1

INTERNSHIP REPORT ON
Allied Bank limited




Muhammad Saleem



Submitted in partial fulfillment of the requirements
For the degree of Bachelors of Business Administration

At

National University of Modern Languages
Islamabad, Pakistan
December 2011


Copyright by Muhammad Saleem, 2011

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NATIONAL UNIVERSITY OF MODERN LANGUAGE
Faculty of Management Sciences



It is hereby certified that the report has been thoroughly and carefully read and recommended to
the Faculty of Management Sciences for acceptance of Final Internship Report, by Muhammad
Saleem, Roll No. 1582, Session (Jan 2008- Dec 2011) Morning, in partial fulfillment of the
requirements for the degree of bachelors of Business Administration of National University of
Modern Languages Islamabad.

Dated:


Supervisor Name ________________________________


Supervisor Signature ________________________________


Penal Member Name ________________________________


Panel Member Signature______________________________




Head of department: _______________________________

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TABLE OF CONTENTS
Preface .v
Acknowledgementvi
Dedicationvii
Executive summary..viii

Chapter No.1 Introduction to organization.1
1.1 Vision...1
1.1 Mission..1
1.3 Values...1
1.4 Meaning of Bank..1
1.5 Meaning of Banking.2
1.6 History of ABL2
1.7 Important Statistics about ABL6
1.8 Main Objective.7
1.9 Operational Division7
1.10 Management Hierarchy..8
1.11 Functional Hierarchy..9
1.12 Board of Directors.10
1.13 Management Team11

Chapter No.1 Introduction to departments.12
2.1 ABL Saidpur road Branch ..12
2.2 Current saving Department.12
2.3 Account Department ..13
2.4 Advance Department..17
2.5 Remittances Department.....19
2.6 Cash Department.21
3.7 Clearing Department...22



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Chapter No.3 Internal and External Analysis...24

3.1 SWOT....24
3.1.1 Strength.....24
3.1.1 Weakness.25
3.1.3 Opportunities..........27
3.1.4 Threats...27

3.2 PEST....28
3.2.1 Political...28
3.2.1 Economical.28
3.2.3 Social......28
3.2.4 Technological.....28

Chapter No.4 Financial analysis30
4.1 Ratio analysis...........................30
4.1 Vertical analysis.......................................................................................................34
4.3 Horizontal analysis...36

Chapter No. 5 Internship Experience....39
5.1 Weekly learning....39
5.1 What I Learnt In ABL ..45
5.1 Skills Used During Internship...45
4.3 How experience impacts my carreer.46

Chapter No. 6 Findings and recommendations.47

6.1 Physical Facilities......47
6.2 Availability of Staff...48
6.3 Commitment of Employees...48
6.4 Simplification of Advances49
6.5 Marketing Concept.49
6.6 Customer Orientation.49

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6.7 Mobilization of Less Cost Deposits...50
6.8 Information Access....50
6.9 Performance Audit.........51
6.10 Campaign for Increasing the Deposits.....51
6.11 Increases in Business Share.51
6.12 ATM Network Problem...52
6.13 Cash Deposits Using ATM..52
6.14 Networking among Banks....52
6.15 Manual vouchers system..53

Bibliography.54































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PREFACE
This Report is specially meant for the student of BBA (Hons) in finance. It is concerned to
a brief study of the operation, Function, tasks and services of Allied Bank of Pakistan.

Banking play very important role in the commerce and economic development of a country,
Banks are the most concerned organization with the applications of finance which influence the
managerial activities, thats why I decided to do my internship Training in the bank.

In preparation of this Report is have tried my best to provide all Possible information about the
operation, functions, tasks and financial aspects of ABL in brief and comprehensive form. It also
includes a brief department worked during internship. I have also tried my best to use simple and
easy words and language.

Then internship report ends with some recommendation after identification of some problems
observed during the course of internship.










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ACKNOWLEDGEMENT
All praise to Almighty Allah, the most merciful and compassionate, who give me skills and
abilities to complete this report successfully

I am grateful to my parents who are always been a source of encouragement for me throughout
my life and from start to the end of this report

I am thankful to all my staff members of Allied Bank Limited Saidpur road branch Rawalpindi.

I found every one very co-operative and helpful for providing me the Theoretical as well as
practical knowledge about the function and operation of the bank.


I express my greatest gratitude to my kindhearted Supervisor Miss. Nida Farman who was the
Person who made me able to write this report, her enthusiasm shows the way forward to me to
achieve this success and who kept me in high spirit through her appreciation. She helped me a lot
each time I went up to her.


MUHAMMAD SALEEM










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DEDICATION


I dedicate this report to my respectable Parents, for their love, endless support and encouragement
and they continuously given me moral support throughout my life. They gave me mental strength
to fight and deal with the hurdles of daily routine which I faced during my study. At this stage I
must say that today what I am and where I am standing is just because of them. Secondly I would
like to dedicate this report to all my friends who were always there to help me. Last but not the
least I owe a special thanks to all my teachers at NUML with their illuminating comments,
valuable ideas and provide me right directions they are one of the main reason of my success.



















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EXECUTIVE SUMMARY

This report provided details of my achievements in term of practical implementation and
understanding of working environment in banks. I had started my internship from Allied Bank
Limited Saidpur road Branch (0341). From 22
nd
September 2010 to 10
th
November 2010. During
the internship I have learnt basic banking work and a lot of practical work which I had not
acknowledged before. I worked in different departments and learnt basic operations of the
departments that departments are: Account opening department, Clearing department, Remittance
department Calling and sorting department etc. I have spent most of my time in Account opening
department and hence I learnt what professional attitude to adopt while dealing with external as
well as internal customers. I have filled out the different vouchers and slips such as Current
Account slip, PLS Saving Account deposit slip, clearing vouchers; online inter branch transaction
slip etc.
And this document provided aspect of Allied bank limited and one of its branch Saidpur road
Rawalpindi.
This report is composed of the ABL History, ABL introduction, organizational structure, finance
structure, its different Analysis such as external analysis and SWOT analysis and
recommendation etc. e.g. ABL is the one of the leading bank that is first Muslim bank
incorporated in the soil of Pakistan in 1942.in Lahore as Australasia bank.
ABL organizational and financial structure is very trustworthy.
ABL has some weakness but by using its strength ABL can overcome the weakness as ABL is the
strong and leading bank, But It also has faces many threats but it has many opportunity to
overcome the threats.


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Chapter No.1
Introduction to the organization

ABL is one of the largest banks in Pakistan, serving the Country for over 60 years in all
spheres at banking and financial Services

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

1.2) Mission
To provide value-added services to our customers
To provide high-tech innovative solutions to meet customer requirements
To create sustainable value through growth, efficiency and diversity for all stakeholders
To provide a challenging work environment, and reward dedicated team members
To play a proactive role in contributing towards the society

1.3 ) Values
Integrity
Excellence in Service
High Performance
Innovation and Growth
ABL has emerged as one of the foremost-privatized financial institutions in Pakistan endeavoring
to gear up its operations to meet the demands of the future.

1.4) Meaning of bank

Some authors write that the word bank is derived from Italian word bancus OR banque which
means a bench. Because in the old days the Jews were used to make banking settlements by
sitting on the benches & to deal the exchange of money in the market place. When any one of

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them becomes insolvent means that he is unable to fulfill his requirements. Then his bench was
destroyed by the customer & this practice given birth to the word BANKRUPT.
Some other Authors are of the opinion that the word bank is derived from a German word back,
which means Joint Stock Fund. & when the major part of Italy was occupied by the German
then this word back was Italianized in to the word Bank. However, no confident record is
available to believe upon. Therefore, we are not in a position to give any bounded meanings to
bank inspire of all these we can define bank as follow.

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

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

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

1.5) Meaning of banking
He Banking companies Ordinance, 1962 defines Banking as Banking means accepting
for the purpose of lending or investment, of deposits of money from public, repayable on demand
or otherwise and withdrawal by checks, drafts, order, or otherwise.
1.6) History of ABL
Established in December 1942 as the Australasia Bank at Lahore with a paid-up share
capital of PKR 0.12 million under the Chairmanship of Khawaja Bashir Bux, and his business
associates, including Abdul Rahman Malik who was amongst the original Board of Directors, the
bank had attracted deposits, equivalent to PKR 0.431 million in its first eighteen months of

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business. Total assets then amounted to PKR 0.572 million. Today Allied Bank's paid up Capital
& Reserves amount to Rs. 10.5 billion, deposit exceeded Rs. 143 billion and total assets equal Rs.
170 billion. The Allied Bank's story is one of dedication, commitment to professionalism,
adaptation to changing environmental challenges resulting into all round growth and stability,
envied and aspired by many.

1.6.1 1942 - 1947: Pre Independence

In the early 1940s the Muslim community was beginning to realize the need for the active
participation in the field of trade and industry. The Hindus had since the late 1880s established a
commanding presence in these areas and industry, trade and commerce in the undivided Sub-
continent was completely dominated by them. Banking, in particular, was an exclusive enclave of
the Hindus and it was widely believed, and wrongly so, that Muslims were temperamentally
unsuited for this profession.

It was particularly galling for Khawaja Bashir Bux and Abdul Rahman Malik to hear the gibe that
Muslims could not be successful bankers. They decided to respond to the challenge and took lead
in establishing this first Muslim bank on the soil of Punjab that was to become Pakistan in
December 1942; by the name of Australasia Bank Limited.
The initial equity of the Bank amounted to Rs 0.12 million, which was raised to Rs 0.5 million by
the end of first full year of operation, and by the end of 30th June 1947 capital increased to Rs.
0.673 million and deposits raised to Rs 7.728 million.

1.6.2 1947 to 1974: Australasia Bank
Australasia Bank was the only fully functional Muslim Bank on Pakistan territory on
August the 14th, 1947.

It had been severely hit by the riots in East Punjab. The bank was identified with the Pakistan
Movement. At the time of independence all the branches in India, (Amritsar, Batala, Jalandhar,
Ludhaina, Delhi and Angra (Agra) were closed down. New Branches were opened in Karachi,
Rawalpindi, Rawalpindi , Sialkot, Sargodha, Jhang, Gujranwala and Kasur. Later it network

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spread to Multan & Quetta. The Bank financed trade in cloth and food grains and thus played an
important role in maintaining consumer supplies during riot affected early months of 1948.
Despite the difficult conditions prevailing and the substantial set back in the Banks business in
India, Australasia Bank made a profit of Rs 50,000 during 1947-48.

By the end of 1970 it had 101 branches. Unfortunately it lost 51 branches in the separation of East
Pakistan which became Bangladesh. The bank did well in despite losing lot of its assets. By the
end of 1973 the bank had 186 branches in West Pakistan.

1.6.3 1974 to 1991: Allied Bank

1974, the Board of Directors of Australasia Bank was dissolved and the bank was
renamed as Allied Bank. The first year was highly successful one: profit exceeded the Rs 10
million mark; deposits rose by over 50 percent and approached Rs 1460 million. Investments rose
by 72 percent and advances exceeded Rs 1080 million for the first time in bank history. 116 new
branches were opened during 1974 and the Bank started participation in the spot procurement
agriculture program of the Government. Those seventeen years of the Bank saw a rapid growth.
Branches increased from 353 in 1974 to 748 in 1991. Deposits rose from Rs 1.46 billion, and
Advances and investments from Rs 1.34 billion to Rs 22 billion during this period. It also opened
three branches in the UK.
1.6.4 ESOP Revolution
(Employee stock ownership plan)

Under the philosophy of ESOP ownership of an enterprise is transferred to its employees
who are in an advantageous position in running the enterprise. The added advantage of ESOP that
it strengthens the workers stake in the free enterprise system, in job securities, better profitability
& unique corporate culture symbolizing family feelings & professional fraternity.
September 10,1991 is the historical date as on this date the bank became the countrys 1st bank to
be reconstituted as an institution jointly owned by its employees through the unique concept of
Employees Stock Ownership plan [ESOP] developed by the Allied Management Group headed
by Mr. Khalid Latif enabled the bank staff to react creatively to the privatization challenge. More

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that 7500 staff members acquired a share in the bank . The articulation of the ESOP is a landmark
in the financial history of Pakistan-indeed of the entire world .It is a practical step ensuring an
increase in workers participation and in productivity a means for enhancing an equitable
redistribution of financial assets & an effective strategy for achieving the cherished goal of
national self-reliance.

1.6.5 1991 to 2004: Privatization

As a result of privatization in September 1991, Allied Bank entered in a new phase of its
history, as the worlds first bank to be owned and managed by its employees. In 1993 the First
Allied Bank Modaraba (FABM) was floated.

After privatization, Allied Bank registered an unprecedented growth to become one of the premier
financial institutions of Pakistan. Allied Banks capital and reserves were Rs. 1.525 (Billion) and
assets amounted to Rs. 87.536 (Billion) and deposits were Rs. 76.038 (Billion). Allied Bank
enjoyed an enviable position in the financial sector of Pakistan and was recognized as one of the
best amongst the major banks of the country.

In August 2004 as a result of capital reconstruction, the Banks ownership was transferred to a
consortium comprising Ibrahim Leasing Limited and Ibrahim Group.

Today the Bank stands on a solid foundation of over 63 years of its existence having a strong
equity, assets and deposits base offering universal banking services with higher focus on retail
banking. The bank has the largest network of on-line branches in Pakistan and offers various
technology based products and services to its diversified clientele through its network of more
than 700 branches.

1.6.6 2005:
In May 2005 Ibrahim Leasing Limited was amalgamated by transfer to and vested in with
and into Allied Bank Limited. ILL shareholders were issued ABL shares in lieu of the ILL shares
held by them. Application for the listing of ABL shares in all the Stock Exchange Companies of

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Pakistan was made. ABL was formally listed and trading of the shares of the Bank commenced
w.e.f. The following dates.
Islamabad Stock Exchange - 8th August 2005
Lahore Stock Exchange - 10th August 2005
Karachi Stock Exchange - 17th August 2005
1.6.6 2007
Mohammad Aftab Manzoor has taken charge as CEO and President of the Bank on
August 13 2007. He is an ex-president of MCB Bank Ltd
1.6.8 Today

Today, with its existence of over 60 years, the Bank has built itself a foundation with a
strong equity, assets and deposit base. It offers universal banking services, while placing major
emphasis on retail banking. The Bank also has the largest network of over 700 online branches in
Pakistan and offers various technology-based products and services to its diverse clientele

1.7) important statistics about ABL

Total customers 4,605,000
Employees 6,747
Total branches 735
Utility booths 34
Airport booths 1
Total clients in Rawalpindi region 145,000

Table 2.1




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1.8) Main objective

The main objective of the bank is to accept deposits and provide loans to its customers and
also to be more efficient in providing services. The bank maintained its commitment to most
efficient and personalized services to its customers. Allied Bank of Pakistan introduces many
remunerative schemes for its depositors and introduce computer services for the first time in the
banking history of Pakistan. Allied bank gives advances to small, medium and Big industries,
commercial establishment, agriculture, construction companies and other needy persons. Allied
bank collects electricity gas and telephone bills from public and over hundred branches of Allied
Bank Ltd. Deal in foreign exchange were facilities are given to financial and commercial so its
ultimate objective is to receive funds from the depositors and provides loans\credit facilities to
different sector including trade, industry and agriculture in its most branches.

1.9) Operational division

Allied Bank has been divided into 16 regions, each under the control of a regional General
Manger (RGM). The RGM is not any fixed designation in the organizational hierarchy. The
person appointed for its position can be a SEVP and EVP.














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President

Senior Vice President
Vice President
Executive Vice President
Senior Executive Vice
President
[rosodmemtPresident
Regional General Manager
Managerxecutive Vice
President
Branch Manager
1.10) Management hierarchy

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

























Figure 2.1 Management hierarchy

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

























Figure 2.2 Functional hierarch
President and CEO
Board of Director
Head of Departments
Regional General Manager
Controllers of Operation
Branch Manager
Office G-I, II and other lower Staff

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1.12) Board of directors



Pervaiz Iqbal Butt
(Director)

Mohammad Waseem
Mukhtar (Director)


Farrakh Qayyum
(Director)

Sheikh Mukhtar Ahmed
(Director)


Abdul Aziz Khan
(Director)

Tasneem M. Noorani
(Director)


Sheikh Jalees Ahmed
(Director)

Nazrat Bashir
(Director)


Mohammad Aftab Manzoor\
(CEO)

Mubashir A. Akhtar
(Director)


Mohammad Naeem
Mukhtar
(Chairman)



Table 2.3









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1.13) Management team

Asim Tufail
(Group Chief, Consumer
& Personal Banking)

Fareed Vardag
(Chief Risk Officer)


Iqbal Zaidi
(Group Chief,
Compliance)

Mohammad Abbas Sheikh
(Group Chief, Special Assets
Management)


Mohammad Aftab
Manzoor
(Chief Executive Officer)

Muhammad Jawaid Iqbal
(Group Chief, Coprate &
Investment Banking)


Muhammad Yaseen
(Group Chief, Treasury)

Mujahid Ali
(Group Chief, Information
Technology)


Shafique Ahmed Uqaili
(Group Chief, Human
Resources)

Syed Shahid Raza
(Head, Business
Transformation Team)


Tahir Hassan Qureshi
(Chief Financial Officer)

Tariq Mehmood
(Group Chief, Operations)


Waheed ur Rehman
(Company Secretary)

Zia Ijaz
(Group Chief, Commercial)






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Chapter No.2
Introduction to the Department

2.1) ABL Saidpur Road Branch
(Branch code = 0341) ADDRESS: SAID PUR ROAD RAWALPINDI

I did my internship of six weeks in ABL SAIDPUR ROAD BRANCH (0341) from 22-09-
2010 to 22-11-2010. It is one of the small branches of ABL, which is yet to be renovated. I
selected this branch because of two reasons. First, I was of the view that one can find more
learning opportunities in a small branch as compare to a big one. Secondly it is situated near to
my residence

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

2.2) Current saving department

In ABL Saidpur road Branch current saving department mainly deals with cheques,
vouchers and advices. First of all a cheque holder have to present his/her cheque to the person
responsible for issuing the tokens. . Then cheque is passed on to the computer operator to entry it
in computer. Afterward it will go for signature verification after which it will be given to cashier
for payment.
2.2.1 Computer operations
In ABL Saidpur road branch the computer section performs several duties that are as under;
1. Daily Transactions

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


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2. Vouchers
To record all the vouchers made by the remittance department. Remittance department have to
prepare debit and credit vouchers for about every transaction recorded in their department. Then
these vouchers are sent to computer operator to record those in computer.
3. Advices
To record all advices received from other branches. Most of the-inter branch or intra branch-
remittances are subject to ultimate receipt of advices from the corresponding branch to materialize
the transactions. These advices also have to be recorded in computer.
4. Statements
To close the daily record a number of statements have to be printed out. Statements like:
Days transactions (sequence)
Overdrawn facilitated a/c statement
Markup sheet
Inter branch transactions
Detail of PLS and Current a/c
Days transactions (a/c wise)
Operative, Dormant, Inoperative and Unclaimed a/c
All ATM transactions
Detail of GL entries (official & non customer transactions)
Summary of all a/c (debits, credits & balances)
Profit due, transferred, disbursed, etc.
2.3) Account department
Deposits the Life Blood of a Bank

Bank borrowing funds from outside parties is more important because the entire banking system
is based on it. Receiving of deposits is a basic function of all commercial banks. Commercial
banks do not receive these deposited for safekeeping purpose only. When the bank receives the

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amount of deposited as a depositor, it become the owner of it. The bank may therefore use these
deposits, as it deems appropriate. But there is an implicit agreement that the amount owned by the
bank will be paid back to the depositors on demand or after a specified period of time.

The borrowed capital of the bank is than the bank own capital. Banks borrowing is
mostly in the form of deposits. These deposits are lend-out to different parties. Larger the
difference between the rate at which these deposits are borrowed and the rate at which they lend-
out the greater will be the profit margin of the bank. Larger the funds lend-out the greater will be
the return earned on them and greater the amount of return on these deposits earned greater will
be the profit for the bank. It is because of this interrelated relationship. Deposits are referred to as
the life blood small for any banking sector.

Kinds of account

There are numbers of account that ABL offers to its customer keeping in mind their needs and
dealing
1. Saving bank account p & loss account

In Pakistan the saving Bank accounts are known as profit and profit and loss sharing accounts
(PLS A/C) fowling the illumination of bank. The owners of such account are not allowed to
withdraw money more than once are twice a week. In case of withdrawal of large sum, the
depositor is required to give to prior notices a week or two. Thus the bankers are not required is
always available to bank for giving to loans to their customers. Thus these deposits also serves as
source of credit certain by the commercial banks.

The rate or profit on this type of account varies from time to time. All the commercial banks
declare the rate of profit every year that is paid on these accounts on the basis of their monthly
credit balance. The bank will determine the proportion of profit & its decision will be final. Profit
will be determined on daily product basis while it will be paid on monthly basis & will be paid on
the minimum balance between the first day & last day of the month. Zakat will be deducted on the
exceeding amount as exempted from the Zakat deduction. Taxes will be imposed according to the

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rules & regulation.In Pakistan post offices & national saving centers also maintain this savings
bank account to encourage saving habits among the people.At the time of opening this account, a
minimum amount of Rs.500 is to be deposited. Subsequently the account is opened & account
number is located. The depositor is given a cheque book. The depositors who are wishing to close
his account are required to present his cheques to the bank in order to draw the credit balance and
to close the account.

2. Current account

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

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

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

3. Fixed deposit account/term deposits

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


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

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

2.3.1 Opening and operation of bank account

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

A person who wishes to open a bank account is required to complete this from the personal
information is to be furnished. The application signs the declaration to effect that he has
understood the rules and regulation of the bank.
2. Introduction
As required by the banking law the new customer needs to be introduced by the account holder of
the same branch where the account is being opened. The manager or any other bank officer may
introduce the new customer if they know them personally.
I. Signature card
At the time of opening an account a specimen signature card containing two signature of the
customer is required which the manager of the branch attaches with application form. During the
operation of account the signature is verified when the cheque is presented for payment.
II. Cheque Book
After completing formalities for opening saving and current a cheque books issued to the
customer for withdrawing cash from his or her account at the time of need. The cheque contains
minimum 25 pages & maximum 100 pages. The bank also charges excise duty on cheque book.


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2.4) Advances department
Lending principles

The basis function of the bank is to accept deposit and lend money to the borrowers against a
spread so to be able to give some profit to the depositors as well as to earn profit for the bank.
While lending the money to the borrowers the bank should observe the following lending
principals:
Safety Principle
It means that the lended money will come back along with interest or service charges etc.
The borrower should not invest the money borrowed in unproductive or speculative business
Liquidity Principle
The money which has been lended to the borrower should be returned to the bank on
demand or as per repayment schedule provided by the client. The sources of repayment should be
clear and definite
Purpose Principle
The purpose of the advances should be legitimate and productive. It should be ensured that
the banks, funds are not being utilized for speculative business. The credit restrictions by the
central bank should not be violated & it should also be ensured. It is always beneficial for the
bank to finance for short-term requirements.

Profitability Principle
The end result of every business activity should be to earn some profit. Similarly the bank
must get some profit out of the activity of lending so that the depositors could get their shares as
well as the shareholders could earn something for their investments..

Security Principle
The proposal should be dealt on its merit not on security. The security should be
considered a safety for the bank only in case of unexpected emergencies. All the relevant
documents of securities must be obtained & got valuation of the property or any other security
should be assessed correctly.



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Spreading of Risk Principle
It is always safe for the bank to spread the risk in large number of borrowers instead of
loaning huge amount to few big shots, it is better to obtain different types of securities instead of
concentrating on one security..

National Interest and Suitability Principle
It is our moral as well as legal obligation to ensure that no loaning is running counter to
national interest. It is also our duty to ensure that our lending policies are not against the social
conditions or bindings

2.4.1) Function of Credit Department

The main function of the credit department is to lend money to the customer. Allied Bank
Ltd. Lends money in the form of clean advances against promissory notes as well as secured
advances against tangible and marketable securities. Beside these ABL also lend money against
life policies and immovable property..
LIEN
Lien is the bank right to with hold property until the claim on the property is paid. The
bank looks at their lien as a protection against loss or overdraft or any other credit facility. In
ordinary lien the borrower remains the owner of the property, but the actual or constructive
possession remains with the creditor or bank though the borrower has no right to sell it.
By Cash Credit
In this the bank lends money to the borrower against tangible security. The total amount of
the loan is not paid in one installment. The borrower has to pay markup on the amount borrowed.
Cash credit is favorite loan for large commercial & industrial concern.
By Overdraft
This the most common type of bank lending. When a borrower requires temporary
accommodation, ABL allows its customer to withdraw an excess of the balance form their
account which the borrowing customers have in credit and thus called overdraft. This facility is
given to regular reliable & well established customer. When it is against collateral securities, it is

28

called Secured Overdraft & when borrowing customer can not offer any collateral security
except his personal security then the accommodation is called Clean Overdraft.

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

Medium Term Finance

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

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

Producer of Applying for Loan

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

2.5) Remittances department
Another important department in ABL Saidpur road Branch is Remittances Department.
The remittances department transfers the funds from one bank to other bank and from one place to
another place. In remittances department the collection take place. The ABL made payment of

29

only open cheques on the counter and prohibits the payment of crossed cheques.ABL transfers
money from one place to another by the following means:
Mail Transfer

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

Telegraphic Transfer

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

Pay Order
Pay order is the most convenient simple and secure way of transfer of money. It is issued
by, drawn upon and payable by the same branch of the bank. It is neither transferable nor

30

negotiable and as such it is payable to the payee named there in. The following are the parties to a
pay order.
Purchaser is a person, firm, company or local authority.
Issuing/paying branch is one which issues/pays on presentation.
Payee is a person named there in.
Demand Draft

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

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

2.6) Cash department

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

An individual who has account in the Bank can deposit money in his account. For deposit
of the money the individual has to fill the deposit slip in which the account holder writes his
name, Account number, amount of the money both in figures and in words.


31

After filling the deposit slip the Cash amount along with the deposit slip is submitted with the
cashier. The cashier collects the cash and counts it and after verification the cashier stamps the
deposit slip. One part of the deposit slip is given back to the customer and the other part of the
deposit slip remains with the bank for the record purposes

The cashier also record the deposits made by the customers in credit sheets daily. The deposits of
all customers of the bank are controlled by mean of ledger account. Every customer has its own
ledger account and has separate ledger cards in which his / her total record is kept.

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

Payments

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

2.7) Clearing department

In clearing process, if the account holder of ABL receives the cheque of other bank like
City Bank, Habib Bank Limited etc, and he submits it in ABL branch to be cashed. At the same
time the clearing process starts. First the bank name. Cheque number and the amount are written
in the register. After this three kind of stamps are required first bank name stamp, secondly
clearing stamp of next date and If the cheque is not local then the inter city clearing stamp is
required.


32

Some cheques are local and some are outstation. The institution N.I.F.T. provides the services in
clearing the cheque. They send the different cheque to different banks. The N.I.F.T service is only
in few cities, like Karachi, Lahore, Rawalpindi. The cheque of inter city is send through N.I.F.T.
And where, the N.I.F.T service is not available so the cheque is sent through T.C.S.

The clearance of cheque is informed through advice. Some cheque is not passed so they should
return so Rs. 100 is deducted and if the cheque is intercity then the postage charges is deducted.
For this purpose the Debit & Credit voucher is used. When the cheque is cleared the today stamp
is required. Some cheque is drawn on ABL. This is called outward clearing. These cheques will
be entered in the outward clearing register. And the advice is sent for the clearance of cheques.
The account holder account is credited.





















33

Chapter No. 3
SWOT Analysis

The SWOT analysis is a comprehensive and critical overview of the operations,
procedures, rules and regulations, services and other related activities, the analysis include the
analysis of ABL Bank Saidpur road branch in the light of the entire branch and Bank specific
variables which directly or indirectly affect the operations of the branch. The tool selected for the
analysis of organization is SWOT analysis.
3.1) SWOT analysis
SWOT analysis is an acronym that stands for Strengths, Weaknesses, Opportunity and
Threats. This is a careful evaluation of an organizations strengths to avail an opportunity by
overcoming its weaknesses and phasing out all he threats to its survival in order to grow and
survive.

3.1.1) Strengths
This branch is provided with 3 fax machines, more than 7 telephone connections, which
makes communication easier with different branches
The branch is linked through a online network of 755 BRANCHES, thus enabling them to
serve customer in better way.
This branch is provided with latest computer which increases the speed of computer work.
The branch is situated in the commercial hub of Rawalpindi. This location provides a
competitive edge to the Branch.
The branch is situated in commercial area were business activities perform greater as
compare to residential area. Thus it increases the number of customers.
The Branch has the most experienced and the least experienced staff, which is a good
combination of experienced heads and exuberance of youth.
The branch is the main branch in the areas, which is another plus point for the Branch.
It holds the Hundi Accounts, where the payments are made through checks. This process
provides an opportunity to the Branch to have more of the Hundi customers as the Bank
customers.

34


4.1.2) Weaknesses
The Branch has a good staff combination on the basis of experience, but their training
capabilities are not up to the requirements of the fast changing banking environment.
The customers Long-term contacts are not maintained with customers.
The technical training of the staff is negligible e.g. In case of the absence of computer there
is no alternate trained personal who can record the daily transactions.
The organization is very much mechanistic and provides no flexibility to encourage
creativity.
The lower staff is non cooperative as compared the lower staff of other branches.
The control of manager is not effective.
The discretionary powers of manger are very low to offer more incentives and value added
services to its customers.
There is a lack of commitment and professionalism on part of the employees. The staff is
always in a hurry to leave the bank as soon as possible. They were also observed to starting
their operations comparatively late.
The organizational culture is not cooperative
Nepotism was observed on part of the manger as well as the top management towards some
staff members.
The branch has no industrial accounts.
The level of technology management in the branch is very low. The technology available is
not maintained well mainly because of the lack of technically trained staff. For instance the
scanner, in spite of its availability has not been used for scanning the specimen signature
cares.
In spite of the presence of technology many jobs are done manually such as the letters,
drafts for fax messages and other calculations, which could be easily, done in MS Word and
Ms Excel.
The branch lacks some physical facilities such as clean washrooms which can affect
employees performance

35

The layout of the branch is such that it is hindering the flow of work on one hand and the
documents are lying exposed which can be easily taken away by any person entering the
branch.
The job distribution is not up to the mark. The immediate result of this immediate result of
which is:

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

Delays were observed because the prescribed procedures are not followed.
Though ABL, Saidpur road branch in the area it lack specialized counters or facilities such
as:
Investment advisory counters;
Leasing or leasing arrangements;
Credit services.
The four branches of Allied bank in Rawalpindi are closely located where most of the
services offered are not at all differentiated.
No efforts are made to recover the outstanding debts.
There is no facility for receiving and satisfying complaints and inviting suggestions.
Foreign currency accounts are not entertained. The main reason for these negative responses
that the staff is not trained in dealing foreign currency accounts.
Customers coming to the Bank for tcs etc. Are not received with open hearts and thus
deprives the bank of revenues.
Some shortcomings on part of Allied Bank of Pakistan, which affects the operations of the
bank Saidpur road branch:

There is a lack of functional and proper research and development, which could scan
the micro and macro environmental data for future planning and strategy.
Financial audits are conducted but operational audits have not received proper
attention as much as it should get.

36

There is no procedure, which could encourage the middle and lower level
management to initiate creativity.

3.1.3) Opportunities

The biggest opportunity for the ABL, Saidpur road branch Rawalpindi is the greater
number of Hindi customers who get their payments through ABL, Bank Saidpur road
branch. These customers can be easily convinced to open their accounts with ABL.
A considerable portion of the labor force of the area is serving overseas. Their families
can be encouraged to use ABL as channel for remittances.
The Internet facility in the area provides an opportunity to ABL to get Online.
The Bank has the basic infrastructure, which can facilitate the online process.
The location of the ABL, Saidpur road branch itself provides an opportunity to ABL to
get more and less cost deposits.
The group from its survey and analysis of IT companies have found out that there are
many companies which are not satisfied with its current bank, so Khyber branch with its
superior service quality and long working hours can capture those customers

3.1.4) Threats

The biggest threat to the operational success of the branch is the better competitors
services. Many private sector banks are offering higher rates of return to customers than
Allied Bank of Pakistan.
Cannibalization of profits is yet another threat to the success of Bank Saidpur road branch.
One of the biggest to the ABL, Saidpur road branch is the increasing rate of dissatisfies
customers. Most of these customers were observed to be dissatisfied with the delays in
their servicing.
The greatest threats to the performance of ABL, Saidpur road branch are the decreasing
morale of employees. They feel that they are not provided with bonuses. They are not
given proper attention to have a say in the annual meetings. The proxy forms are signed
on their behalf without letting them know.

37

High-pressure interest groups are developing which poses a constant threat to Allied
Bank.

3.2) PEST Analysis:-

3.2.1) Political

Pakistan despite all international and public perceptions, today is a functioning democracy
and gradually there is a change in complexion and composition of legislatures with
more educated people and women (27% of National Assembly and 17% of Senate)
entering into politics Similarly it helps in designing best strategies to implement that
could support the revival of bank industry. Like in the era of nationalization banks had
to suffer as other industries thats why that impact is still found in the performance of this
industry.

3.2.2) Economical

Although banking sector development is important at the early stage of economic
growth,general liberalization presuming a homogeneous bank role may not necessarily promote
growth. The estimated cost structure indicates that state-owned commercial banks are large
enough, while development financial institutions and private banks can expect to obtain
cost-saving advantages by expanding their operations. Since scope economies are
significant, portfolio diversification generally increases bank profits. In addition, privatized
banks are the most efficient, followed by foreign and private banks. Public banks are the
least efficient.

3.2.3) Social

Banks always helped people in improvement of living condition of poor people in
various forms like giving loans to poor for starting business or directly providing them the
instruments that could enhance their living conditions. Similarly Allied Bank always tried

38

to provide the needy people loans on soft terms and also helped to eradicate
unemployment by providing job opportunities Recent high growth trends coupled with
enhanced spending on social and 2008/2009 has together begun to pay some dividends
as evident from the reversal in poverty incidence trends and social indicators.

3.2.4) Technology

The Banking sector in Pakistan has experienced a rapid transformation. Just about a decade back
this sector was limited to the Sarkari (read nationalized) and co- operative banks. Then
came the multi-national banks, but these were confined to serving an elite few. One could
regard the past as the 'medieval ages' in the banking industry, wherein every branch of the same
bank acted as an independent information silo and multi-channel banking (atms, Net banking,
Tele-banking, etc) was almost non-existent. Today banks have to look much beyond just
providing a multi-channel service platform for it customers. There are other pressing issues
that banks need to address in order to chalk-out roadmap for the future. Here are the top
three concerns in mind of every bank's CEO. The customer is interested in how he/she can
benefit from the bank and its products. That's why it becomes necessary for a bank to differentiate
its products from the others. Some of the ways in which differentiation can be introduced are
through specialization, new products, and increasing the added value












39

Chapter No. 4
Financial Analysis

Importance

Analysis is vital to figure out, weigh up and evaluate the operating performance of the firm.
Another reason that depicts the importance of ratio is that investors make their investment
decision in certain firm based on these ratios.
Analysis of Financial Statement

Financial analysis involves the use of various financial statements, e.g. Balance sheet, income
statement etc. There are various stakeholders such as owners, managers, creditors, government
agencies, employees, prospective investors etc. Interested in the financial condition and results of
operations of a business enterprise. In general, the varying interests of all groups fall in four broad
categories. Solvency refers to the companys ability to meet its debt on due dates. Profitability
means the success that the firm has had in earning a return on the assets. Stability is composed of
several factors, a continues demand for a companys product or services, a reasonable and stable
relation between revenues and expenses and sufficient shows net income to pay a regular
dividend. Efficiency ratio shows the performance the company that how effective it is working.
4.1) Ratio Analysis
Financial ratios are calculated from one or more pieces of information from a company's financial
statements. For example, the "gross margin" is the gross profit from operations divided by the
total sales or revenues of a company, expressed in percentage terms. In isolation, a financial ratio
is a useless piece of information. In context, however, a financial ratio can give a financial analyst
an excellent picture of a company's situation and the trends that are developing. In this project the
following ratios are calculated




40

1) Loan to deposit ratio

(Total Loans/Total Deposits)*100 (Rupees in `000)
2006 2007 2008 2009 2010
Total
loans/Advances
144,033 168,407 212,972 237,344 253,100
Total deposits 206,031 263,972 297,475 328,875 371,284
69.90% 63.79% 71.59% 72.16% 68.16%

Analysis

This ratio shows relationships between loans and advances and reveals how much productively
the deposits are used. Analysis shows an increase and decrease as well in loan to Deposit ratio,
because advances are also increasing sharply with the increase of deposits. This condition is
favorable or the bank. If deposits increase by higher rate than an increase in loan than bank has to
face difficulty.

2) Loan to assets ratio
(Total Loans/Total Assets)*100 (Rupees in `000)

2006 2007 2008 2009 2010
Total loans
advances
144033 168407 212972
237,344 253,100
Total assets 252026 320109 366680
418,374 449,932
57.00% 52.00% 58.00%
56.74% 56.25%

Analysis

Total advances of the bank increased from 2006 to 2010 and total asset Also increases from
2006 to 2010. This parallel increase in advances Provide us gradually increasing ratio.

2 ) Net profit ratio

(Net Profit/Return On Financing)*100 (Rupees in `000)
2006 2007 2008 2009 2010
Net profit 4397 4076 4156 7122 8225
Return on
financing
19665 25122 35467 47080 50664

41

22.35% 16.22% 11.17% 15.12% 16.23%

Analysis

The net profitability of the company is increasing from 2008 to 2010 as Shown above. The
increasing net profit trend shows the managements efficiency to control the operating cost and
to maximize the profit.

4) Rate of return at loan

(Interest Income/Total Loan)*100 (Rupees in `000)
2006 2007 2008 2009 2010
Interest
income
10,423 11,108 13,298
18,700 22,565
Total loan 144,033 168,407 212,972
237,344 253,100
7.23% 6.59% 6.24%
7.87% 8.91%


Analysis

The rate of return at loans of the company is increasing. This show that the bank is in good
position. When we compare the interest income of the company with the loan. The rate of return
is increasing with the amount of total loan. This shows that the bank is earning favorable interest
income on the loans.

5) Return on assets


(Net Income/Total Assets)*100 (Rupees in `000)
2006 2007 2008 2009 2010
Net income
after tax
4397 4076
4156 7122 8225
Total assets 252626 320109
366680 418,374 449,932
1.74%
1.27% 1.13% 1.70% 1.82%

Analysis

In return on assets ratio we evaluated whether the bank management has earned a reasonable
return with the assets under its control. The bank is required to increase its performance as the
standard rate of return is 3 % or more.

42


6) Return on equity capital

(Net Income/Equity Capital)* 100 (Rupees in `000)

2006 2007 2008 2009 2010
Net income
after tax
4397 4076 4156
7122 8225
Total equity 4488 5386 6463
7110 7821
97.97% 75.67% 64.30%
100.16% 105.16%


Analysis

The equity capital of the bank is increased every year while in 2007 the net income decrease and
in 2008 the net income is also increased. Due to this the equity capital ratio has decreasing trend
from 2008 to 2010. We cannot set any Standard for the banks return on capital because different
capitals have different Capacities

7) Return on equity

(Net Income/Share Holder Equity) (Rupees in `000)
2006 2007 2008 2009 2010
Net income
after tax
4397 4076 4156
7122 8225
Share holder
equity
16230 18408 20805
25891 31166
27.09% 22.14% 19.97%
27.50% 26.39%

Analysis

It is a tradition that stock holders have expected to earn in average annual return of 12% or more
from equity investment in large companies. In this case we can see that the banks return on
equity is up to the standard of the return on equity and stock holders received favorable return
from 2006 to 2010.





43

4.2) Vertical Analysis

Vertical/Cross-sectional/Common size statements came from the problems in comparing the
financial statements of firms that differ in size. In the balance sheet, for example, the assets as
well as the liabilities and equity are each expressed as a 100% and each item in these categories is
expressed as a percentage of the respective totals. In the common size income statement, turnover
is expressed as 100% and every item in the income statement is expressed as a percentage of
turnover (sales).

Balance sheet
For the year ended Dec 31, 20.
2006 2007 2008 2009 2010
Cash

Cash balance 10% 9% 7% 7% 7%
Lending to financial
institutions
8% 6% 4% 7% 3%
Investments 19% 26% 23% 23% 27%
Advance-net 56% 53% 58% 56% 56%
Operating fixed assets 3% 2% 2% 3% 3%
Other assets 4% 4% 4% 4% 4%
Total assets 100% 100% 100% 100% 100%
Liabilities

Customer debt 82% 83% 83% 78% 82%
Inter bank borrowing 7% 7% 7% 10% 5%
Bills Payable 1% 1% 1% 1% 1%
Other liabilities 2% 2% 2% 3% 3%
Sub- ordinate loans 1% 1% 1% 1% 1%

44


In balance sheet we take asset as a key figure and the total liability and S.H.E as a key figure. In asset
side maximum asset value is due to the advances and the investment which the bank has done. On the
other side that main liability is from deposits which show a greater position of the bank in the current
era.
Profit & loss a/c
For the year ended Dec 31, 20.
Net assets 7% 6% 6.7% 7% 8%
Total liabilities 100% 100% 100% 100% 100%
Represented by:
Share capital 2% 2% 2% 2% 2%
Reserves 2% 2% 2% 2% 2%
Un-appropriated profit 2% 2% 2% 2% 3%
Equity-tier 1 6% 6% 6% 6% 7%
Surplus on revaluation of
assets
1% 0% 0% 1% 1%
Total equity 7% 6% 6%

7% 8%
2006 2007 2008 2009 2010
Interest/Return/Non
interest income earned

Markup/Return/Interest
earned
88% 85% 87% 88% 89%
Fee,commission,Brokerage
and Exchange income
8% 9% 9% 7% 6%
Capital gain & Dividend
income
3% 6% 4% 5% 5%
Other income 1% 0% 0% 0% 0%
Total 100% 100% 100% 100% 100%
Markup / Return /Non
interest Expense


45


Vertical analysis of profit and loss shows increase or decrease in each item as a percentage of
sales means that sales are chosen as key figure. As we have seen in the above table the interest
expense is increasing with the turnover so the company is more utilizing on expenses.
Administrative expenses shows decreasing trend from year 2008 to 2010 also the profit after tax
is in both increasing and decreasing positions.

4.3) Horizontal Analysis
This technique is also known as comparative analysis. It is conducted by setting consecutive
balance sheet, income statement side-by-side and reviewing changes in individual categories
On a year-to-year or multiyear basis. A comparison of statements over several years reveals
direction, speed and extent of a trend. The horizontal financial statements analysis is done by
restating amount of each item or group of items as a percentage.

Balance sheet
For the year ended Dec 31, 20.



2006 2007 2008 2009 2010
Assets
Cash balance 100% 123% 104% 112% 129%
Lending to financial
institutions
100% 97% 83% 148% 60%
Investments 100% 178% 179% 206% 263%
Markup / Return /
Interest
Expensed
-34% -41% -48% -48% -44%
Operating expenses -27% -25% -24% -21% -23%
Provisions -5% -11% -10% -9% -9%
Taxation -12% -7% -6% -7% -8%
Total expense percentage
of total income
-78% -84% -88% -85% -84%

Profit after taxation 22% 16% 12% 15% 16%

46

Advance-net 100% 118% 147% 165% 177%
Operating fixed assets 100% 117% 173% 193% 238%
Other assets 100% 105% 170% 166% 157%
Total assets 100% 127% 145% 166% 179%
Liabilities

Customer debt 100% 128% 144% 160% 180%
216% 113% Inter bank borrowing 100% 125% 151%
Bills Payables 1005 153% 130% 139% 181%
Other Liabilities 100% 143% 266% 216% 240%
% 220% 220% Sub- ordinate loans 100% 100% 100%
Total liabilities 100% 128% 147% 166% 177%
NET ASSETS 100% 113% 127% 170% 204%
Share capital 100 120% 144% 158% 174%
Share premium 100% 79% 54% 39% 23%
Reserves 100% 145% 191% 269% 360%
Un-appropriated
profit
100% 124% 152% 218% 282%
Equity-tier 1 100% 113% 128% 160% 190%
Surplus on
revaluation of
assets
100% 101% 106% 279% 330%
Total equity 100% 112% 126% 169% 203%

In balance sheet horizontal analysis shows that current assets increases over the period of time, the
increase in cash and decrease in loan shows that company wants to have more cash in hand rather
lending it to others and losing the return on that investment. As far as the fixed assets of company
are concern they are showing increasing trend and same is case with the current and long term
liabilities.



47


Profit & loss a/c
For the year ended Dec 31, 20.

2006 2007 2008 2009 2010
Interest/Return/Non
interest income
earned

Markup/Return/Inter
est earned
100% 123% 178% 239% 261%
Fee,commission,Brokera
ge and Exchange income
100% 138% 200% 212% 178%
Capital gain & Dividend
income
100% 294% 291 % 454 % 465 %
Other income 100% 28% 22% 13% 92%
Total 100% 160% 200% 243% 232%

Markup / Return /Non
interest Expense

Markup / Return /
Interest
Expensed
100% 149% 254% 330% 330%
Operating expenses 100% 117% 159% 182% 218%
Provisions 100% 315% 390% 484% 474%
Taxation 100% 83% 87% 151% 182%
Total expense
percentage of total
income
100% 89% 92% 158% 185%

Profit after taxation 100%

93% 95% 162% 187%

In Horizontal analysis of profit and loss we have seen that revenues increases from 2008 to year
2010 continuously but every year revenues were increased with increasing trend. The company
profit after tax decreases as compare to the 2008 because the banks administrative and other
expenses are increasing.

48

Chapter No. 5
Internship Experience

I learned many things during my internship at Allied bank limited. During my stay at Allied bank
limited Saidpur road branch. I enjoyed the learning environment provided to me. It was much
difficult to work with all the department of the bank in short time, but I thank to all the employees
who really help me and provide me all the necessary information that I requested from them.
They guide me in very proper manner. I am very much thankful to Mr. Muhammad Arif (branch
manager) who provides me such a learning environment to work in at the stay in the branch. I
performed various tasks and work in almost all the departments in the bank.

5.1) First Week
During the first week I learned about the account opening of the accounts and I performed the
same tasks during the week.
Opening Account

Opening account is a function of the account department. There are different kind of customers
who came for the opening account they may be individuals, sole proprietorship, partnership,
public/private limited companies, trusts accounts, agents, Govt. Institutions etc.
The most frequently accounts are
Current
PLS saving
Opening account is the start of the relationship between the bank and its customer.
Basic information for the accounts
Introduction and preliminary investigation
Before opening account ABL as like other banks in Pakistan ascertain whether or not person who
is going to open the account is a desirable customer or not. The ABL determine the prospective
customers integrity, respectability, occupation and the nature of business by the introductory
references given at the time of account opening. Negligence in this informal preliminary

49

investigation may result in serious consequences not only for the banker concerned directly also
for the other bankers and the general public who may affected indirectly. In order to further
strengthen and streamline this process, the Federal Ombudsman of Pakistan, vide his ruling on
complain No. II/31/5186, has directed the banks to retain with the account opening from a
Photostate copy each of the CNIC of the person desiring to open an account as well as of
introducer. As per these directions, concerned Branch Managers are required to obtain the CNIC
along with their photocopies and the return the original after attesting the authenticity of the
retained copy.
Preliminary Investigation is necessary because of the following reasons
Protection against Fraud

In this regard learned that if a banker does not make the necessary inquires mentioned above he
may enable dishonest person to possess check books for fraudulent purposes. If any such person
happens to be undercharged bankrupt, the banker might be placed in an awkward for having
allowed such a person to open and a bank.
Inquires About Client

Being a banker I think ABL has a business obligation to respond to inquiries from other banks
etc. About his customers financial position. Though the banker gives only a general idea about
financial standing of his customer, it should nevertheless have necessary information available
with him.
General Record for the Opening Account

Following are the commonly steps followed while opening account.
First take the photo copy of CNIC of the person who is interested to open account and
send this for NADRA verification of the person that he is the original holder the card and
a citizen of Pakistan..
After the verification of the person we open an account of that person an account opening
form is to be filled for the opening of the account.

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In the account opening form the information include types of account, nature of account,
initial deposit, title of the account and a very important information of the next of the
relative will also be given net of relative is that person who will operate the account after
the death or misplace of the original account older.
Account opening from then sign from the customer so that the information filled is
relevant and correct.
A signature form is to be filled from the customer so that the sign may be verified from
the cheque in the future transactions.
Then the required documents are attested to the account opening form.
Then the sign are verified by the accounts officer and signed A/C opening form.
The account opening form then sent to operation manger with a request that please open
the account then operation manager authorized the account and account is opened.
Documents Required For the Opening An Account

During the internship I learned about the documents that are to be attached while opening a
new account. Different documents are required for the different accounts. Their detail is as
follows
Individuals

Copy of CNIC
Copy of the driving license in case of without photograph or the attested photograph
from the gazette officer.
A copy of the next of relative CNIC
A copy of the CNIC of the other family member
Partnership

CNIC copy of all partners.
Partnership deed (certificate copy).
Attested copy of registration certificate with registrar of the firm.
Original authority letter favoring the person authorized to operate the account.

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Private/Public Limited Account

Certified copies of the certificate of the incorporation
Certificate of the commencement of the business
Memorandum & Article of the association
List of directors.
Board of directors Resolution
CNIC copy of the Board of directors
Second Week

During the second week I worked in the advance department and learned about the procedures
how to provide loans to the different customers there I repeatedly perform the demand finance
(Gold). There I learned different kind of the advances are given to the customers and to the
employees of the ABL
Demand Finance
Staff Loans
Demand Finance (Gold)

It is a kind of advance in which he customer demand for the loan against a security. During
the spam of my internship the most commonly open account was the loan against gold.
The Procedure of Gold Advance

Following steps are to be followed:
First customer comes to the manager for the approval of the gold finance.
After the approval the person goes to the gold smith for the weights, market value and
originally checking of the gold ornaments.
Then the person comes to the branch with the detail provided by the gold smith. Then that
information is recorded on the ledger book of the demand finance. The information
entered include the name of the customer, occupation, phone no. , address, account
opening date, the information provided by the gold smith.

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Then that ledger sends to the manager for the approval.
After the approval that person submits the Gold ornaments and takes loan as much as
he/she demanded. The maximum limit is 50% of the total market value of the ornaments.
The maximum limit of the gold finance is one year; however the account can be renewed
after the one year by paying the markup amount which is charged on the days the person
use the loan. The markup is 15.5% per annum
Staff loans

The other kind of loans which is given to the staff of the ABL. Different rates are charged to the
different rank of the employees. Following are the loans that are given to the staff of the bank.
Advance for Home.
Advance for Car
Advance for the Computer.
Third Week

During the third week I worked in the clearing department. I found that every banker acts both as
a paying as well as collecting banker. It is however an important function of crossed cheques. A
large part of this work is carried through the bankers clearing house. A clearing house is a place
where representatives of all he banks city get together and settle the receipts and payments of
cheques drawn on each other bank. As the collecting banker runs the certain risks in receipt of
their ownership, the law has provided certain protection to the banks. At the branch level the
cheques is just received and a slip is filled and handover the customer who comes with cheques
that we has received the cheques then the cheques information is recorded in the relevant book
and send the clearing house.
Clearing Of Cheques

Clearing of cheques are those cheques which are drawn on the branches of some other bank of the
city of the same area which cover a particular clearing house.

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Inter City Clearing

Inter city clearing means the cheques which are drawn on the branches of some other banks from
outside the city. In Airport branch Islamabad, all the cheques that come from outside the city
mare handling as intercity clearing. In this week I have also done the dispatch work
Fourth Week

During the fourth week of the internship I performed the miscellaneous tasks. In this week I
performed the following tasks.
Issuing of the cheques book
Again opening the accounts
Demand finance
In the issuing of the cheques book the customer is verified first and then provides the cheques
book no. Other person can take the cheques book except the account holder. Unless or until the
person authorize to other person. In the cheques book we punch the account number of the
customer.
Fifth Week

In the fifth week I learned the operation of number of the ABLs software. The software name is
Electronic Banking System. In this software the record of all transactions is managed. All the
bank keeping, new account information, existing account holders information, the financial
reports of the week, month, and year. All the information is kept, and managed in this software. I
learned the punching of the mail transfers, debit and credit of the cheques from the accounts,
entering the information of the new opening accounts, and printing the report of different kinds.
Six Week

During six week I worked on the pension department. First I learned the book keeping record of
different pensions like DDP, govt pension, EOBI and railway pensions. Here my duty was to keep
the record of all the pensions in a book and compare it with the computer record.


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5.2) What I Learnt In ABL
I learnt that how to apply the knowledge in practical form.
I got the knowledge of promotional activities.
I learnt that how the customers pay orders.
I learnt that whenever customer comes to submit the cheque, the cheque should be
written clear and also signs and amount is mentioned correctly, the date should not be
of future and must not be 6 month before, signatures must be verified, account number
should be on the cheque, amount in both numbers and words should be the same.
I learnt that the customers are very important, they must be delivered first, their
complaint must be resolved as soon as possible and dealing should be very beneficial
for both..
I learnt that employees work better in friendly and co-operative atmosphere.
5.3) Skills Used During Internship
The following are the skills that I got a chance to practice in the practical environment

Interpersonal Skills
This is most common and one of the most important skills during my internship period. This skill
helps a person to interact with others in much better and pleasant manner. It is an art to present
ones views, thoughts, and ideas before its listeners. During my internship period it helped me to
build good rapport with the other employees who guided me in the best possible manner. My
interaction and dealings with the customers helped me to broaden my social network.

Communication Skills
Communication means exchange of messages between people for the purpose of achieving
common meanings. It is an art to make information flow smoother. Today it is very necessary to
communicate well especially in business sector and especially for those who are seeking
information. My communication skills gave me self confidence while interacting with everyone
else.
Conceptual Skills

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I used my conceptual skills to gain an insight into the working of the bank: how the work is done?
What are the problems? Their relative contribution to the economy as a whole.

5.4) Achievements
The following skills I gained during my internship session.

Time Management Skills
During my internship period I have learnt punctuality and the significance of time in an
organization. I have realized that time management is an important element of work. My practical
learning has taught me to prioritize and organize my work according to schedule that enabled me
to complete my tasks in the allotted time.

Office Working Skills
I had to maintain vouchers, registers, perform some other documentation, as well as work on the
system. Thus I learned manual as well as the system office working skills.
Human Skills
I learnt the human skills in BOP in true manner. Human skills associated with an employees
ability to work well with others both as a member of a group as well as individual leader who gets
things done through others.

Better Communication Skills
During my MBA I have attended courses on communication in different semesters and was taught
how to communicate effectively with others. This was my first hand experience of
communicating with the manager, junior officers and others and to socialize myself among those
professionals. This experience augmented my communication skills and gave me the confidence
of communicating with professional people.





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Chapter No.6
Finding and Recommendations

The critical analysis ABL in the previous section is the representation of its past, mirror of its
present, and an insight into its future. The past data of ABL Saidpur road branch enabled me to
study the organization in a historical perspective and understand the nuisances in the banking
operations. Study of he present of ABL helped me evaluate the organization in comparison to its
future and competitors. The data obtained from the analysis of its present and future in
combination with my professional studies resulted in some suggestions and implementation plans,
which can help to increase the profitability and operational success of the ABL, Saidpur road
branch Rawalpindi .
Some of the major findings suggestions are discussed.

6.1)Physical facilities.
The physical facilities or the layout are the most fundamental features in an organization, which
the customers observe in forming an opinion, perception or idea about the organization.
Therefore, every organization tries to make a good first impression on customers through the
presentation of its physical facilities or layout. The physical facilities in the branch are not up to
the mark, which requires timely changes to provide good environment to customers. The
suggested changes and corrective actions are gives below:

The lighting system must be improved and all the out of use lights must be replaced.
There is always a stinking smell in the Bank due to the out of order condition of washroom.
Therefore the washroom must be brought into order to remover this unpleasant smell.
Generators should be made available to the branch to minimize the disruptions due to power
failure.
Newspaper should be provided to the customers to avoid the pain of waiting long.
A cash counting machine can help reduce the time spent in counting cash.



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6.2) Availability of staff
The existing staff in the Bank is overburdened due to the non-availability of more staff. Staff in
the branch must be in proportion to the customer has so as to expedite the workflow, avoid
overloading of staff and remove the customers grievances arising mainly due to delay in
workflow.

The additional staff required is in the fallowing categories.
More technically trained staff should be added to the existing staff strength
One staff assistant or grade 2 officers properly trained in computer and sufficiently trained in
foreign currency accounts.
One employee of grade 4 should be hire on daily wages or contract, to maintain filing.

6.3) Commitments of employees

The decreasing commitment of employees can be increased by introducing an effective
performance appraisal system, which can reward and recognize the achievements and services of
employees for the Bank.

The appraisal system must have the following features.

Feed Back:
Periodically provided to employees and recognizing their efforts through reward (bonuses) and
publicly appreciation.
Uniform:
The appraisal system must be uniform in evaluating all the employees without any
discrimination.
Objectivity:
The appraisal system must be based on facts and figures and objective evaluation of the facts on
grounds.


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6.4) Simplifications of advances

The biggest source of the bank revenue is advances. The advances of ABL, Saidpur road branch
are on him decreasing trend, causing a decrease in the revenue for the bank. The bank should
make the advance procedure simple and quick to meet the customers requirements. The
following steps are suggested for simplifying the advance procedure
Increasing the discretion of manager for the amount of advance to Rs. 100,000.
Speeding up the process of investigation and verification.
Expanding its customer base.

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

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

6.6) Customer orientation

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

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

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

6.7) Mobilizations of less cost deposits

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

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

6.8) Information access

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

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


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6.9) Performance audit

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

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

6.10) Campaign for increasing the deposits.

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

6.11) Increases in business share

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

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6.12) Atm network problem

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

6.13) Cash deposits using atm.

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

6.14) Networking among banks.

In allied bank the networking is only done within the bank, means the customer cant transfer his
funds to other bank through online. The account holder who has the debit card can transfer his
money to other bank account through ATM. But the customer who doesnt have account but
someone gave him a habib bank cheque to transfer it online through near situated Allied bank. So

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the allied bank cant transfer it to habib bank via online. So I recommend an idea that there should
be a networking among different banks so that they can transfer funds via online
6.15) Manual vouchers system.
As all the ledger system and vouchers are made manually which is a much time consuming job
and it also requires much more efforts most importantly human error chances are there thats why
if the organization implement SAP FINANCE MODULE in their current saving department
that will help them creating automatic vouchers and ledger if any transaction is made by customer
because SAP has the capability to keep all the records of a an individual at just one place and it
has the capacity to store much data.





















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BIBLIOGRAPHY

1. Mhuhammad Khalid kayani.customer services manager, ABL Saidpur road branch
Rawalpindi.
2. Javeria tariq.Grade-1 officer,ABL Saidpur road Branch Rawalpindi
3. Muhammad arif.branch manager, ABL Saidpur road branch Rawalpindi
4. Allied Bank Ltd Annual report (2010), Karachi.
5. Head office of Punjab performance report (2010)
6. Http://www.abl.com.pk
7. Http://www.google.com
8. White, Sondhi, Fried. (2002). The analysis and use of Financial Statements, Analysis of
Financial Statement, Evaluating Operating Performance, 10, 309-315.
9. Gibson, C.H. (2002). Financial statement analysis using Financial accounting information,
balance sheet, Basic elements of balance sheet, 3, 96-103.
10. Horne, J.V. (1999). Financial Management and Policy, Financial ratio analysis, different
types of ratios, 12, 351-363.
11. Brown, R. (1996). Investment Analysis and Portfolio Management, Analysis of Financial
Statement, Comparative analysis of Ratios, 10, 337-343.
12. Gibson, C.H. (2002). Financial statement analysis using Financial accounting information,
Basics of Analysis, Different types of analysis, 5, 191-199.






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