INTERNSHIP REPORT
ON
ALLIED BANK LIMITED
Specialization: MBA (FINANCE)
Submitted to:
Chairman
Department of Business Administration
Submitted by:
Name:
Roll No.
Registration No.
Mailing Address:
,
Contact No.
Date of Submission
Allama Iqbal Open University
Islamabad
.
TABLE OF CONTENTS
EXECUTIVE SUMMERY.
CHAPTER – I
1
INTRODUCTION ...
1.1 PURPOSE OF STUDY...........................................................
1.2
1.2.1
1.2.2
1.2.3
1.2.4
1.2.5
1.3
INFORMATION ABOUT THE ORGANIZATION...........................
VISION.............................................................................
MISSOIN..................................................
VALUES....
MAIN OBJECTIVE
SERVICES/PRODUCTSOFALLIEDBANKLTD
DEPARTMENT INFORMATION
1.3.1 CURRENT SAVING DEPARTMENT ...............................................
1.3.2 ACCOUNT DEPARTMENT...............................................................
1.3.3 ADVANCES DEPARTMENT.............................................................
1
2
6
6
6
7
8
8
15
15
15
15
CHAPTER – II
2.1
2.1.1
2.1.2
2.1.3
2.1.4
SWOT ANALYSIS
STRENGTHS.........
WEAKNESSES......
OPPORTUNITIES.
THREATS ..............
19
20
20
22
23
2.2
2.2.1
2.2.2
2.2.3
2.2.4
PEST ANALYSIS:-..................................
POLITICAL..............................................
ECONOMICAL .......................................
SOCIAL.....................................................
TECHNOLOGY ......................................
23
24
24
24
24
CHAPTER – III
3.1 INTERNSHIP EXPERIENCE
26
3.2 CONCERN DEPARTMENT, DUTIES & LEARNING
26
CHAPTER – IV
4.1 VERTICAL ANALYSIS
4.2 HORIZONTAL ANALYSIS
4.3 RATIO ANALYSIS
CHAPTER – V
5.1 RECOMENDATION
ANNEXURE
REFERENCE
34
35
35
41
48
49
EXECUTIVE SUMMERY
This document provided details of my achievements in term of practical implementation
and understanding of working environment in banks. ALLIED BANK is almost the leading
commercial banks in the country and has always played pioneering role in introducing
innovative. Technology based banking services.
Allied bank limited was the first bank to be established in Pakistan. It was first started in
Lahore by the name Australasia bank before independence in 1942, was renamed Allied bank of
Pakistan limited 1974 and then Allied Bank ltd in 2005.
During my stay at the bank I learnt a lot as the practical knowledge of the banking sector
is concerned. I was rotated in different departments including clearing, online transfer, and
customers’ services foreign exchange and advances departments.
I learnt the basics of operations performed in each department. I undertook some
assignments that helped me apply the learnt techniques. I faced some problems during this
course, but I got full attention from the concerned persons and they always encouraged me for
asking any kind of question that rose during the course of my work.
I have been sending the reports of my progress on weekly basis to my internship advisor.
On the last day, the manager gave his comments and evaluation of my work on the prescribed
form provided by the institute and also certificate of internship.
.
i
Chapter – I
INTRODUCTION
1. INTRODUCTION
The study is about the general operations and management of Allied Bank
Limited TENCH BHATTA BRANCH RWP,
Every student of MBA has to undergo an internship program of SIX weeks in any
organization to get exposure to the real time business environment and to know what sort
of changes Information Technology brings in management activities.. The real purpose of
this internship program is to provide an opportunity to the students to see the practical
applications of their background professional studies.
The repot is a reflection on my experience when I was internee in ABL, Since its
inception in 1942, ABL has maintained a steady growth over the sixty years span of its
operations. After its nationalization in 1974, it was denationalized in 1991 and the
employees became the owners of ABL, through the unique concept of ESOP (Employees
Stock Ownership Scheme).
1.1 PURPOSE OF THE STUDY
Purpose of the study was two pronged.
General Purpose
·
To get acquaintance to the banking operations.
·
To know what sort of changes IT brings in managerial activities.
·
To see the application of our Professional studies especially.
Specific Purpose
Specific purpose of the study includes.
·
A partial fulfillment as a requirement for the completion of degree.
·
To objectively observe the operations of Allied Bank of Ltd in general and the
operations of ABL, Tench Bazaar branch Rawalpindi in specific.
·
To make recommendations or implementation plans for the improvement of the
operations of ABL, Tench Bazaar branch Rawalpindi in the light of our
professional studies.
3
NATURE OF THE STUDY
The study is critical in nature. It was conducted to investigate critically into the
operations of Allied Bank Ltd and it also explains that how ABL provides facility of
online banking to its customers. The annual reports or the consolidation data of the Bank
has not been focused in specific because it does not reflect on the operational
performance of branches. However, they have been referred to as when and where
required.
SCOPE OF THE STUDY
The study covers two areas with its variables, which affects the operations of the
branch directly, or indirectly. These two areas of variables are:
·
Branch specific variable.
·
Bank specific variable.
The branch specific variables are the variables under the control of the branch
management and directly affect its operations e.g.
·
Layout of the branch.
·
Customers’ relations.
·
Departments in the branch
·
ATM
·
Online banking.
The bank specific variables are those variables, which are not in control of the branch
management e.g.
·
History of ABL
·
Services provided by ABL
·
Role of ABL
HISTORY OF ABL
4
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 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.
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.
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,
5
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 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 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 which became Bengladesh. The bank did well in despite
losing lot of its assets. By the end of 1973 the bank had 186 branches in West Pakistan.
1974 to 1991: Allied Bank
I
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.
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.
6
September 10,1991 is the historical date as on this date the bank became the country’s 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 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.
1991 to 2004: Privatization
As a result of privatization in September 1991, Allied Bank entered in a new
phase of its history, as the world’s 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 Bank’s 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 Bank’s 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.
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
7
Exchange Companies of 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
2015
Mohammad Aftab Manzoor has taken charge as CEO and President of the Bank
on August 13 2015. He is an ex-president of MCB Bank Ltd.
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
1.2 INFORMATION ABOUT 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
1.2.1 VISION
To become a dynamic and efficient bank providing integrated solutions and the first
choice of bank for all customers.
1.2.2 MISSOIN
·
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
8
1.2.3 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.
1.2.4 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.
1.2.5 SERVICES/PRODUCTS OF ALLIED BANK Ltd
All-Time Banking
Allied Bank has introduced the Allied Cash last year also referred to as ATM card.
The customer will now have the convenience of withdrawing cash from any of ABL’s
ATMs (Auto Taller Machine) conveniently located in major cities at any time of the day
or night even on closed days/holidays. Other services include customer being able to
inquire about the balance of his/her account or printing an abbreviated (mini) statement
showing the most recent eight transactions up to the previous working day.
9
In order to obtain Allied Cash+ Card, the customers simply have to fill out
prescribed Application form available at selected Allied Bank Branches in Karachi and
Lahore. The dully-filled form should be handed over the Manager of the Branch where
the customer is maintaining his account. Non-account holders would first have to open an
account with Allied Bank to have access to this facility. The Customer can feel absolutely
safe his Allied Cash + Card because it can only be used with the Personal identification
Number (PIN), which is given to him by the bank. Graphical representations have been
employed, where appropriate, for ease of understanding. This topic is further explained in
chapter 4.
Allied Umrah Aasan
This unique scheme facilities those persons, who cannot afford to incur the lump
sum expenses for Umrah. It allows the intending pilgrims (Aazmeen) to make payment of
Umrah charges in monthly installments. Its salient features are:
·
It is free of interest and markup.
·
Using this scheme family, relatives and household servants can be sent for
Umrah.
·
Around 2500 Aazmeen are to be sent for Umrah every month.
·
Lucky winners of the draw are duly informed by their respective branches.
·
Total package for Aazmeen from Karachi is being Rs. 45,000. Aazmeen from
Lahore and Islamabad will have to pay an extra Rs. 3,000/- for Airline fare.
·
Umrah packages are of 10 days duration. The charges include Airline return
ticket.
·
Fee Visa, family accommodation and traveling within Saudi Arabia (Jeddah to
Makka, Makka to Madina and Median to Jeddah).
·
Application for whole Family/Group can be filed through a single Application
Form. All applicants of a family/group are sent for Umrah even if only one
member of that family/group is declared successful in the draw.
·
Due to any reason if Umrah Applicant needs to withdraw his/her application,
he/she will given a refund of all money deposited through installments till that
time.
·
At the time of submitting the application Aazmeen has to deposit Rs. 2,000 per
person as first installment. Rest of the money is to be deposited through monthly
installments of Rs. 2,000/- person on every 5th day of the month.
10
·
If an Applicant wins in the draw he/she is required to pay the balance amount
through monthly installments on returning from Umrah.
·
Aazmeen have to submit a copy of their NI Cards and Passports with the
application.
·
Applicants have to deposit the monthly installment using deposit slips still 5th of
every month. Defaulters will not be included in the draw.
Master Cards
The customer can now become the holder of a true Credit Card here in Pakistan.
Allied Bank under license from Master Card International, U.S.A. issues its Master Card
to anyone meeting the eligibility criteria. With the Allied Bank Master Card the customer
is assured of a service meeting the highest international standards maintained by Master
Card.
The Allied Bank Master Card helps the customer pay without the complications of cash
or checks. It doesn’t cost the customer anything if he pays in full within the due date, but
if he decides to spread the payments over several months a service charge @ 2.50% per
month is charged. Allied Bank – Master Card is safer than cash and simpler than checks.
The customer has been an account holder with the Allied Bank to apply for the Allied
Bank – Master Card that is available to the customer for an initial fee of Rs. 2,000/- (Rs.
500/- membership fee + Rs. 1,500/- annual fee). Once the customer obtains his card, he
simply presents it at Shops, Supermarkets, Hotels, Pharmacies, Nursing Homes,
restaurants, Petrol Pumps and hundreds of other establishments which display the
familiar Master Card sign throughout Pakistan and abroad.
Once purchases are made, the customer signs a voucher and that’s it he is not required to
take extra troubles. Every month the customer receives a statement showing details of
transactions, outstanding and the minimum amount due. The statements also give the last
date for payment so the customer can avoid paying service charges.
In order to avoid disruption in use of the card, it is essential that a least minimum payable
amount of the bill be paid regularly. In case the required payment is not received the
11
operation of the Master Card is automatically, suspended by the system. In such case, the
card is activated after receipt of overdue payment only.
Allied Tahafuz Deposit Scheme
Brings the customer unparalleled life insurance covers along with attractive
monthly profit. Minimum Deposit amount – Rs. 50,000/- or multiples thereof. Insurance
cover up to - Rs. 5,000,000/. As Competitive rate profit. The features of this scheme are:
·
Prospective client who will maintain a return free deposit for at least 3 months
shall eligible to avail interest free/mark-up free finance.
·
Payment of profit on monthly basis, automatic renewal on face value.
·
Life insurance up to 5 times of the customer’s deposit amount with no extra cost.
·
Premium shall be paid by the bank.
·
Full payment of claim in case of – Death – Permanent total Disability.
·
Eligibility Age – 18 to 64 years.
·
No medical examination for:
Allied Karzas Scheme (No Interest/Markup)
Allied Bank moves a step forwards by introducing interest free banking through Allied
Karzas Scheme. The aim of this scheme is to provide an opportunity to the depositors to
take advantage of a real Riba Free economic environment and avail
·
Prospective client will maintain a return free deposit for at least 3 months shall be
eligible to avail interest free/mark-up free finance.
·
Deposit amount Rs. 100,000/- and multiples thereof.
·
Minimum deposit period, 3 months with automatic rollover facility.
·
Premature encashment allowed, without any penalty/charge.
·
Minimum deposit period for eligibility of finance, 3 months.
·
Maximum period of finance, 6 months.
·
Maximum period to avail finance, 12 months from the maturity of deposit.
·
Every month (30 days) completed by the deposit shall be taken into account for
calculation of entitlement of finance.
12
·
Finance proposal processing fee Rs. 100/- (non-refundable) plus documentation
cost on actual basis.
·
In case of default/delay in repayment @ 0.055% per day (20.075% p.a._ to be
placed in charity A/C.
·
Formula for calculation of entitlement of finance.
-
Same amount of finance for half the period of deposit or
-
Same period of finance for half the amount of deposit.
Other Products
Home Remittances
The Bank having a network of 755 branches all over Pakistan, undertakes to
provide safe and instant payment of remittance from expatriates, routed through
designated foreign exchange companies and correspondent banks with whom special
arrangements have been made in this regard. Through the Allied Express Services, ABL
ensures that beneficiaries’ Accounts in ABL branches are credited with in 48 hours of
receiving home remittance information from overseas.
Hajj Services
The Bank serves the intending pilgrims by helping them in performing this religious
obligation. The Hajj forms and other related services are provided by the bank. However,
the terms and conditions for accepting the Hajj forms from intending pilgrims are in
accordance with the Hajj Policy announced by the government, each year. Hajj
applications are available with all branches during Hajj season, immediately after the
Hajj policy is announced by the Government of Pakistan.
Utility Bills
All branches of the Bank collect utility bills of electricity, gas and telephones. For
convenience of the customers, Utility Bills are collected by the branches during banking
hours and also in the evening banking on all working days. Bills can be paid through cash
or checks. Consumers may drop bills with crossed checks into a drop box available at the
branches under “Checks Drop-in” system.
Agricultural Finances
13
Bank under Agricultural Financing Schemes envisaged by the State Bank of
Pakistan extend 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).
Lockers
Allied Bank Lockers are available in three different sizes Small, Medium and
Large on a yearly fee. Locker holders need not have an account in the Bank.
Import Export Business/Trade Finance
ABL 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.
Allied Bank Rupee Travelers Checks
Carrying cash to strange alien location can prove to be risky as a single incident
can render one without monetary backup of any sort. Hence banks introduce traveler’s
checks in order to protect against any contingency.
Seasonal Finance
v
Running Finance 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 markup is recovered on the products of daily
outstanding balance. The running finance is suitable for meeting day-to-day
financial needs of the business.
v
Cash Finance is allowed against pledge of goods. The delivery of goods is made
against payment.
v
Demand Finance is disbursed in lump sum or in accordance with the agreed
disbursements schedule and it is repayable as per the agreed installments, which
could be monthly, quarterly, biannual or annual.
Data Sources
14
Both primary and secondary have been used in the compilation of this report. The
methodology used is as under:
During the compilation of this report, I relied mainly on the primary data. The tools used
for the collection of primary data are interviews and observation. To get primary data I
also performed some practical work. The secondary data was mainly used for as a
background material and for purpose of references. The major sources of secondary data
were the annual report 2015; other printed material of the Bank and internet played a vital
role as a source of secondary data.
Research Approaches
Keeping in view my limitations during and the nature of the study, two research
approaches were adopted. These research approaches are:
·
Survey.
·
Observation as.
Ø Participant observation and
Ø Non-participant observation.
Sampling Plan
Details of the sampling plan used during this report are given below.
Sampling Unit
The sampling unit constitutes of the following.
·
Manager of ABL Tench Bazaar branch.
·
Staff of ABL Tench Bazaar branch.
·
Customers.
·
Personnel from Regional operations department.
·
ATM coordinator
Sample Size
The sampling size constituted of
·
All the customers coming into the Bank.
·
Five bank managers.
·
Fifteen staff members.
·
Two personnel from operation department.
15
·
Three ATM coordinator of different branches
Sampling Procedures
The sampling procedure used was non-probability judgmental and convenience
procedure.
Contact Method
Personal contact method was used as a contact method, which included:
·
Structured interviews with managers and personnel from operations department.
·
Unstructured interviews with staff members.
·
Structured interviews with stuff related to ATM
1.3 DEPARTMENT INFORMATION
1.3.1 CURRENT SAVING DEPARTMENT
In ABL Tench bazaar 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.
1.3.2 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 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. Bank’s 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
16
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.
1.3.3 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:
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.
REMITTANCES DEPARTMENT
Another important department in ABL Tench bazar 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 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:
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
Payments
FOREIGN CURRENCY DEPARTMENT
Like Pak rupees account the foreign currency has many accounts like
17
§
Saving account
§
Current account
§
Term deposit account.
The bank deal in three type of foreign currency account
1. Dollar
2. Euro
3. Pound
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.
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.
18
19
Chapter – II
SWOT & PEST
ANALYSIS
20
21
2.1 SWOT ANALYSIS
SWOT analysis is an acronym that stands for Strengths, Weaknesses, Opportunity and
Threats. This is a careful evaluation of an organization’s strengths to avail an opportunity
by overcoming its weaknesses and phasing out all the threats to its survival in order to
grow and survive.
2.1.1 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.
2.1.2Weaknesses
·
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 customer’s 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.
22
·
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
employee’s performance
·
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:
Ø
The filing system is not up-to-date. Much time is wasted while searching for
even a week old document.
Ø
The staff spent ore time in collections than required.
·
Delays were observed because the prescribed procedures are not followed.
·
Though ABL, Tench Bazaar branch in the area it lack specialized counters or
facilities such as:
Ø
Investment advisory counters;
23
·
Ø
Leasing or leasing arrangements;
Ø
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 TTs 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 Tench Bazaar branch:
Ø 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.
Ø Financial audits are conducted but operational audits have not received proper
attention as much as it should get.
Ø There is no procedure, which could encourage the middle and lower level
management to initiate creativity.
2.1.3 Opportunities
·
The biggest opportunity for the ABL, Tench Bazaar branch Rawalpindi is the
greater number of Christine customers who get their payments through ABL,
Bank Tench Bazaar 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, Tench Bazaar 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 Tench
24
branch with its superior service quality and long working hours can capture those
customers
2.1.4 Threats
·
The biggest threat to the operational success of the branch is the better competitor’s
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 Tench Bazaar
branch. The branch of Allied Bank are located very close to the Soneri Bank Tench
Bazaar branch. All these branches are taking away each other’s customers.
·
One of the biggest to the ABL, Tench Bazaar 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, Tench Bazaar 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.
·
High-pressure interest groups are developing which poses a constant threat to Allied
Bank.
2.2 PEST ANALYSIS:2.2.1 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 that’s why that impact is still found in the performance of this
industry.
25
2.2.2 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.
2.2.3 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 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 005/2014 has together begun to pay some dividends as
evident from the reversal in poverty incidence trends and social indicators.
2.2.4 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. 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
26
Chapter – III
INTERNSHIP
EXPERIENCE
27
28
3.1 DEPARTMENT, DUTIES & LEARNING
My duties at the bank during my internship were of the diversified nature. I was rotated
in the different departments of the bank. I was also assigned with some responsibilities of
the minor level. They gave me some assignments as well to give me the true exposure of
practical work environment. So my duties can be categorized department wise as under:
CLEARING DEPARTMENT
In this department I spent about 3-4 days. I observed the procedure carried down here.
Based on my observation and briefing from the staff I was asked to prepare advices for
collection of demand draft amount, Outward Bill for Collection (OBC), fill in the deposit
slips presented by the customers, enter the proceedings in concerned registers.
ONLINE FACILITY PROVIDER DEPARTMENT
Online banking is a wide spreading concept in banking sector. This department mainly
performs the basic operation of fund transfer and other functions facilitating the transfer
and enquiries. I observed the basics of the department. I didn’t have the opportunity to
seek the details because the online department is a sensitive area and also electronic
based.
I prepared online transfer slips foe the customers. I also informed the customers of their
account balance, account status and about other queries available online.
CUSTOMER CARE DEPARTMENT
This department serves as the front representative of the bank. Multiple tasks are
executed in this department. I was asked to observe different complaints received by the
bank by its customers. I maintained the sundry account register, suspense account
register. I put the applications received for the ATM cards in the register. I also had to
maintain the register maintained to record the receipt of new account opening forms
along with the register kept for recording those ATM cards, which have been delivered
FOREIGN EXCHANGE DEPARTMENT
This is the department with a very vast scope and a variety of dimensions. There, I had to
maintain the record of some Letters of Credit (LCs). I was liable for making drafts of
29
outgoing SWIFT messages. I also made the entries of incoming SWIFT messages in the
register. I was asked to enter the particulars of I-form (Import form) and E-form (Export
form) in their respective registers.
ADVANCES AND CREDIT DEPARTMENT
In this department I was given some files to study, which were about the applications of
credit to be approved. The person in charge briefed me about the term and conditions on
which the bank accepts or rejects an application for the credit. In this department, like the
online department, I didn’t have an opportunity to practically handle the work due to the
sensitive nature of the work.
DIVERSE DUTIES
Apart from the duties mentioned above, I had to perform some other duties as well. The
prominent amongst them is called “Calling” in the banking jargon. It’s manual checking
of the record produced by the computer pertaining encashment, transfer and collection of
cheques and other instruments like deposit slips and online slips. I had to work with the
person responsible of keeping the record of DD payable. I was assigned with the duty of
keeping the record of DD payable of a given period.
NEW KNOWLEDGE ACQUIRED
CHEQUE BOOK ISSUING PROCESS
If someone opens a new account and become the client of the Allied bank of certain
branch then he gets the requisition slip on which cheque book is issued Normally people
use two types of accounts
1)Current Account
2)Profit and loss account or PLS Account
3)Term Deposit Account
Current account cheque book has 50 leaves and it cost RS.100
Profit and loss account or PLS account cheque book has 25 leaves and it cost RS.125
Term deposit account cheque book has also 25 leaves and it also cost RS.50
In every cheque book there is also a requisition slip available for the purpose of reissue of
a cheque book, if the first cheque book has no more leaves. There is written the title of
account holder, his account number, the stamp of Allied bank and the signatures of the
authorized person on every page of cheque book and also on the requisition slip.
30
CLEARING AND COLLECTION
There are two types of clearing/collection cheques
1 Inward clearing/collection
2 Outward clearing/collection
CLEARING CHEQUES
This department receives negotiable instruments drawn on local branches of other banks.
NIFT clearing house, in which cheques and other negotiable instruments are brought by
each local bank representative and the claims of each bank on other is offset and a
settlement is made by the payment of difference. Clearing system is helpful for both the
customers and bank in saving money, time and labour.
PROCEDURES
The cheques and drafts come to branch from different BANKS. They enter the particulars
of the cheques on a register. After this process the balance with total drafts and total
amount are given to the representative. ABL works under the rules and regulations
prescribed by State Bank of Pakistan (SBP) and has an account with SBP. The
clearinghouse of SBP (NIFT), through whom branches forward/receive-clearing cheques
along with a schedule conducts clearing.
The clerk of forwarding branch prepares the schedule and vouchers of all the clearing
cheques, which he receives by the clerk on that day and sends these cheques to the
checking officer. Checking officer passes these cheques and vouchers by his initials,
endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of
these vouchers in the clearing register. Representatives’ banks collect these cheques. Next
day at 8:30 A.M. representatives of all local banks and foreign banks each The cheques
and drafts come to branch from different banks.
They enter the particulars of the cheques on a register. After this process the balance
with total drafts and total amount are given to the representative. ABL works under the
rules and regulations prescribed by State Bank of Pakistan (SBP) and has an account with
31
SBP. The clearinghouse of SBP (NIFT), through whom branches forward/receiveclearing cheques along with a schedule conducts clearing.
The clerk of forwarding branch prepares the schedule and vouchers of all the clearing
cheques, which he receives by the clerk on that day and sends these cheques to the
checking officer. Checking officer passes these cheques and vouchers by his initials,
endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of
these vouchers in the clearing register. Representatives’ banks collect these cheques. Next
day at 8:30 A.M. representatives of all local banks and foreign banks exchange their
cheques, which are drawn on their banks.
The clearinghouse debits/credits the payee/receipt branch with the total amount of the
cheques paid on their behalf. The settlement of book entries e.g., if ABL is to give Rs. 2
Million to UBL and UBL has to give Rs.1 million to ABL then ABL will draw a cheque
of 1 Million in favour of UBL. SBP will debit this amount from ABL account and credit
of UBL account. In this way mutual cross debiting and crediting in the books of SBP
settle obligation of banks
PAK ACCOUNT
All the inter-bank adjustments will be affected through head office account called Pak
account. It will be essential for the branch to advise pak account of each transaction so
that they may also pass the necessary entries in their books. The NIFT will send a
consolidated debit/credit advice to the branches in respect of clearing cheques delivered
to or received from the branches. The amount of the advice will agree with the total of
amount appearing in the schedule of cheque delivered/received. The head office will
similarly send advice to the branches of the returns, if any. Copies of all advices will sent
to the head office
INTER-BRANCH CLEARING AND COLLECTION
The same clearing cheque procedure will be adopted in the transfer deliveries except in
case when the facility of SBP is not availed. In case of cheques drawn on one branch and
collected by another branch for the credit of its constituents, the branch delivering the
cheques will send a consolidated debit advice. If any cheque is returned unpaid, a Branch
receives the cheques and other negotiable instrument drawn on other branches of the
32
same bank. Main branch of ABL handles the credit advice will be sent to the branch
returning the cheque.
33
COLLECTION CHEQUES OR OBC
The collection cheques/OBCs are the cheques, which we have cleared for our customers
when some of our customers receive the cheque that is of some other city. These types of
cheques are known as collection cheques or the other name we gave them is OBC
PROCEDURE OF COLLECTION
On the cheque there is written that the person to whom it may concern can cash it from
the certain branch of the bank in favour of which it’s drawn. The customer presents the
cheque to his branch, which send a document called “OBC” to the bank that has to make
the payment. The clearing department of the receiving bank follows a prescribed
procedure and credits the amount to sending bank through a central account maintained
by each bank with SBP. ABL sends the cheque to it’s own branch if available for
collection from the payer’s bank otherwise the OBC is directly sent to other bank.
MAINTAINING REGISTER for OBCs
We have a register in which we have the serial no for OBCs with other details like
amount, date, sending and receiving branches’ codes. Every OBC is entered in the
register on daily basis. If OBC is not cleared due to whatever fault, we take it back as a
return but after that we call the concerned person and we also write name of the person
ACCOUNT OPENING
I learnt how to open a new account. The person willing to open an account has o
complete the account opening forms, which has several particulars pertaining to personal
information of the person.
The bank makes sure that all the information provided by the person is authentic. Along
with the information given by the person himself, bank requires introduction of an
already existing account holder of the same bank but preferably of the same branch.
The bank also requires account no. and copy of the introducer’s NIC.
Bank also requires a copy of the NIC from account opening person. He will also have to
provide two samples of his specimen signatures for any withdrawal of amount. In case of
illiterate person, he will provide the bank with his left thumb impression along with two
photographs. In case of a Pardah Observing lady, the bank prefers not to open an account
but if so, it will require her to provide impressions of her both thumbs.
34
After all this formality, the bank after a few days sends a letter of thanks to the address of
the person disclosed in the AOF. When the letter is received, the person may come to
bank and collect his cheque book
The bank also informs its head office about the new accounts and also charges nominal
amount at first time.
MATTER OF ZAKAT
The deductions of Zakaat from the account of Muslims are made on the 1 st Ramadan
according to the Islamic rate. But the people who do not want the bank to deduct Zakaat
and want to disburse it at their own, they have to provide an affidavit on a prescribed
format provided by the bank.
ONLINE TRANSFER
The department providing online facility to the customers, I liked the most. I learnt
different procedures regarding this department. I learnt the process of online transfer. The
whole this process need is filling of a slip, and cheque or cash. In the slip the name of
remote branch and account number of the remote person must be entered. If the person is
not an account holder of the bank then he has to attach his NIC copy with the slip for his
identification. The person availing this facility submits the cash on the cash counter and
then gives the slip to the host person at the department, who then enters the data in the
computer. In this way the money is transferred to an account through PAK account,
which is the central account of the bank and all the inter branch transactions has to go
through this process.
LEARNINGS IN FOREIGNEXCHANGE & ADVANCES DEPTT
As an internee I learnt many things some of which I have described above. The
remaining few include the processes involved in the foreign exchange and advances
department. Now a day, both of these departments are considered to be the backbone of
any bank. Foreign exchange department brings foreign reserves. Mostly import and
export business takes place through foreign exchange department.
35
Advances/Credit department is equally important. This department gives the bank a real
business. The bank gives money to the borrowers on interest and earns a lot in this way.
The bank lends money against some guarantee or pledges some property for this purpose.
So that in case the customer cannot pay back money, the bank can meet over come its
expenditures.
HOW EXPERIENCE IMPACTS MY CAREER
My internship experience has given me a realistic preview of practical life. Now I feel
that I am better prepared to enter the world of professional work. I have come to know
and been appreciated by a number of professionals who are lending their services to the
banking sector for more than a decade.
I feel honored that I have worked with such experienced professionals. I must admit that
such interaction in this respectable professional community will help me in seeking out
good job opportunities in the near future. Each task I performed was a different
experience in itself. By the end of it, I must say I realize my potentials, I have realized
that practical life is not so easy after all, it takes a lot of hard work and devotion, and not
to forget time
. And I now know that if I want I can make things possible, and I also know how good it
feels to having accomplished something and being appreciated for it. I definitely have
learnt things, which will impact my career and my character. The overall experience of
my internship was very good; I have learnt the sense of responsibility in its literal
meaning. I am now capable of dealing with different sort of customers, and how to be
patient while doing so. Besides this I also gained knowledge about banking which I
previously lacked and many more products being offered by the bank. So in a nutshell,
this internship gave me the experience, which would no doubt boost my confidence to
work in future.
36
Chapter – IV
FINANCIAL
ANALYSIS
37
38
4.1 VERTICAL ANALYSIS
(AMOUNT IN RS)
cash
Lending to
Financial
institutions
investments
Ad net
Fixed asset
Asset
Other asset
Total asset
Liabilities
Customer
dept
Inter bank
borrowing
B/P
Other
liabilities
Subordinate
loans
Total
liabilities
Net assets
2014
RS
24745023
%AGE
9.28%
2015
RS
30408306
%AGE
9.5%
2016
RS
25750533
%AGE
7.02
19050239
7.56
18419241
5.75%
15793183
4.31%
46953241
144033634
6445111
638168
10161361
252026776
18.63%
57.15%
2.56%
0.25%
4.03%
100%
83958463
168407280
7548628
662431
10705374
320109723
26.23%
52.61%
2.36%
0.21%
3.34%
100%
82631118
212972016
11134436
1029223
17369961
366680192
22..53%
58.08%
3.04%
0.28%
4.74%
100%
206031324
87.92%
263972382
100%
366680192
86.39%
18410428
7.86%
22933656
7.64%
27778151
8.07%
2278007
5119267
0.97%
2.18%
3494384
7332059
1.17%
2.4%
2952490
13620616
0.86%
3.96%
2500000
1.07%
2499000
0.84%
2498000
0.72%
243339023
100%
300231481
100%
344324578
100%
17687753
7.55%
1987242
6.62%
22355614
6.49%
39
4.2 HORIZONTAL ANALYSIS
( Amount in rupees)
2014
Cash
balance
Lending to
institutions
Investment
s
Advance
net
Op fixed
asset
Deferred
tax
Assets
Other
assets
24745023
2015
100%
30408306
2016
122.88%
25750533
104.06%
19050239
100%
18419241
96.68%
15793183
82.901%
46953241
100%
83958463
82631118
175.98%
144033634
100%
168407280
178.814
%
116.92%
212972016
147.86%
6445111
100%
7548628
117.12%
11134436
172.75%
638168
10161361
100%
100%
662431
10705374
104.95%
105.35%
1029223
17369961
161.27%
170.93%
Total
assets
liabilities
25202677
6
1005
32010972
3
127.01
%
36668019
2
145.49
%
Customer
debt
Inter bank
borrowing
B/P
Other
liabilities
Subordinate
loans
206031324
100%
263972382
128.12%
297475321
144.38%
18410428
100%
22933656
124.59%
27778151
150.88%
2278007
5119267
1005
100%
3494384
7332059
153.39%
143.22%
2952490
13620616
129.60%
266.08%
2500000
100%
2499000
99.96%
2498000
99.92%
Total
liabilities
24333902
3
100
%
30023148
1
128.11
%
34432457
8
146.9%
NET
ASSETS
17687753
100%
19878242
40
112.38%
22355614
126.3%
4.3 RATIO ANALYSIS
LOAN TO DEPOSIT RATIO
FORMULA
(TOTAL LOANS/TOTAL DEPOSITS)*100
(RS IN MILLION)
Total loans advance
Total deposits
2014
144033
206031
69.90%
2015
168407
263972
63.79%
2016
212972
297475
71.59%
ANALYSIS
This ratio shows a r/s between loans and advances and reveals how much Productively the deposits
are used. Analysis shows an increase 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
LOAN TO ASSET RATIO
FORMULA
(TOTAL LOANS/TOTAL ASSETS)*100
RUPEES IN MILLION
Total loans advances
Total ASSETS
2014
144033
252026
57.00%
2015
168407
320109
52.60%
ANALYSIS
41
2016
212972
366680
58.06%
Total advances of the bank increased from 2014 to 2016 and total asset Also increase from in
2014 to in2016. This parallel increase in advances provide us gradually increasing ratio.
NET PROFIT RATIO
FORMULA
(NET PROFIT/RETURN ON FINANCING)*100
RUPEES IN MILLIONS
2014
4156
15006
27.69%
Net profit
Return on financing
2015
4076
12387
32.90%
2016
4397
12166
36.14
ANALYSIS
The net profitability of the company is increasing from 2014 to 2016 as Shone above. The increasing
net profit trend shows the managements Efficiency to control the operating cost and to maximize the
profit
RATE OF RETURN AT LOAN
FORMULA
(INTEREST INCOME/TOTAL LOAN)*100
(RUPEES IN MILLION)
Interest income
Total loan
2014
9.717
144.033
6.74%
2015
8.467
168.407
5.02%
42
2016
10.854
212.972
5.09%
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.
RETURN ON ASSET
FORMULA
(NET INCOME/TOTAL ASSETS)*100
(RUPEES IN MILLION)
NET INCOME AFTER TAX
Total ASSETS
2014
4397
252026
1.74%
2015
4076
320109
1.27%
2016
4156
366680
1.13%
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.
RETURN ON EQUITY CAPITAL
FORMULA
(NET INCOME/EQUITY CAPITAL)*100
RUPEES IN MILLION
NET INCOME AFTER TAX
Total ASSETS
2014
4397
4488
97.97%
ANALYSIS
43
2015
4076
5386
75.67%
2016
4156
6463
64.30%
The equity capital of the bank is increased every year while in 2015 the net Income decrease and
in2016 the net income is also increased. Due to this the Equity capital ratio has decreasing trend
from 2014 to 2016. We cannot set any Standard for the bank’s return on capital because different
capitals have different Capacities.
RETURN ON EQUITY
FORMULA
(NET INCOME/SHARE HOLDER EQUITY)
(RUPEES IN MILLION)
NET INCOME AFTER TAX
SHARE HOLDER E QUITY
2014
4397
16299
27.09%
2015
4076
18404
22.14%
2016
4156
20805
19.97%
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 2014 to 2016.
44
Chapter – V
CONCLUSION
AND
RECOMENDATIONS
45
5.1 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 Tench Bazaar
branch enabled me to study the organization in a historical perspective and understand the
nuisances in the banking operations. Study of the 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, Tench Bazaar
branch Rawalpindi.
Some of the major findings suggestions are discussed.
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.
46
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 customer’s 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.
COMMITMENT 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.
47
·
Objectivity:
The appraisal system must be based on facts and figures and objective evaluation
of the facts on grounds.
SIMPLIFICATION OF ADVANCES
The biggest source of the bank revenue is advances. The advances of ABL, Tench
Bazaar 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
customer’s 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.
MARKETING CONCEPT
The concept of marketing should be followed in every aspect of the organization.
Generally, the bank’s 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.
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.
48
·
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 “that’s not my job” should not exist
anymore.
MOBILIZATION 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.
IINFORMATION ACCESS
The Bank should provide information to all the present and potential customers
relating to the new products, services, some service’s 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 customer’s 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 customer’s services and put
forward their suggestions on his improvement of the services quality of the Bank.
PERFORMANCE AUDIT
49
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, otherwise, 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.
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, Tench Bazaar 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.
ATM NETWORK PROBLEM
I have found some problems with ATM network. Many customers have
complaints that their requests placed on ATMs don’t 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
50
the bank should hire technicians who can work during public holidays to make the ATM
useable while it shows any distortion.
CASH DEPOSITES 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.
NETWORKING AMONG BANKS
In allied bank the networking is only done within the bank, means the customer
can’t 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 doesn’t have account but someone gave him a Habib Bank cheque to transfer it
online through near situated Allied bank. So the allied bank can’t 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.
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 that’s 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.
ONLINE LOANS
I have found that there is no online facility to apply for a loan. Whereas, in other
banks especially in foreign banks the customer who has an account in the same bank, can
apply for a loan through internet. So that he can save his time from going physically to
the bank.
51
ANNEXURE
52
53
ANNEXURE
BALANCE SHEET
As on December 31 2016
ASSETS
Cash & balance with treasury bank
Balance with other banks
Landing to financial institutions
Investments
Advances
Opening fixed assets
Deferred tax assets
Other assets
2016
23653754
2096779
15793183
82631118
212972016
11134436
1029223
17369691
366680192
2015
29739857
668449
18419241
83958463
168407280
7548628
662431
10705374
320109723
2014
23042011
1703011
19050239
46953241
144033634
6445111
638168
1016136__
252026776
LIABILITIES
Bill payable
Borrowings
Deposits and other account
Sub ordered loans
Liabilities against assets subject
To finance lease
Deferred tax liabilities
Other liabilities
Net assets
Share capital
Reserve
Inappropriate profit
Surplus on revaluation of assets
54
2952490
27778151
297475321
2498000
3494384
22933656
263972382
2499000
2278007
18410425
206031324
2500000
13620616
344324578
7332059
300231481
22355614
6463644
5804779
8536697
20805117
1550497
22355614
19878242
5386370
6050713
6971308
18408391
1469851
19878242
5119267
234339023
17687753
4488642
6133209
5607796
16229647
1458106
17687753
PROFIT AND LOSS ACCOUNT
For the year ended dec 31 2016
Markup/return/interest earned
Mark up/return/interest earned
Net markup/interest income
Loan against non-performing loans
And advances net
ion for diminution in the value of
Investments net
Bad debts written directly
Net markup/interest income
Free commission and brokerage income
Dividend income
Income from dealing in foreign
currency
Gain/loss sale of securities
Other income
Total non-markup/interest income
Non markup interest expense
Admin exp
Provision against other assets net
Provision against off b/s
Other charges
Total non-markup interest exp
Extra ordinary/unusual items
Profit before tax
Taxation current
Deferred
Profit after tax
Inappropriate profit b/f
Transfer from surplus
Profit available for appropriation
Basic earning per share (in rupees)
Diluted earning per share
2016
30570540
15559805
14010734
1372155
2015
21201422
10093010
11108412
2712935
1781110
719
(14523)
2735
3155001
10854733
2291459
1420354
230050
1187
2714842
8393570
2052577
147084
194879
135189
704871
9717535
1353888
193255
282285
59154
4152105
15005838
(1453)
77435
3920099
1231559
(30180)
273028
2449058
12155503
5089913
214284
190824
390877
8885898
5120940
1829425
134829
1954254
4155585
5971308
17541
5988849
1145535
5.43
5.43
5944340
119579
39805
255859
5350593
5953075
1887299
(10381)
1875918
4075158
5507795
32701
5540497
9715555
5.31
5.31
5290578
205307
2545
7078
5505509
5551094
2215092
48752
2253884
4397250
2731979
19452
2751431
7148581
8.15
8.15
55
2014
17215507
5793101
10422405
583305
REFERENCE:
Published Reference:
ü
Weihrich.H & kootz H(1997)
Management A Global Prospective
th
10 Edition (New York M.C CRAW HILL)
ü
Siddiqui A.A (1998)
Practice and Law of Banking in Pakistan
th
6 Edition-Karachi-Royal Book Company
ü
Horne V. (2002)
Financial Management
12th Edition New York M.C Craw Hill
ü
Irshad M (2015)
Money, Banking and Finance
2nd Edition Lahore Majeed Publisher
Online Reference:
ü
http://www.scribd.com/doc/17345321/Internship-Report-on-Allied-Bank
ü
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Sports/08Feb-2010/Diamond-PaintsAllied-Bank-down-spirited-PAF-in-final
ü
https://allied.direct.abl.com.pk/allied.direct/index.htm
ü
https://abl.projects2.mags.net.pk/commercial/dep_account.asp
ü
http://finance.kalpoint.com/highlights/corporate-news/allied-bank-limited-declaresprofit-rates.html
56