available here, so sufficient service area

and seating arrangements must be provided for customers.

2) Staff Behavior Staff behavior in term of customer dealing should be uniform for all customers, without

any favoritism that discourages the other clients .

3) Lengthy ProcedureThe book keeping system and filling system of the bank is so lengthy and time taking.

So staffs document processing time, should be reduced to improve working efficiency

through proper training.

4) Proper CheckThe cheques payment service and other bills receiving service is very slow, In this

way they deliberately waste time of their customers. Therefore, there should be a

proper check of manager on them so that they can recognize and understand their

responsibilities .



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5) To Be ConscientiousIt is usually observed that staff members waste lot of valuable time while performing

their duties. During my training period, I felt that all staff members make a lot of

unnecessary telephone calls while dealing with their customers. In this way they not

only waste a very precious time of their customers, but also waste the wealth of the

country .

6) No Proper Security SystemDuring my training, I felt that security system to safeguard the cash deposits of bank is

not good. The gunman of the bank is often busy in doing some irrelevant job. So bank

should take steps to improve its security system.

Other Suggestions

New blood should be injected and young professionals should be recruited on merit to

induce enthusiasm in the bank. Customers should be focused of all activities to boost

up the business.

New marketing strategies should be developed to attract new customers.

Maximum automated machines should be used.

Security should be strengthened to minimize the chances of decoities.

The workers should be given a sense of teamwork and the manager should be trainedto manage the team as good leader.

There should be a proper check on staff members so that they become punctual and

conscientious.

Business promotional activities should be increased to enhance the business.



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CONCLUSION Steady growth and development of business over the last few years have placedUnited Bank in a very good competitive position. A strengthened capital base willenable it to expand in new areas while core products will continue to be strengthened/developed to contribute towards higher profitability. The key to success in thiscompetitive environment is innovation and foresight.

I feel compelled to say that working as an internee has truly been a remarkableexperience. It was only during the course of this practical training that I got to discover its real meaning.



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REFERENCES

Websites:

www.ubl.com.pk

www.google.com

Library:

Basic Banking Skills For New Entrants

UBL: Human Resource Department

Magazines:

UBL Dialogue

A News Letter of UBL

http://www.ubl.com.pk/http://www.google.com/http://www.ubl.com.pk/http://www.google.com/


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