INTERNSHIP REPORT
On
ALLIED BANK LIMITED
Submitted to:
Hailey College of Banking
and Finance (PU).
Submitted By:
Student Name:
Father Name:
PU Reg. No.
Program:
Session:
1
PREFACE
Internship is an integral part of MBA (3 ½ Year Program). For the sake of internship the
most initial thing is to have a practical experience. This effort may get as a student to get
a practical experience if right organization is selected. During this internship, a student
comes to particle knowledge. He learns what has so far been studied.
By the grace of Allah Almighty, I am presently employed at Allied Bank Limited (ABL)
since February 2006. Therefore, this report is based on my actual work experience at
ABL. The report is specially meant for the students of MBA. This report is just a brief
study of operations, services, and financial highlights of the Bank. In preparation of this
report, I have tried my best to provide all possible information about the Bank in a brief.
2
DEDICATION
My report is dedicated to my parents, my teachers and my friends who are always with
me in Every Hardships of the life.
May! Allah Give them Long Life (AMEEN)
3
ACKNOWLEDGEMENT
Most grateful to Almighty Allah who enabled me to utilize my knowledge and skills for
the preparation and completion of this report. I want to express my most humble gratitude
to my teachers, especially Prof. Usman Latif Awan and my class fellows who furnished
me with the opportunity to complete this report. I am also grateful to my colleagues and
friends who provided unconditional support during the completion of this report.
4
EXECUTIVE SUMMARY
Allied Bank is amongst the leading commercial banks in the country and has always
played a pioneering role in introducing innovative technology based banking services.
The role played by its Human Resources is highly valued, both in terms of skills and
dedication in implementing unique banking services.
Allied Bank was the first bank to be established in Pakistan. It started out in Lahore by
the name of Australasia bank before Independence in 1942. It was renamed Allied Bank
of Pakistan Limited in 1974 and then Allied Bank Limited in 2005.Today with its
existence of over 74 years, the bank has built itself a foundation with a strong equity,
assets and deposit base. It offers universal banking services while places major emphasis
on retail banking.
The bank also has a large network of over 1000 online branches in Pakistan and offers
various technology based products and services to its diverse customers. In this report,
the history and background of the organization is discussed followed by the discussion
about the vision, mission and values of the organization. The structure and operations of
the organization are also highlighted in the subsequent pages. It also includes the
hierarchy and the organizational set-up, involving the management style and internal and
external communication systems.
This report also provides the information about all departments of Allied Bank in brief.
The departments where I have been working includes Commercial & Retail Banking
Group (CRBG) and Special Assets Management Group (SAMG).
5
S.NO.
TABLE OF CONTENTS
PAGE NO.
1
Introduction of Banking
8
2
Introduction & History of Allied Bank
9
3
Vision & Mission of ABL
14
4
Company Information
16
5
Chairman Message
22
6
Corporate Structure
23
7
Communication System
25
8
Products & Services
27
9
My Experience at ABL
41
10
Special Assets Management Group (SAMG)
43
11
SWOT Analysis
44
12
Structure of SAMG
46
13
My Job description at SAMG
47
14
Peer Bank NPLs Analysis
50
6
15
Financial Statements Analysis
51
16
Key Performance Indicators
54
17
Financial Ratios
58
18
Industry Share
66
19
Other Information
66
20
Horizontal Analysis
67
21
Vertical Analysis
69
22
Conclusion
71
23
Recommendations
72
24
References
73
7
Introduction of Banking in Pakistan
Banking plays a major role in a country’s economy. After partition, British Government’s
Commission distributed the reserves between Pakistan and India.
In August 1947, various Banks transferred their headquarters and funds to India. Before
partition, some Banks were already operating including Chartered Bank, Grind-lays
Bank, Imperial Bank of India, Australasia Bank and Habib Bank. After the independence
of Pakistan, Muslim Commercial Bank Limited, Bank of Bahawalpur Limited, Punjab
National Bank and National Bank of Pakistan were providing banking facilities to general
public.
State Bank of Pakistan was inaugurated by our great leader Muhammad Ali Jinnah on 1 st
July, 1948. Australasia Bank and Habib Bank were providing services to the nation. After
some period, Australasia Bank Limited was converted into Allied Bank of Pakistan
Limited.
State Bank of Pakistan is the Central Bank of Pakistan. Other Banks are Commercial
Banks, Specialized Banks and Investment Banks.
Now a day in Pakistan, fifty four different banks are operating with thousands of
branches in and outside Pakistan. Pakistan’s banking sector consists of Islamic Banks,
Conventional Banks, Public Sector Banks, and Micro Finance Banks. These Banks are
doing Corporate Banking, Trade Financing, Lease Financing, Consumer Banking and
almost all the Banks are providing online banking facilities, ATM facility and funds
transfer facilities.
Banking sector is a back bone of our economy. If this sector is making progress than
whole economy is also growing a lot. Our Agricultural sector, Industrial sector, Mining
sector, Export sector all depend on the banking industry because Banks provide short
8
term funds as well as long term funds to all these sectors to meet out their short term as
well as long term requirement. Hence, progress in this sector is inevitable.
Introduction & History of Allied Bank Limited
Allied Bank was the 1st Muslim Bank that was established in Pakistan in December 1942
in the name of Australasia Bank in Lahore with the Paid-up share capital of Rs. 0.120
Million under the Chairmanship of Khawaja Bashir Bux. The Bank attracted deposits
equivalent to Rs. 0.431 Million in its first eighteen months of the Business. At that time,
the Bank’s total assets amounted to Rs. 0.572 Million. Today Allied Bank’s Assets
amount to Rs. 991.662 Billion, with deposits of Rs. 734.596 Billion.
The Pre-Independence History (1942-1947)
In the early 1940’s, the Muslim community was beginning to realize the need for its
active participation in the fields of trade and industry. Since the late 1880’s, Hindus had
established a commanding presence in the areas of trade, industry and commerce and
were especially dominating in the Sub-Continent area. Banking, in particular, was the
exclusive forte of Hindus and it was popularly and wrongly believed that Muslims were
temperamentally unsuited for this profession.
Therefore, Khawaja Bashir Bux decided to take up the challenge and took the lead by
establishing this first Muslim Bank by the name of Australasia Bank Limited in
December 1942.
Australasia Bank (1947-1974)
Australasia Bank was the only fully operational Muslim bank in Pakistan on Aug 14 th
1947. The Bank was identified with the Pakistan Movement. At the time of
Independence, all the branches in India, (Amritsar, Batala, Jalandhar, Ludhiana, Dehli
9
and Agra) were closed down. New branches were opened in Karachi, Rawalpindi,
Peshawar, Sialkot, Sargodha, Jhang, Gujrawalan and Kasur. Later, the network spread to
Quetta and Multan as well.
The Bank financed trade in cloth and food grains, thus played an important role in
maintaining consumer supplies during the early months of 1948 affected by riots. Despite
the difficult conditions prevailing and substantial set back in the Bank’s 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. But the Bank did well despite losing a lot of its assets and by
the end of 1973 it had 186 branches in West Pakistan.
Allied Bank of Pakistan Limited (1974-1991)
In 1974, the Board of Directors of Australasia Bank was dissolved and was renamed
Allied Bank of Pakistan Limited after the amalgamation of four banks. The first year was
highly successful; profit exceeded Rs. 10 Million, deposits rose over 50 percent and
approached Rs. 1,460 Million.
Investments rose by 72 percent and advances exceeded by Rs. 1,080 Million by the first
time in the banking history. 116 new branches were opened during 1974 and the Bank
started participating in the Government’s spot procurement agriculture program. Those
seventeen years saw a rapid growth for the Bank. Branches increased from 353 in 1974 to
748 in 1991. Deposit 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 U.K.
Allied Bank- A New Beginning
In November/December 1990, the Government announced its commitments to the rapid
privatization of Banking sector. Allied Bank’s management under the leadership of Mr.
Khalid Latif decided to react positively to the challenge. In September 1991, Allied Bank
Limited entered in a new era of its history a world’s first bank to be owned and managed
10
by its employees. The 850 executives and 7,200 staff members spread over 800 branches
throughout the Pakistan established in high degree of cooperation and family feelings.
Allied Bank (1991-2004)
As a result of privatization in September 1991, Allied Bank entered a new phase and
became the world’s first bank to be owned and managed by its own employees. In 1993,
the first Allied Bank Modarba (FABM) was floated. After privatization, Allied Bank
became one of the premier financial institutions of Pakistan.
Allied Bank’s Capital and Reserves were Rs. 1.525 billion; its assets amounted to Rs.
87.536 Billion and deposits Rs. 76.038 Billion. Allied Bank enjoyed an enviable position
in Pakistan’s financial sector 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 bank’s ownership was
transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group.
Today, the Bank stands on a solid foundation built over 72 years of hard work and
dedication, giving it a strong equity, an asset and a deposit base and the ability to offer
customers universal banking services with more focus on retail banking. The bank has the
largest network of online branches in Pakistan and offers various technology-based
products and services to its diverse clients through its network of more than 1000
branches today.
Allied Bank (2005 to date)
In May 2005, Ibrahim Leasing Limited dissolved and the company was merged into
Allied Bank Limited. All the shareholders were issued ABL shares to replace all shares
held by them. An application for the listing of ABL shares in all the Stock Exchange
Companies of Pakistan was made. ABL was formally listed and the bank’s shares started
trading on the following dates i.e. Islamabad Stock Exchange Aug 8, 2005, Lahore Stock
Exchange Aug 10, 2005 and Karachi Stock Exchange Aug 17, 2005.
11
Today, all the shareholders can trade in bank’s shares at their will and the Bank stands on
a solid foundation of over 72 years of its existence having a strong equity, assets and
deposits base offering universal banking services with higher focus on retail banking.
Ibrahim Group Assumes Control of Allied Bank
Ibrahim Group, through its different companies and sponsors owns more than 75% of
ABL shares. The group apart from interest in financial sector is engaged
in
manufacturing of yarn and polyester staple fiber, trading and power generation.
The consortium of Ibrahim Leasing Limited and Ibrahim Group, which injected Rs. 14.2
Billion into Capital of Allied Bank of Pakistan for acquiring its 325 Million additional
shares, today assumes the control of the Bank. The then Governor State Bank of Pakistan,
Dr Ishrat Hussain handed over the relevant documents to Mr. Muhammad Naeem
Mukhtar, Authorized Attorney of the consortium at a simple ceremony held at SBP,
Karachi. Among those who present at the ceremony were Deputy Governor, Mr. Taufeeq
A. Hussain and senior officials of State Bank of Pakistan, representatives of the Allied
Bank and the consortium.
Speaking on the occasion, the State Bank Governor termed the successful reconstruction
of ABL as beneficial both for the organization as well as for banking industry. He
expressed the hope that the transfer of the management of ABL to a strategic investor
will turnaround the bank and usher in a new era of growth and stability in the banking
sector. He stressed upon the new Board of the Bank to run it professionally, prudently
and with the highest standards of corporate governance. It may be recalled that the
auction of 325 Million additional shares as a part of reconstruction of Allied Bank of
Pakistan was held under the chairmanship of the Deputy Governor, State Bank of
Pakistan, Mr. Taufeeq A. Hussain at Islamabad on 23rd July, 2004. In the auction, the
consortium of Ibrahim Leasing Limited and Ibrahim Group were the successful bidder as
they offered the highest bid of Rs. 14.2 Billion for acquiring these additional shares,
which constitutes 75.35% of the revised Capital of ABL. The federal Government
12
approved the scheme for reconstruction of ABL, under section 47 of the Banking
Companies Ordinance 1962 on July 24, 2004.
After the approval of the scheme by the Federal Government, State Bank issued the
Letter of Acceptance (LOA) to the consortium of Ibrahim Leasing Limited and Ibrahim
Group, on July 26, 2004 in terms of which the full payment of Rs. 14.2 Billion was made
on August 19, 2004. On receipt of full payment by the Allied Bank of Pakistan Limited
and the verification of the sources of funds by State Bank of Pakistan, the control of the
Bank was handed over to consortium of Ibrahim Leasing Limited and Ibrahim Group.
13
Vision and Mission statement
Vision Statement
To become a dynamic and efficient bank providing integrated solutions in order to
be the first choice bank for the customers.
Mission Statement
To provide value added services to our customers.

To provide high tech innovative solutions to meet customers’ requirements.
To create sustainable value through growth, efficiency and diversity for all
stakeholders.
To provide a challenging work environment and reward dedicated team
members according to their abilities and performance.
To play a proactive role in contributing towards the society.
14
Core Values
Integrity
Excellence in Service
High Performance
Innovation and Growth
Strategic Objectives

Enhancing brand image and creating shareholders’ value through
sustainable performance, while optimizing return against acceptable risk
appetite.

Augmenting financial inclusion of unbanked population through innovative
and diversified technologies, building customers’ confidence through
convenient delivery channels and product designs.
Continuous re-engineering of policies, procedures, SOPs, SLAs and TATs,
ensuring operational efficiencies through effective management of key
resources.

Instilling a culture of ethics and responsibility among human resource and
becoming an ‘Employer of Choice’ for the Top Professionals.
15
Company Information
Board of Directors
Mohammad Naeem Mukhtar
(Chairman)
Sheikh Mukhtar Ahmad
Muhammad Waseem Mukhtar
Abdul Aziz Khan
Mubashir A. Akhtar
Dr. Muhammad Akram Sheikh
Zafar Iqbal
Tariq Mahmood
(CEO)
Audit Committee of the Board
Zafar Iqbal
(Chairman)
Dr. Muhammad Akram Sheikh
Mubashir A. Akhtar
Human Resource & Remuneration Committee
Abdul Aziz Khan
(Chairman)
Muhammad Waseem Mukhtar
Tariq Mahmood
(CEO)
Company Secretary
Muhammad Raffat
16
Shariah Board
Mufti Ehsan Waquar
(Chairman Shariah Board)
Mufti Mahmood Ahmad
Mufti Muhammad Iftikhar Baig
Auditors
KPMG Taseer Hadi & Co.
Chartered Accountants
Legal Adviser
Mandviwalla & Zafar Advocates
Shares Registrar
Technology Trade (Pvt.) Limited
Registered & Head Office
3 Tipu Block, New Garden Town
Lahore – Pakistan Postal Code 54000
Website & Email
www.abl.com
info@abl.com
Tel Number
(+92-42) 35880043
17
Board Committees
Audit Committee of the Board

Zafar Iqbal (Chairman)

Mubashir A. Akhtar (Member)

Dr. Muhammad Akram Sheikh (Member)
Terms of Reference
Primary responsibilities of the Audit Committee of the Board (ACOB) are to determine
appropriateness of measures taken by the management to safeguard Bank’s assets, ensure
consistency of accounting policies, review financial statements and recommend
appointment of the external auditors and also coordinate with them to fulfill statutory and
Code of Corporate Governance requirements. The Committee is inter-alia responsible to
ascertain the effectiveness of the Internal Control System including financial and
operational controls, ensuring adequate and effective accounting and reporting structure
and monitoring compliance with the best practices of the corporate governance. The other
function of the Committee includes assurance that an independent and effective internal
audit function is in place.
Board Risk Management Committee

Sheikh Mukhtar Ahmad (Chairman)

Muhammad Waseem Mukhtar (Member)

Abdul Aziz Khan (Member)

Tariq Mahmood (Member)
Terms of Reference
The primary functions of Board Risk Management Committee (BRMC) are the
monitoring of management’s adherence to prudent and sound risk policies, assessing the
18
ever changing risk profile and providing risk appetite to the business units. BRMC also
monitors quality of asset portfolio and suggest measures to keep the infected portfolio at
the minimum level. BRMC approves risk limits for credit, market and operational risks,
credit approval grid and proposals regarding write-offs above certain limits. In term of
Bank’s Recovery Policy, BRMC considers and approves Debt-Asset-Swap proposals. It
also monitors Bank’s Basel initiatives including capital adequacy requirements.
Overseeing of Asset Liability Committee (ALCO), Risk Management, Special Asset
Management and Compliance functions is also undertaken by the BRMC. BRMC also
monitors the initiatives pertaining to Basel and up gradation of Risk Management
Systems.
Human Resource and Remuneration Committee

Abdul Aziz Khan (Chairman)

Muhammad Waseem Mukhtar (Member)

Tariq Mahmood (Member)
Terms of Reference
The Committee defines the organizational structure and functional responsibilities of all
areas of the Bank. It approves staff strength, key appointments, salary revisions, bonuses
and special allowances and recommends to the Board appointment, remuneration bonuses
/ performance awards, terms and conditions of employment and other benefits of the key
position holders. It nominates the Bank’s directors and management personnel on the
boards of other companies / subsidiaries. It also recommends amendments in Human
Resource related policies to the Board, besides monitoring performance of Human
Resource Committee and Human Resource function.
19
Strategic Planning & Monitoring Committee

Muhammad Waseem Mukhtar (Chairman)

Abdul Aziz Khan (Member)

Mubashir A. Akhtar (Member)

Tariq Mahmood (Member)
Terms of Reference
The Strategic Planning and Monitoring Committee (SPMC) is responsible to review
rolling long term strategic plans, operational plan and budget of the Bank before Board’s
consideration / approval. The Committee also monitors progress against above referred
plans and budget. SPMC is also responsible to approve capital expenditure over Rs. 15
Million and donations of over Rs. 1 Million up to Rs. 5 Million. SPMC is also
responsible to assist the Board on corporate development activities and new initiatives
including, but not limited to acquisitions, mergers, alliances, joint ventures and
divestitures etc. SPMC also oversees activities of Management Committee (MANCO),
Corporate Investment Banking, Retail Banking, Commercial Banking, Islamic Banking,
Treasury, Finance, Banking Services, Corporate Affairs and Real-estate, Engineering &
Infrastructure functions of the Bank.
e-Vision Committee
Mohammad Naeem Mukhtar (Chairman)
Mubashir A. Akhtar (Member)
Dr. Muhammad Akram Sheikh (Member)
Tariq Mahmood (Member)
20
Terms of Reference
One of the key functions of the e-Vision Committee is to provide strategic direction for ebanking and adoption of evolving technologies for providing new products, better
services to its customers and to improve internal control environment. Review of
strategic plans to improve IT infrastructure and automation of processes and systems
including alternate delivery channels are within the scope of the responsibilities of the eVision Committee. The Committee provides assistance to the Board with insights
regarding international developments in the field of e-banking for adoption; keeping in
view the Bank’s requirements. It also oversees activities of Information Technology
function.
21
Chairman’s Message
2015 was a challenging year all over the world with negative sentiments developing
towards emerging markets, a sharp fall in commodity prices, persistently low interest
rates, surplus liquidity, regional conflicts and changing regulatory framework. Global
GDP growth remained muted during 2015 and is expected to face sustained challenges
going forward. According to the latest World Economic Outlook update released by
International Monetary Fund (IMF), the global GDP is expected to grow by just 3.4% in
2016. Economic slowdown in China, with the lowest GDP growth witnessed in the last
25 years, Russia and Brazil have become a critical challenge to global growth outlook.
Naeem Mukhtar
22
Corporate Structure
Chairman
Board of Directors
Chief Executive
Officer
Chief Operating
Officer
Group Chiefs
Corporate & Investment Banking Group
Commercial Banking
Retail Banking
Treasury
Islamic Banking
Risk Management
Banking Services
Information Technology
Human Resource & General Services
Finance
Compliance
Special Assets Management
Real Estate, Engineering & Infrastructure Development
23
Corporate Affairs
Audit & Risk Review
Organizational Structure
The Bank is having the functional Structure with a hybrid touch because having the
specific departments for each specialized functions. This structure enables the employees
to have in-depth knowledge and skill development. According to them the functional
structure is their requirement because most of their work is technical in routine and
functional structure is best for technical and skill related work. But at the same time they
also have some characteristics of learning organizations as well. For example, they
believe that employees are their human assets. So, they provide them training to make
more competent. Every year they spend a great amount on their training program. They
also give their employees the power to make decisions where needed. They value their
ideas and opinions. So, we can say that their structure is the combination of two
structures that’s why it is a hybrid structure.
Centralization/Decentralization
Branch follows the pattern of centralization except for a few cases. Top management has
designed an overall policy for the bank and then the bank follows those patterns. Branch
form their own strategy following policies made by higher command, to reach targets.
But for every procedure, branch need approval of higher command so they can’t make
decisions on their own.
Bureaucratic Culture
The culture of bank is bureaucratic as bank has an internal focus. Also the tasks
performed are routine based and employees strictly follow the rules and procedures. No
change is needed as customers are not concerned with any change.
24
Communication System in Bank
A good deal of verbal interchange takes place in bank each day. It is a two-way
thoroughfare (road). The officers discuss rather than direct, listen as well as interact. The
bank makes the communication channel more effective by staff meetings that are an
extension of the conversational or discussion technique but embraces a larger segment of
the bank. Such meetings are regular features of the bank and take a wide variety of forms,
ranging from daily or weekly officers meetings to annual weekend conferences.
The major portion of communication necessary for the day-to-day operations of a bank
consists of simple person-to-person conversation more complex ideas, however, gain
clarity if they are put in writing. Thus the bank is talented in the ability to write clearly
which is an invaluable management talent that needs constant practice and development.
Communication occurs at different levels which are as under:

Communication with Foreign Banks and Traders

Communication with State Bank

Communication with Domestic bank

Inter branch Communication

Intra branch Communication
Communication Channels:
1.
Mail
2.
Telephone
3.
Fax
4.
Intranet
25
5.
Internet
6.
Courier
7.
Swift
Inter branch or intra branch communication occurs mostly through;
1.
Letters
2.
Advices
3.
Memorandum
4.
Verbal Communication
The communication with foreign bank is done mostly through Swift. Test keys are also
being used so that no other can look into the information. Communication with customers
is made through telephone and fax. Moreover, online facility is also there to
communicate within different branches.
26
PRODUCTS & SERVICES
Deposit Products
1.
Current Account
2.
PLS Saving Account
3.
Allied Basic Banking Account
4.
Foreign Currency Deposit
5.
Monthly Profit Plus
6.
Rewarding Term Deposit
7.
Allied Munafa Account
8.
Behtar Munafa Account
9.
Behtar Munafa Term Deposit
10.
Allied Business Account
11.
Allied Rising Star
Current Account:
This account offers unlimited deposit and with drawl facility to facilitate business
transactions. There is absolutely no limit on number of transactions, deposits, and
withdrawals.
PLS Saving Account:
Allied Bank offers PLS Saving Account to its customers with the following
attractive features:

Attractive return of up to 5% per annum.

Free issuance of cheque book at the time of Account opening.
27
Foreign Currency Deposits:
Allied Bank offers the facility of opening Current, Saving and Term Deposit
accounts. Foreign Currency Accounts can be opened in US Dollar, Pound Sterling,
Euro and Japanese Yen at designated branches.
Allied Basic Banking Account:
In order to provide basic banking facilities to its lower middle class customers,
Allied bank has introduced the “Allied Basic Banking Account” (ABBA).

Account can be opened with an initial deposit of Rs 1,000/-

It is a non-remunerative account with a no minimum balance requirement.

The statement of Account is issued on an yearly basis.

The Account will be closed automatically if the balance remains “Zero”
for one year.

No service charges on the account for a maximum of 2-withdrawls and 2deposits during a calendar month. Additional transactions will be subject
to a service charge as per the Bank’s schedule of charges for every
withdrawal or deposit.

Unlimited withdrawals from ATMS.
Allied Rising Star Account:
“Youth’s 1st Bank Account”
Allied Rising Star – Youth’s 1st Bank Account is a saving account for all
youngsters below 18 years of age. It can help you save your pocket money and
earn daily profit. And when you have collected enough, there’s so much you can
do with your savings……like buy your favorite books and toys or a special
present for your mummy and daddy, or even carry on saving.
28
So if you are below 18 years of age, you can open your own Allied Rising Star Youth’s 1st Bank Account and have all the fun that goes with it.
When you open your account, it’s in your name, but you still have to take
Mother’s, Father’s or your guardian’s help to use it. Like with:

Signatures

Taking cash out from the ATM or the Bank

General Banking activities
You can use your account any time-which means you can take money out with
your parent’s or guardian’s help, or deposit money yourself, whenever you need
to.
Once you are an Allied Rising Star, you and your parent or guardian get to enjoy
the following goodies and benefits:
For
You




A cash box for you to save money everyday
Your first bank account certificate to be the pride of your bedroom wall
Your very own picture ID card that you can show off to all your friends
An exciting gift for you to enjoy at home
Allied Phone Banking:
Allied Bank is focused on delivering exceptional services to its customers that
strengthen the relationship and build loyalty. To make banking experience quick,
efficient, secure and easy Allied Bank of Pakistan now offer its customers 24/7
phone banking services.
Allied Phone Banking provides its customers immense comfort!
29
Allied Bank customers can avail a host of services by simply calling the Toll free
number which is 0800 – 22522.
The following services with Allied Phone Banking:

Account opening procedure

ATM locations

Allied Bank Schedule of charges

All Allied Bank product related information

Branch locations

Account balance inquiry

Debit card activation

ATM pin generation

Credit Card activation

Allied Bank Credit Card bill payment

24 –hour complaint registration
Allied Direct Internet Banking:
Banking at your fingertips
Allied Direct Internet Banking offers convenience to its customers to manage and
control their banking and finances-when they want to, where they want to! So
just get clicking.
Allied Direct Internet Banking is:
o Simple and convenient
o Secure and faster
30
o 24/7 Account access
Allied Online Banking:
Allied Online Banking is a unique service being offered by Allied Bank. Through
this service, account in Allied Bank is available to customers from any of ABL
branches worldwide.
Customers can also use the service, from any branch, to deposit cash for instant
credit into their account or any other account in Allied Bank. Similarly the
account-to-account funds transfer facility is also available for instant remittance.
Customers’ cheque drawn from a remote branch for credit into a beneficiary’s
account or encashment of a specified amount can also be presented by a third
person at any branch. What’s more, making a balance inquiry and getting an
account statement are additional services available to account holders from
remote branches. Allied Online provides a secure, efficient and convenient facility
or making payments to beneficiary accounts from any of ABL branches
countrywide.
Allied ATM Networks:
Allied Bank has a vast network of over 1,000 ATMs installed in over 150 cities,
which continues to grow at a rapid
31
1 Link Network:
Additionally Allied Bank is a member of the ‘1 Link ATM sharing switch’
comprising of over 3,000 ATMs nationwide, therefore, giving its Allied
Cash+Shop Visa Debit card holders access to even more ATMs across the
country.
32
Allied Smart Bill Pay:
Customers can pay utility bills (e.g. electricity, gas, telephone) at any of the banks
branches. For further convenience, bills are collected on all working days during
normal banking hours and also at certain times during the evening.
Bills can be paid with cash or cheque or customer can drop crossed cheque in
drop-boxes available at all branches.
Alternative Bill Payment Methods:



ATMS
Internet Banking
Phone Banking
Furthermore customers can also pay their bills using any of the Bank’s ATM or
via Internet banking for SSGC, SNGPL, KESC, LESCO, Ufone, Warid and
Telenor.
So, customers can pay their bills at their own convenience, 24 hours a day and 7
days a week. To make their life even easier, more companies will be coming on
board with us very soon.
Lockers:
Allied Bank Lockers are available, at an annual fee, in four different sizes- small,
medium, large and extra large. Locker holders are not required to have an account
with the Bank.
33
How to operate a Locker?
A locker normally has to be operated using two keys. One key remains with the
bank and the other one with the customer.
The key which the bank keeps with itself is called the “Master Key”, and that in
possession of the customer is usually referred to as the “Original Key”.
In order to open a locker, the Master key needs to be rotated first by the banker in
the Counter-Clockwise direction. Afterwards, the customer is directed to rotate
the Original key in the Clockwise direction.
S.#
Locker Size
Annual
Maximum Loss
Locker Rent
Coverage / Limit
1.
Small
Rs. 3,460/.
Rs. 500,000/.
2.
Medium
Rs. 4,620/.
Rs. 1,000,000/.
3.
Large
Rs. 5,800/.
Rs. 1,500,000/.
4.
Extra Large
Rs. 7,250/.
Rs. 2,000,000/.
 Hajj Services:
The Hajj Service is available to all pilgrims. The forms and other related services
are provided by the bank. Hajj applications are available at all branches during
Hajj season, immediately after the Hajj policy is announced by the Government of
Pakistan.
34
Cheque Books:
Cheque books issued according to the nature of account. There are two types of
Cheque Books, the first one is of 25 leaves and the second one is of 50 leaves. For
current account, bank issued cheque book of 50 leaves and for saving account of
25 leaves. The charges will be Rs. 125 for 25 leaves and 50 leaves cheque book
charges are Rs. 250. Cheque book issued after one week of account opening and
1st cheque book is free. There is another requisition slip inside each cheque book,
which is used for the reissuance of new cheque book if the leaves of first cheque
book start finishing. There is written the title of account holder, his account
number, the stamp of Allied Bank and the signature of authorized person on every
page of cheque book and also on the requisition slip.
Allied Visa Credit Card:
In order to cater the growing the financial needs of customers ABL is proud to
introduce the Allied Visa Credit Card with the lowest service charge ever. So now
customers can save money where it counts and spend lavishly at favorite places
with greater flexibility, convenience and most important affordability.
With Allied Visa Gold Credit Card customer can enjoy a verity of state-of-the-art
features and unmatched value by spending at over 49,000 merchants across
Pakistan and 27 million merchants outlets worldwide. And what more customers
can also use Credit Card at over 1 million ATMs internationally.
35
Lending Products
The Bank offers following Commercial Financing Loans:
Running Finance
Cash Finance
Demand Finance
Finance Against Imported Merchandise
Finance Against Trust Receipt
Export Re-Finance
Finance Against Packing Credit
Foreign Bills Purchased
Inland Bills Purchased
Corporate Lease Financing
Allied Business Finance
Allied Fast Finance
PSO Channel Finance
Finance Against Dishonored Bills
Student Loans
Agri Credit
Non Fund Based Products
Letter of Credit at Sight
Letter of Credit Usance
Letter of Guarantee
Utilities Guarantee
Customs Guarantee
Performance Bond
Bid Bond
36
Shipping Guarantee
Advances Department
Advances are the most important source of earning for the banks. Allied Bank is also
giving full attention towards this aspect and it is also obvious from the growing portfolio
of advances and from very low delinquency rate. The credit portfolio of this institution is
in a very much better shape than other financial institutions of Pakistan and the credit
goes to the man for getting the advance the following steps are there:

Initial Information required by the bank

Preparation of credit proposals

Sanction advice
Initial Information required by the bank
Following information is required to be submitted to bank.
Nature & structure of borrower business.
Name(s) of proprietor, partners or directors.
Detail of all firms or companies associated with borrower.

Financial condition of borrower’s business.
An assessment of his business abilities.
Accurate and up to date financial statements of last two years for comparison
purposes.
37
Market report on the borrower where borrower has maintained an account with
another bank, a report from his bank should also be obtained.
A report from credit standing bureau of State Bank of Pakistan.
Preparation of Credit Proposal
At first a formal application for credit approval is obtained from the party along with
complete group position. The party’s credibility report is obtained from the bank with
which the bank is doing its business. The party’s credibility report is also taken from the
Head office of Trade Information Division.
For obtaining credit, party has to submit the last two years Balance Sheet and Profit &
Loss statement duly attested by authorized auditors.
If the party is also involved in export or import business then the bank also considers the
data of three years about import & export. Current debt and equity ratio is also calculated
by the bank. The type of data required to prepare the credit proposal is to be gathered
from the different departments. Some data is obtained from the foreign Exchange
department. Some data is available in Advance Department. The purpose of obtaining
Credit should be explained clearly. The securities offered by the party to the bank are also
evaluated. In case of pledging of property in shape of land or building the complete
evaluation of the property should also be attached
After all the necessary documents for applying for advance is fulfilled by the party then
the case is sent to Manager for approval. If the credit limit is in his range then he can
decide over it otherwise the case is forwarded to seniors. If there is any discrepancy then
the party is informed of it.
38
Sanction Advice
When the documents required are complete and there is no ambiguity then the
party is advised that their credit or loan is approved and will be available to you
soon. There is a separate form for every annual approval or in case of a new
facility.
The form contains following information:
Nature and amount of limit.
Purpose
Security/ Collateral
Margin (%).
Pricing (KIBOR + Spread)
Validity/Expiry
Following are the some of credit facilities ABL offers:
Seasonal Finance
Seasonal Finance facility is allowed against pledge of produce of Cash Crops
harvested in that particular crop season. The delivery of pledged stocks/goods is
made against appropriate cash payment.
Agricultural Finance
Bank under Agricultural Financing Scheme envisaged by the State Bank of
Pakistan extends short, medium and long term, farm and non-farm credits.
The farm credits are extended for production (inputs) and development purposes.
Non-farm credits are allowed for livestock (goats, sheep and cattle), poultry,
factory including social forestry and fisheries (inland and marine excluding deep
sea fishing).
39
Import Export Business / Trade Finance
Allied Bank provides highly efficient trade finance services for import/export
business for our clients/customers through large number of authorized branches
where trained and motivated staff is available to handle the business on behalf of
customer.
Running Finance
It is a short term loan allowed by the bank for a period of one year. The running
finance account can be operated and daily sale proceeds can be deposited into the
account. The mark-up is recovered on the products of daily outstanding balance.
The running finance is suitable for meeting day to day financial needs of the
business.
40
MY WORK EXPERIENCE AT ABL
Office of the Group Head CRBG
I joined ABL in as a Officer Grade- in the Office of Group Head Commercial & Retail
Banking (Central), Upper Mall, Lahore.
The office has been taking care of the banking operations for whole of the Punjab
Province the largest in terms of volume. The Advances portfolio of our group amounted
to Rs. 23 Billion comprising Agri Credit, SME & Commercial segments. During my
posting at the office, I had been looking after the Advances Portfolio of:

Lahore City Region.

Multan Region.

Sargodha Region, &

Jhang Region.
My duties at the office included:

Processing of Credit Proposals received from the Regions.

Conducting Financial Analysis of the borrower’s business.

Arranging Market check through various available sources.

Pointing out deficiencies, if any, and suggesting amicable resolution.

Compliance to SBP Prudential Regulations for Lending.

Compliance to the Bank’s Internal Credit Policies and the Procedures.

Preparing a brief Comments Sheet so as to facilitate the Group Head to arrive at a
suitable decision.

Coordination with Risk Management Group for early approval of the credit
proposals recommended by the Group Head.
41

Arranging the desired response for any shortcomings subsequently pointed out by
Risk Management Group.

Direct Liaison with the borrowers for early resolution of the shortcomings.

Conveying the approvals to the Regions and the Branches.

Coordination with Credit Administration Division (CAD) for timely completion
of the security related documentation and disbursement of the approved credit
facilities.

Periodical review of the disbursed portfolio to ensure timely Debt Servicing and
final adjustment of the credit facilities by their respective maturities.

Follow up with the Branches and the borrowers to minimize the NPL portfolio.

Review of Quarterly Classification MIS in coordination with Risk Management
Group.

Any other task assigned by the Group Head.
42
 Special Assets Management Group, Head Office
While recognizing my skills and work experience, and showing confidence in my
capabilities, the Management elevated me as a Manager to Assist the Group Chief at
Head Office.
In line with the Bank’s vision to become a dynamic and efficient bank by creating
sustainable value through growth, efficiency and diversity for all stakeholders, Special
Assets Management Group (SAMG) gives the leverage to the Business Groups to focus
on their core activity by passing on the ailing assets to SAMG.
Prime Objectives of SAMG:
•
Reduce quantum of Non-Performing Loans through structured settlements and
legal foreclosure.
•
A major role in the Period Reviews of the non-performing loans parked with the
business groups
•
Play an instrumental role in dealing with law enforcement agencies e.g. NAB,
FIA & Police for handling cases of Willful Defaulters, frauds etc.
•
In-house legal advice on all the Operational areas of bank is also centralized with
SAMG in order to curb Legal Risk faced by the bank/ banking sector as a whole.
43
SWOT Analysis
Strengths

Allied Bank earned a reputation for extending quality services.

Allied Bank Limited was the first Muslim bank to be established in Pakistan.

The bank is passionate about high performance, innovation and delivering value
to its customers.

Allied Bank Limited do the time to time monitoring over its different wings and
groups to increase efficiency.

Successfully launching new product lines.

Professional working environment

At ABL the customers who have more than one account can have the facility of
same account number only the suffix is changed for easy remembrance.

ABL has the large network of ATM throughout the nation.

ABL provides the compassionate customer service.
Weaknesses

There is no any customer services desk or person to greet the customer.

There is no any sales team in the branch to achieve the deposit targets only branch
manager is designated for sales.

Problem exists in the ATM machine.

In spite of the presence of technology many jobs are done manually.

Many employees remain idle due to their influence with executives.

Weak internal check due to big organizational structure.
44
Opportunities

The policies of the new Government to uplift the economy and pursue financial
sector reforms e expected to yield positive results in the banking industry of the
country.

ABL is well praised to avail promising opportunities.

As a result of different steps taken by the government regarding the betterment of
the economy, small borrowers are attracted to get the financing and start the
business. So the ABL has an opportunity to attract the customers by giving them
more schemes.

They have wide area network in all over the Pakistan, if ABL can made it possible
the fast delivery of funds from abroad through online banking, it can cover the
major market of Pakistan.

There is great potential in the Islamic banking in Pakistan. ABL should open new
Islamic banking branches and should introduce more Islamic banking product to
attract the Customers.
Threats

Threats from increased number of competitors in market

Government Policies

Destabilized economy

Changes in State Bank Policies

Devaluation

Threat from competitors who especially offering more products.
Large number of employees is switching over due to low incentives and rewards.
45
Structure of SAMG
In order to achieve its objectives smoothly and to participate effectively into the overall
Vision and Mission of our bank, SAMG has been segregated as follows:
Special Assets Management
Legal Affairs Division.
Fraud Monitoring/Claims & Regulatory Reporting Division.
Special Assets Management – Key Functions
•
Negotiate with defaulters for finding workable solutions through rescheduling /
restructuring.
•
Arranging suit filing through bank’s legal counsels and pursuing these cases in
courts for achieving legal foreclosure
•
Handle all the cases filed by defaulters against bank to ensure dismissal of the
same
•
Facilitating in auctions of Defaulter’s Properties by coordinating with court
auctioneers and valuators.
•
Recommend and approve write-off / waiver in line with the bank’s policy where
deemed viable in order to effect recovery.
46
•
Protecting the securities held against NPLs by arranging periodic valuations and
taking steps to ensure physical security of assets
•
Monitoring recovery operations of SAM branches aiming at achievement of
allocated recovery targets
•
To act as a hub for credit approvals involving NPLs classified Doubtful & Loss
•
To act as a hub for all write-off / waiver cases of the bank for approval and
reporting purposes.
•
Approve / provide cash incentives to the bank staff on effecting recovery of
defaulted amounts.
My Job Description at SAMG:
Processing of settlement proposals raised by SAMG branches as well as RBG,
CBG, CIBG & IBG branches.
Processing of Short Form Credit Application (SFCA) for release of documents in
respect of adjusted/settled accounts parked at SAMG branches.
Processing of SFCA's received from RBG, CBG, CIBG & IBG for release of
documents in respect of classified account parked with field offices.
Processing the requests of cash incentives against recovery in written off loans
affected by SAM & other groups.
Processing the Classified Credit Review proposals received from CBG, RBG,
IBG and CIBG.
Coordinating with ARRG for arranging write off audit required under BPRD
circular No.6 of 2007.
Processing proposals for suit filing in respect of cases/account parked with
SAMG.
Processing proposals for write off/waiver of liabilities for book cleaning purpose.
Processing of requests received from SAMG branches for incurring legal and
other miscellaneous expenses.
Assist GH-SAMG to evaluate the performance of subordinate staff.
47
To ensure settlement of NPL accounts through strict monitoring and persuasion &
achievement of targets of cash recovery, recovery in written-off loans,
regularization & write-off of NPL accounts

To implement various Recovery Schemes / Guidelines issued by SBP, or those
approved by Bank’s own Board of Directorsthrough SAMG Branches
To follow-up the guide lines, & instructions in respect of reducing the NPL
accounts, duly issued from time to time by the BOD and Management for
achievements of desired goals including Annual Recovery Targets
To liaison with legal counsels when needed for expediting the litigation process
and early conclusion of the cases.
Continuously monitor and gauge performance of SAMG branches specifically
relative to allocated targets and take steps where necessary to remove the
deficiencies and impediments hampering performance and accomplishment of
targets.
To recommend cases for parking of NPLs with SAMG branches, in line with
instructions laid down in bad debts recovery policy of the bank.
To ensure timely submission of accurate information relating to write off/waiver
to various departments of the bank/management and SBP as desired by the bank
and the regulator.
Ensure reporting requirements, both internal & regulatory, classified advances,
write-off/ recovery of loans are managed accurately, efficiently and on timely
basis.
To put up periodical reports to Chief SAMG for the perusal of BOD, ACOB &
BRMC etc. as required by Credit Policy or as per demand of the higher
management.
To coordinate with internal, external & SBP auditors for review of SAMG at
Head office level and ensure timely rectification and non recurrence of
observations/lapses raised by the auditors.
Any other task assigned by the management.
48
SAMG – Methods of Resolving NPLs
•
Out right Payment of Liabilities in one-go
•
Rescheduling of loan according to cash flows
•
Restructuring to suit borrower’s conditions
•
Facilitating Sale of excess assets of Borrower
•
Acquisition of Borrower’s property through Debt Assets Swap (DAS)
•
Converting Loans into equity shares to ease the debt burden through Debt Equity
Swap.
•
Enter into Credit Default Swap in order to improve security position of the bank
in multi lender scenario.
SAMG – Key Issues in Recovery
•
Political Instability and influence in economic system
•
Complicated Legal System resulting in Lingering Judicial Proceedings
•
Delays in recovery due to weak Laws enforcing foreclosure of properties/assets
•
Slow response from law enforcing agencies
•
Corruption in Government institutions responsible for ensuring writ of law.
•
Worsening Security Threats due to growing terrorism.
49
Peer Bank NPLs Analysis
Rs. In Million
Sr.
No.
BANK
GROSS
ADVANCES
NPLs
NPL %
31-12-2015
NPL %
31-12-2014
1
Allied Bank Limited
340,769.406
21,903.729
6.43%
7.03%
2
Bank Al-Habib
214,272.308
5,874.374
2.74%
2.67%
3
Bank Al-Falah
343,490.280
18,455.399
5.37%
6.37%
4
MCB Bank Limited
332,626.923
20,369.225
6.12%
6.80%
5
United Bank Limited
496,212.332
46,720.752
9.42%
11.22%
6
Habib Bank Limited
665,295.645
68,949.121
10.36%
12.02%
7
Askari Bank Limited
228,412.998
31,483.717
13.78%
15.79%
8
Standard Chartered Bank
139,156.704
25,122.326
18.05%
15.39%
9
National Bank of Pakistan
691,622.562
127,280.297
18.40%
16.60%
10
NIB Bank Limited
135,028.024
28,173.224
20.86%
24.67%
50
FINANCIAL
STATEMENTS
ANALYSIS
Last three years financials are as follows:
Allied Bank Limited
Statement of Financial Position
As at December 31
ASSETS:
Cash and Balances with treasury Banks
Balances with other Banks
Lending's to financial institutions
Investments
Advances
Operating fixed assets
Deferred Tax assets
Other assets
LIABILITIES:
Bills payable
Borrowings
Deposits and Other accounts
Subordinated Loans
Liabilities against assets subject to
finance lease
Deferred Tax liabilities
Other liabilities
NET ASSETS
2015
Rs. in ‘000
2014
Rs. in ‘000
2013
Rs. in ‘000
56,711,573
4,077,598
3,628,366
544,077,215
321,605,140
28,849,577
32,716,043
991,665,512
41,254,975
873,494
2,030,062
428,790,733
306,014,402
27,250,482
36,054,979
842,269,127
44,673,079
1,102,231
12,461,403
363,378,998
267,001,028
22,083,612
23,495,595
734,195,946
4,942,189
137,959,818
734,596,166
-
4,831,801
66,096,472
667,877,615
2,994,000
-
4,878,954
32,952,406
608,411,670
4,242,200
-
8,907,457
16,003,425
902,409,055
89,256,457
3,622,651
15,956,263
761,378,802
80,890,325
1,808,405
15,704,648
667,997,923
66,198,023
51
REPRESENTED BY:
Share Capital
Reserves
Un-appropriate Profit
Surplus on Revaluation of Assets
11,450,739
15,102,026
41,415,882
67,968,647
21,287,810
89,256,457
11,450,739
13,549,355
37,053,691
62,053,785
18,836,540
80,890,325
10,409,763
12,438,158
30,855,565
53,703,486
12,494,537
66,198,023
Allied Bank Limited
Unconsolidated Profit and Loss Account
For the year ended December 31,
Mark up/ return / interest earned
2015
Rs. in ‘000
72,116,230
2014
Rs. in ‘000
67,001,497
2013
Rs. in ‘000
54,221,577
Mark up / return / interest expensed
35,976,740
38,815,342
32,551,922
Net mark up / interest income
36,139,490
28,186,155
21,669,655
(288,190)
2,111,694
651,481
1,812,488
(503,387)
(86,538)
1,524,368
34,615,122
1,609,307
26,576,848
564,943
21,104,712
3,570,398
3,527,589
838,256
833,214
-
3,301,188
3,512,429
456,592
4,167,097
170,616
3,079,338
3,401,019
631,858
1,245,773
1,907
985,681
9,755,138
44,370,260
1,127,832
12,735,754
39,312,602
1,247,698
9,603,779
30,708,491
18,175,080
63,242
16,961,650
34,816
15,511,063
48,000
(Reversal) Provision against non-performing
loans and advances
Provision / (Reversal) for diminution in the
value of investments
Bad debts written off directly
Net mark up / interest income after
provisions
NON MARK UP / INTEREST INCOME
Fee, commission and brokerage income
Dividend income
Income from dealing in foreign currencies
Gain on Sale of Securities
Unrealized Gain on Revaluation of
Investments classified as held for trading-net
Other income
Total non mark up / interest income
NON MARK UP / INTEREST EXPENSES
Administrative expenses
Provision against other assets
52
Provision / (reversal) against off Balance
Sheet obligations
Workers Welfare Fund
Other charges
Total non mark up / interest expenses
61,496
(389,709)
14,955
510,068
56,994
18,866,880
455,044
49,044
17,110,845
295,218
78,358
15,947,594
25,503,380
22,201,757
14,860,897
PROFIT AFTER TAXATION
8,347,670
1,460,245
575,158
10,383,073
15,120,307
7,413,119
(226,454)
7,186,665
15,015,092
4,079,460
(4,085,622)
123,699
117,537
14,643,360
Un-appropriate profit brought forward
Profit available for appropriation
37,053,691
41,415,882
30,855,565
37,053,691
23,687,566
38,384,397
Extraordinary / unusual items
PROFIT BEFORE TAXATION
Taxation
Current
Prior years
Deferred
53
KEY PERFORMANCE INDICATORS
Long Term
Objectives
Key
Significance
Analysis
Performance
Going
Indicators
Forward
Maintain
Overall
The Bank maintained stable profitability trend and posted KPI
profitability
Earnings
profit before tax of Rs. 25,503 Million, registering a remain
trend enabling
growth of 15% over last year. Whereas Profit after tax, relevant
continuous
posted a growth of 0.7% despite an effective tax rate of future
recognition
40.7% as compared to 32.3% last year; mainly on account
among
of imposition of retrospective uniform tax rate of 35% on
the top tier
all income and one-off Super tax of 4% on 2014 taxable
profitable
income through Finance Act 2015. Had we charged the
banks of the
prior year tax in 2014, the PAT growth comes to 12%.
country
Profitability growth drivers included optimization and
volumetric growth in earning asset mix backed by growth
in no / low cost deposit base, increased fee income
especially in FX and trading related gains upon being
elevated as a primary dealer (PD) and through inculcating
operational efficiencies despite significant expansion in
outreach and IT platform.
The above performance was achieved despite facing
multifaceted additional challenges during the year in an
evolving economic environment with shrinking spreads.
Credit
and
market
risk
emanating
from
volatile
commodity prices and bearish stock markets were
reviewed and related charge to profit and loss was duly realigned. The Bank also maintained its strategy to hold
fixed income securities till maturity considering the
possible adverse impact of significantly lower interest rate
54
shall
for
scenario going forward.
Despite the aforementioned prudent approach, ABL’s
Return on Equity (ROE) stood at 23.3%, in 2015
compared to 25.9% in 2014, which is in line with average
ROE of 23.2% as at September 2015 for the top 10 peer
banks in the country.
Continuous
Deposits
Deposits registered a growth of 10% during the year KPI
growth
Mobilization
compared to last year and stood at Rs.735 billion. ABL remain
in Balance
maintained its focus on containing cost of deposits, which relevant
sheet
translated into improved CASA mix from 72.7% in 2014 future
primarily
to 74.1% in 2015.
shall
for
through no/
low costs
ABL retained its market share at approx. 8% while also
deposits
maintaining its position among the top 5 deposit
mobilizing Banks.
Consistently
Quality
augment Risk
Assets
of Bank continues to promote a strong risk culture KPI
throughout the operations. The robust risk management remain
Management
framework reinforces resilience by encouraging a holistic relevant
culture
approach towards management of risk, return, capital and future
resulting in
reputational profile.
superior
asset quality
shall
Infection ratio decreased to 6.4% as at Dec 31, 2015 from
7.0% as at Dec 31, 2014. Top 10 peer bank average stood
at 10.6% as at September 30, 2015. Net infection ratio
decreased to 0.9% as at December 31, 2015 as against
1.1% as at December 31, 2014. The loan loss coverage
increased to 87.5% as at December 31, 2015 from 86.4%
as at December 31, 2014 against industry average of
81.8% as at September 30, 2015. The Bank has not taken
benefit of Forced Sale Value of collaterals,
while
55
for
calculating the provision against non-performing loans.
Inculcate
Effective and
Despite continuous investment in expansion of Branch KPI
operational
efficient cost
and ATM network along with persistent enrichment in remain
efficiencies
controls
Information
technology
platform;
effective
cost relevant
through
rationalization, automation and centralization of various future
innovative
process enabled the Bank to curtail intermediation cost to
and viable
2.6%
cost
intermediation cost of top 10 peer banks was 3.2% as at
controlling
September 30, 2015. Cost to income ratio for the year
measures
ended December 31, 2015 was controlled at 39.6% as
as
compared
to
2.7%
in
2014.
shall
for
Average
compared to 41.4% during 2014 and peer banks’ average
of 46.3% in September 2015.
Strengthen
Capital
Capital Management aims to ensure that there is sufficient KPI
capital base to
Adequacy
capital to meet the capital requirements of the Bank as remain
support
Status.
determined by the underlying business strategy and the relevant
business
Compliance
minimum requirements of the State Bank of Pakistan future
development
with
(SBP). The Capital Management process is monitored by
regulatory
the Bank’s ALCO and MANCO committees under the
minimum
supervision of Board’s relevant subcommittees.
capital
requirements
Common Equity Tier (CET) and Tier-1 Capital Ratio
stood at 17.08% against SBP’s minimum requirement of
6% and 7.5% respectively as at December 31, 2015.
Capital Adequacy Ratio as per Basel III requirements
improved from 19.75% in 2014 to 20.85% in 2015. This is
well above the minimum benchmark stipulated by the
SBP, indicating high quality of asset portfolio maintained
by the bank. The Bank is well placed to meet any credit
expansion opportunities resulting from increased credit
appetite of private sector. Banking sector CAR as
at
56
shall
for
September 30, 2015 stood at 18.2%.
Sustainable
Return to
ABL continues to maintain healthy dividend streams. KPI
payout
Shareholders
Cash Dividend of Rs. 7.0 per share was declared in 2015 remain
to our
Shareholders
as against Rs.6.5 in 2014.
relevant
future
57
shall
for
FINANCIAL RATIOS
December 31,
2015
2014
2013
Return on equity
23.26%
25.94%
29.96%
Return on assets
1.65%
1.90%
2.14%
Profit before tax ratio
55.57%
54.25%
47.20%
Gross spread ratio (Net markup income / Gross
50.11%
42.07%
39.97%
Return on Capital employed
22.93%
24.87%
27.91%
Advances to deposits ratio (ADR) - Gross
46.39%
48.79%
46.91%
Advances to deposits ratio (ADR) - Net
43.78%
45.82%
43.88%
2.47
2.35
1.98
Cost / Income ratio
40.53%
42.50%
50.54%
Growth in gross income
12.15%
30.85%
-2.74%
0.70%
2.54%
25.79%
markup income)
Income / Expense ratio
Times
Growth in net profit after tax
Total assets to shareholders’ funds (Tier 1)
Times
15.25
14.55
15.02
Total assets to shareholders’ funds (Tier 2)
Times
11.66
11.45
12.42
Intermediation cost ratio
2.65%
2.73%
2.81%
NPL ratio
6.43%
7.03%
6.81%
Net infection ratio
0.87%
1.05%
0.44%
Weighted average cost of debt
4.56%
5.84%
5.66%
20.85%
19.75%
17.85%
Weighted Average cost of deposit
3.94%
5.18%
5.07%
Earning assets to total assets ratio
87.66%
87.48%
87.56%
8.30%
9.09%
8.43%
70.00%
65.00%
52.50%
7.44%
5.75%
5.83%
53.01%
49.57%
37.32%
Capital Adequacy ratio – unconsolidated
Gross Yield on Earning Assets
Cash Dividend Per Share
Dividend Yield Ratio (based on cash dividend)
Dividend payout ratio (Total payout)
58
Earnings Per Share (EPS)
Rs.
13.20
13.11
12.79
Price to earnings ratio
Times
7.13
8.63
7.04
Price to book value ratio
Times
1.21
1.60
1.56
Market value per share - at the end of the year
Rs.
94.07
113.12
90.00
Net assets per share
Rs.
77.95
70.64
57.81
129,531
103,057
Market Capitalization
Rs. in Million
107,717
RATIOS ANALYSIS
Financial Ratio Analysis helps various stakeholders to arrive at some suitable financial
decision. These ratios may differ from industry to industry and also according to the
requirements of the decision makers. Again, ratios are generally helpful only when we
are able to compare them with some benchmark ratio.
Note: Following ratios can be calculated in case of a bank on the basis of available
data. I could not be able to calculate the Liquidity Ratios as the bank does not provide
information regarding its current assets and current liabilities. Therefore, it is a
limitation in this regard.
A few important ratios and their explanations of our bank are as follows:
1) RETURN ON EQUITY:
Net Profit x 100
Shareholder Equity
This ratio shows that residual profit as a proportion of the bank value of common
shareholders equity.
59
Ratio for 2015:
23.26%
Ratio for 2014:
25.94%
INTERPRETATION
The return on equity measures the rate of return earned on the shareholders equity. The
high ratio is better to maintain shareholders interest but due to increase in shareholders
overall equity, the ratio has slightly reduced by 2.70% in 2015. However, the ratio is still
attractive for the interest of shareholders.
2) RETURN ON ASSETS:
Net Profit after Taxes
x 100
Total Assets
Ratio for 2015:
1.65%
Ratio for 2014:
1.90%
INTERPRETATION
This ratio measures the profitability against investment in total assets. It indicates the
efficiency with which management uses its available resources to generate income. The
high ratio is better to maintain stockholders interest, on the other hand low ratio shows
the less efficiency/use of assets of the firm. The ratio decreased in 2015 as compare to
2014. Over all assets of the bank increased, profit also increased change in assets is
higher as compare to change in profit that caused decrease in the overall ratio.
60
3) RETURN ON CAPITAL EMPLOYED:
Net Profit x 100
Total Capital Employed
This ratio shows that what a business has earned against overall capital employed.
Ratio for 2015:
22.93%
Ratio for 2014:
24.87%
INTERPRETATION
Again the ratio in 2015 is slightly lesser than that 0f 2014 due to higher increase in
capital employed as compare to increase in profitability of the bank.
4) ADVANCES TO DEPOSIT RATIO (ADR):
Advances
Deposits
x 100
This ratio shows that relationship between lending made by the bank and the deposits
collected by the bank.
Ratio for 2015:
46.39%
Ratio for 2014:
48.79%
INTERPRETATION
Although the bank has shown growth both in Advances and Deposits but the ratio
indicates that deposits have increased at higher rate than the Advances, mainly because of
61
the overall economic conditions of the country.
5) INCOME TO EXPENSE RATIO:
Total Income x 100
Total Expenses
This ratio shows relationship between gross earnings and the overall expenses incurred
against such earnings.
Ratio for 2015:
2.47%
Ratio for 2014:
2.35%
INTERPRETATION
The bank’s management has shown efficiency by earning more and incurring lesser
expenses for the increase in earnings.
6) TOTAL ASSETS TO SHAREHOLDERS FUNDS (TIER 1):
Total Assets
Tier 1 Equity
This ratio shows the quantum of Total Assets in comparison with Tier 1 Equity.
Tier 1 Equity is arrived at by deducting Revaluation Surplus from overall equity of the
shareholders.
Ratio for 2015:
15.25 Times
Ratio for 2014:
14.55 Times
62
INTERPRETATION
The ratio has slightly improved in 2015 as total assets increased more than the increase in
Tier 1 Equity of the bank.
7) NPL RATIO:
Non Performing Loans x 100
Advances
Non Performing Loans are those advances which have been classified as NPLs due to
non payment of mark up or the principal amount at respective due date. The lower the
ratio the better it is.
Ratio for 2015:
2.65%
Ratio for 2014:
2.73%
INTERPRETATION
Due to improved Risk Management Policies of the bank, the ratio has been slightly
reduced favorably.
8) TOTAL ASSETS TO TOTAL LIABILITIES:
Total Assets
Total Liabilities
Ratio for 2015:
1.10 Times
63
Ratio for 2014:
1.11 Times
INTERPRETATION
This ratio compare to total assets to total liabilities. Besides, shareholders equity the
bank’s total assets are 1.10 Times of its liabilities.
9) EARNING PER SHARE:
Net Profit
No. of Shares
Ratio for 2015:
Rs. 13.20
Ratio for 2014:
Rs. 13.11
INTERPRETATION
EPS indicates the earnings per each common share. EPS is a useful indicator of the
company as that shows that how much the bank has earned per share. ABL did not issue
any right or bonus share in 2015 that’s way the number of share remained unchanged but
profit is slightly increased as compare to 2014. Therefore, earnings per share also
increased.
10)
INTEREST EXP. TO TOTAL EXP. RATIO:
Interest Expense x 100
Total Expense
Ratio for 2015:
54%
Ratio for 2014:
60%
INTERPRETATION
Due to reduction in Mark up rate on deposits, and more concentration on Current
Account deposits, the ratio has improved and reduced by 6%.
64
11)
PRICE / EARNINGS RATIO:
Market Price Per Share / EPS
Ratio for 2015:
7.13 Times
Ratio for 2014:
8.63 Times
INTERPRETATION
Market value of the share in 2015 has been reduced to Rs. 94 from Rs. 113 in 2014.
Therefore, PE ratio has been reduced.
65
INDUSTRY SHARE
2015
2014
2013
Deposits
7.59%
8.01%
8.10%
Advances
6.95%
7.31%
7.01%
Total Assets
7.41%
7.43%
7.72%
2,783
3,359
3,400
4.66%
5.20%
5.46%
1,661
1,386
994
8.61%
8.05%
6.81%
2015
2014
2013
Rs. in Million
21,904
22,922
19,424
Number of employees - Permanent
Nos.
9,792
9,654
9,675
Number of employees - Total
Nos.
10,244
10,121
10,213
Number of branches
Nos.
1,050
1,000
950
Number of ATMs
Nos.
1,011
890
794
Trade Share
Import & Export Volume
USD Million
Market Share
Home Remittance
Remittances handled
USD Million
Market Share
OTHER INFORMATION
Non - performing loans (NPLs)
66
Horizontal Analysis
2015 Rs.
M
15 vs
14 %
2014 Rs.
M
14 vs
13 %
2013 Rs.
M
13 vs
12 %
STATEMENT OF FINANCIAL POSITION:
ASSETS
60,789
44%
42,129
8%
45,775
3%
3,628
79%
2,030
-84%
12,461
16%
Investments – Net
544,077
27%
428,791
18%
363,379
36%
Advances – Net
321,605
5%
306,014
15%
267,001
-2%
Operating fixed assets
28,850
6%
27,250
23%
22,084
11%
Other assets
32,716
-9%
36,055
53%
23,496
16%
Total Assets
991,665
18%
842,269
15%
734,196
16%
4,942
2%
4,832
-1%
4,879
-21%
Borrowings
137,960
109%
66,096
101%
32,952
-15%
Deposits and Other accounts
734,596
10%
667,878
10%
608,412
18%
-
-100%
2,994
-29%
4,242
-23%
Other liabilities
24,911
27%
19,579
12%
17,513
7%
Total Liabilities
902,409
19%
761,379
14%
667,998
15%
89,256
10%
80,890
22%
66,198
27%
Cash and Balances with treasury Banks
Lending's to financial institutions
LIABILITIES
Bills payable
Subordinated Loans
NET ASSETS
REPRESENTED BY
67
Share Capital
11,451
0%
11,451
10%
10,410
10%
Reserves
15,102
11%
13,549
9%
12,438
14%
Un-appropriated Profit
41,415
12%
37,053
20%
30,855
30%
Equity - Tier I
67,968
10%
62,053
16%
53,703
22%
Surplus on Revaluation of Assets
21,288
13%
18,837
51%
12,495
56%
Total Equity
89,256
10%
80,890
22%
66,198
27%
72,116
8%
67,001
24%
54,222
10%
4,409
17%
3,758
1%
3,711
17%
4,360
-44%
7,850
69%
4,645
-55%
986
-13%
1,128
-10%
1,247
358%
81,871
3%
79,737
25%
63,825
1%
Mark up / Return / Interest expensed
(35,977)
-7%
(38,815)
19%
(32,552)
5%
Operating Expenses
(18,603)
7%
(17,390)
10%
(15,804)
6%
Donations
(139)
83%
(76)
-5%
(80)
-23%
Provisions
(1,649)
31%
(1,254)
100%
(628)
-54%
Taxation
(10,383)
44%
(7,187) 6014%
(118)
-97%
Total Expenses
(66,751)
3%
(64,722)
32%
(49,182)
-5%
15,120
1%
15,015
3%
14,643
26%
PROFIT AND LOSS ACCOUNT
Mark up / Return / Interest earned
Fee, Commission, Brokerage and
Exchange Income
Capital Gain, Dividend Income, and
Unrealized Gain
Other Income
Total Income
Profit After Taxation
68
Vertical Analysis
2015 Rs.
M
%
2014 Rs.
M
%
2013 Rs.
M
%
STATEMENT OF FINANCIAL POSITION:
ASSETS
60,789
6%
42,129
5%
45,775
6%
3,628
1%
2,030
1%
12,461
2%
Investments – Net
544,077
55%
428,791
51%
363,379
50%
Advances – Net
321,605
32%
306,014
36%
267,001
36%
Operating fixed assets
28,850
3%
27,250
3%
22,084
3%
Other assets
32,716
3%
36,055
4%
23,496
3%
Total Assets
991,665
100%
842,269
100%
4,942
0%
4,832
1%
4,879
1%
Borrowings
137,960
14%
66,096
7%
32,952
4%
Deposits and Other accounts
734,596
74%
667,878
79%
608,412
83%
-
0%
2,994
1%
4,242
1%
Other liabilities
24,911
3%
19,579
2%
17,513
2%
Total Liabilities
902,409
91%
761,379
90%
667,998
91%
89,256
9%
80,890
10%
66,198
9%
Cash and Balances with treasury Banks
Lending's to financial institutions
734,196 100%
LIABILITIES
Bills payable
Subordinated Loans
NET ASSETS
REPRESENTED BY
69
Share Capital
11,451
1%
11,451
2%
10,410
1%
Reserves
15,102
2%
13,549
2%
12,438
2%
Un-appropriated Profit
41,415
4%
37,053
4%
30,855
4%
Equity - Tier I
67,968
7%
62,053
8%
53,703
7%
Surplus on Revaluation of Assets
21,288
2%
18,837
2%
12,495
2%
Total Equity
89,256
9%
80,890
10%
66,198
9%
72,116
88%
67,001
84%
54,222
85%
4,409
6%
3,758
5%
3,711
6%
4,360
5%
7,850
10%
4,645
7%
986
1%
1,128
1%
1,247
2%
81,871
100%
79,737
100%
Mark up / Return / Interest expensed
(35,977)
44%
(38,815)
48%
(32,552)
51%
Operating Expenses
(18,603)
23%
(17,390)
22%
(15,804)
25%
Donations
(139)
0%
(76)
0%
(80)
0%
Provisions
(1,649)
2%
(1,254)
2%
(628)
1%
Taxation
(10,383)
13%
(7,187)
9%
(118)
0%
Total Expenses
(66,751)
82%
(64,722)
81%
(49,182)
77%
15,120
18%
15,015
19%
14,643
23%
PROFIT AND LOSS ACCOUNT
Mark up / Return / Interest earned
Fee, Commission, Brokerage and
Exchange Income
Capital Gain, Dividend Income, and
Unrealized Gain
Other Income
Total Income
Profit After Taxation
63,825 100%
70
CONCLUSION
It is evident from above Analysis that ABL has strong position in the banking
industry. It enjoys a unique position as being the first Muslim bank in Pakistan. The
profit of the bank is growing every year and assets of the bank are growing every
year. Number of branches is increasing day by day that leads to more customer
satisfaction and the services in door step of the customers. ABL is focusing to open
more number of Islamic branches and products that have great potential in the
banking industry of Pakistan. By capitalizing the available opportunities and strengths
and by overcoming weaknesses, bank will be able to grow at higher rate as it is
progressing. The profit leads to more satisfaction for shareholder that ultimately leads
to increase its worth and positive image in the industry. ABL is introducing the more
products and creating innovative products that also leads the commitment of the
management to fulfill its vision
Overall performance of the bank is excellent which shows that the bank will grow
more in the future and would be able to capture more market share in the industry.
In the end, I conclude that the extended hour banking gives customers chance to avail
the services of the bank up to 8 PM. The Bank should enhance its network of
extended hours banking to compete in the industry. Furthermore, Islamic Banking has
shown a tremendous growth during last few years. Therefore, ABL should also pay
more attention towards enhanced Islamic Banking Network.
71
RECOMMENDATIONS

It is generally found that some people are over burdened and some people use to
sit idle for most of their working hours. There should be work load analysis for all
employees and work load should be distributed respectively keeping in view the
capacities and capabilities of the employees.

The management should also try to make awareness among the public about new
schemes and products, so that they come to know about them and can properly
avail those schemes and new products.

Allied Bank should introduce the Islamic products in its Branches. Since Pakistan
is an Islamic Country and some people avoid using banking services due to
interest factor in commercial Banking, so there is a need to introduce the Islamic
products more vigorously to exploit this opportunity.

Customers normally make complaints about Problems related with ATMs. So this
is suggested that these problems should be overcome by replacing the existing
machines with the latest machines.

ABL should also provide Consumer financing facilities to the low-income
customers.

There is no job rotation in the departments of bank so the employees are bored by
working in the same department for longer period so there should be job rotation.

Allied Bank limited should become specific about its competitors, so that it can
understand which competitor is in the first degree and which one is in the second
degree. Then the first-degree competitors should be watched closely.
72
REFERENCES
ABL Annual Reports from 2013 to 2015.
ABL website abl.com.
Peer Banks websites.



73