1.

Executive Summary:

Allied Bank was the first Muslim bank established in Pakistan in 1942 in Lahore Rs. 0.12 Million. It grows very rapidly. Now it has total assets of Rs. 170 billion and it has 779 branches all over the Pakistan. ABL introduced different new strategies with the passage of time. It focused on new product development, differentiation, diversification, and many other strategies. The main objective by introducing these strategies is to capture the large market share and to beat the competitors. The organization structure of ABL starts from president, assistant president, sectaries and than so on mean to say it used top down approach. Allied Bank has seven departments. First one is accounts department. In this department accounts are opened and operated. ABL offer joints account, minors account, Sole Proprietorship Accounts and Partnership firms Accounts. Moreover, ABL offer different categories of account like current account, profit and loss account. In Allied Bank account is opened after proper verification of the customers. Closing of account or changing of account is also the responsibility of accounts department. The second department of ABL is clearing. This department maintains all inward and outward clearing records. Now-a-days NIFT services are used to perform the clearing services. Online department is the third department of ABL. It performs all online transactions. Advances department is a major department of Allied bank. It provides loans / advances to needy persons or organizations. ABL provides running finance, cash finance, export finance and different other types of financing. Cash department exist in all banks. Like other banks the functions of cash department are same. Mean to say it receives the cash from customers and provides cash (payment) to customers against cheques or against any other monetary instrument. It also receives the utility bills. One of the major other function of ABL is remittance of funds from one customer to another. Different

instrument are used in remittance department like Demand Draft, Telegraphic Transfer. The last department of ABL is foreign exchange department. In this department foreign currency exchanged and it is also helpful in foreign trade. But this department not exists in all branches like Yazman Mandi Branch. Allied Bank offers full range of Deposit and Advances products from general to specific & tailor-made solutions to meet the customer needs. This includes various deposit products, Commercial & SME Loans, Agriculture Loan, Trade Facilities, online banking including instant transfer of funds within the entire banking network. The corporate retail banking group is driven by the ambition to continue contributing as the leading Business, serving 2.5 million longstanding customers with candid and reliable banking services. ABL posted pre-tax profit of Rs. 10,536 million during 2009 compared to Rs. 6,121 million in previous year, an impressive growth of 72.1%. The after tax profit also rose by 71.4% from previous year to Rs. 7,122 million during 2009. As a result, the ROA & ROE increased to 1.81% and 30.50% during 2009 from 1.21% and 21.2% in previous year. The balance sheet size stands at Rs. 418,374 million as at December 31, 2009, while the equity registered a strong growth of 34% to reach Rs. 29,960 million. Deposits increased to Rs. 328,875 million as at December 31, 2009 compared to Rs. 297,475 million in previous year, a growth of 10.6%. Meanwhile, the gross advances rose to Rs. 249,887 million at December 31, 2009, a rise of 11.74%. Allied Bank Limited has different strengths like large branch network, more ATMs, strong IT system. But ABL is not perfect in its field; it has many weaknesses like no Islamic product, no advertisement, etc. In the market there is a great potential for the ABL to grow. It can establish its more branches at domestic and international level as well.

2.

Introduction
2.1. History and Back Ground:

Allied Bank was the first Muslim bank that has been established in Pakistan in December 1942 as the Australasia Bank in Lahore with a paid-up share capital of Rs. 0.12 million under the Chairmanship of Khawaja Bashir Bux, the Bank attracted deposits equivalent to Rs. 0.431 million in its first eighteen months of business. At the time, the Banks total assets amounted to Rs. 0.572 million. Today, Allied Bank's paid up Capital & Reserves amount to Rs. 10.5 billion, deposits exceed Rs. 143 billion and total assets equal Rs. 170 billion. The Banks journey has been about dedication, commitment, professionalism and adapting to environmental changes, leading to its immense growth and stability. A view of Khawaja Bashir Bux's Residence that was the first branch of Australasia Bank came into existence. It is these factors that have made it a Bank the rest look up to.

THE PRE-INDIPENDENCE HISTORY (1942-1947):

In the early 1940s, the Muslim community was beginning to realize the need for its active participation in the fields of trade and industry. Since the late 1880s, Hindus had established a commanding presence in the areas of industry, trade and commerce and were especially dominating in the Sub-continent area. Banking, in particular, was the exclusive forte of Hindus and it was popularly and wrongly believed that Muslims were temperamentally unsuited for this profession. It was particularly upsetting for Khawaja Bashir Bux to hear that:

Muslims could not be successful bankers.

He decided to step-up to that challenge and took the lead in establishing this first Muslim bank by the name Australasia Bank Limited in Punjab, which was to become Pakistan in December 1942. The initial equity of the Bank amounted to Rs 0.12 million, which was raised to Rs. 0.5 million by the end of the first 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.

AUSTRALASIA BANK (1947-1974):

A view of the building in Lahore that once housed the Australasia Bank branch, Australasia Bank was the only fully operational Muslim bank in Pakistan on August 14th, 1947. However, it was severely hit by the riots in East Punjab. The Bank was identified with the Pakistan Movement. At the time of independence all the branches in India, (Amritsar, Batala, Jalandhar, Ludhiana, Delhi and Angra (Agra)) were closed down. New branches were opened in Karachi, Rawalpindi, Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and Kasur. Later, the network spread to Multan and Quetta as well. The Bank financed trade in cloth and food grains thus, played an important role in maintaining consumer supplies during the early months of 1948 affected by riots. Despite the difficult conditions prevailing and the substantial set back in the Banks business in India, Australasia Bank made a profit of Rs. 50,000 during 1947-48. By the end of 1970 it had 101 branches. Unfortunately, it lost 51 branches in the separation of East Pakistan. But the Bank did well despite losing a lot of its assets and by the end of 1973 had 186 branches in West Pakistan.

ALLIED BANK (1974-1991):

In 1974, the Board of Directors of Australasia Bank was dissolved and was renamed Allied Bank after the amalgamation of four banks. The first year was highly successful; profit exceeded Rs. 10 million, 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 the banking history. 116 new branches were opened during 1974 and the Bank started participating in the Governments spot procurement agriculture program. Those seventeen years saw a rapid growth for the Bank. Branches increased from 353 in 1974 to 748 in 1991. Deposits rose from Rs. 1.46 billion and Advances & Investments from Rs. 1.34 billion to Rs. 22 billion during this period. It also opened three branches in the U.K.

ALLIED BANK- A New Beginning:

In November/December 1990, the government announced its commitments to the rapid privatization of the banking sector. Allied Banks management under the leadership of Mr. Khalid Latif decided to react positively to the challenge. In September 1991, Allied Bank Limited entered in the new era of its history a worlds first bank to be owned and managed by its employees. The 850 executives and 7200 staff members spread over 800 branches throughout the Pakistan established in high degree of cooperation and family feelings.

ALLIED BANK (1991-2004):

As a result of privatization in September 1991, Allied Bank entered a new phase, and became the worlds first bank to be owned and managed by its employees. In 1993 the First Allied Bank Modaraba (FABM) was floated. After privatization, Allied Bank became one of the premier financial institutions of Pakistan. Allied Banks capital and reserves were Rs. 1.525 billion; its assets amounted to Rs. 87.536 billion and deposits to Rs. 76.038 billion. Allied Bank enjoyed an enviable position in Pakistans financial sector and was recognized as one of the best amongst the major banks of the country. In August 2004, as a result of capital reconstruction, the Banks ownership was transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group. Today, the Bank stands on a solid foundation built over 63 years of hard work and dedication, giving it a strong equity, an asset and deposit base and the ability to offer customers universal banking services with more focus on retail banking.

The Bank has the largest network of online branches in Pakistan and offers various technology-based products and services to its diverse clientele through its network of more than 700 branches.

(2005 to date)
In May 2005, Ibrahim Leasing Limited dissolved and the company was vested into Allied Bank Limited. ALL the shareholders were issued ABL shares instead of the all shares held by them. An application for the listing of ABL shares in all the Stock Exchange Companies of Pakistan was made; ABL was formally listed and the Banks share trading began on the following dates: Islamabad Stock Exchange Lahore Stock Exchange Karachi Stock Exchange

8th
10th

August August

2005 2005

17th August 2005

Today, all Allied Bank Limited shareholders can trade in the Banks shares at their will and 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.

IBRAHUM GROUP ASSUMES CONTROL OF ABL:

Ibrahim Group, through its different companies and sponsors owns more than 75% of Allied Bank. The Group apart from interest in financial sector is engaged in manufacturing of yarn and polyester staple fiber, trading and power generation. The consortium of Ibrahim Leasing Limited And Ibrahim Group, which has injected Rs. 14.2 billion into capital of Allied Bank of Pakistan for acquiring its 325 million additional shares, today assumed the control of the bank. The Governor, State Bank Of Pakistan, Dr. Ishrat Hussain handed over the relevant documents to Mr. Mohummad Naeem Mukhtar, Authorized Attorney of the consortium at a simple ceremony held at SBP, Karachi. Among those who present at the ceremony were Deputy Governor, Mr. Tawfiq A. Hussain and senior officials of

the State Bank of Pakistan, representatives of the Allied Bank and the consortium. Speaking on the occasion, the State Bank Governor has termed the successful reconstruction of ABL as beneficial both for the organization as well as for banking industry. He expressed the hope that the transfer of the management of ABL to a strategic investor will turnaround the bank and usher in a new era of growth and stability in the banking sector. He stressed upon the new Board of the Bank to run it professionally, prudently and with the highest standards of corporate governance. It may be recalled that the auction of 325 million additional shares as a part of reconstruction of Allied Bank of Pakistan was held under the chairmanship of the deputy Governor, State Bank of Pakistan, Mr. Tawfiq A. Hussain at Islamabad on 23rd July, 2004. In the auction, the consortium of Ibrahim Leasing Limited And Ibrahim Group were the successful bidder as they offered the highest bid of Rs. 14.2 billion for acquiring these additional shares, which constitutes 75.35% of the revised capital of ABL. The Federal Government approved the scheme for reconstruction of ABL, under section 47 of the Banking Companies Ordinance 1962 on July 24, 2004. After the approval of scheme by the Federal Government, the State Bank issued the Letter of Acceptance to the consortium of Ibrahim Leasing Limited And Ibrahim Group on July 26, 2004 in terms of which the full payment of Rs. 14.2 billion was made on August 19, 2004. On receipt of full payment by the Allied Bank of Pakistan Limited and verification of the sources of funds by the State Bank of Pakistan, the control of the Bank was handed over to consortium of Ibrahim Leasing Limited And Ibrahim Group.

3. General Profile of ABL

Allied Bank Limited operates by the following Vision, Mission & Values: 3.1. Vision: To become a dynamic and efficient bank providing integrated solutions in order to be the first choice of bank for all customers. 3.2. Mission: To provide value-added services to our customers To provide high-tech innovative solutions to meet customer

requirements To create sustainable value through growth, efficiency and diversity for all stakeholders To provide a challenging work environment, and reward dedicated team members To play a proactive role in contributing towards the society

3.3. Core values: The core values of Allied Bank are these: Integrity Excellence in Service High Performance Innovation and Growth

3.4. Objectives: Allied Bank has following objectives: Prime focus to earn profit by providing values to its customers To provide superior services to its customers To provide assistance in the development of the commerce and trade industry Focus on blending skills and experience towards creating an enabling environment Core focus is to inculcate a culture of collaboration intended to deliver world class customer service To develop and introduces new products for moving up small saving at all grass root level. Upgrade technology particularly computerization and automation of the banks operation. Enhance research on the banks operation and product development.

4.

Branch net work of ABL:

Allied Bank has 779 nationwide branches of which approximately 67% i.e. 513 are located in large metropolitan area, namely Karachi, Islamabad, Faisalabad, Lahore, Multan, Peshawar and Hyderabad. The network of 779 branches enables the bank to generate a substantial and stable deposit base, provide a wide range of banking products and other financial services and diversify lending risks geographically, as well as on the basis of credit and customer type. Allied Bank divided into four Centers i.e. North, Central-I, Central- II and South. These Centers shave the regions and the regions further have the sub branches of Allied Bank Limited. The details given there: Central I Group Regions Gujrat Sialkot Gujranwala Gulberg, Lahore City, Lahore Faisalabad Sargodha Total Branches 22 25 34 41 35 35 36 228 [Source: (http://www.abl.com.pk/)]

10

Central II Group

Regions Jhang Multan Shaiwal Bhawalpur Rahimyarkhan Total

Branches 19 31 25 22 12 109 [Source: (http://www.abl.com.pk/)]

North Group

Regions Abbottabad Kohat Peshawar Mardan Islamabad Rawalpindi Mirpur Muzzaffarabad Total

Branches 21 18 40 32 31 46 33 18 240 [Source: (http://www.abl.com.pk/)]

11

South Group

Regions Hyderabad Nawabshah Sukkur City Region, Karachi Saddar & Society, Karachi Nazimabad Karachi Quetta Total

Branches 26 17 22 34 34 35 34 202 [Source: (http://www.abl.com.pk/)]

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5.

Strategies:

Allied bank follow following strategies: New products: The introduction of new products for consumer and retail customers is one of the top priorities of the new Board. A new hybrid ATM/Debit card having a variety of innovative features has been launched. Allied bank also introduce many new deposits accounts like allied rising start, rewarding profit account. The Bank is in the process of building the requisite team and infrastructure for launching a number of unique and innovative consumer banking products. Diversification Strategies: Allied bank focused on diversification strategies like related diversification. For example now-a-days it focused on leasing. Differentiation strategy: In this strategy the firm wants to make its product unique as compared to its competitors and that uniqueness is appreciated by the buyer or customers. Allied focused on different cash management strategies like issuance of coupons same as demand draft. For example coupon against PSO Team Building: To form a team of qualified and dedicated professionals having relevant qualifications and expertise was a challenge for us. The induction of expertise required at most of the management positions has already been completed. The results of the year 2005 speak for the achievements and synergies achieved by the team. Technology Infrastructure: One of the foremost goals is to deploy technology based systems and standards across the Bank so that the customers can conveniently transact with the Bank at any time from any place. All the branches of Allied Bank have the online

13

connectivity to provide real time online services to its customers. Also, the internet banking facility has been launched to enable the customers to do banking at their own convenience. A best of the breed global core banking solution is planned to be deployed for unique customer experience. Productivity and Efficiency: From the very beginning, the new Board focused on cost efficiency and optimal utilization of the Bank's resources. The loan/deposit ratio has improved substantially to 74% from 39% as of August, 2004, while the NPLs to Gross Loans ratio have been reduced to 11% from 35%. The revenue to cost ratio significantly improved to 2.3% from 1.6% in 2004. Corporate Governance: There has been a great emphasis from the regulators on good governance over the last three years. The Board is committed to ensure implementation of good governance and best practices across the Bank. Market Development: Allied bank also focus on allied market development. It constructs new branches in different new area to capture large market share. Branch network increased in 2009 as compared to 2008. Customer Caring: Allied bank is very conscious in caring of its customer. It provides better facility to its customers as possible. Complaints and suggestions also considered as positive.

The Cover Concept Delivering Value to the people we serve

At Allied Bank, we believe that more than being economic engines, banks should also be transformed into enterprises that utilize their resources and engage in

14

activities designed to serve the people and become essential in serving societies delivering value and elevating the lives of communities we operate in. We are striving for a system thats less arbitrary and less complicated, in which each of our products has a fitting place in everyones lives. With a composition of several facets of the community on this years, we celebrate various aspects of our society where we conduct our business, every opportunity that belongs to Allied Bank belongs to you, and every value that Allied Bank believes in is crafted for you. The transition of our systems into this very thought might be subtle, but it is always on its way, every day!

15

6. Organization Structure
(Annexure 1) Overall Hierarchy of ABL

16

ORGANIZATIONAL SET UP OF ALLIED BANK OF PAKISTAN LIMITED (Annexure 2)

17

Branch structure
(Annexure 3)

GENERAL BANKING
18

Board of Directors
Mohammad Naeem Mukhtar (Chairman) Sheikh Jalees Ahmed (Director Muhammad Raffat Mohammad Waseem Mukhtar (Director) Khalid A. Sherwani (Chief Executive Officer) Sheikh Mukhtar Ahmed

(Company Secretary) (Director) Abdul Aziz Khan (Director) Mubashir A. Akhtar (Director) Pervaiz Iqbal Butt (Director)

Management
Khalid A. Sherwani (Chief Executive Officer) Mohammad Abbas Sheikh (Group Chief, Special Assets Management) Fareed Vardag (Chief Risk Officer) Shafique Ahmed Uqaili (Group Chief, Human Resources) Muhammad Shahzad Sadiq (Group Chief, Audit & CRR) Mujahid Ali (Group Chief, Information Technology) Tahir Hassan Qureshi (Chief Financial Officer) Khawaja Mohammad Almas (Head, Core Banking Projects) Muhammad Jawaid Iqbal (Group Chief, Corporate & Investment Banking) Muhammad Yaseen (Group Chief, Treasury) Tariq Mehmood (Group Chief, Operations) Waheed-ur-Rehman (Group Chief, Compliance) Zia Ijaz (Group Chief, Commercial & Retail Banking) Muhammad Raffat (Company Secretary)

7. Main Departments of ABL

Following are the main departments of Allied Bank Limited:

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7.1. Accounts Department: In this department the bank accepts the deposits from different accounts.

A. Nature Of Accounts:
There are five major types of accounts: i. ii. iii. iv. v. Joint Account Minors Accounts Sole Proprietorship Accounts Partnership firms Accounts Accounts for Pardah Observing Women

B. Forms of Accounts:
Allied bank provides following forms of accounts: a) PLS Account b) Current Account c) Allied Business Account d) Allied Rising Star e) Allied Basic Banking Account f) Allied e-Savers account g) Foreign Currency Deposit h) Rewarding Term Deposit i) Monthly Profit Plus j) Allied Advance Profit Scheme k) Behtar Munafa Account l) Behtar Munafa Term Deposit m) Allied Bachat Scheme

20

Note: The detail of all these accounts available in the next part of this report (Products of Allied Bank)

Opening of account (Opening process):

One of the primary functions of bank is to accept from the public. Continuity in the opening process is very necessary for the survival of the bank as it builds up the deposit as well as increase profitability.

Minimum Initial Deposits:

All deposit are opened with a fixed minimum initial deposit like a current account may be opened with minimum cash of Rs. 500/-. While opening an account following steps are under taken: i.

Proper Introduction: At first proper introduction of account holder is

taken from different sources.

ii.

Verification of Introducers Signature: Introducers signature shall

be verified carefully from his previous bank record and verification of its account is also taken.

iii.

Completion of account Opening Form: It is checked carefully that

account opening form is complete in all respects and signed by account opener and introducer.

iv.

Obtaining Identity Card: As an additional precaution attested copy of

national identity card of account holder and introducer will be obtained.

v.

Account Opening Register:

Relevant information is recorded in

Opening register after account Opening process is complete. Particular records in the account opening register are: Date Name Of Account Holder Account number

21

Closure of Account:
There may be following grounds for closing an account.

i.

Customers request:
Due to any personal reason or inconvenience if the customer request closing of his account than his account will be closed.

ii.

At banks directions:
If the customer not satisfactory operates the account then bank has directions to close account after giving notice to customer.

iii.

Death of customer:
On the death of customer the bank must stop the payment of cheques.

iv.

Insolvency of Customer:
If insolvency of the customer comes to knowledge of the branch then no further withdrawal will be allowed and account will not be operated and problem will be referred to higher authority.

v.

Order of Court:
In case of any legal order from court payment of cheques is also stopped and account cannot be operated.

7.2. Clearing Department:

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Clearing is a system in which cheques and other monetary instrument of other banks taken by their customer for deposit wheres bank send it back to specific banks for verification. After verification occurred the account of customer credited while other bank debited that account. The process is occur at same time and operated by HUB Branch Clearing is a system by which bank exchange cheques and other negotiable instruments drawn one each other within specified area and securing the payment for their clients through the clearing department. Clearing takes usually one day.

Inward clearing:
All the cheques and demand drafts received by Allied Bank, sent by other banks and branches for collection, are called inward collection. These cheques and drafts are drawn on the Allied Bank. It is outflow of the cash as the cash is paid to other banks and branches. But now-a-days no cash payment is made because all branches are online. Procedure: Bank receives cheques and drafts from other banks and branches that are drawn on same branch. After recording these in register stamping is done Then the payment is made to the banks.

Outward clearing:
All cheques and drafts deposited by the customer with the Allied Bank for collection from other bank locally or out of the city are called collection outward. These cheques and drafts are drawn on other banks and branches. It is in flow of the cash as the cash is collected from other banks and branches.

Procedure:

23

 Customers submit the cheques and drafts those are drawn on other banks and branches After recording and stamping them, these are sent to the concerned banks and branches After their documentation, payment is received from them and paid to the customers on whose behalf collection is done.

Outward Clearing Register:

When through clearing payment is given to the bank than this entry will be recorded in outward clearing register. The register contains the following information: Date Serial Number From whom it is received Drawer Drawee Cheque number Account number Amount

Inward Clearing Register:

When payment is received from the bank than entry is recorded in inward clearing register. The register contain following information: Serial number Date

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 Account Number Amount Remarks

N.I.F.T. Service.
NIFT is king of medium through which cheques are move among banks. This is an institution working under the SBP takes cheques from each bank and then after sorting deliver these cheques to their mentioned banks for verification. After verification takes back and deliver to banks with a report having result of clearing.

Services of Clearing:
i.

Normal Clearing:

Normal clearing means local clearing or clearing within district clearing and it is not restricted by timing. Usually it receives back within 24 hours. Operating area of normal function is local area (whatever is included). Services charges = Rs.0 ii.

Intercity Clearing:

Besides local clearing, there occurs an intercity request of clearing in which cheques from all over the Pakistan receives or sends for clarification. It usually takes more time than normal clearing. Intercity charges =Rs. 200 + Rs.32FED

iii.

Same day Clearing

If any cheque needs to clear on urgent basis and having amount 200,000 than it is transferred to specific bank immediately through NIFT service and receives bank in same day. Note that clearing case must be of local clearing area. Services charges = Rs.300 + 16% FED

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7.3. Online Department: On-line inter-branch transaction is a facility whereby customers maintaining accounts in On-line branch would be able to operate their accounts from any of the On-line branches across the country. The online service is being called IBR-Inter Branch Transaction. Specifically an On-line branch offers the following transactions to account holder for their On-line branch: Balance inquiry Cash Deposit/ Withdrawal Transfer of Funds Statement of account (Display/Print) The online transactions are accepted during banking hours.

Request for Online Transaction:

A Request for Online Transaction has been developed and has to be filled by the customer requesting for Online Transaction. A copy of the request is attached. These forms are available in the online branches and initially the branches help the customer in filling these forms. The customer will have to fill both requests as the counterfoil with following information: Branch name where the request is made Date of request The type of transaction is asked Applicants name and address CNIC of the Applicant if available Cheque number (in case of cash withdrawal or transfer) Title of account of Remote branch

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 Account at remote branch Amount in figures and words In case of funds transfer local branch account title and account number 7.4. Advances Department: The basic function of the bank is to accept deposits from general public. The Amount received through deposits is not kept idle. The bank keeps a percentage of deposits of cash reserve and balance is offered for loans and advances.

Types of Loans:
Allied bank facilitates its customers by providing different types of loans such as: i. ii. iii. iv. v. vi. Running Finance Cash Finance Letter of guarantee Working capital Finance Export Finance Agricultural Finance

i.

Running Finance:

Running Finance is short term loan usually allowed by the bank for a period of one year. The running finance account can be operated and daily sale proceed can be deposited into account. The markup is recorded on the products of daily outstanding balance. The running finance is suitable for meeting day to day financial needs of business.

ii.

Cash Finance:

Cash Finance is allowed against pledge of goods. The delivery of goods is made against payment.

27

iii.

Letter of Guarantee:

The bank issue letter of guarantee in local and foreign currency and thereby undertakes the responsibility on behalf of the customer for the debit, default merchandize by the customer whether such requirement is domestic or overseas.

iv.

Working Capital Finance:

The bank extends Working Capital Finance to the industry project. The working capital finance may be in the shape of running finance, cash finance, demand finance or one form of finance products of imports and exports.

v.

Export Finance:

The bank also provides the finance for exports. Such Finance may be preshipment or post shipment. The pre-shipment finance is to meet the financial requirements of the exports order before shipment, whereas the bank makes post shipment finance available after shipment of export consignment. The post shipment finance may be in the form of finance against export bills, negotiation of foreign bills or purchase of foreign bills.

vi.

Agricultural Finance:

Bank under Agricultural Finance scheme envisaged by the State Bank of Pakistan extends short, medium and long term farm and nonfarm credits. The farm credits are extends for production and the development purpose. Nonfarm credits are allowed for livestock (goats, sheep and cattle) poultry, factory including social factory and fisheries (inland and marine excluding deep and fishing). Note: The detail of agriculture finance available in the next part of this report (Products of Allied Bank)

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7.5. Cash Department:

i.

Receipts:

An individual who has account in the Bank can deposit money in his account. For deposit of the money the individual has to fill the deposit slip in which the account holder writes his name, Account number, amount of the money both in figures and in words. After filling the deposit slip the Cash amount along with the deposit slip is submitted with the cashier. The cashier collects the cash and counts it and after verification the cashier stamps the deposit slip. One part of the deposit slip is given back to the customer and the other part of the deposit slip remains with the bank for the record purposes. The cashier also record the deposits made by the customers in credit sheets daily. The deposits of all customers of the bank are controlled by mean of ledger account. Every customer has its own ledger account and has separate ledger cards in which his / her total record is kept. Moreover, when cashier forward the slip to the officer he/she record it in the computer and supervised by another officer. Bill collection is also one of the main functions of bank. Cashier has to prepare a list of bills serial number, a copy of which is to be sent to the corresponding organization. Receipts Register: The cashier or teller maintains a receipts register. The register contains the following heads: Serial Number Account Number Title of Account

29

 Commission Total amount received Initials

ii.

Payments:

The procedure of clearance of a cheque or payments is as following. First of all the customer presents his cheque to the officer. Then the officer check the cheque number in the computer for the verification whether the account holder has such amount in his account which he is demanding or not. If the computer passes the cheque, the Passing officer signs the cheque and sent it to the cash counter then cashier pays the written amount to the customer and then in the end cashier records the amount paid in computer. Payment Register: The cashier also maintains a payment register, it contains following heads: Serial Number Account Number Cheque Number Amount of cheque or instrument Initial 7.6. Remittance Department: One of the major functions of bank is remittance of funds from one customer to another. Remittance of funds through bank has become the most popular. Safe, sensible, and acceptable medium of settlement of payment as physical movement of cash is very risky and costly now a days this important service is provided to bank, customer and general public through instruments like: i. ii. Demand Draft Telegraphic Transfer

30

iii.

Deposit at call

i.

Demand Draft:

A method used by individuals to make transfer payments from one bank account to another. Demand drafts are marketed as a relatively secure method for cashing cheques. The major difference between demand drafts and normal cheques is that demand drafts do not require a signature in order to be cashed. D.D also known as "remotely created checks" A bank D.D has following particulars: Payers name Date of issue Amount in words and figures Drawer branch name and code Address Serial number

ii.

Telegraphic Transfer:

When a customer desire to send funds from one station to another on urgent basis, such funds are transfer through Telegraphic transfer. Following are its particulars: T.T on Amount in worlds and figures Name of sending branch Name of receiving branch and the Address of applicant

iii.

Deposit at Call:

These are made for tender purpose. These are kept as security when a tender is submitted by any person to company. If tender is approved then these are

31

payable to that company but if the person fails to get approval of tender than these are cancelled and will be refunded by the person. There is no limit of the period of deposits at call. 7.7. Foreign Exchange Department: Foreign exchange is defined as the mechanism of exchanging currency of one country with that of another country. Allied bank also deals in foreign exchange and has separate department.

Importance of Foreign Exchange:

Trade when take place among different countries there is need for settlement of payments mechanism because more than one currencies are involved in it foreign exchange department performs that function and facilitates the international trade.

Controlling Authority:
In Pakistan authority to regulate in State Bank of Pakistan and policies are made by SBP, which are followed by all dealers of foreign exchange, and they have to report to SBP at every months end.

Function of Foreign Exchange Department:

The department provides function of import, export letter of credit, export refinancing, negotiation, collection, foreign currency accounts, foreign currency drafts, telegraphic transfer, import on consignment basis, advances payments in import. Allied bank Foreign exchange department deals in following currencies. a) US Dollar c) Euro b) GBP (UK) d) Japanese Yen

Modes of Payments in import export:

These are different mode of payment for importer such as advance payment but in there is high risk for buyer another way in import on consignment basis and in

32

that commodity is send and then payment is given which involves risk for seller another method in collection is that there is involvement of their party but there is no guarantee of bank. So the softest way is letter of credit.

Letter of Credit:
Letter of credit is an instrument that is used in foreign trade.

Definition: A concept is developed between seller and buyer. Buyer goes to

bank makes his letter of credit. It is just like a guarantee. Guarantee to pay account from bank but if terms and conditions of letter of credit are fulfilled.

Parties Involve in L/C: Following parties are involved in it: Importer: The person who wants to open a letter of credit in favor of exporter
when importing something from abroad called an importer. i.

Exporter: The person who is selling in abroad letter f credit is open for
exporter.

ii.

Issuing Bank:
importer.

The bank that issue letter of credit is the bank of

iii.

Advising Bank: The bank which issuing bank negotiates in exports

country is called Advising Bank.

iv.

Export Company: The bank that works on behalf of exporter, Advising

bank and exporter bank may be the same but it is not necessary.

v.

Confirming Bank: In case if exporter hesitates for trading due to bad

economic conditions of importers country than confirming bank assure the exporter bank that payment are made to exporter.

vi.

Reimbursement Bank: This bank maintains the account of issuing

bank and it is situated in that country whose currency is used for payments.

Note: Foreign exchange department is not working in Yazman Branch.

33

8.

Products of Allied Bank Limited:

Allied bank has following products: 8.1. Deposit Accounts:

Allied bank has different types of accounts, these are discussed below:

a. PLS Account:
Allied Bank offers the PLS Savings Account facility to its customers with the following attractive features: Attractive return of up to 5.00% per annum Free Cash Deposit / Withdrawal / account to account transfer within city. Free Online Transactions, DD/TT/PO for depositors maintaining an average monthly balance of Rs. 2.500 (M) & above. Free issuance of cheque book at the time of account opening

b. Current Account:
Allied Bank offers the Current Account facility for individuals as well as for institutions and commercial customers. There are free Online Transactions, DD/TT for depositors maintaining an average monthly balance of Rs. 0.5 (M) & above Free issuance of cheque book at the time of account opening Free Cash Deposit / Withdrawal / account to account transfer within city

c. Allied Business Account:

Enjoy unlimited freedom and convenience with numerous free services all with Allied Business Account. Now with current account clients can make unlimited transactions via 779 online Allied Bank branches it is all due to allied business account.

34

On maintaining a daily minimum balance of just Rs. 50,000, you can enjoy the following services FREE of charge: FREE Pay Orders FREE Demand Drafts FREE Deposit FREE Withdrawals FREE Funds Transfer FREE Telephonic Transfer FREE Internet Banking No Cheque return charges

d. Allied Rising Star:

Allied Rising Star - Youths 1st Bank Account is a savings account for all youngsters below 18 years of age. It can help you save your pocket money and earn daily profit. And when youve collected enough, theres so much you can do with your savings like buy your favorite books and toys or a special present for your mummy or daddy, or even carry on saving! So if youre below 18 years of age, you can open your very own Allied Rising Star - Youths1st Bank Account and have all the fun that goes with it! When you open your account, its in your name, but you still have to take mummys or daddys or your guardians help to use it - like with: Signatures Taking cash out from the ATM or the Bank General banking activities You can use your account any time which means you can take money out with your parents or guardians help, or deposit money yourself, whenever you need to. You get 2 accounts when you become an Allied Rising Star. One is your

35

Main Account, which has all the money that you deposit in it. The second is called your Wallet Account, in which all your profit is collected. You get to make daily profit! Your profit goes in your Wallet Account everyday, which means your total savings increase everyday! But thats not all! The Bank gives you Bonus Cash on your profit too!

e.

Allied Basic Banking Account:

In order to provide basic banking facilities to its lower-middle class customers, Allied Bank has introduced the Allied Basic Banking Account (ABBA). Account can be opened with an initial deposit of Rs 1,000/= It is a non-remunerative account with a no minimum balance requirement. The Statement of Account is issued on a yearly basis. The account will be closed automatically if the balance remains zero for one year. No service charges on the account for a maximum of 2-withdrawals and 2deposits during a calendar month. Additional transactions will be subject to a service charge as per the Banks Schedule of Charges for every withdrawal/deposit. Unlimited withdrawals from ATMs

f.

Allied e-Savers account:

Saving has never been so flexible! The Allied e-Savers Account is a unique savings plan where you can earn returns as high as 7.5% with the convenience of 4 withdrawals a month! ALLIED E-SAVERS Slabs Rs. 400,001 up to Rs. 500,000 Rs. 300,001 up to Rs. 400,000 Rs. 200,001 up to Rs. 300,000 up to Rs.200,000 Profit Rate 7.50% 6.00% 5.00% 5.00%

36

[Source: (http://www.abl.com.pk/)]

Salient Features: Investment: Profit: Expected Profit Rate: Eligibility: Additional Benefits: 24 hours phone banking service Free Internet Banking facility SMS transaction alerts Allied Cash+Shop Visa Debit Card for cash withdrawals through any ATM including our largest network of ATMs across Pakistan and for debit transactions at various retail outlets First free cheque book - A/c Payee only Note: All profits payable are subject to applicable Zakat and Govt. Levies and changes in the Banks policy from time to time Rs. 10,000 to Rs. 500,000 Payable on Half Yearly basis. Up to 7.50% p.a Individuals

g. Foreign Currency Deposit:

Allied Bank offers the facility of opening Current, Savings and Term deposit Accounts. Foreign Currency accounts can be opened in US Dollar, Pound Sterling, Euro, and Japanese Yen at designated branches.

h. Rewarding Term Deposit:

A term deposit scheme which gives high rate of return and the flexibility of various tenure. Investment can be made with the minimum of PKR 25,000 only. Rate of Profit:
Rewarding Term Deposit Scheme

1 Month

3 Months 6 Months 12 Months

37

Rs.25,000 to Rs.9,999,999 Rs.10,000,000 & Above

7.50% 8.50%

9.00% 10.00%

9.75% 10.75%

11.25% 11.75%

[Source: (http://www.abl.com.pk/)]

Salient Features: Account Type: Term Period: Investment: Profit: Eligibility: Term Deposit 1-12 months Rs. 25,000 & above Payable on maturity Individuals & Institutions

i. Monthly Profit Plus:

Saving has now become all the more appealing with our Monthly Profit Plus Scheme, which provides you monthly profits on investments. The scheme is designed for a period of 1 Year with the following profit rates: Tenure Profit Rate Profit Payment 1 Year 11.00% p.a. Rs.917 * per month
[Source: (http://www.abl.com.pk/)]

Approximate monthly returns calculated on the investment of Rs.100, 000 Withholding tax, Zakat or other Government Levies are applicable separately Salient Features: Account Type: Term Period: Profit: Term Deposit 1 year Payable on monthly basis

38

 Minimum Deposit Amount: Eligibility: financial institutions) Additional Benefits:

Rs.25, 000 Individuals & Institutions (other than

Chequing Account for monthly profit credit 24 hour phone banking service Free internet banking facility SMS transaction alerts Allied Cash + Shop Visa Debit Card

j. Allied Advance Profit Scheme:

In keeping with our objective to bring you new and innovative services and banking products, we now introduce Allied Advance Profit Scheme that gives the entire profit upfront. Product Specifications: Minimum Investment Amount Rs.25, 000/= Investment Terms: 18 months Auto roll-over (optional) Profit Payment: Profit of Rs.14, 000 will be immediately credited in the customers current account. On an investment of Rs.100,000 Tax/Zakat will be applicable as per rules Additional Features & Benefits:

39

 Current account for regular banking needs Allied Cash+Shop Visa Debit Card Financing facility of upto 80% on investment Free internet banking facility 24-hour phone banking service Note: All profits payable are subject to applicable Zakat and Govt. Levies and changes in the Bank's Policy from time to time.

k. Rewarding Profit Account:

Rewarding Profit Account is introduced for the customers who have liquidity and can manage to maintain sizeable monthly average balance and earn greater profit on it. Rate of Profit: Rewarding Profit Account Rs.10 Million to less than Rs. 50 Million Rs.50 Million to less than Rs. 100 Million Rs.100 Million to less than Rs. 250 Million Rs.250 Million to Rs. 1 Billion Profit Rate 8.00% 8.50% 9.25% 10.00%
[Source: (http://www.abl.com.pk/)]

Salient Features: Account type: Profit: Maximum Investment Amount: Rs. Eligibility: Chequing Payable on monthly basis 1 Billion Individuals, and institutions

40

Additional Benefits: 24-hour phone banking service

l. Behtar Munafa Account:

A profit bearing chequing account with attractive rate of return, paid on monthly basis. Rate of Profit: Behtar Munafa Account Upto Rs.5,000,000 Rs.5,000,001 to Rs.25,000,000 Rs.25,000,001 to Rs.50,000,000 Rs.50,000,001 to Rs.100,000,000 Rs.100,000,001 to Rs.250,000,000 Rs.250,000,001 to Rs.500,000,000 Rs.500,000,001 & above Profit Rate 5.00% 6.00% 7.00% 7.50% 8.00% 8.50% 9.00%
[Source: (http://www.abl.com.pk/)]

Salient Features: Account Type: Profit: Highest Profit: Eligibility: Additional Benefits: 24-hour phone banking service Free internet banking facility Chequing Account Payable on monthly basis Upto 9.00% p.a Individuals, and institutions

41

 SMS transaction alerts Allied Cash + Shop Visa Debit Card

m. Behtar Munafa Term Deposit:

If you want to fix your money now to secure your future, this is the product for you. Rate of Profit: Behtar Munafa term deposits: Upto Rs. 5,000,000 Rs.5,000,001 to Rs.25,000,000 Rs.25,000,001 to Rs.50,000,000 Rs. 50,000,001to Rs. 100,000,000 Rs.100,000,001& Above 1 Month 5.00% 5.25% 5.50% 5.75% 6.00% 3 Months 6.00% 6.50% 7.00% 7.50% 8.00% 6 Months 6.50% 7.00% 7.50% 8.00% 8.50% 1 Year 7.50% 8.00% 8.50% 8.75% 9.00%

[Source: (http://www.abl.com.pk/)]

Salient Features: Account Type: Profit: Highest Profit: Eligibility: Fixed Term Deposit Payable on maturity Upto 9.00% p.a. Individuals, and institutions

n. Allied Bachat Scheme:

Allied Bachat Scheme is a PLS Term Deposit Scheme based deposit scheme whereby you can double your investment in just 7.5 years. Maturity Period: Minimum Deposit: Expected rate of Profit: 7.5 years Rs. 50,000/The deposit amount will be doubled in 7.5 years

42

Allied Bachat Scheme is a PLS Term Deposit Account, whereby you can double your investment in just 7.5 years.

This scheme comes with the following schedule of profit rates: No. of Years 0 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 ABL Projected Rates 0 7.00% 7.50% 8.00% 8.75% 10.00% 10.25% 10.50% 10.75% 11.00% 11.25% 11.50% 11.75% 12.00% 13.33% Repayment amount 50,000.00 53,500.00 55,625.00 58,000.00 60,937.50 65,000.00 67,500.00 71,000.00 74,187.50 77,500.00 80,937.50 84,500.00 88,187.50 92,000.00 100,000.00
[Source: (http://www.abl.com.pk/)]

Salient Features: Maturity Period: Minimum Deposit: of Rs. 10,000) Expected Profit Rate: Eligibility: Up to 13.33% p.a. All individuals and institutions 7.5 years Rs. 50,000 (additional investment in multiples

Free Internet Banking facility

43

Note: All profits payable are subject to applicable Zakat and Govt. Levies and changes in the Banks policy from time to time. 8.2. SME (Small and Medium Enterprises): The Commercial and Retail Banking Group (CRBG) caters to the needs of commercial entities and small and medium enterprises. A dedicated team of Relationship Managers first identifies the specific needs of each customer segment, then designs and delivers a facility package, which is in conjunction with those needs, and provides customers the full support and opportunity to take advantage of the various business prospects available in the market. Following are the main credit facilities we offer: Export Refinance Facility RF (Rural Finance)/CF (Credit Finance) Foreign Bill Purchase/Bill Discounting Facility Demand Finance Facility Letter of Guarantee 8.3. Agriculture: The Bank, under the guidelines of the State Bank of Pakistan, extends short, medium and long term Agriculture credit facilities to farming community of Pakistan on easy terms to increase the credit flow to Farm and Non-Farm segments of Agriculture sector.

a. Farm Loans:
Farm credit is extended for the purpose of production of crops to meet working capital expenses and Development of Agri land. Production Loans Inputs like seeds, fertilizers, pesticides, weedicides, herbicides, labour charges, water charges, vegetables, floriculture, forestry etc.

44

 Working capital finance to meet various farming expenses Development Loans: Improvement of agricultural land, orchards, etc. Construction of Godowns Purchase of Tractors, Machinery & other equipments Installation of Tube wells Farm Transportation, etc.

b. Non-Farm Loans:
Non-Farm Credit facilities are offered for Livestock (Cow, Buffaloes, Goats, and Sheep etc.), Poultry (Eggs, Day Old Chicks, Layer, Broiler, Hatchery) and fisheries (inland and marine, excluding deep sea fishing). Livestock Poultry Allied Bank also provides loan for Fisheries and Forestry same as live stock and poultry. 8.4. Other Services: Allied Bank Limited provides following other facilities: a. Utility bills collection b. Lockers facility c. Hajj services

a. Utility Bills:
Customers can pay their utility bills (e.g. electricity, gas, telephone) at any of the Banks branches. For further convenience, bills are collected on all working days during normal banking hours and also at certain times during the evening. Bills

45

can be paid with cash or cheque, plus customers can even drop crossed cheques in drop-boxes available at all branches. Furthermore, customers can also pay their bills using any of the Banks ATMs or via Internet Banking for SSGC and SNGP bills.

b. Lockers:
Allied Bank Lockers are available, at an annual fee, in four different sizes - small, medium, large and extra large. Locker holders are not required to have an account with the Bank. S. # 1. 2. 3. 4. Locker Size Small Medium Large Extra Large Annual Locker Rent (Current) Rs.1,500/ Rs.2,000/ Rs.4,000/ Rs.5,000/ Maximum Loss Coverage / Limit Rs.500,000/ Rs.1,000,000/ Rs.1,500,000/ Rs.2,000,000/

[Source: (http://www.abl.com.pk/)]

c. Hajj Services:
The Hajj Service is available to all pilgrims. The forms and other related services are provided by the Bank. Hajj applications are available with all branches during Hajj season, immediately after the Hajj policy is announced by the Government of Pakistan. 8.5. Internet Banking: Banking is now at your fingertips! Allied Direct Internet Banking offers you the convenience to manage and control your banking and finances - when you want, where you want! It's Simple, Convenient, Secure and Faster. So, just get clicking! Some of the advantages of Allied Direct Internet Banking are:

46

 Simple and Convenient Easier navigation and help provided at every step so you can make full use of this service. With Allied Direct convenience is just a click away. Secure and Faster Encrypted with latest tools and technologies, Allied Direct is the choice for secure and fast Internet Banking.

24x7 Access: You now have access to your account 24 hours a day, 7 days a week. You can transfer funds or pay bills, even when it's a holiday. 8.6. Online Banking: Allied Online Banking is a unique service being offering from Allied Bank. Through this service, your account in Allied Bank is available to you from any of our branches countrywide. No matter where you are in the country and whichever branch your account is maintained at, you can have your cheque cashed at any of our 784 online branches located in 250 cities. You can also use the service, from any branch, to deposit cash for instant credit into your account or any other account in Allied Bank. Similarly, the account-to-account Funds Transfer facility is also available for instant remittance. Your cheque drawn from a remote branch for credit into a beneficiarys account or encashment of a specified amount can also be presented by a third person at any branch. Whats more, making a Balance Inquiry and getting an Account Statement are additional services available to Account holders from remote branches. Allied Online provides a secure, efficient and convenient facility for making payments to beneficiary accounts from any of our branches countrywide.

47

Corporate customers requiring fund collection or a disbursement facility can use it for cash management services. 8.7. Corporate Leasing: Allied Bank started lease operations when it integrated with Ibrahim Leasing Limited. Facilities include leases for machinery, commercial vehicles and equipments. The Bank provides lease facilities to corporate and commercial clients in all industrial enterprises for balancing, modernization, replacement and expansion schemes. Leasing is a popular mode of financing because of its distinctive features like tax shield, preserve working capital, easy documentation and less processing time. Lease applications are processed at all Bank branches in Pakistan. 8.8. Corporate Banking: CBG offers a wide range of financial services to medium and large sized public and private sector entities. CBG has expertise in providing exemplary customized and personalized service to its Corporate Customers under the Relationship Management concept, which is basically catering to all the customer needs through One Window operations. CBG has strategically placed its presence in all major corporate hubs of the country namely Karachi, Lahore, Islamabad, Multan and Faisalabad. It presently enjoys a leading position in corporate lending in the country and has played a key role in economic development of the country by providing large facilities, long term, short term, working capital etc in all the key sectors of the economy. Despite being a late entrant in Corporate Banking, CBG has not only able to position itself as one of the prime banks for the existing clientele but also created and cemented new relationships with several top tier names in the market. 8.9. Investment Banking:

48

 Allied Bank IBG was established in 2005 and focuses on the Investment Banking market. It has the highest number of Successful Arrangement and Participation in Key Privatization & Acquisition Financing Transactions achieved by any Investment Banking Group in Pakistan. It has already penetrated the investment banking market by taking the lead in a number of major transactions and arranging funding of more than US$ 6 billion to date. Allied Bank IBG is reputable for building business on the basis of strong corporate relationships and showing a clear understanding of Structured Finance. The team consists of dedicated and young professionals with extensive experience, who provide various Advisory & Arrangement Services to Corporate Clients. Allied Bank-IBG has played an active role in Debt Origination and Distribution through innovative and tailor made solutions for its target customer base. It is also well known for having successfully completed mandates in a timely manner, and is regarded as one of the most active Investment Banking entities in the country today. 8.10.

Financial Institutions, Cash Management & Home

Remittances:
a. Financial Institutions:
ABLs Financial Institutions team shows a strong commitment to product and business development. Our client portfolio includes top domestic names, important regional players, top global financial institutions, and covers banks, NBFIs, leasing companies, modarabas, microfinance, the insurance sector and specialist money transfer companies. ABL's dedicated team of Financial Institution professionals brings a wealth of local and international expertise to all

49

facets of this complex industry, and can serve as your single point of contact for a comprehensive set of products and services, including: International remittances with immediate processing capability Payment and collection solutions Negotiation Guarantees Payments Trade finance L/C Issuance

b. Cash Management:
ABLs cash management team offers a full range of transactional banking services, from collections to cross-border payments, from customized services to comprehensive industry expertise. Having the largest real-time online branch network in Pakistan, combined with a host of value-added services, ABL is uniquely positioned to meet the demanding requirements of global corporates, public sector enterprises and top-tier domestic companies. With its collaborative approach to building and implementing solutions, ABL is committed to giving its customers the best service possible.

c. Home Remittances:
Allied Bank has rolled out its state-of-the-art e-Remittance services to facilitate international remittances sent to Pakistan by overseas Pakistanis. ABL has been significantly important in originating home remittances to Pakistan, and is continuously working to develop innovative ideas for maximizing its reach to all Pakistanis living abroad. We have identified several strategic partners in the main overseas markets, and will be providing a fully automated, end-to-end solution for non-resident Pakistanis. ABLs real-time online branch network one of the largest networks in Pakistan, consists of over 760 branches in 350 cities,

50

and provides domestic distribution of remittances to customers receiving money in Pakistan. A host of top international banks, exchange houses and funds transfer companies from across the world, including the Middle East, Europe, Asia-Pacific and North America, have been involved to make this a quality service. By implementing a fully automated, straight-through processing facility, we are in a position to activate an innovative set of remittance products. A host of options is available to non-resident Pakistanis under this service, including direct credit to account, cash payment over the counter and issuance of the Allied Express cheque, a payment instrument that can be honoured across the entire ABL network of branches. 8.11.

ATM Network:

Allied Bank has a vast network of over 538 ATMs installed in over 130 cities, which continues to grow at a rapid pace. Online Banking facilities are available to customers maintaining accounts at all online branches across the country. The following facilities are available: Cash Deposit for immediate credit to a remote branch. Remote Cheque Encashment from any online branch. Instant Funds Transfer between any 2 online branches. Remote Balance Inquiry and Statement of Account Additionally, account holders of all online branches can obtain the Allied Cash+Shop Visa Debit Card for use at ATMs as well as at POS terminals. To locate a branch simply select the city. 8.12.

Allied Visa Credit Cards:

Welcome to the world of privileges, benefits and savings with your Allied Visa Credit Card. In order to cater to your growing financial needs we are proud to introduce Allied Visa Credit Card with The Lowest Service Charge ever! So now

51

you can save money where it counts and spend lavishly at your favorite places with greater flexibility, convenience and most important-Affordability! With your Allied Visa Credit Card you can enjoy a variety of state-of-the-art features and unmatched value by spending at over 49,000 merchants across Pakistan and 27 million merchant outlets worldwide! And what more, you can also use your credit card at over 1 million ATMs internationally! 8.13.

Allied Visa Debit Cards:

Allied Visa Debit Card has following features: Get Cash You are always on the move, now your bank account is too. You can use your Allied Cash+Shop Visa Debit Card to withdraw cash directly from your bank account from over 3,500 ATMs in Pakistan - including Allied Bank's largest network of ATMs - and over 1 million ATMs worldwide Shop Anywhere Use the Visa power of your Allied Cash+Shop Visa Debit Card to shop at over 49,000 retailers in Pakistan and over 27 million retailers internationally Dine Out Go to all your favorite restaurants and order whatever you want without having to worry about how much cash you have in your pocket - thanks to your Allied Cash+Shop Visa Debit Card. Enjoy Traveling Imagine traveling without carrying cash. With your Allied Cash+Shop Visa Debit Card, you can buy your plane tickets and do all your shopping abroad without worrying about spending too much or running out of cash Get Groceries

52

Go groceries shopping with your Allied Cash+Shop Visa Debit Card and you will never have to worry about having enough cash in your pocket when you're standing in line at the cash counter. Have Fun Whether you feel like taking the family to see a movie at the cinema or treating some friends to a night of bowling, you can do it all and more with your Allied Cash+Shop Visa Debit Card. Fuel Up Now you can fuel up your car without emptying your wallet. Pay for all your fuel purchases with your Allied Cash+Shop Visa Debit Card. Stay Alert Now, be more secure and keep better track of your spending. With your Allied Cash+Shop Visa Debit Card, you can get SMS alerts when you make transactions on your Card. You can also access the details of your transactions via internet banking at abl.com.pk. So you are always updated and alert.

53

9.

Financial Analysis:
Allied Bank Limited Profit and Loss Account
2005 2006 17216 6793 10423 2007 21201 10093 11108 2008 30571 17273 13298 2009 41122 22422 18700

Rupees in Millions

Markup / Return / Interest earned Markup / Return / Interest expensed Net Markup / Interest income Fee, Commission, Brokerage and Exchange income Capital gain & Dividend income Other income Noninterest income Gross income Operating expenses Profit before provisions Donations Provisions - (charge) / reversal Profit before taxation Taxation Profit / (Loss) after taxation

9892 2025 7867

1471 196 273 1940 9807 4264 5543 -15 -694 4834 -1744 3090

1636 540 273 2449 12872 5289 7583 -9 -913 6661 -2264 4397

2259 1585 77 3921 15029 6174 8855 -28 -2874 5953 -1877 4076

3267 1571 59 4897 18195 8431 9764 -82 -3561 6121 -1964 4157

3470 2452 36 5958 24658 9609 15049 -97 -4416 10536 -3414 7122

54

Earning Per Share Rs.

4.35

6.18

5.73

5.85

10.02

(annual_report_2009/complete_annual_report/annual_report09.pdf.)

Allied Bank Limited Balance Sheet

2005 2006 2007 2008 2009 Rupees in Millions

Assets Cash and balances with treasury and other banks Lending to financial institutions Investments-Gross Advances-Gross Operating Fixed Assets Other assets Total assets-Gross Less: Provisions against non-performing advances Less: Provisions against diminution in value of investment Total Assets-Net of Provisions Liability & Equity Customer deposits Inter bank borrowings Bills payable Other Liabilities Sub-ordinate loans Total Liabilities Net Assets / Liabilities Share Capital Share premium Reserves Un-appropriated profit / (Loss) Equity Surplus on revaluation of assets

18035 5777 45269 119866 4721 7908 201576 -8659 -342 192575

24745 19050 47156 151705 6445 10800 259901 -7672 -203 252026

30408 18419 84151 178524 7549 11368 330419 -10117 -192 320110

25750 15793 84602 223640 11134 18399 379318 -10668 -1956 366694

27716 28123 96975 249887 12447 17955 433103 -12543 -2186 418374

161410 9694 2449 4472 0 178025 14550 4489 4316 1377 2732 12914 1636 14550

206031 18410 2278 5119 2500 234338 17688 4489 4316 1817 5608 16230 1458 17688

263972 22934 3495 7332 2499 300232 19878 5386 3419 2632 6971 18408 1470 19878

297475 27778 2952 13636 2498 344339 22355 6464 2341 3463 8537 20805 1550 22355

328875 39819 3162 11061 5497 388414 29960 7110 1695 4888 12198 25891 4069 29960

55

(annual_report_2009/complete_annual_report/annual_report09.pdf.)

9.1. Vertical Analysis: Vertical analysis of Balance Sheet:

Allied Bank Limited Balance Sheet 2005 Assets Cash and balances with treasury and other banks Lending to financial institutions Investments-Gross Advances-Gross Operating Fixed Assets Other assets Total assets-Gross Less: Provisions against non-performing advances Less: Provisions against diminution in value of investment Total Assets-Net of Provisions Liability & Equity Customer deposits Inter bank borrowings Bills payable Other Liabilities Sub-ordinate loans Total Liabilities Net Assets / Liabilities Share Capital Share premium Reserves Un-appropriated profit / (Loss) Equity Surplus on revaluation of assets 9.37 3.00 23.51 62.24 2.45 4.11
104.67

2006 9.82 7.56 18.71 60.19 2.56 4.29

103.12

% 2007 9.50 5.75 26.29 55.77 2.36 3.55

103.22

2008 7.02 4.31 23.07 60.99 3.04 5.02

103.44

2009 6.62 6.72 23.18 59.73 2.98 4.29

103.52

-4.50 -0.18 100. 83.82 5.03 1.27 2.32 0.00 92.44 7.56 2.33 2.24 0.72 1.42 6.71 0.85 7.56

-3.04 -0.08 100. 81.75 7.30 0.90 2.03 0.99 92.98 7.02 1.78 1.71 0.72 2.23 6.44 0.58 7.02

-3.16 -0.06 100. 82.46 7.16 1.09 2.29 0.78 93.79 6.21 1.68 1.07 0.82 2.18 5.75 0.46 6.21

-2.91 -0.53 100. 81.12 7.58 0.81 3.72 0.68 93.90 6.10 1.76 0.64 0.94 2.33 5.67 0.42 6.10

-3.00 -0.52 100. 78.61 9.52 0.76 2.64 1.31 92.84 7.16 1.70 0.41 1.17 2.92 6.19 0.97 7.16

56

Vertical analysis of Profit and Loss account:

Allied Bank Limited Profit and Loss Account % 2007 84.4 9 6.3 0.3 100

2005 Interest / Return / Non interest income earned Markup / Return / Interest earned Fee, Commission, Brokerage and Exchange income Capital gain & Dividend income Other income Total Interest / Return / Non Interest Expense Markup / Return / Interest expensed Operating expenses Provisions Taxation Total Expense-Percentage of total income Profit / (Loss) after taxation Total 82.6 12.4 1.7 2.3 100

2006 87.5 8.3 2.7 1.5 100

2008 86.2 9.2 4.4 0.2 100

2009 87.3 7.4 5.2 0.1 100

17.1 36.2 5.9 14.7 73.9 26.1 100

34.5 26.9 4.7 11.5 77.6 22.4 100

40.2 24.7 11.4 7.5 83.8 16.2 100

48.7 24 10 5.6 88.3 11.7 100

47.6 20.6 9.4 7.3 84.9 15.1 100

57

Interpretation Vertical Analysis:

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities and equities) in a balance sheet is represented as a proportion of the total account. The main advantage of vertical analysis is that the balance sheets of businesses of all sizes can easily be compared. It also makes it easy to see relative annual changes within one business. Since the computed value of cash and cash equivalents under vertical analysis taking total assets as base showing decreasing trend like it 9.37% in 2005 while 6.62% in 2009, so it indicates decrease. Lending to financial institutions show overall increasing trend. Other assets not indicate significant change. Current liabilities decrease as to total liabilities, where as total liabilities not increase de crease significantly. The volume of share capital also shows decrease from 2006 to 2009 as compared to 2005. Equity also shows same trend. In income statement for vertical analysis we take total income as base and measure the weights of other items. Mark up increase in 2006 as compared to 2005, while in the next years it also shows mix trend mean to say show increase and decrease. Fee income shows decrease. The trend of capital gain and other income shows mix trend.

58

9.2. Horizontal Analysis: Horizontal analysis of Balance Sheet: Allied Bank Limited Balance Sheet % 2007 168.61 318.83 185.89 148.94 159.90 143.75 163.92 116.84 56.14 166.23

2005 Assets Cash and balances with treasury and other banks Lending to financial institutions Investments-Gross Advances-Gross Operating Fixed Assets Other assets Total assets-Gross Less: Provisions against nonperforming advances Less: Provisions against diminution in value of investment Total Assets-Net of Provisions Liability & Equity Customer deposits Inter bank borrowings Bills payable Other Liabilities Sub-ordinate loans Total Liabilities Net Assets / Liabilities Share Capital Share premium Reserves Un-appropriated profit / (Loss) Equity Surplus on revaluation of assets 100 100 100 100 100 100 100 100 100 100

2006 137.21 329.76 104.17 126.56 136.52 136.57 128.93 88.60 59.36 130.87

2008 142.78 273.38 186.89 186.58 235.84 232.66 188.18 123.20 571.93 190.42

2009 153.68 486.81 214.22 208.47 263.65 227.05 214.86 144.86 639.18 217.25

100 100 100 100 0 100 100 100 100 100 100 100 100 100

127.64 189.91 93.02 114.47 100.00 131.63 121.57 100.00 100.00 131.95 205.27 125.68 89.12 121.57

163.54 236.58 142.71 163.95 99.96 168.65 136.62 119.98 79.22 191.14 255.16 142.54 89.85 136.62

184.30 286.55 120.54 304.92 99.92 193.42 153.64 144.00 54.24 251.49 312.48 161.10 94.74 153.64

203.75 410.76 129.11 247.34 219.88 218.18 205.91 158.39 39.27 354.97 446.49 200.49 248.72 205.91

Horizontal analysis of Profit and Loss account:

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Allied Bank Limited Profit and Loss Account % 2007 214.32 498.42 141.20 153.57 808.67 28.21 202.11 153.25 144.79 159.75 186.67 414.12 123.15 107.63 131.91 131.72

Markup / Return / Interest earned Markup / Return / Interest expensed Net Markup / Interest income Fee, Commission, Brokerage and Exchange income Capital gain & Dividend income Other income Non interest income Gross income Operating expenses Profit before provisions Donations Provisions - (charge) / reversal Profit before taxation Taxation Profit / (Loss) after taxation Earning Per Share Rs.

2005 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

2006 174.04 335.46 132.49 111.22 275.51 100.00 126.24 131.25 124.04 136.80 60.00 131.56 137.79 129.82 142.30 142.07

2008 309.05 852.99 169.04 222.09 801.53 21.61 252.42 185.53 197.73 176.15 546.67 513.11 126.62 112.61 134.53 134.48

2009 415.71 1107.26 237.70 235.89 1251.02 13.19 307.11 251.43 225.35 271.50 646.67 636.31 217.96 195.76 230.49 230.34

Interpretation Horizontal Analysis:

A procedure in fundamental analysis in which an analyst compares ratios or line items in a company's financial statements over a certain period of time. The analyst will use his or her discretion when choosing a particular timeline; however, the decision is often based on the investing time horizon under consideration.

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Since the computed value of cash show increasing trend from 2006 to 2009 as compared to the base year 2005. Lending to the financial institutions shows significantly increase as compared to base year. Investment and advances also shows increasing trend from 2005 to 2009. Other assets show normal increase in first whereas in 2009 it shows significantly increase as compared to 2008. Total assets also show increase from 2005 to 2009. So, we can say that the overall financial position of Allied Bank is going to be better in comparison of different years. Liability portion also shows increasing trend from 2006 to 2009 as compared to base year. Interest on borrowings shows significantly increase, whereas the other liabilities shows decline in 2009. Share Capital did not change in 2005 and 2006, while from 2007 to 2009 it shows increase. An income also increases from 2005 to 2009. Markup increased rapidly where as expenses are not increased so rapidly. Capital gain also increased with very significant ratio. The overall profits shows increasing trend as compared to expenses.

9.3.

Ratio Analysis:
Return on Assets:
Net Profit Total Assets 100

i.

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Years Net Profit (Rs. in million) Total Assets (Rs. in million) ROA (%)

2005 3090 19257 5 1.60

2006 4397 25202 6 1.74

2007 4076 32011 0 1.27

2008

2009

4157 7122 36669 4 418374 1.13 1.70

Return on Aassets 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 2005 2006 2007 Years 2008 2009

Return on Aassets

Interpretation:
ROA is an indicator of how profitable a company is relative to its total assets. It gives an idea as to how efficient management is at using its assets to generate earnings. Since the computed value of ROA shows increasing trend in 2006 as compared to 2005, while in 2007-08 it shows decreasing trend, the reason is that net profit decline and total assets are increased. It also indicates that assets are not utilized effectively. Moreover in 2009 ROA shows increasing trend, the reason is that net profit increased significantly as compared to increase in assets. So we can say that assets are utilized effectively and efficiently.

ii.

Return on Equity:

g a t n c r e P

Net Profit

100

Shareholder's Equity

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Years Net Profit (Rs. in million) Shareholders Equity (Rs. in million) ROE (%)

2005 3090

2006 4397

2007 4076

2008 4157

2009 7122

12914 16230 18408 20805 25891 23.93 27.09 22.14 19.98 27.51

Return on Equity 30 25 Percentage 20 15 10 5 0 2005 2006 2007 Years 2008 2009 ROE

Interpretation:
Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. Since the computed value of ROE is showing increasing trend in 2006 as compared to 2005, however, in 2007-08 it shows decreasing trend, the reason is that net profit show decreasing trend as compared to 2005, and it indicates that investors behavior not attractive. In 2009 it shows significant increase as compared to previous year the reason is that net profit show more increase as compared to increase to assets. So we can say that in 2009 the behavior of investors attractive because ROE higher from previous.

iii.

Profit before Tax Ratio:Profit Before Taxation 100

Gross Income

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Years Profit before Taxation (Rs. in million) Gross Income (Rs. in million) Profit Before tax ratio (%)

2005 4834 9807 49.29

2006 6661

2007 5953

2008 6121

2009 10536

12872 15029 18195 24658 51.75 39.61 33.64 42.73

Prof it Before Tax Ratio 60 50 40 30 20 10 0 2005 2006 2007 Years 2008 2009
Profit Before Tax Ratio

Interpretation:
Profit before tax ratio is a profitability measure that looks at a company's profits before the company has to pay corporate income tax. This measure deducts all expenses from revenue including interest expenses and operating expenses, but it leaves out the payment of tax. Since the computed value of PBT Ratio shows increase in 2006 as compared to 2005 because in 2006 company has low provision percentage and expense as compared to previous year. In 2007-08 it shows decline the reason is that in that years expenses and provisions are increased rapidly as compared to income. However, in 2009 it again shows increasing trend because expenses are increase by less percentage as compared to income.

iv.

Earnings per Share:

g a t n c r e P

Earnings available for common share holders No. of common shares outstanding

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Years Earning available for common shareholders (Rs. in million) No. common shares outstanding (in million) EPS (Rs.)

2005 3090

2006 4397

2007 4076

2008 4157

2009 7122

710.34 711.49 711.34 710.60 710.78 4.35 6.18 5.73 5.85 10.02

Earning Per Share 12 10 8 6 4 2 0 2005 2006 2007 2008 Years 2009

Earning Per Share

Interpretation:
EPS shows the portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability. The computed value of EPS of Allied Bank Limited is showing overall increasing trend. In 2006 it shows more increase because there is no increase in number of shares but increase in net profit. However, in 2007-08 it shows decline as compared to 2006 but increase in 2005. In 2009 EPS shows significant increase because in that year net profit also shows significant increase due to less expenses and provisions.

v.

Price Earning Ratio:

. s R

Market Value Per Share Earning Per Share

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Years Market value per share (Rs.) EPS (Rs.) Price-earning Ratio (X)

2005 54.81 4.35 12.6

2006 58.71 6.18 9.5

2007 98.56 5.73 17.2

2008 28.66 5.85 4.9

2009 58.12 10.02 5.9

Price Earnign Ratio 20 18 16 14 12 10 8 6 4 2 0 2005 2006 2007 Years 2008 2009

Interpretation:
It is a valuation ratio of a company's current share price compared to its EPS. Moreover price earning ratio measure the amount that investors are willing to pay for each dollar of a firms earnings; the higher the price earning ratio the greater the investor confidence. Since the computed vale of Price Earning Ratio is decrease in 2006 due more increase in EPS as compared to Market Price. In 2007 it shows significant increase the reason is that EPS decrease whereas market price shows significant increase. In 2008-09 it shows significant decline the reason is that share price decrease significantly.

vi.

Earning Yield:

s e m i T

Price Earnign Ratio

Earning Per Share Market Value per Share

100

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Years EPS (Rs.) Earning Yield (%)

2005 4.35 5.03

2006 6.18 6.61

2007 5.73 4.40

2008 5.85

2009 10.02

Market value per share (Rs.) 54.81 58.71 98.56 28.66 58.12 18.69 17.07

Earning Yeild 20 18 16 14 12 10 8 6 4 2 0 2005 2006 2007 Years 2008 2009

Earning Yeild

Interpretation:
The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each dollar invested in the stock that was earned by the company. The computed value of earning yield show increase in 2006 as compared to 2005 the reason is that in 2006 EPS show more increase as compared to market value per share. In 2007 it shows significant decrease the reason is that market value per share show significant increase in that in year. However in 2008-09 it shows overall increase due to the increase in EPS and decrease in market value.

vii.

Debt Ratio:

g a t n c r e P

Total Debt Total Assets

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Years Total Debt (Rs. in million) Total Assets (Rs. in million) Debt Ratio (X)

2005 17802 5 19257 5 0.92

2006 23433 8 25202 6 0.93

2007 30023 2 32011 0 0.94

2008 34433 9 36669 4 0.94

2009 388414 418374 0.93

Debt Ratio 0.95 0.94 0.94

s e m i T

0.93 0.93 0.92 0.92 2005 2006 2007 Years 2008 2009

Debt Ratio

Interpretation:
Debt ratio indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. A debt ratio of greater than 1 indicates that a company has more debt than assets; meanwhile, a debt ratio of less than 1 indicates that a company has more assets than debt. Used in conjunction with other measures of financial health, the debt ratio can help investors determine a company's level of risk. Since the computed value of debt ratio show mix trend and it is also less than 1 from 2005-09. So we can say that company has less debt burden and has more assets as compared to debt.

viii.

Advances to Deposits Ratio: Advances

100

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Deposits Years Advances (Rs. in million) Deposits (Rs. in million) Advances to Deposit Ratio (%) 2005 11120 7 16141 0 68.90 2006 14403 3 20603 1 69.91 2007 16840 7 26397 2 63.80 2008 21297 2 29747 5 71.59 2009 23734 4 328875 72.17

Advances to deposit Ratio

74 72 70 68 66
Advances to deposit Ratio

g a t n c r e P

64 62 60 58 2005 2006 2007 2008 2009 Years

Interpretation:
Advances to deposit ratio indicates that how much advances as compared to deposits, moreover, this ratio tells us about lending and deposits. The calculated value show increase in 2006 because advances show more increase as compared to deposits. In 2007 it show decline as compared to 2005-06 because deposits show significantly increase. However, in 2008-09 it shows increase because the increase in advances more.

ix.

Equity to Assets Ratio: Shareholders Equity 100

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Average Total Assets Years Shareholders Equity (Rs. in million) Average Total Assets (Rs. in million) Equity to assets ratio (%) 2005 12914 19257 5 6.71 2006 16230 22230 1 7.30 2007 18408 28606 8 6.43 2008 2009

20805 25891 34340 2 392534 6.06 6.60

Equity to Assets Ratio 8 7 6 5 4

Equity to Assets Ratio

g a t n c r e P

3 2 1 0 2005 2006 2007 Years 2008 2009

Interpretation:
The equity to assets ratio indicates the finance and profitability of the company. It shows what proportion of total assets is financed by equity, and hence what proportion is financed by loans and non-equity shares. A low equity to assets ratio means much of the business is financed by loans, or non-equity shares, whereas a high equity to assets ratio means that most or all of the long-term capital is equity. Since the computed value of equity to assets ratio shows overall increasing trend. In 2006 it show increasing trend because equity increase as compared to assets. While in 2007-8 it shows decrease the reason is that assets show significant increase. However, in 2009 it again shows increase because equity shows more increase as compared to assets.

x.

Equity to Deposits Ratio: Shareholders Equity 100

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Deposits Years Shareholders Equity (Rs. in million) Deposits (Rs. in million) Equity to deposit ratio (%) 2005 12914 16141 0 8.00 2006 16230 20603 1 7.88 2007 18408 26397 2 6.97 2008 20805 29747 5 6.99 2009 25891 328875 7.87

Equity to Deposit Ratio

8.2 8.0 7.8 7.6 7.4 7.2 7.0 6.8 6.6 6.4 2005 2006 2007 Years 2008 2009

Equity to Deposit Ratio

Interpretation:
This ratio measures the long term solvency position of a bank. This ratio tells us that how much customers deposit in the proportion of equity. The calculated value show decrease from 2006-07 as compared to 2005 because customers deposits increase rapidly. However, in 2008-09 it shows increase because equity show more increase as compared to customer deposits in that years.

xi.

Investment to total Assets Ratio:

g a t n c r e P

Investment 100

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Total Assets Years Investment (Rs. in million) Total Assets (Rs. in million) Investment to total Assets Ratio (%) 2005 44927 19257 5 23.33 2006 46953 25202 6 18.63 2007 83959 32011 0 26.23 2008 82646 36669 4 22.54 2009 94789 418374 22.66

Investment to Total Assets Ratio 30 25 Percentage 20 15 10 5 0 2005 2006 2007 2008 2009 Years Investment to Total Assets Ratio

Interpretation:
This ratio tells us the percentage of investment in total assets. It is helpful for the investors. The computed value of investment to total assets ratio shows decrease in 2006 because net total assets show significantly increase whereas investment show normal increase. In 2007 this ratio shows significantly increase because there is a significant increases in investment, moreover the market price per share also show significant increase in this year. However, in 2008-09 it shows overall decline because investment decrease and assets increase, the share price also shows decrease.

xii.

Advances to Assets Ratio:

Advances 100

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Total Assets Years Advances (Rs. in million) Total Assets (Rs. in million) Advances to Assets Ratio (%) 2005 11120 7 19257 5 57.75 2006 14403 3 25202 6 57.15 2007 16840 7 32011 0 52.61 2008 21297 2 36669 4 58.08 2009 237344 418374 56.73

Advances to Assets Ratio 59 58 57 56 Percentage 55 54 53 52 51 50 49 2005 2006 2007 Years 2008 2009 Advances to Assets Ratio

Interpretation:
This ratio is used to measure the credit risk of banks. It shows the proportion of lending as compared to assets. Since the calculated value show decrease in 2006-07 as compared to 2005 because advances show less increase as compared to total assets. In 2008 it shows increase because advances show significant increase. However, in 2009 it show again decrease because the increase in advances is less in comparison of total assets.

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xiii.

Income to Expense Ratio:

Gross Income Operating Expenses

Years Gross income (Rs. in million) Operating Expenses (Rs. in million) Income to Expense Ratio (X)

200 5 980 7 426 4 2.30

2006

2007

2008

2009

12872 15029 18195 24658 5289 2.43 6174 2.43 8431 2.16 9609 2.57

Income to Expense Ratio 2.7 2.6 2.5 2.4 Times 2.3 2.2 2.1 2 1.9 2005 2006 2007 Years 2008 2009 Income to Expense Ratio

Interpretation:
This ratio indicates that how much times income is sufficient to pay the operating expenses. This ratio also shows the profitability trend of an organization. Since the computed value of income to expense ratio is showing overall increasing trend. In 2006-07 it is constant but increase as compared in 2005. In 2008 it shows decline because expenses show more increase as compared to income. However in 2009 it shows increase because income show more increase. Overall all companys performance is better in 2009 as compared to other previous years.

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xiv.

Dividend Yield (Based on cash dividend):

Dividend Per Share Market Value per Share

100

Years Dividend per share (Rs.) Market value per share (Rs.) Dividend Yield (%)

2005 1.58

2006 1.57

2007 2.27

2008 2.29

2009 3.96

54.81 58.71 98.56 28.66 58.12 2.89 2.67 2.30 7.99 6.81

Dividend Yield 9 8 7 Percentage 6 5 4 3 2 1 0 2005 2006 2007 Years 2008 2009 Dividend Yield

Interpretation:
A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. The computed value of dividend yield shows decline from 2006-07 as compared to 2005 because in 2006 dividend remain same but share price increased, however, in 2007 share price shows significantly increase whereas dividend shows normal increase. In 2008 it shows significant increase because share price shows significantly decrease,

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while in 2009 it shows again decrease the reason is that share price shows more increase as compared to dividend.

xv.

Return on Investment:

Operating Profit

100

Operating Fixed Assets Years Operating profit (Rs. in million) Operating fixed assets (Rs. in million) ROI (%) 2005 4834 4721 2006 6661 6445 2007 5953 7549 2008 6121 2009 10536

11134 12447 54.98 84.65

102.39 103.35 78.86

Return on Investment 120 100 Percentage 80 60 40 20 0 2005 2006 2007 Years 2008 2009 ROI

Interpretation:
A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. This ratio also indicates how much we utilize our assts efficiently. The computed value of ROI show normal increase in 2006, the reason is that operating profit shows more increase as compared to operating assets. In 2007-08 it shows decline because assets increased rapidly in that years, so we can say that operating assets are not utilized effectively and efficiently in 2007-08. However, in 2009 it shows

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increasing trend the reason is that profit shows significantly increase. So, we can say that assets utilized efficiently. 10. SWOT

Analysis:

A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. 10.1.

Strengths:

A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. The strengths of ABL include: Strong IT system: Allied bank has very strong IT system. All transactions take place online and have record at three places like in branch, in Hub branch and at the head office. Computers and other devices work very properly and no problems occur even a single time. Moreover, IT system of allied is very secure. Strong financial position: Allied banks financial position is very strong as compared to other banks like Askari Bank, Bank Alflah, and Nib bank. High customer loyalty: Customer loyalty is very high of Allied bank because according to my observation all customers are satisfied for the dealing with allied bank. Largest number of ATMs in the country building close customer relationship. Good and familiar brand name because it is too much old bank in Pakistan. Secure Banking because the user IDs of all employees is very secure it not based only passwords but thumb or finger impression on the device of

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the person whose ID is logged in is necessary, otherwise, ID is not logged in. ABL is the 4th largest Bank in Pakistan, having 779 branches and 24 controlling offices. Proper internal audit based at head office in accordance with SBP requirements ABL provides its customers a complete range of banking products and services including retail banking, corporate and institutional banking, trade finance and consumer finance. ABL as a qualified management in their knowledge and experience as compared to other banks like UBL. No employee union in ABL. ABL has fastest mode of home remittance from overseas like 3 days through Allied express. The bank is passionate about high performance, innovation and delivering value to its customers. For employees entertainment and relaxation, ABL gives the facility that the employees may get the 36 medical leaves and 1-month vacation in one year with their pay.

10.2.

Weaknesses:

The absence of certain strengths may be viewed as a weakness. Following are the weakness of ABL: High (ADR) Advance to Deposit Ration (above SBP's requirement of 70 per cent) shows lower room for growth in loan book. ABL did not introduce any Islamic product. No entertainment facility for the customers like newspaper. Late promotions of employees also a weakness of ABL because it promotes its employees to late by this employees satisfaction level also decreased.

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 In spite of the presence of technology many jobs are done manually like DD register, Deposit register, Payment register, etc. Poor reward system because ABL gives very low reward to its employees on good performance by this the satisfaction level of employees decreased. Shortage of training programmers for new and existing employees because it offers no training programs for existing employees. Moreover, mostly new employees trained on the job by this their efficiency decreased. Branch network is restricted to urban areas underestimating the potential of rural banking needs. In many braches the employees are less so it creates more work burden on the existing one. Lack of proper advertisement Outlook of branches also not attractive in remote or backward areas

10.3.

Opportunities:

The external environmental analysis may reveal certain new opportunities for profit and growth. Following are the opportunities for ABL: Free staff training facilities offered by foreign correspondents should be taken up. SBP policy to allow Islamic banking business separately Now ABL has no facility of Car Financing so, it is opportunity for ABL that it provide car financing facility. There in also an opportunity for ABL in house financing. It has an edge on newly established banks as it has a large network of branches. It can earn a lot by entering this segment of business. Bank can open branches in foreign countries and in rural areas of Pakistan as well in order to make it more stable and strong.

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 As a result of different steps taken by the government regarding the betterment of the economy, small borrowers are attracted to get the financing and start business. So, the ABL has an opportunity to attract the customers by giving them more attracted schemes. Establishment of marketing division with the help of marketing professionals that can conduct proper market survey and launch new schemes and services that are successful and used by customers.

10.4.

Threats:

Changes in the external environmental also may present threats to the firm. Following are the threats for ABL: Entry of new banks domestic and foreign as well. Participation of foreign banks in local market which can hurt the market share. New regulations of SBP. High taxes rates also a thereat because by this profit decreases. Financial environment is changing day by day; new technologies are introduced by foreign banks that provide customers by efficient and quick services. Decline in private and public sector credit due to tight monetary policy. Because of unfair promotion system and absence of proper and recruitment techniques competent persons may move to other banks. There is a need of proper marketing because certain schemes face failure due ignoring marketing of the product. Failure of the schemes or products is a threat because it becomes a cause of decrease in profits. Political instability. Sudden rise and fall in the trade and industry conditions and stock exchange business of the country also adversely affect the growth of banking sector.

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11. Suggestions

and Recommendations:

After a thorough analysis of financial performance and operations of Allied Bank Limited during my internship, I am able to draw following suggestions and recommendations for the bank so that I should be the top performing bank in the banking industry of Pakistan and also internationally. Emphasize on Marketing: Although the banks are regarded as truly a finance driven organizations, but todays dynamic environment has changed the scene of banking activities. Now, the banks need to emphasize as heavily on advertisement as it places upon the attraction of funds. Allied Bank needs to advertise heavily to show the customers its existence and readiness to facilitate them at any time. Heavy advertisement provides a perception of high performance and a sense of belongingness. Job Rotation: Most of the bank employees are stick to one seat only, which result that they become master of one particular job and lose their grip on other banking operations. So, all employees should have regular job rotation. Decrease manual work: In ABL mostly work also maintained that is a work load on the employees. They feel extra burden because they perform it duly. So, manual should be decreased to decrease the employee workload. Introduction of new Products : Allied Bank needs to introduce new products for the sake of facilitating the customers well and to retain them and to attract more customers. Allied Bank has not yet entered in the business of car financing. It can capture

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market and easily earn profits by it because it has large number of branches all over Pakistan. ABL should introduce the Islamic products because it has the potential market. Introduction of training programme for employees: Allied Bank has offered very rare training programme for the employees by this its employee not aware timely and properly about the modern banking. So, it is necessary for the ABL that it should introduce training programme for new and existing employees as well. Revitalization of Compensation system: Currently, the compensation system of the Allied Bank is very vague. It is offering very little pays to its employee. On the other hand, new banks have got a perception of paying high pays, which could result a shift of talented personnel from ABL to other banks. So, ABL needs to revise its compensation system by benchmarking that of its competitors to retain the professional at hand. Revise Promotion system: As discussed earlier, the promotion system of ABL is very slow. I know the people who have worked years and years on the same designation and have not been promoted. This can be cause of employee dissatisfaction and high turnover. So, the bank needs to identify the necessary changes in its promotion system to eradicate favoritism. Installation of more ATMs: At current the ATMs are only located only at the main branches within a city. Allied bank has a broad base of branch network all round the country. So, it can use this advantage coupled with the installation of more and more ATMs to provide convenience to its customers. Introduce customer oriented products / polices: During some previous years Allied Bank launched some schemes and policies, which were not needed by customers. These were also not marketed properly and launched without any market research which caused their failure and incurred heavy losses to the bank. In this regard

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the Marketing Information System (MIS) should be provided with more funds to search out new ways to satisfy the needs of customers. Renovation of remote branches: The branches those are located in remote areas their outlook is not good and established on inferior or old minded layout. So, it is suggested that should be renovated and established according to the current banking building or modern building patterns to attract the customers. Maintain staff requirement in all braches: In most of the branches of ABL staff or employees are less from requirement by this existing employee feels overburden. Moreover, customers suffer in trouble due to shortage of staff. So, it is suggested that ABL should maintain staff requirement in all branches. Establish branches in rural areas: The branch network of ABL is restricted to urban areas; there is no availability of branches in rural areas. So, it is suggested that ABL should increase its branch network in rural areas. These suggestions and recommendations are being given by me based on my personal judgments, other people might not agree with them. However, I tried to cover the basic suggestions that would prove worthy for the bank.

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12. Conclusion: Allied Bank Limited was the first Muslim bank to be established in Pakistan. It started out in Lahore by the name Australasia Bank before independence in 1942; with a paid-up share capital of Rs. 0.12 million under the Chairmanship of Khawaja Bashir Bux, the Bank attracted deposits equivalent to Rs. 0.431 million in its first eighteen months of business. It was renamed Allied Bank of Pakistan Limited in 1974 and then Allied Bank Limited in 2005. In August 2004, because of capital reconstruction, the Banks ownership was transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group. 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 780 online branches in Pakistan and offers various technology-based products and services to its diverse clientele. Moreover, now Allied Bank's paid up Capital & Reserves exceed Rs. 13 billion, deposits exceed Rs. 325 billion and total assets exceed Rs. 418 billion. Allied Bank is amongst the leading commercial banks in the country and has always played a pioneering role in introducing innovative technology based banking services. The role played by its human resources is highly valued both in terms of their skills and their leadership and dedication in implementing the state of the art banking services. ABLs aim is to provide a host of products and services to its customers; substantial ground work has been done to establish a strong consumer banking business. Furthermore, to achieve this objective, professionals from across the industry have been recruited into areas of product development, sales, credit policy, research, consumer analytics, call centers and service quality

84

departments. The consumer portfolio, comprising the debit card, credit cards, auto loans, personal loans and mortgages will be established phase by phase. However, bank is confident that its strengths, together with its largest network of online branches, a superior technology platform and a big customer base, will take the Banks profitability to new heights. Operations group of ABL continued to focus on centralization of processes and business continuity. The Internal Controls Division under the ambit of Operations Group is entrusted with the responsibility of expediting rectification of irregularities and control lapses in branches operations and various controlling offices pointed out through audit reviews. On the other hand the Compliance Group, through its regional offices, ensures adherence to the regulatory requirements and Banks internal policies and procedures, with specific emphasis on KYC. The Commercial & Retail banking is the core business arm of the bank generating a major share in income. It caters to the needs of the customers from almost every segment of life including Individuals like salaried persons, students, senior citizens, house wives and Businesses from small shops and cottage industries to middle / large size organized businesses. Consumer Retail Banking Group offers full range of Deposit and Advances products from general to specific & tailor-made solutions to meet the customer needs. This includes various deposit products, Commercial & SME Loans, Agriculture Loan, Trade Facilities, online banking including instant transfer of funds within the entire banking network. The Group is driven by the ambition to continue contributing as the leading Business, serving our 2.5 million longstanding customers with candid and reliable banking services. The Commercial & Retail Banking group is organized under four geographical territories consisting of 27 regions and more than 780 branches (100% online) spread across the country for providing quality banking services to the customers. Consumer Retail Banking Group has always been focusing to establish Allied Bank as market leader by proactively identifying needs of its customers and satisfying those needs in true spirit. Accordingly innovative and unique business products were offered from the platform of

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CRBG including Allied Advance Profit Scheme, Allied Business Account, Allied Business Finance and Agriculture Finance Products which significantly contributed to our customer convenience. As a matter of fact Allied Advance Profit Scheme was first of its kind in the banking history of Pakistan. In terms of commercial assets, focus was laid on various sectors of economy and large number of customers was brought to the fold of the bank from different sectors, such as, Rice, Cotton, Pesticide, Wheat, traders and exporters. The Corporate Investment Banking Group (CIBG) holds the Banks loan portfolio and enjoys a leading position in corporate lending in the country. It offers a wide range of financial services to medium and large sized public and private sector entities. These services include, providing and arranging tenured financing, corporate advisory, underwriting, cash management, trade products, corporate finance products and customer services on all bank related matters. The Bank has played a key role in the countrys economic growth by providing a vast amount of funds to large industrial and corporate sectors of the economy. And because it has played a big part in major investment and corporate banking transactions, Allied Bank is considered one of the top investment banks in the country today. ABL also remained active in securing cash management mandates during the year and also managed to increase its share in trade related business. Furthermore, due to enhanced focus on the foreign remittance business, the revenue from this avenue has increased manifold during the year. Allied Bank received the mandate of sixteen international money-transfer companies as well as a key regional bank. The Bank IT team has developed an in house tool Allied express that has enhanced the capacity and speed of handling the remittance business. Pakistans economy continues to face major challenges emanating from persistent inflationary pressures, weak fiscal position, sensitive security situation in the country and structural bottlenecks, mainly severe power shortage. Although external current account deficit and economic growth have shown improvement in FY 2010, the overall recovery remains fragile. Meanwhile, the

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uncertainty attached with global economic outlook also adds to the difficulties. The recent catastrophic flooding in major parts of the country, leading to huge loss of lives, displacement of a large segment of population and extensive damage to infrastructure, presents another formidable challenge. The global slow down emanating from a severe financial crisis posed serious challenges for the economic mangers around the globe. Shocks of the crises impacted the Pakistans economy indirectly, resulting into substantial decline in foreign investment inflows and limiting of funding opportunities. Economic activity in Pakistan during 2009 remained subdued owing to major challenges in the operating environment; GDP grew by only 2.0% during FY09 compared to 4.1% in previous year, mainly due to sensitive security situation, acute energy shortage, and weakening demand on account of high inflation. The lower GDP growth was on account of negative growth in large scale manufacturing sector and slowdown in growth of services sector. By this scenario ABL also effected. Because if we review the year 2008-09, overall financial crisis occurred, all banks were affected by this crises, Allied Bank also one of them. However, in this declining condition ABL showed performance upward from the previous years. Under the current circumstances, ABL pursued its strategy of consolidation and remained focused on the improvement in quality of assets and achievement of a more favorable deposit mix. In line with this strategy, the Bank continued to align its risk management framework to effectively respond to changing dynamics. Meanwhile, efforts to enhance customers satisfaction continued during the year through strengthening delivery capabilities by leveraging technology platform and the Banks extensive outreach and developing innovative products and solutions. Allied Banks Profit before Tax increased to Rs. 10,536 million during 2009 as compared to Rs 6,121 million in 2008, increase of 72.1%. Profit after Tax also rose to Rs. 7,122 million in 2009 as against Rs. 4,157 million in 2008, showing an increase of 71.3%. Consequently, the ROA and ROE of the Bank increased to 1.81% and 30.5% as compared with 1.21% and 21.2% in previous year. The EPS of the Bank stands at Rs. 10.02 for 2009 compared to Rs. 5.85 in previous

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year. The balance sheet size of Bank increased to Rs. 418,374 million as at December 31, 2009, rise of 14.1%. Equity of the Bank increased upto 34% at December 31, 2009. This shows Banks focus on balance sheet strengthening while also ensuring regulatory compliance. Deposits grew by 10.6% to Rs. 328,875 million as at December 31, 2009 compared to Rs. 297,475 as at December 31, 2008. Gross advances increased to Rs. 249,887 million at December 31, 2009 compared to Rs. 223,640 million at December 31, 2008, rise of 11.74%. Net Mark-up / Interest Income of the Bank increased upto 40.6% by Rs. 18,700 million as compared to Rs. 13,298 million in the previous year. NonMark up income rose to Rs. 5,958 million showing an increase of 21.7%. The Banks operating expenses increased by 13.9% to Rs. 9,609 million during 2009. The Gross Income to Expense ratio has improved to 2.57 times during 2009 from 2.04 times in 2008. The financial position of ABL is better as compared to other banks like NIB, Askari Bank, etc. Its IT system also better from other banks. But the major drawback of ABL is that it not focused on advertisement, moreover, it has no proper promotion plans for its employees so, and they are not satisfied. However, in spite of weakness, it has a great room in the market to grow. It has potential to work in car financing or house financing or introduce Islamic products. The macroeconomic outlook remains unstable owing to slippages in fiscal deficit and government borrowings against the target. Such fiscal developments are inconsistent with the objectives of macroeconomic stability. Thus aggravating expectations of rising inflation have kept an upward pressure on interest rates. As a result sustainability of credit to private sector seems uncertain. In these challenging times, the asset quality of the banking industry is likely to remain under pressure. ABL being watchful of the economic conditions would continue with its strategy of achieving steady growth by maintaining quality of earning assets and optimizing efficiencies to reduce cost. Meanwhile, its focus would remain on providing state of the art banking services to its large customer base and aim for higher customers satisfaction levels by further improving service quality. In this regard ABL is continually upgrading the technological

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infrastructure and delivery systems and proactively enhancing the skill set of field functionaries. Through concerted efforts of its team, the implementation of a world class core banking software application at the branches is progressing well.

13. References: http://abl.com/thebank/pdf/annual_report_2009/complete_annual_report/annual_r eport09.pdf. (2009). www.abl.com. www.docstoc.com. www.investopedia.com. www.scribd.com . reports.blogspot.com/.../internship-report-allied-bank-ltd.html .

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Overall Hierarchy of ABL (Annexure 1)

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ORGANIZATIONAL SET UP OF ALLIED BANK OF PAKISTAN LIMITED (Annexure 2)

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Branch structure
(Annexure 3)

GENERAL BANKING
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