Professional Documents
Culture Documents
ISLAMIA UNIVERSITY
OF BAHAWALPUR
Submitted By ;
Muhammad Ibrar
M.com (Finance) 41
“I dedicate this work of mine to my
Teachers, My Parents and to all My
Friends, who truly help and guide me in
completing this project. “
Master of commerce (M.COM) is a program in which we studied about business and
finance. In Pakistan the banking sector is at the maturity stage and banking sectors are the
best institutes in which we are easily understand the practical experience. Master of
commerce gives us and opportunity to touch the practical experience about business and
finance as the internship. The Internship program in an important part to give students an
opportunity to have experience of practical field. Unless and until the students experience
the novelty of practical work, their knowledge of what they study in theoretical courses
remains incomplete. The most important point in an Internship program is that the student
should spend their time in a true manner and with the spirit to learn practical orientation of
theoretical study framework.
This Internship Report is on my Six weeks practical training at (UBL) UNITED BANK
LIMITED CHUNA WALA HASIL PUR. In this Internship Report I have tried to give
details about the United Bank Limited, working and the functions of different departments
of the bank.
MUHAMMAD IBRAR
First of all, I thank my respected teachers for providing me
Purposes of Study-------------------------------------------------- 12
Scope of Study------------------------------------------------------ 12
Limitations of Study------------------------------------------------ 12
Methodology of Report--------------------------------------------- 13
Scheme of Report---------------------------------------------------- 13
Chapter No. 2
Development Finance------------------------------------------------ 14
Seasonal Finance------------------------------------------------ 15
Commercial Finance----------------------------------------- 16
Chapter No.3
Account Department--------------------------------------------- 17
Chapter No.4
Birth of UBL---------------------------------------------------- 19
Subsidiaries---------------------------------------------- 19
Functions of UBL---------------------------------------- 20
Management of UBL--------------------------------- 23
Function of Hierarchy--------------------------------- 24
CHAPTER NO.5
Deposit Department---------------------------------------- 25
Remittances Department-------------------------------------------------27
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Credit Department of UBL------------------------------------- 29
Clearing Department--------------------------------------------------- 31
CHAPTER NO.6
Introduction-------------------------------------------------------------- 34
Financial Analysis----------------------------------------------------- 38
CHAPTER NO.7
CHAPTER NO.8
SWOT Analysis-------------------------------------------------------------50
PEST Analysis--------------------------------------------------------------53
CHAPTER NO.9
CHAPTER NO.10
CHAPTER NO.11
BIBLOGRAPHY
Annexure
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EXECUTIVE SUMMARY
This is an internship report regarding the different products of UBL. It starts with an
introduction about Banking followed by the introduction of UBL. It gives a briefing about all
the financial products of UBL.
This report also includes the different features of these products. All the Services
provided by UBL has also been discussed and explained along with the strength and
weaknesses of the organization.
This report shows and internal architecture of the working of the UBL’s
Business. It gives a detail about the supporting department that has helped the business in
their daily working.
Also it discusses the objectives, policies of the organization. There are also some
suggestions/recommendations for UBL.
CHAPTER NO.1
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INTRODUCTION:
PURPOSE OF STUDY:
The purpose of the study is to work in real life situation and learn banking practice by
doing. In this context its objectives are:
i. To analyze banking operations i.e. operational analysis, financial analysis.
SCOPE OF STUDY:
The study is confined to banking operations. An attempt, along with all its limitations,
to collect financial data and general statistics of the bank has been made. Keeping in
view the purpose of the study, which is to make an acquaintance with practical doings
in the bank, this seems a comprehensive effort.
LIMITATION OF STUDY:
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It is to admit that the study attempts only those aspects, which are closely relevant to
the purpose of the study. Facts and figures, which otherwise might be equally
important, but not having a direct bearing on the conclusions arrived at this study,
have been ignored.
METHODOLOGY OF STUDY:
Both primary and secondary data were used in compilation of the report.
Methodological tools used were:
i. Primary Data:
Personal Observations.
Discussion with Bank Personnel.
Internet.
CHAPTER NO.2
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Development finance
Loan provide for tractors agriculture instrument tubewell turbine, land leveling etc
Tractor loans are recover within five year, on half yearly basis other agriculture instrument
loans repaid within three year 25% borrower contribution the borrower can apply for loan,
the borrower worth can be decide on its property
If a person have10 acher land
Then the patwari make its unit with some specific process these unit multiply 400 and have
some value or amount then 80% of this value can obtain by borrower for this process
following thing are required
Procedure for Loan Apply
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After approval the proposal the branch entries in “PASSBOOK” and verify this passbook by
patwari and request the patwari pleases transfer this land temporary toward bank
Agreement IB
Seasonal financing:
Loan provide on seasonal crops like cotton ice factories, oil mills, agri related industry.
Procedure:
• Property documents
• NOC: no objection certificate
• NEC: non encumbrance certificate
• Small amount estimate by bank
• Above 1 million CA estimator
• EM/%RM: property for security
In case of renewal
• Application request for renewal loan
• Balance sheet
• Profit loss calculation.
CHAPTER NO.3
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Account Department
• In A/C department all the subsidiary ledgers are include maintenance of income and
expenditure subsidiary ledgers are prepared.
• General’s types of statements called by RHQ and head office are prepared.
• Income statement and expenditure statement at the end of each month is prepared.
• If there is any mistake in any record it is checked and removed in A/C department.
• Journal System
• Voucher System
In commercial industrial institution journal system is used. In journal system entries are
reported on journal books and then posted to main ledger.
In banking voucher system is used and for every transaction voucher has to be prepared.
Voucher preparation:
Vouchers are prepared in
• Cash
• Transfer
• Clearing
Record books
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The books used for record keeping in accounts department are:
• Payment book
• Scroll book
• Cashier’s books
• Transfer book
• Journal ledger books
Payment book:
At the end of business all the instruments are entered in paying book. Cashier writes grand
total of these instruments in words and figures signs in full on it and send it to the officer.
Officer check and put initial in front of each and every entry and signed in full on grand total.
Scroll books
It is designed for credit vouchers i.e. for the amount deposited against the issuance of TTs or
DDs etc.
Receiving cashier book
Party goes to cashier and deposit the cash. Cashier takes the cash enters the voucher in
receiving cashier’s book signs in full on it and send it to the officer. Officer puts his initial in
front of each and every entry and affix cash received stamp on it.
At the close of the business officer after checking receiving cashier’s book will sign in full on
it.
Transfer book
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Transfer book is used to keep record of that transaction in which there is no cash
involvement. the amount of one cheques is transfer from one account to other account in the
same bank, the account in the same bank, the account from which the cheques will be drawn
is written on right page which is Dr. page and the account in which the cheques is deposited
is written on left page of transfer book which is Cr. Page.
Journal ledger:
The daily transactions are entered in this ledger. The ledger has two portions:
Dormant section
Current section
Dormant section contained the accounts in which there is no transaction for a long period.
While current section is for running account.
Supplementary preparation:
A/C clerk accumulate the different voucher transaction wise on a sheet and consolidates into
one figure called supplementary.
There are two types of supplementary.
i. Debit supplementary
ii. Credit supplementary
Debit supplementary is used for debit voucher expenses and credit supplementary is used for
credit voucher expenses. These are of red and green color respectively. From this
supplementary cash cum daybook is helpful for the preparation of statement of affairs of the
day.
OPENING OF AN ACCOUNT
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Requirements for Account Opening
(i) Account Opening Form
It is a form that contains the account number, date, title of the account introducer’s name and
address, special instruction (if any) information about Zakat deduction and mode of delivery
of checkbook etc. Then this filled form is submitted in bank, the bank admits the signatures
of the applicant and verifies the introducer’s signatures (specimen is enclosed in Appendix)
(ii) Specimen Signature Card This card contains account number, title of the account
and the specimen signatures of the account holder. When this form is submitted in
bank the bank officer admits the signatures of the applicant and keeps this specimen
card in record
(iii) Cheque Requisition Slip
This is a request made by the client to the bank to issue him a checkbook containing
number of leaves mentioned. When this slip is submitted in bank, the bank as per instruction
the account of the person is debited or the client pays the amount in cash. If the account is to
be debited then party debit voucher is prepared which is actually intimation to the party that
her account has been debited. But if the amount paid is in cash, then cash is debited which is
actually cashier’s stamp. Regardless whether the account is debited or cash is debited the
account heads of Central Excise duty and Sales Tax are credited.
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For this account in addition to above said documents national ID card of all the
account opening parties is required. Also in the box of special instruction it should be clearly
mentioned that one person’s signatures will be enough to get it honored the check or there
should be signatures of all the parties.
BIRTH OF UBL:
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On November 9, 1959, UBL was notified and included as a private schedule bank with
authorized capital of Rs. 20 million; issued and paid up capital of Rs. 10 million divided into
1 million shares of Rs. 10/ each. Currently BOD and president/ CEO Mr. Amar Zafar Khan
being a member of this newly formed set up manage UBL. Chairman His Highness Shaikh
Nahayan Mabarak Al Nahayan and Deputy Chairman Sir Mohammed Anwar Pervez are the
two supreme controllers of the bank’s affairs.
NUMBER OF BRANCHS:
UBL has a large network of branches, which extends to the remotest areas of the
country. In December 1983, there were 1623 branches whereas in 1974 it had only 1238
branches and in October 2009 these figures show total number of 1112 branches3.
UBL has been very active in increasing its overseas branches network. The first
foreign branches were established in London in 1963. Now UBL has branches in Bahrain,
Qatar, Saudi Arabia, United Arab Emirates, Yemen Arab Republic, UK Switzerland, Egypt,
Oman and The United States. These branches are playing a significant role in channeling
home remittances and foreign trade of Pakistan.
SUBSIDIARIES:
FUNCTIONS OF UBL:
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Muhammad Ibrar, (2010) Internship Report On UBL Chuna Wala Branch Hasil Pur
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UBL is a commercial bank, which transacts the business of banking in accordance with the
provisions of BCO, 1962. Section 7 of the Act authorizes banks to engage in the prescribed
form of business. In the light of this section UBL’s functions can be categorized as under:
Agency services
Hajj-related services.
The impressive growth and development, which UBL achieve, present it undoubtedly the
most dynamic and progressive. In a very shorter period of time it became one of the leading
banks overtaking several other older and its competitor banks4. The major contributions5 the
Catalyst of changes
Professional management
4
Muhammad Ibrar, (2010) Internship Report On UBL Chuna Wala Branch Hasil Pur
5
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Pacesetter in economic research established in 1967, department for economic
research.
COMPUTERIZATION OF UBL:
UBL has taken leading start in the introduction of computers in (1966-1968) in important
cities. Its three computers centers Rawalpindi, Lahore and Karachi are equipped with the
modern mainframe computers of various capacities. Every branch has been decorated with
microcomputers.
The use of computers has enabled the bank to save time and efforts raise efficiency
and deliver the goods speedily to its customers. This has also allowed the bank to maintain its
leadership within the industry.
o Graphical analysis
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Muhammad Ibrar, (2010) Internship Report On UBL Chuna Wala Branch Hasil Pur
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The bank has recently employed money gram service system, which can affect money
transfers within minutes. Similarly the system used for local transfer of money transactions is
called uni-remote.
Hajj service:
Keeping to its tradition is august 1982 provided electronic facility at its Hajj booth
and has installed now modern computers at designated branches (Hajis) and increasing
efficiency. This facility has reduced the service time to less than six minutes per Haji
compare to about half-an-hour to 45 minutes per Haji earlier.
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MANAGEMENT OF UBL:
M.A Manna
Deputy CEO
Risha Moheyuddin
Nauman Hussain Global Treasurer
Director Operations &
Utilities Khalid Munawar-ud-din
Mansoor M. Khan Head Credit Policy
Head Corporate Banking Supervision
Group
Muhammad Ejazuddin
Shaharyar Ahmed
Audit Chief
Head Investment Banking
group
Aman AzizMehmood
Siddique Mehboob A.Khan
Shahid Waqar
Head Commercial bank
Rukhasana Asghar
Global Head Human
Resources
Head International
Operations (Dubai)
Ali sameer Ameer Karachiwala
Chief SAM (domestic) Chief financial Office/HCA
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FUNCTION HIERARCHY:
Chairman
Deputy Chairman
Board of Directors
Executive Committee
Managing Director
SEVP
EVP
VP
Officer Grade-I
CHAPTER NO.5
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DEPOSITE DEPARTEMNT
As per the definition of “Banking” under see 5(b) of BCO 1992 one of the main functions of
a bank is to accept deposit. Deposits are the backbone of any bank; other functions of the
Opening of Account:
To open an account in UBL the customer will have to fill an account opening form in front of
bank officer. He has to sign in all required places in front of the officer.
Documents Required in Account Opening:
i. N.I.C Copy.
ii. Account opening form (provided by bank)
Types of Account:
a. Individual Account
In this account a single customer operates the account. The banker will run the
account according to the rules, but if the customer gives special instructions the Bank will
have to follow it.
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M.Com (Finance)
b. Joint account:
In this type of account two or more than two persons will open the account. The
account will be operated by one account holder in case of (either of the survival). If the
instructions are not given, all the account holders will have to sign the check.
A) Current Account:
These are non-profitable demand accounts. The account can be opened with minimum
amount of rupees 1000/-. These account are usually maintained for business purpose. Due to
enormous competition UBL has introduced daily profit current account for corporate clients
called (UNISEVER) minimum balance required is Rs. 100,000/-. If minimum balance
requirement is not met, bank is authorized to recover predetermined charges.
C) Term Deposits:
Term deposits are also called fixed deposits. These can be with drawn after a specified period
of time. Interest is paid to the depositor on all fixed or term deposits. The rate of return varies
with the duration for which the amount is kept with bank
There are two types of term deposits.
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STDR’S – Special Term Deposit Receipt (local currency):
Special Term Deposit Receipts are issued for different periods of maturity ranging from
one month to 5 years, having attractive returns. There is no limit on denominations.
REMITANCES DEPARTEMNT:
Current business trends demand fast movement from one geo-graphic end to another. Latest
technology and telecom data transmission has made it possible to make such transactions
with in minutes. UBL Chuna Wala Remittances Department performs following functions.
Place of payment
Amount of D.D
Commission is charged on D.D as bank income. The applicant is asked to deposit the cash
specified on the application form to the teller. After depositing cash the remittances incharge
prepare a D.D. That is singed by two officers must having power of attorney.
Bank also provides this facility to general public who don’t have account in UBL. They will
have to submit a N.I.C copy along with D.D application form.
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Telegraphic transfer (T.T):
Transfer of funds to another branch of the same bank with the help of test numbers. If the test
number agrees the bank make payment to the party.
A) Procedure for T.T:
The procedure for T.T is same as D.D. But in D.D it is given on a printed-paper and singed
by two officers but, in T.T, only test number is given to the customer.
When the money is not required immediately, the remittances can also be made by MT. Here
the selling officer of the bank sends instructions in writing by mail to the paying bank for the
payment of a specified amount of money. The payment under transfer is made by debiting
the buyer’s account at the sending office and crediting it the recipient’s account at the paying
bank. UBL takes mail charges from the applicant where no excise duty is charged.
Pay Orders:
Pay order is banker cheque issued favoring a named beneficiary. The issuance bank is
discharged by payment in due course. Application for the PO stamped and the customer’s
account balance is checked or cash received for the amount PO and other charges. Pay Order
leaf is typed and crossed if required and signed by two authorized persons. Thereafter it is
delivered to the customer. PO can be cancelled at original purchaser’s request in writing and
surrender the instrument, which then marked canceled along with other documents and prior
entries.
Supper Traveler Cheques:
UBL has launched R.T.C Brand named “Hamrah” in November 1996. These are issued to
applicants with varied denominations without excise duty and commission. When issued HO
account is credited and on encashment the same account is debited. RTC’s lost cases are
communicated to HO and client is either repaid or new RTC’s are issued to him/her.
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CREDIT DEPARTMENT OF UBL
Credits operations are undertaken in accordance to bank’s credit policy. The policy strictly
prohibits violation of SBP/Local central bank’s rules and suggest financing of self
liquidating, cash flow supported and well collateralized transactions, which equate the
Security:
The bank will secure itself against the lending. There can be two type of security.
Commercial
Residential
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The bank prefers commercial security. Relationship Manager (RM) is mainly responsible for
the relationship between the bank and party. He acts like a bridge between the two.
In the first instance the party would prepare the following property documents.
AKS Shajarah
Naqsha Tasveeri
Approved Building Plan
Tresh fard
Intaqal Naqal
The party is asked to contact any valuator on the panel of UBL. ICM&L and Tajak Builder
are on the panel of UBL Chuna Wala. The valuator will visit the site and set market value
and FSV of the said property. He prepare report of at least three pages. These document sent
for one page legal opinion to any layer on the panel of UBL. Having clear legal opinion RM
start preparing credit Approval (CA). The documents are singed by the RM & AM and then
forwarded to UBL RHQ in Peshawar. Here SRM examines the CA if he found some
exception he will send it back to the respective Rm.
RM rectifies the acceptation and send it back to SRM. SRM studied and pass it to credit
officer. He has three hours of time to study the CA and if found correct then he pass it to
another credit officer. After his examination the CA is passed on to the credit risk manager.
He checks the CA and after signing it sent to CAD. He forwards the CA to SCO. Whose
office is at UBL RUCO at Lahore, after his signature the C.A is sent back to RCAD.
RCAD make a check less list and asked the RM to contact the party to complete the said
documents they are.
Letter of continuity
Personal Guarantee
Letter of hypothecation of stock
D.P Note
Mortgage Deed
NIC of executants and witness
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Stock report
Insurance policy
Party profile
After completion of charge document RM send it to RCAD when they found it correct, they
issues DAC. A copy of DAC is sent to RM and NICF account is opened and debit transaction
starts.
CLEARING OF BILLS:
General:
Bank can make payments of only open Cheques on the counter payment. Payment of cross
Cheques cannot be made on counter its payment is possible through collecting bankers. The
functions of clearing department are divided into two main classes.
Inter Branch Transaction
Inter Bank Transaction
Whenever bank receives a Cheque of other bank from the client he cannot make payment on
the counter. The first job banker has to perform is to put a special crossing across the face of
cheque. By special crossing cheque is secured. If it is stolen the paying banker would not
suffer because of non-endorsement. On the back of the cheque the stamp is made of payee
account will by credited on realization. It is signed by authorized person. Along with the
cross cheque the customer has to fill the deposit slip. The half part of slip is given back to the
customer. after the special crossing and is necessary endorsement the banker write the
amount along with cheque number on paper and attach with each slip. Then again on he
smile paper the amount of all the Cheques along with the bank names are added and attached
to cheque presented for clearing, and advice is also attached with the cheque presented for
clearing. The following entry is passed on sending the cheque for clearing.
Bill lodged for clearing ……. Dr
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M.Com (Finance)
Bill for collection ………. Cr
The Cheques are sent on the same day for clearing. The bank receives it on other day. The
paying bank receives the receipt and the amount is credited in the respective account. The
paying banker passed the following.
The other entry passed its Dr. HQ account and Cr Party account.
I B C:
It means “Inter Branch Transaction” when UBL received a Cheque a drawn on the customers
of his branch; first they will Cheque the amount in the account on which Cheque is drawn. Of
the required amount is available in the account they will match the signature on the Cheque
along with their SS card. If all the requirement are completed the bank will send an IBCA to
L B C:
LBC means local branch Cheques received for collection. UBL Chuna Wala, received
Cheques from their spoke braches as well as from other UBL branches of the country, drawn
of any other bank in Chuna Wala. They send the Cheque to responding bank and after
clearing the Cheque through clearing houses (which is NBP) in Chuna Wala. They send LBC
advised to the bank from which the Cheque was received. The following entry is passed after
sending LBCA.
Ho a/c………. Cr
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OBC
When the bank receives the Cheque from its customer or from any other spoke branch drawn
on any other bank of any other city. They sent the Cheque to the UBL main branch of that
city, after receiving OBCA the bank will passed the following entry. In case of his own
customers.
Ho a/c………. Dr
Customer a/c………. Cr
Ho a/c………. Dr
CHAPTER NO.6
INTRODUCTION
These section efforts have been made to cover all relevant aspects of the financial
performance of UBL. Overtime comparison and Common Size analysis are carried out with
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the view to extract concrete conclusion to describe financial standing and performance of the
bank.
Revenue Recognition
Returns on advances and investments are recorded on accrual basis. Debts securities
purchased at premium or discount are amortized over their maturity periods.
Dividend income is recognized on accrual basis of declaration of dividend up to the year-end.
Returns on classified assets are recorded on receipt basis. ccrual basis.
Advances
These items are stated net of provisions against non-performing loans as per SBP PR – IIIV.
• Investments:
Unquoted securities are valued at the lower of cost and break up value and difference is
charged to income. Provisions for diminution in the values are made after permanent
impairment, if any.
a. Owned
Such assets are showed at their cost or revalued amount less accumulated
depreciation and impairment loss, if any. No depreciation is charged on freehold land.
During the year, amendment related to section 235 of the Companies Ordinance 1984,
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surplus on revaluation can now be reversed to the extent of incremental depreciation
charged. As a result such differentials are now transferred to retained
earnings/accumulated losses as per the Securities and Exchange Commission of
Pakistan’s (SECP) clarifications.
Gains and losses on sale of fixed assets are included in income currently, except that
the related surplus on revaluation of fixed assets is transferred directly to retained
earnings/accumulated losses.
b. Leased
Assets under financial leases are stated at cost. The outstanding obligations are shown as
a liability. The finance charges are allocated to accounting periods in a manner so as to
provide a constant periodic rate of charge on the outstanding liability.
• Taxation
Current
Provision is based on the taxable income for the year or minimum tax computed on the basis
of turnover, whichever is higher.
Deferred
The bank accounts for deferred taxation on major timing differences, using the liability
method in respect of those timing differences, which may reverse in the foreseeable future.
Deferred tax debits are, however, recognized only if there is reasonable expectation of
realization of the amount.
c. Foreign Currencies:
Balances are translated into rupees at the applicable rate of exchange prevailing at the
balance sheet date or where applicable at contractual rates. During year transactions are
converted into Pak rupees applying the exchange rate at the date of respective transactions.
Gains and losses are included in income currently.
d. Deferred Cost and Lease Payments
These are amortized over a period of five years. Rental obligations under operating leases are
charged to profit and loss account as incurred.
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RISK MANAGEMENT
The bank is primarily subject to interest rate, credit and currency risks. The bank has
designated and implemented a frame work of controls to identify, monitor and manage these
For the purpose of efficient management of this risk, the group enters into ready, spot,
forward and swap transactions in the inter bank market and with the State Bank of Pakistan
in order to kedge its assets and liabilities and cover its foreign exchange position.
Out of the total assets of Rs.183, 139.879M assets subject to credit risk amounted to Rs.178;
958.323M. The bank’s major credit risk is concentrated in textile sector. To manage it the
bank applies credit limits to its customers and obtains collaterals. Credit risk in the portfolio
is monitored by the CRM who formulate appropriated policies and procedures to ensure
The bank’s financial institution risk management unit assesses, recommends financial
The group is mainly exposed to mark up interest rate risk on its deposit liabilities and its
loans and advances and investment portfolios. The asset liability committee of the bank
reviews the portfolio of the bank to ensure that risk is managed within acceptable limits.
Most of the loans and advances portfolio comprises of working capital, which are reprised on
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a periodical basis. The group’s interest is limited since the majority of customer’s deposits
are retrospectively reprised on a six monthly basis due to the profit and loss sharing
principles.
INVESTMENT PORTFOLIO
UBL employs diversified investment portfolio. The bank invests its funds both in risk free
assets as well as in risky assets. This enables it to minimize its unsystematic risk to a great
extent.
UBL values its security holding on market value, in accordance with the guidelines given in
SBP circular. Any unrealized surplus/deficit arising on such revaluation is taken directly to
“Surplus/Deficit on revaluation of securities” in the balance sheet. Where an active market is
not available, securities continue to be stated at cost. Provision for diminution in the value of
these securities is made after considering permanent impairment, if any, in their value.
PROFITABILITY
The operating profit before provisions and write offs increased by 80%, where as the profit
before tax and extraordinary items increased by 62% as compared to last year. The increase
is mainly attributed to 14% increase in the net revenue from funds (NRFF), 10% increase in
fee and brokerage income and 75% reduction inn write offs/provisions for non-performing
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Performing advances increased by Rs. 2 billion as compared to 2008 while NPAs decreased
by 53%. Presently NPA constitutes 7.4% as compared to 14.6% in 2008 of the total loan
portfolio. The branches reduced to 1077 from 1112. The bank handled over Rs. 96 billion of
import and export business during the year, an increase of 24.7% as compared to last year.
FINANCIAL ANALYSIS
Financial statements are the principal means of reporting the financial condition and results
of operations of a business entity. These statements are meant to assist various parties in
decision making who are interested in the activities of the business. These statements are
decision making proper analysis of these statements helps a lot. Financial statements analysis
helps in determining the financial conditions at any particular points in time and
The various stakeholders of business are interested in the analysis of financials statements.
But the focus of interest of all is not the same. For example, creditors and credit reporting
agencies are interested in finding out the credit worthiness of the firm to which they have
extended credit or intend to extend credit. Short term creditors are interested in short term
liquidity of the business and long term creditors are interested in the long term cash flow
which the firm can generate over the long period of time. Investors are interested in the
firm’s ability to sustain profitability over a period of time. Government agencies analyze
financial data for tax purposes. The internal users of financial statements like management
also analyze financial data for planning and control.
Common size analysis is an analysis of financial statements where the total assets divide all
balance sheet items of asset side and all credit side balances divided by all liability items, and
all income statement items are divided by net sales/revenues. Common size analyses are
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extremely helpful to highlight changes over the time in financial performance and financial
conditions of the company. The table shows common size analysis of the balance sheets for
The common size analysis given in the table shows that there have been improvements in the
current assets in 2009 as compared to 2008, about 17%. But there has been decrease in fixed
assets of about 16%. The main reason for this change is increase in short term investment
showing a constant increase as a percentage to total assets. This implies that the bank is
concentrating now more on non-interest income and the interest rates are constantly falling.
Short-term advances have shown a significant change of 15% whereas total advances show a
total change of only 6.3%. This is very significant to note that major decrease has occurred in
long-term performing and non-performing advances.
There is decrease in long term assets of about 17% which mainly cause the decrease in long
term advances which are about 13% and 6% decrease in long term investment.
On the liability side the total current liability has shown change of about 4%. The main
reason for which is increase in current deposits, which are about 6%. The long-term liability
of the organization is also decreased by 4%.
The common size analysis of income statement is given in the table. Which shows that the
UBL has been able to control its interest or mark up expense? As a result of decrease in mark
up expense as a percentage of total revenues the gross profit margin has shown a trend of
continuous increase. The increasing G/P Margin shows efficiency of the bank in controlling
cost of sales (Markup expense) and better strategy of pricing, products and services.
The provision for non-performing loans has a decreasing trend making no provision for non-
performing loans and diminution in value of investment, which increases the profit of current
year. The reduction in provision is a good sign, which shows that the bank is recovering its
disbursed advances. It shows the good credit management of the bank.
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There is a great increase in non-markup income, which is about 23%. Among its individual
components investment income has shown a large increase as a percentage of sales.
Non markup expenses also show a rising trend in absolute amount though the common size
in percentages has shown a mixed trend due to the changes in revenue figures. The non-
performing expanses also increased to about 25%, which is a very high percentage, but the
other aspect of this is that it increased the efficiency and credit management of the staff.
Like gross profit the net profit margin before tax has also increased with 24% rate. The
extraordinary item expanse has not occurred in 2009 that caused a slight increase in the net
income. The tax expanse is increased about 7% because of the increase in profit. Loss
brought forward from previous year is reduced by 14%.
The common size analysis of the UBL is clearly showing that the bank has shown a lot of
improvement in its performance. The organization shows profit for the first time in the last 5
years which is a positive sign and it will build up the moral of the employees by which they
can work more effectively and efficiently increasing the performance of the bank.
The user of financial statements finds it helpful to calculate ratios when they interpret
company’s financial statements. A financial ratio is simply one quantity divided by another.
Ratios focus on special relationship between two items of balance sheet, income statement or
one from each. Ratios make it easier to understand a specific relationship between various
items of financial statements then looking simply at the raw numbers themselves. The
number of financial ratios that might be created is virtually limitless, but there are certain
basic ratios that are frequently used, these ratios can be placed into six different classes.
Liquidity Ratio
Asset Turnover Ratio
Leverage Ratios
Coverage Ratios
Profitability Ratios
Market Value Ratios
The calculation and interpretation of these ratios of financial statements of UBL are as
follows.
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Financial Ratio analysis
YEARS 2007 2008 2009FORMULA
Current Ratio 0.84 0.91 1.15Current Assets / Current Liabilities
Asset Turnover 0.07 0.06 0.04Markup Revenue / Total Assets
Debt to Asset 0.99 0.94 0.93Total Debt / Total Assets
Debt to Equity 14.54 14.4 13.47Total Equity / Total Assets
Coverage Ratio 0.1 1.15 3.34EBIT / Interest Expense
Gross Profit Margin 44.65% 52.50% 79%Gross Profit / Revenue * 100
Net Profit Margin -65.12% 12.69% 30%Net Profit / Revenue * 100
Return On Investment -4.43% 0.76% 1.24%Net Profit / Total Assets * 100
Return On Equity -887.99% 16.78% 18%Net Profit / Total Equity * 100
Advances to Deposit 56.46% 46.74% 45%Advances / Deposits * 100
Investment to Deposit 20.22% 41.63% 28%Investment / Deposits * 100
Cash Ratio 9.59% 9.23% 28%Cash / Current Liabilities * 100
CURRENT RATIO:
UBL’s current ratio is increasing over the time. Higher the current ratio higher the ability to
meet the short-term obligations as they come due. The UBL’s current ratio is increased by
0.18% as compared to 2008. this in turn decreases the risk of insolvency. The change is
occurring due to increase in short term investment and decrease in short term borrowings.
ASSETS TURNOVER:
This shows revenue generated per rupee investment in total assets. UBL’s assets turnover
ratio has shown a little decrease. This is because of increase in total assets with proportionate
increase in revenue. Banks have relatively low ATR capital, as they are selective in
The analysis of total debt to assets ratio, there has been decrease of one percent as compared
to 2008 and 6% to 2007. In 2007 every rupee one of assets was being financed by rupees
0.098 or debt and in 2008 it is 0.94 while in 2009 it is reduced to 0.93 worth of debt per
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rupee of asset. Although the decrease is not large enough but it is a good sign for bank’s
creditors. The decrease may be attributed to the substantial decrease in borrowings from
financial institutions but the affect was weakened by an increase in bills payable and other
liabilities.
DEBT TO EQUITY:
This ratio measures how the company is leveraging its debt against the capital employed by
its shareholders. Analysis of debt to equity ratio indicates that the current position for the
debt to equity is that for every one rupee in equity provided by the shareholders the bank has
Rs. 13.5 as a debt. This shows that the bank is heavily relying on debt financing. The reason
for huge difference stated in the table is because of losses occurred in 2007 and 2008.
COVERAGE RATIO:
This ratio shows the number of times a company can cover or meet its financial charges or
obligations. One of the most commonly used ratios is the interest coverage ratio that
measures the number of times the income is available to pay interest charges. The UBL
interest coverage ratio has shown significant improvement in these three years. The ratio is
Gross profit margin is the difference between the revenue and cost of goods sold. Gross
profit is critical because it represents the amount of money remaining to pay operating
expanses financing cost and taxes. UBL’s gross profit margin per rupee has shown rising
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trend in last three years. There is an increase of 27% in 2009 as compared to 2008. this shows
This ratio shows the profit that is available from each rupee of the sale. After all expanses
have been paid. Net profit margin is also showing an increasing trend. UBL has improved net
profit margin in the current years. The net profit margin has reached to 30% as compared to
2008 in which it was only 12.69%. While in 2007 it was in negative figure. It shows a good
RETURN ON INVESTMENT:
This ratio measures the profitability per rupee of investment in assets. UBL’s return on
investment has shown an improvement more than 100%. In 2009 the ratio is 1.24% while in
2008 it was 0.76% and in 2007 it was in –ive figures. Although the assets have increased but
the operational recovery of the bank is main cause of increasing this ratio.
RETURN ON EQUITY:
This ratio shows the profit as a proportion of the book value of the common shareholders.
The return on equity is also shown a great deal of positive change. In 2009 the ratio is 45%
while in 2008 it was only 16% and in 2007it was in negative figures.
ADVANCES TO DEPOSIT RATIO:
This ratio shows the companies advances employed per unit of deposit. This ratio of UBL
over the recent three years shows a decreasing trend. In 2007 it was 56% while in 2008 it was
INVESTS TO DEPOSIT:
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This ratio shows the company’s investment employed per unit of deposit. This ratio increased
development factors in the country by which lending has been increased and investment is
slightly decreased.
CHAPTER NO.7
During my two months of internship period I have tried to fully commit myself in the
learning process. I kept critically observing the things that I could analyze and the result of
the exercise is presented as below.
A) Organizational:
Existing organizational hierarchy hinders vertical communication and blocks flow of
information among the levels of management.
The workload is not equally distributed.
There is centralization of authority and branch managers are bound and restricted to
take initiative.
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Due to overlapping nature of duties and jobs there exists chaos and confusion in
branches.
B) Departmental:
During my internship period in UBL, in various departments, I noticed following
departmental problems.
• Cash Department:
i. Not very frequently but there are instances of fake currency notes, being
identified. At times notes received from other branches were found to have certain
fake currency notes.
ii. Counting mistakes occur due to overcrowding particularly during the collection of
utility bills. Manual counting system also affects efficiency of the bank.
iv. There is generally the lacking in observing and practicing bank’s relevant
procedures and SOP’s.
• Remittances Department:
i. Application of tests for authentication of TTs is not known to al concerned
individuals that reduces the efficiency and further the wrong application of tests
prevent payments and the delay could dissatisfy customers.
ii. Telegraphic messages require specific skills and training. The employees are partially
equipped of such knowledge.
iii. Preparation, execution and management of TTs and MTs and particularly DDs ask for
mastering applicable rules and regulations and most of the staff was found ignorant of
those.
• Deposit Department:
i. Newly designed AOF has an inbuilt deficiency of restricted space and cannot
accommodate more than two names.
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ii. Identification of customer’s signature is very important particularly when cash is to
be withdrawn by him. Manual practices pose problems in those branches where
automation has not been done yet.
iii. In cases where the presence of customer himself is must, is sometime compromised
due to influences of\r fear of loss of customer.
• Clearing Department:
i. Wrong endorsement and stamping causes loss to the customers and extra efforts for
the bank to repeat the procedures.
ii. Reasons for the return of the cheques at times are not mentioned on the return memos.
iii. At times due to lack of training wrong stamps are applied on instruments.
• Credit Department:
iii. Lack of infrastructure for carrying out computerized financial analysis of borrower’s
business.
iv. Large pool of potential borrowers cannot apply for loans due to lack of collaterals.
Heavy collateral requirements restrict credit business of the bank.
v. The credit proposal and other documents at times are not properly and sufficiently
prepared before taking approval.
vi. Filing and record maintenance of credit related documents are not done efficiently.
• Bills Department:
i. Bills are sent to other cities; therefore, extra care should be exercised in making
entries and stamp affixing.
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ii. Proper scrutiny at times is not carried out and it causes loss to the bank or increase
procedural timings.
iii. Employees at times mismanage their time and fail to forward bills promptly.
iv. Most of the employees of this department lack the ability to handle the Letters of
Credit.
CHAPTER NO.8
SWOT ANALYSIS:
SWOT is useful tool for providing a framework for analysis of an organization. SWOT
stands for Strengths, Weaknesses, Opportunities and Threats. It is a common approach to
make assessments in terms of internal and external environment of the organization, and to
formulate strategies analyzing its internal strengths and weaknesses, external opportunities
and threats, coming up is the SWOT analysis for the UBL.
STRENGTHS:
• It is one of the largest private banks with a deposit base of Rs. 94883/- millions
showing constant growth over the period from 1999 till the day.
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• It has a well-knitted and adequately equipped branch networking system that
efficiently covers both the domestic and international markets.
• The bank is actively emerging and is engaged in international trade and foreign
exchange transactions. Foreign trade volume showed an increase of 17% over the
previous year.
• Advances investment of the bank shows a constant growth pattern. The current year’s
growth rate is 32%.
• The bank is owned by parties of financial repute and credit worthiness like, SBP with
48.69% interest, Best Way group and Abu Dubai group with 25.50% of interest each.
Others are GOP, NBP Trustee Department, State Life Insurance Corporation etc.
WEAKNESSES:
• Due to risks such as political, economic and legal etc the bank has suffered losses the
main reason was that of piling up of large amount of unrecoverable loans and debts
• Accumulated losses pushed the bank to cut down its promotional activities in order to
reduce expenses for last few years.
• During the nationalization life span of the bank political lords used influence in bank
business and selection of employee at each level and thus adversely affected the
bank’s efficiency and effectiveness.
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• Promotions are carried out on annual basis ignoring the importance of capabilities and
performance outputs.
OPPERTUNITIES:
• Growing policies of the GOP on business and economic sectors provide UBL an
opportunity to efficiently meet with the business people requirements of instant cash
sectors.
• Increase the product range to meet the broader range of customers’ needs.
THREATS:
• Threats are also external factors in the environment, which are not in the favor of
company, which can seriously hamper the company’s ability to serve its customers.
• Expansion of new commercial banks like ASKARI bank, UNION bank and etc.. And
their better performance may cause loss of market shares of UBL.
• According to World Bank report the Pakistan has become “over banked” economy
with cut throat competition for deposits in the industry the battle is on for the market
shares. The customers have emerged as the main Beneficiaries of the competition.
Now they are getting more personalized services and innovative product.
• All banks are facing a stiff competition to attract new customers. With privatization
program began in Pakistan in 1991, three of five NCBs and three DFIs were
privatized, and eleven new private banks were set up.
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• Along with the growth in size, the banks are now incorporating innovative
approaches to their traditional commercial banking operations, keeping in the view
the changing demand of the time. UBL face problem.
• The political influences affect the performance of bank very badly. Most of the loans
become bad dad debits due to political pressure
• No stable government in Pakistan, Government policies change with the change of
government.
• The concept of evening and Saturday banking, telephonic and online banking, ATM’s
and credit cards are direct result of the intensive competition. But UBL is behind the
above-mentioned services.
• Freezing of foreign currency account by the government of Pakistan is also a fear for
the bank.
It is very important that an organization considers its environment before beginning the
marketing process. In fact, environmental analysis should be continuous and feed all aspects
of planning.
1. The internal environment e.g. staff (or internal customers), office technology, wages and
finance, etc.
2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our
competitors, etc.
3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural
forces, and Technological forces. These are known as PEST factors.
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POLITICAL FACTORS.
The political arena has a huge influence upon the regulation of businesses, and the spending
power of consumers and other businesses. You must consider issues such as:
2. Will government policy influence laws that regulate or tax your business?
Economic Factors.
Marketers need to consider the state of a trading economy in the short and long-terms. This is
especially true when planning for international marketing. You need to look at:
1. Interest rates.
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3. Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so
on.
SOCIOCULTURAL FACTORS.
The social and cultural influences on business vary from country to country. It is very
important that such factors are considered. Factors include:
6. How long are the population living? Are the older generations wealthy?
TECHNOLOGICAL FACTORS.
1. Does technology allow for products and services to be made more cheaply and to a better
standard of quality?
2. Do the technologies offer consumers and businesses more innovative products and
services such as Internet banking, new generation mobile telephones, etc?
3. How is distribution changed by new technologies e.g. books via the Internet, flight tickets,
auctions, etc?
4. Does technology offer companies a new way to communicate with consumers e.g.
banners, Customer Relationship Management (CRM), etc
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CHAPTER NO.9
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relevant to the target market and competition situation. This will be accomplished through
secondary research in Pakistan. UBL’s own record of financial products and very often-
primary research surveys of potential customers and focus group information. The business
review provides a qualitative and quantitative decision activities and a rational for all the
strategic marketing decisions with in the plan.
Step 2: Problems and Opportunities
The problems and opportunities step of UBL is a summary of the challenges that will emerge
from the marketing database. In this step the data collected from the business review is
shaped into meaningful summary points that form the basis of the implementation plan.
Step 3: Target Markets and Marketing
The target market and marketing objective both are inducted in one step due to their critical
link to one another.
Target Market: Once the deposits collection being developed as quantifiable
objective, the staff of marketing department at the Hub branches and Head Office of bank
must determine to whom they will be selling their new financial packages. In response to
which bank will raise deposits, making this determination is really defining a target market.
Which is a group of people with common characteristics. This part of implementation plan is
concerning on marketing efforts towards the portion of population wit similar banking needs
and saving habits.
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Step 5: Informational Goals:
All steps of this implementation plan are highly dependent, but step 5, 6 & 7 are much more.
Informational goals means to set the target the market awareness and attitudes package and
fulfill the marketing objective of the bank. Another purpose is to provide direction for what is
to be accomplished by each strategic tool in term of informational context.
Step 6: Strategic Marketing Mix:
This step is highly concerned with getting attention of the customers towards the service of
the UBL offering. Here we are concerned with a new package launched by the bank. Focus
will be on that financial product. This step of disciplined implementation plan provides some
strategic plans for marketing of the product. These strategic and tactical plans incorporate
marketing executed. When implemented, will allow the bank to meet it’s marketing
objectives and fulfill the overall marketing strategies and information and communication
CHAPTER NO.10
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There is a great need of proper training of employees. Because when ever they were
asked about the latest banking the answer was sorry we don’t know.
Like the other reputed commercial banks UBL should recruited some officers
especially from the fresh MBA’s and M.Com students. Doing so, the more talented
persons would enter in the management and they will try to make the National Bank
compatible with the other banks.
All the branches must be fully equipped.
The behavior with the customer should be improved.
Try to establish effective communication between top-level management and
executive.
Also do marketing through internet
Effective training and qualified, dutiful and vigilant inspection teams are inducted per
force in all the banks. .
This branch is not doing many functions to open the L/C and to deal in export and
import facilities. So bank should hire export staff for such type of activities and start
them in the branch.
CHAPTER NO.11
PERSONAL LEARNING
Cohesiveness
Ever Ready For Challenges
Board Vision
Learning From Cradle To Grave
Always Create Opportunities
Open Communication With The Boss
appearance
Cohesiveness
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A team player can achieve more than an individual. Good coordination and
cooperation with peers and other staff members can impulse a person to perform better in
difficult situations. During my internship I noticed that the degree of cohesiveness among the
UBL employees is high that is why UBL is achieving its target quite efficiently.
BROAD VISION
“THINK GIG”
Think positively to avoid any kind of discrepancy and hurdle in your task. Positively
thinking and broad vision helps you to achieve some thing different and new.
LEARNING FORM CRADLE TO GRAVE
Latest researches and journals can be very helpful in order to generate new ideas.
UBL offers many new courses to the employees to upgrade their knowledge.
If you are able to create opportunities, success is yours. Now the question is how?
The answer is very simple, by generating new and useful ideas for the organization.
So be friendly with your staff and boss and communicate freely to avoid
organizational switching.
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APPEARANCE
BIBLIOGRAPHY
Web sites
www.ubl.com.pk
www.google.com
www.sbp.com.pk
News papers
BANKING JOURNAL
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www.dawn.com
www.nation.com.pk
Books
Principals of Banking
Marketing
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