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Banking System

Banking services are extremely important for both economy developed and developing economy such as Pakistan. Banking services serve two primary purposes. First, by supplying customers with the basic mediums-ofexchange (cash, current accounts, and credit cards), banks play a key role in the way goods and services are purchased. Without these familiar methods of payment, goods could only be exchanged by barter (trading one good for another), which is extremely timeconsuming and inefficient. Second, by accepting money deposits from savers and then lending the money to borrowers, banks encourage the flow of money to productive use and investments. This in turn allows the economy to grow. Without this flow, savings would sit idle in someone’s safe or pocket, money would not be available to borrow, people would not be able to purchase cars or houses, and businesses would not be able to build the new factories the economy needs to produce more goods and grow. Enabling the flow of money from savers to investors is called financial intermediation, and it is extremely important for the growth of economy.

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Benefits of banking for economy The deposit and loan services provided by banks benefit an economy in many ways. First, Current account, because they act like cash, make it much easier to buy goods and services and therefore help both consumers and businesses, who would find it inconvenient to carry or send through the mail huge amounts of cash. Second, loans enable consumers to improve their standard of living by borrowing money to purchase cars, houses, and other expensive consumer goods that they otherwise could not afford. Third, loans help businesses finance plant expansion and production of new goods, and therefore increase employment and economic growth. Finally, since banks want loans repaid, banks choose borrowers carefully and monitor performance of a company’s managers very closely. This helps ensure that only the best projects get financed and that companies are run efficiently. This creates a healthy, efficient economy. In addition, since the owners (stockholders) of a company receiving a loan want their company to be profitable and managed efficiently, bankers act as surrogate monitors for stockholders who cannot be present on a regular basis to watch the company’s managers.

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BANKING INDUSTRY IN PAKISTAN

After the emerging of Pakistan our entire Banking System collapsed because Hindus who migrated to India owned most of the banks in Pakistan. Pakistan received only 631 branches of scheduled Banks out of 3496. Immediately after the birth of Pakistan the numbers reduced to 231 branches due to shut down of banks in Pakistan by the Hindu owners. Realizing the necessity of Banks, attention was soon given to this sector in Pakistan. In 1947, in Pakistan there is only two Muslim Banks, namely, Habib Bank Limited, Australasia.State Bank of Pakistan was set up in 1st July 1948.In 1948 another banks was made by the Government to fulfill the needs of consumer banking. In 1957 PICIC was established. In 1959-60 four banks were established namely, United Bank, Commerce Bank, Standard Bank, And Eastern Mercantile Bank. In late 1960’s some foreign banks started financial services. In 1971 local private banks were nationalized. Till the end of 1980s, Pakistan’s banking sector was heavily regulated in most of the areas of activities. The regulated and nationalized banking system created an industry structure where competition was unknown to management of the banks. Forced by the structural reforms agenda and the desire to strengthen its financial

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system, Pakistan moved towards liberalization and financial sector deregulation in 1990. It started with the privatisation of state-owned commercial banks and induction of new ones from private sector to establish a market-based banking system. The government seems to be conscious about improving the efficiency of banking sector in Pakistan. Few considerable efforts have been made in this regard which include enhanced capital adequacy, strengthening asset quality, improving management and increasing earnings. Furthermore, interest rate deregulation, abolition of credit controls and further developments in capital market have also led towards a more competitive banking environment. The market for banks is diverse in Pakistan comprising nationalized commercial banks (NCBs), Private banks and foreign banks. In 1993, there were 33 commercial banks in Pakistan 14 being local and 19 foreign. By the end of 2001, the number of banks has increased to 43, 24 being local and 19 as foreign2. The deregulated and increasingly competitive environment poses a challenge in terms of efficiency, as the most efficient banks would survive while the less efficient will be driven out of the market During early 1990’s government encouraged private sector to enter in the banking sector. The Government including Muslim Commercial Bank (MCB), Allied Bank Limited (ABL), United Bank Limited (UBL), National Bank of Pakistan (NBP) and Habib Bank Limited (HBL) has privatized all nationalized commercial banks.

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History Of United Bank Limited (UBL)

The history of UBL can be divided into four main Phases 1. Formulation 2. Nationalization 3. Privatization 4. Today

1.Formulation In June 1957, Mr. Agha Hassan Abidi decided to open a Bank different from others, to provide modern facilities to trade and industry and to promote thrift and habit of saving amount common thereby stimulating the economy as a whole. Necessary formalities completed for obtaining registration certificate from State Bank of Pakistan to perform business activities. After passing through all these formalities on 7th November, 1959 United Bank Ltd came into existence as a Schedule bank. The Head office of the Bank was established in the New Jubilee Insurance House, 1.1 Chandrigar Road Karachi. It was registered as a joint stock company. The bank was incorporated with an Authorized Capital of Rs 20,000,000 and issued and subscribed and paid up capital of RS 10,00,000. Saigol family owned it and Agha Hassan Abedi was its first managing Director. It had posted a profit of 0.7 million in its first year of operation with just eight branches at Karachi.

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2. Nationalization As a policy of nationalization fourteen commercial banks was merged into five big banks. So consequently on 21st December 1974 Commerce Bank and Union bank was merged with the UBL. Mr.Mushtaq Ahmed khan Yousafi took over the charge of UBL. Now, there are six directors, a secretary and a president.

3. Privatization Of UBL UBL was the largest privatisation attempted by the government of Pakistan, launched in June 2001, with 21 interested parties. It was impacted by the adverse developments of the September 11, 2001 and was finally concluded in October 2002, which left stage only three bidders. The consortium comprising Bestway Group (BG), out of the UK and Abu Dhabi Group (ADG) from the UAE were finally the winners at a record price. Sale proceed was Rs 12350 million. This signaled the strong confidence reposed by these investor groups, in the improved governance of the country, the economic potential, the banking opportunity and the existing management of the bank.

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4. UBL today Today they bank has take progressive step. Change the loge The United Bank Limited (UBL) management has launched its new corporate identity and changed its 44 year-old-logo following its privatization. UBL online Now access your account from 71 cities across Pakistan. Our network is growing at an amazing pace and now you can avail services like cash withdrawal, payments, deposit, stop payment, acquisition of account statement and many more from more than 350 online branches. Business Partner

9-5 Non-Stop Banking Banking at your own convenience has been made possible. UBL now offers 9-5 Non-Stop Banking service at more than 450 branches across Pakistan. Countrywide Instant Cheque Clearance Submit a cheque in Karachi and get it cleared in Peshawar within

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minutes. With online banking services, you can get your cheque cleared instantly, without any hassle.

Instant funds transfer Funds transfer was never this easy. Make payments or receive payments within minutes using our online facility. With the introduction of Internet Banking now funds transfer is even made easier and is just a click away.

Click n remit This is one of the easiest ways to remit money from USA to Pakistan Money Direct This remittance facility has been started to facilitate transfer of money from UK to Pakistan. Consumer Financing You as an individual can gain and benefit the most through UBL Consumer Banking. In UBL you get friendly, efficient and attentive personalized banking services - a unique banking relationship experienced by each UBL client. You can utilize the following services. •

UBL Drive

•

UBL Address

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Cash Line

•

Personal Loan (Coming Soon)

•

Credit Card (Coming soon)

Over view of UBL UBL has assets of over Rs. 190 billion, Shareholder's Equity of over Rs. 12 billion and a solid track record of 43 years - in addition to the convenience of over 1000 branches serving you throughout the country and also at several overseas locations  Date Established November 7, 1959  Chairman His Highness Shaikh Nahayan Mabarak Al Nahayan  Deputy Chairman Sir Mohammed Anwar Pervez OBE  President & CEO Mr. Atif Bukahri  Deputy CEO Mr. M.A.Mannan  Branches 1111: 1096 Domestic, 15 Overseas Branches

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 Joint Venture with NBP United National Bank Limited, U.K  Representative Offices Tehran and Cairo  Subsidiary United Bank A.G. Zurich, Switzerland  Associated Company Oman United Exchange Company, Muscat  Offshore Banking Unit Export Processing Zone, EPZ Branch, Karachi, Pakistan  Employees 8,998 plus more than 500 contractual staff  Head Office State Life Insurance Corp. Building #1, I.I. Chundrigar Road, Karachi, Pakistan P.O. Box No.: 4306 Phone: (92-21) 111-825-111 Gram: "UNITED" Fax: (92-21) 2413492

Branches by Region Region Karachi Hyderabad Multan Lahore Faisalabad Quetta Peshawar Islamabad Azad Kashmir

Branches 114 133 170 90 165 45 167 161 81 1126

Branches by specific functions Function

Number of branches

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Money Gram Branches Uni bank branches Hub Branches Rupee Traveler cheque Branches (RTC)

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BOARD OF DIRECTORS Chairman His Highness Shaikh Nahayan Mabarak Al Nahayan Deputy Chairman Sir Mohammed Anwar Pervez OBE President & CEO Mr. Amar Zafar Khan 1. Director Mr. Omar Ziad Jaafar Al Askari 2. Director Mr. Zameer Mohammed Choudrey 3. Director Mr. Ahmad Waqar 4. Director Mr. Javed Sadiq Malik 5. Director Mr. M. Tahsin Khan Iqbal 6. Director Mr. Jeeva Shahid Haroun Barrister-at-law, Chief Legal Counsel & In-charge Company Secretariat

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SENIOR MANAGEMENT

Mr.Atif Bukhari President and C.E.O Mr.M.A. Mannan Deputy C.E.O Mr. Nauman Hussain Director Operations & Utilities Mrs. Rukhsana Asghar Global Head Human Resources Mr. Aameer Karachiwalla Chief Financial Officer / HCA Mr. Muhammad Ejazuddin Audit Chief Mr. Mansoor M. Khan Head Corporate Banking Group Mr.Ali Sameer Chief Special Assets Management Risha Mohyeddin Global Head, Treasury & Capital Markets Tariq Mohar Global Head, Establishment

& Branch Operation

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Brief profile of management Sir Mohammed Anwar Pervez, OBE, HPk Deputy Chairman Sir Mohammed Anwar Pervez, OBE, HPk first hit the headlines in 1992 when he became the proud recipient of the order of the British Empire. He was also awarded a Knights Bachelor in the Queen's Birthday Honours list for services to business and the world of charity in the UK and internationally. The president of Pakistan conferred the highest civil award ‘Hilal-e-Pakistan’ on him in March 2000.

Mr.M.A. Mannan Deputy C.E.O UBL has always adopted the policy to induct qualified people from different source available from home or abroad. Mr.M.A. Mannan was inducted by UBL from Citibank New York as the Dy. Chief Executive officer UBL. An MBA from IBA Karachi. Mannan started his career from Citibank Pakistan in 1991 where for the first nine years he worked in sales, distribution and marketing launching most of Citibank’s new credit and depositor products during the nineties. He rose to become the Director of Marketing, Sales and Distribution at Citibank Consumer bank.

He was then transfer to the U.S.A the most matured and

competitive consumer market in the world and was promoted to Senior Vice President, Cross Self Division covering a comprehensive array of customers and products.

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With his reputatation as a great team- builder and achiever, UBL’s management firmly believes that Mannan will prove to a great institutional and national asset.

MS. Rukhsana Asghar Global Head Human Resources Ms. Rukhsana Asghar holds a BA (Hons) Degree in International Relation * a Bachelor of Law Degree from University of Karachi. She further enriched herself professionally by attending many senior level training courses seminars & conferences no Leadership, Strategic Management, Career Counseling, Marketing of Financial Services & Human Resource Development in the U.S.A, Europe, Middle East & the Far East. Till recently Director HR Citibank Pakistan, she was instrumental in developing the talent base for Citibank, which led the institution to emerge as a major player on the financial scene. She served as a Vice President HR Citibank, Assistant manager Personnel at Lever Brothers Pakistan Ltd. Rated amongst the few HR specialists in the country the feather in the cap is Rukhsana’s selection as one of the twelve members out of 101 countries to work on a global initiative relating to the paradigm shift in the role of human resources.

The result were applied and

implemented globally.

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Mr. Nauman Hussain Director Operations & Utilities

Mr. Nauman Hussain did his Master in Economics from the Punjab University Lahore. He possesses 24 years of International Banking (Retail & Corporate) experience in the Middle East, Asia and the Far East. Prior to joining UBL he served as Vice President & Head of Operations ar Mashreqbank UAE, Senior Director & Chief Administrative Officer, American Express Bank Ltd Karachi & Lahore included Assistant Vice President& Manager Operation, Assistant Treasurer & Financial Controller, Head Country Treasury/ Correspondent banking & relation Manger.

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Organizational Structure Provisional Headquarters Province Punjab Sindh N.W.F.P Baloucihstan

Lahore Karachi Peshawar Quetta

Head Office

Provisional Head Quarters Zonal office Hub branches Branches

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Structure Management President and Chairman of Board of Director

Executive vice President General manager of

Deptt 1

Deptt 2

Deptt 3

Deptt 4

Zonal incharge

Area Manager

Branch manager

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United bank limited DOMESTIC NETWORK AS ON DECEMBER 31 2002

HUB Name

Sr no

Region Name

No. of

Branches Corporate Bkng 1

Gulberg market Lahore

1

2

Corporate Branch Karachi

1

Total

2

1

Napier Road Karachi

2

SITE Karachi

9

3

16

4

PECHS Karachi UBL Building North Naziamabad Karachi

5

City Branch Karachi

14

6

Airport Karachi

18

7

Clifton Karachi

14

Total

1 2

Karachi

15

Karachi

Farid Chamber Karachi (S.A.M.) SAM Branch Lahore (S.A.M.) Total

17

103

1 1 (S.A.M.)

2

Hyderabd

19

1

New Town Mirpur Khas

2

13

3

Masjid Road Nawab Shah Raxa Shah Kabir Road Larkana

4

Minara Road, Sukkur

18

5

Naushero Feroze

9

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Civic Centre Branch Hyderabad

30

7

Lashi Gate Shikarpur

14

Total

Lahore Region

Hyderabd

117

REGION

Branches

Lahore

20

1

Bank Square Lahore

2

Depalpur Road ,Okara

12

3

S.D Vault Lahore

14

4

Model Town Lahore

18

5

Liberty Market Lahore

16

Total

Lahore

80

Sialkot

21

1

Mujahid Road, Sialkot

2 3

Hafizabad Chamber of Commerce Building Gujranwala

20

4

Narowal

9

5

Cirular Road Wazirabad

12

Total

8

Sialkot

70

Faisalabad

15

Faisalabad 1

Nankana Sahib

2

Jauharabad

9

3

people's Colony Faisalbad

14

4

Aziz Bhatti Road, Sheikhupura

11

5

Ballokhel, Mianwali

13

6

Toba Tek Singh

10

7

Ghalla Mandi Samundari

15

8

Bank Square Faisalbad

18

9

Main Bazar Balwal City

8

10

Railway Road Sargodha

24

11

Distt. Courts Jhang

14

total

Faisalabad

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Islamabad Rgion 1

Chakwal. Main Branch

2

Gujar khan

11

3

Cantt Branch, Rawalpindi

17

4

Wah Cantt

17

5

Mangla Road Dina

8

6

Civil Lines jhelum

11

7

Kallar Saidan

15

8

Kotla

8

9

Mandi Bahauddin

7

10

Kharian City

12

11

Jinnah Avenue,Islamabad

14

12

G.T Road Gujrat

11

total

Islamabad

17

Islamabad

148

Multan

14

1

Hassan Agahi Multan

2

Multan Cantt

10

3

Akber Bazar Kahnewal

18

4

Azmat Road Dera Ghazi Khan

11

5

Fari Gate Bahawalpur

14

6

Vehari

13

7

Grain Market Khanpur

11

8

Imam Bare Road, Burewala

9

9

Main Bazar Branch , Muzaffar Garh

17

10

Shahi Road Rahim Yar Khan

12

11

High Stree Sahiwal

13

12

Main Bazar Chishtian

9

total

Multan

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where you come first Peshawar Region

Region

Branches

Peshawar

23

1

Cantt Branch Peshawar

2

Cantt Branch Nowshera

14

3

Hangy Road Kohat

13

4

Bhatkehla

8

5

Bank Square Mingora

14

6

Cantt Branch Mardan

13

7

Parady Gate Bannu

6

8

Swabi

9

9

Main Bazar Branch Haripur

12

10

Timergara

11

11

Circular Road,D.I Khan

8

12

Hangu

9

13

Mansehra

8

14

UBL Building Lambi Dheri

8

Total

Peshawar

156

Quetta

13

1

UBL Complex Branch Quetta

2

Turbat

12

3

Virtual

17 Total

Quetta

42

Azad Kashmir

18

1

Dadyal

2

Kotli

14

3

Bhamber

8

4

Rahiyal

10

5

Commecial Centre Mirpur

15

6

Main Bazar Chattar

4

7

Rawlakot

10

total

Azad Kashmir

Total Domestic Branches Total Hub

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United bank limited OVERSEAS NETWORK AS ON DECEMBER 31 2002

Sr. No HUB Name

Region

No of Branches

United Arab Emirate

8

Bahrain

3

Yeman

2

Qatar

1

United States of America

1

Export Processing Zone, Karachi

1

Total Branches

16

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OVERSEAS NETWORK COUNTRIES Branches "" "" "" "" "' representative offices "" Associated companies

Name Of Country U.S.A Qatar U.A.E Bahrain Republic of Yeman Zurich Iran Egypt Oman

BRANCHES IN USA UK AND OTHER REPRESENTAIVE & ASSOCIATED OFFIECES New York New York Address: 30 Wall Street, 10th Floor New York, NY 10005 United States of America

United Kingdom UK United National Bank

Branches: LONDON BIRMINGHAM BRADFORD GLASGOW MANCHESTER Representative offices 1 Dokki, Cairo, Egypt 2 Tehran, Iran Associated Companies 1 Oman United Exchange Co. LLC, Sultanate of Oman Branch Name : Ruwl 2 Oman United Exchange Co. LLC, Sultanate of Oman Branch Name : Salalah

NAME OF OVERSEASE COUNTRY WITH NAME OF BRANCH

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Name of country Qatar

serial number 1

26

Branch name Doha Branch

U.A.E 1 2 3 4 5 6 7 8

Zayed Road Branch, Abu Dhabi Muroor Branch , Abu Dhabi Alain Branch, Alain Deira Branch, Dubai Bur Dubai Branch Sharjah Branch Shaikh Hamdan Road Branch Abu Dhabi Dawar Al Mussala Branch Total 8 Bannches

1 2 3

Babal Bahrain Manama Muharraq

1

United Bank AG Zurich, Switzerland address: Feldeggstrasse 55 , P.O Box 1176, 8034 Zurich, Switzerland

1

Sana'a P.O.Box No. 1295, Sana'a Hodeidah P.O.Box No.3927, Hodeidah

Bahrain

Zurich

Republic of Yemen

2

Off Shore banking unit

Off Shore Banking Unit, EPZ Branch Karachi Export Processing Zone Landhi Industrial Area Karachi. Branch Manager Malik Mumtaz Awan

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Functions In modern time commercial bank play a very important role and their functions are manifold. Primary functions of the banks are to take deposit and lending. They take deposits from different persons and lend to others. Beside this they undertake agency services and general utility functions. Some of the important functions are listed below. 1.

Transfer money from one place to another.

2.

Accepting bills of exchange on behalf of customers.

3.

Purchasing shares for the customers.

4.

Collecting cheques and bill of exchange for its customers.

5.

Undertaking foreign exchange business

6.

Acting and executor, trustees or attorneys for the customers.

7.

Providing safe custody and facilities to keep jewellery, documents or securities.

8.

Furnishing trade information and tendering advice to customers

9.

Issuing of Travellers cheques and letters of credit to give credit facilities to travelers.

10.

Collecting interests due, dividend pensions and other sums due to customers.

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Departments of UBL The following are the main department of UBL: 1. Deposit Department 2. Lending Department 3. Clearing Department 4. Cash Department 5. Remittance Department 6. Account Department 7. Bills Collection Department 8. Internal Audit Department (only in HUB Branches)

Types of Banking UBL perform almost all types of banking. 1. Consumer Banking 2. Commercial Banking 3. Corporate Banking 4. Investment Banking 5. Relationship Banking 6. Treasury

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Products and Services UBL offer wide range of products and services to all types of customers such as individual/ Consumer, Commercial ,Corporate etc. Following are some of important products and services that UBL now offers to its Customers. Deposit Deposit are called the life blood of Banks. To generate more deposit the UBL has offered the following attractive deposit Schemes. 1. Current Account 2. PLS Saving 3. PLS term Deposit (TDR) 4. Notice Deposit 5. Unisaver (daily Profit) 6. Unizar (foreign Currency Deposit) Lending 1. Cash Credit 2. overdratt 3. Loans (both short Term and long Term) 4. Agricultural Loans 5. Commercial Loan 6. Corporate Financing 7. Import Export Financing Remittances 1. Tez Raftar 2. Money Gram 3. Click n Remit (sending money from USA) 4. UBL Money Direct (Sending money from UK)

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Rupee Traveller Cheque 1. UBL Humrah Rupee Traveller Cheque Lockers Facilities Utility Bills Collection TV/VCR Dish fee Collection Hajj and Umrah Services Uni remote (All the above products and facilities will be analyze in the next Sections)

Services of UBL After the privatization of UBL, the bank has taken progressive steps and introduces many new products and services for its valuable customers. The following are some of the important services:

1. Cheque Encashment Facility 2. UniCash 3. Lockers Facility 4. Hajj and Umrah Services 5. Uni Remote 6. Utility Bills Collection 7. Dish TV fee collection

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1.Cheque Encashment Facility

UBL has now provided facility to its customer to encash cheque at any designated branch in addition to the branch where the customer has maintained the account. For example your account is in the UBL Aziz Bhatti Road branch Sheikhupura and you visit Karachi. In Karachi you need money and you have not possess traveler cheque but you possess Cheque book issued by UBL branch Sheikhupura.

Features

this facility is available for UBL valued customers maintaining their Rupee PLS Saving or Rupee Current accounts at any of the designated branch of UBL .

 personal UBL account cheques, whether favouring yourself or a third party can be encashed at any of the designated branch of UBL.

 the maximum amount per cheque can be Rs. 25,000 (at present)

 This facility is FREE OF COST if the balance in the customer's Rupee PLS Saving or Rupee Current account stays constantly at Rs. 100,000 or above and the cheque is encashed by the customer personally. In other cases the following charges will be applicable;

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Rs 50 for a cheque presented for payment in

different branch of the same city, where the customer holds his/her account ii. Rs 150 for a cheque presented for payment in a branch of a different city.

2.UniCash Like other banks UBL has also ATM card which has given the name of UNICASH CARD. Now the customer can withdraw money from any ATM machine installed by UBL at different cash point. You can avail the following self-service banking facilities

 Balance Inquiry  Mini Statement  Cash Withdrawal Features 1.Personal Identification Number (PIN) ensures that only you can use your ATM Card. 2.The PIN protects you against misuse in case your card is lost. 3.You can change your PIN anytime you want. 4.You can specify flexible weekly withdrawal limits. 5.You can withdraw your weekly limit in one go, or in multiple installments.

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You can use UNICASH Cards at UBL Cash Point located in the following cities

City

Cashpoints

Islamabad

5

Rawalpindi

2

Karachi

1

UAE

8

Bahrain

3

Doha, Qatar

1

ATM Branches For instant cash at any time of the day or night, without the hassle of queues and tokens, use one UBL ATMs in Pakistan or Overseas. In the UAE UBL have connected all its Automatic Teller Machines (ATMs) to the UAE ATM Switch, giving access to over 550 third party ATMs throughout the region to all our customers. UBL has signed with 1 Link ATM Switch Network, which comprises of 11 leading banks of the country. The signing ceremony was held on April 25, 2003 at ABN AMRO’s Head Office in Karachi. UBL’s customers can use 165 ATMs on the Switch. The bank is also in the process of installing its own ATMs to facilitate its valuable customers.

Following is the detail of existing ATM locations:

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 UBL Civic Centre Branch: G/6, Islamabad  UBL School Road Branch: F/6, Islamabad Islamabad

 UBL Jinnah Avenue Branch: Islamabad  UBL Markaz Branch: F/7, Islamabad  UBL Markaz Branch: F/8, Islamabad

Rawalpindi Karachi

 UBL Cantt Branch: Rawalpindi  UBL Chandni Chowk Branch: Rawalpindi  UBL Head Office, Karachi  UBL Bab-ul-Bahrain Branch

Bahrain

 UBL Manama Branch  UBL Muharraq Branch

Doha, Qatar

 UBL Doha Branch  UBL Sharjah Branch  UBL Abu Dhabi Branch  UBL Dubai Branch

UAE

 UBL Al Ain Branch, Abu Dhabi  UBL Airport Road Branch, Abu Dhabi  UBL Shiekh Hamdan Road, Abu Dhabi  UBL Deira Branch, Dubai  UBL Dawar Al Musallah Branch, Dubai

Lockers Facility UBL also provide its valuable customer lockers facility for keeping their valuables in safe custody at very reasonable rate.

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Hajj and Umrah Service UBL is also performing hajj and Umrah services. Every year a special counter is opened to facilitate hajjis. In this counter hajj form is filled and other information relating to Hajj is provided. Hajj schemes The following hajj schemes has been started by Government this year (2003) Regular Hajj Scheme. According to Policy for Hajj 1424 Hijri (2004 A.D.) Sponsorship Scheme has been merged into the Regular Scheme. Intending Hajjis in this Scheme can opt for government accommodation or for private accommodation. All the pilgrims under Regular Scheme will deposit full amount of Hajj dues in Pak Rupees along with the Hajj Applications Forms. This year 120,000 pilgrims will be allowed to perform Hajj under Regular Hajj Scheme. Open Hajj Scheme This year the Ministry of Religious Affairs has decided to provide Hajj passport to those intending to perform Hajj under Open Hajj scheme also. There will be no need of an International Passport. 10,000 pilgrims will be allowed for Hajj under Open Hajj Scheme this year. Balloting In case the number of applicants exceeds the prescribed quota, balloting will be held to determine successful applicant.

ELIGIBILITY Only Pakistani NATIONALS are eligible to apply for Hajj. THE FOLLOWING ARE NOT ELIGIBLE Ladies in an advanced stage of pregnancy. Medically unfit & handicapped people without a helper or assistant

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Those infected by contagious diseases Ladies without Mehram (other than Ahle Tashee)

6.Utility bills collection

Features •

UBL has over 1000 branches collecting electricity, gas, telephone and other utility bills during business hours.

•

Special bills collection counter in every bank

•

Separate booths for utility bill collection are available at all major cities for the convenience of the public.

•

Branches in all major cities have electronic bill collection machines.

•

For your convenience, UBL accepts cheques for payment of utility bills.

•

Drop box facility

7.Dish/T.V Fee collection UBL is one of the main collecting agents of Pakistan Television (PTV) collection against issuance of licenses/renewal of licenses at its authorized branches all over the country.

Uni-Remote

Comprehensive Report on UBL

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UBL is the pioneer of use of computer network system in the country with the help of which almost all the branches are interconnected with each other. This system is known as Unibank. UniRemote System is designed to perform transactions between any two UBL Branches over WAN (Wide Area network) with the assurance that the information will be secured by taking security measures. UniRemote is not in direct access of the customer but it is the system between branches where they can make online transactions with each other on behalf of UBL customer. All UBL online branches on WAN will handle the UniRemote Operations. Customers can make transaction from any of the selected online branch in any city. Today we have 73 online Hubs running UniRemote all over the country.

. Transactions / facilities presently permitted in UniRemote are as follows: •

Cash Deposit

•

Cheque Encashment

•

Stop Payment

•

Account Statement

•

Funds Transfer (Account to account / IBCA)

Following are the main reports to be generated from the UniRemote system. 1.

Non UniRemote Customer list

2.

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3.

Outward transactions

4.

Inward stop payment

5.

Outward stop Payment

6.

UniRemote Customer Advices

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Activities of the bank 1.Receiving Deposit Deposit department has the responsibility to create deposit as much as possible. The officer of that department has given the target to take deposit, and then the officers induce the person to open the account with the bank. Deposit is also important because more the deposit of the bank the more the bank can lend and make money in the form of mark up. All the deposit which UBL maintain can be covered under the following types of deposit. The main difference is the period and customer convenience to withdraw the deposit. General role is that the greater the period of deposit more the return and greater the customent convenience to withdraw deposit lesser the return. Because of this golden rule bank pay no interest on Current account, customer can withdraw money at any time. So the following are the main types of Deposits Current Deposits: Current deposit account can be opened with the minimum amount of Rs.5000. In this type of account the client is allowed to deposits or withdraw money as and when hi likes. Usually the businessmen open this type of account. No interest is allowed by

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the bank and no service charger is deducted by the bank on current deposits account. profit and loss Account Under such types of accounts the bank allows no interest to the customers. Profit of loss is declare every by the executive Board of the Bank. Profit and loss account has two types 1. Profit and loss Sharing Tern Deposit Account 2. Profit and loss Sharing Saving Account 1. Profit and loss sharing Term Deposit Account PLS Term Deposit is that type of deposit that is maintained for a fixed period of time. Minimum period is 3 months and maximum is 5 years. The salient features of PLS sharing term Deposits are given as under:

 The PLS Tem Deposit receipt can be made in a sum or Rs 1000 or its multiple e.g. RS 2000 Rs 3000 etc.

 If a customer maintain an account with bank can convert it into PLS term deposit account without any charge

 The deposits for longer period will earn little more profit than these for shorter period deposits. Profit and loss Sharing Saving Account PLS Saving Account can be opened with the minimum amount of RS 200. Minimum amount of Rs 10000 must be maintains in order to earn profit. No profit will be allowed below Rs 10000 and bank will charge Rs 200 service charges below Rs. 10000. Fixed Deposits

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In this type of account a certain amount is deposited for a certain period such as six month. Two years or longer. It is also called time liabilities of a banker. They are called so because the money is payable on expiry of a fixed period of time only. The terms and condition of this deposit are regulated by central bank for this purpose. Fixed deposits are two types 1. Notice Deposit Receipt 2. Term Deposit Receipt

Foreign Currency Account The UBL also maintain Foreign Currency account. But it can only opened in specific currency such as Dollar, pound sterling etc. In case of dollar the foreign currency account can be opened with 1000 US$ and in case of Pound Sterling 750 pounds.

2. lending The bank is an intermediate party between the borrower and the lender. It borrows from one party and lends to another. The difference between the rate of interest it borrows and lends is called the spread, and is the income of the bank. Lending is the main source of income. Bank don’t lends to every one who applies for loan but before giving advances the bank follow certain principles which are as follows:

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Principles of Lending The following are the principles, which the bank follows while advancing loans. 1. Safety 2. Liquidity 3. Dispersal 4. Remuneration 5. Suitability 1.Safety Safety of the amount is very compulsory because the real owner of the deposit is not the bank all these deposits belongs to account holders of the bank. The bank shall be very careful to extend the loans in the safe hand and without risk of loss. Following points must be kept in mind to ensure” Safety of the Amount”.

 Character  Capacity  Capital  Cash flow  Competition  Collateral  Country Risk  Currency Risk Character

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The borrower character will indicate the attitude to repay the amount. His honesty and integrity is important Capacity This refers to the managerial ability, knowledge and technical skill. He may lack in the financial resources but he must possess experience and deep insight ability in management of the business Capital First the bank must evaluate or calculate the investment made by the owner in his business then the bank should disbursed the loan Cash flow This refers to source of income of borrower and strength of expenses. Competition refers to the feasibility of the project in the prevailing competitive market Collateral This refers to the amount or strength of security, which the borrower offers to the bank to get loan. Country risk and Currency risk Bank should observe the economical and political situation of country it must also look neighboring country interference. Currency risk is directly connected with county risk. If the political and economical condition are suitable then exchange rate favorable 2.Liquidity It refers to the ability of the borrower to repay the loan. It is the evaluation to repay the amount in lump sum at short notice. 3.Dispersal Spreading of the total quantity of credit to all the sectors of the economy, which include industry, commerce, farming, agriculture, traders, housing etc. The main advantage of spreading is that if the

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bank loan only to a specific sector then there is greater chances to become loan bad debts in case of financial crisis in this sector. 4. Remuneration This refer to the amount recovered by the banker in the form of the interest. This is the earning source by which the bank is going to meet its expenses.

 Interest payable to the depositor  Salaries and fringe benefits payable to staff  Overhead expenses and depreciation  Provision of reserves for unforeseen expenditure  Payment of dividend to the shareholders 5.Suitability Advances must be made to selective suitable borrowers keeping in mind national development plans workout by the central government. It must also conform with the national credit policy of the central bank. UBL advances the following types of advances: 1. Running Finance (Overdraft) 2. Cash Finance (Cash Credit) 3. Demand Finance (Loan) 4. Discounting the bills of Exchange 1.Running Finance (overdraft) Running finance (old name overdraft) are advances, which are generally given to meet temporary requirement of the customers. The following are the characteristics of this type of finance:

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 Allow the customers to withdraw over and above their credit balance.

 Interest is charged on outstanding balance only. Types of Running finance 1. Secured 2. Unsecured 1.Secured Under this type of overdraft the bank allow customers to withdraw more than their deposit after giving security 2.Unsecured Under this type bank allow this facility against personal security of the customer. 2.Cash finance (Cash Credit) Under this type of advance limit is established which can be avail at one time or as and when required. This is the most common form of borrowing against pledge or hypothecation. Borrower prefer this facility because interest is charged on the amount utilized and not on the total limit sanctioned. For example limit sanctioned 5000,000,000 but avail only 3000,000,000 so interest will be charged on 3000,000,000 only and not on the total limit. Sometimes bank impose restriction to pay markup or service charges on at least one half or one fourth of limit. Security accepted for cash credit may be:

 Local manufactured goods  Rice and paddy  Pledge  Trust receipt Comprehensive Report on UBL

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 Other commodities 3.Demand Finance (Loan) “When the borrower borrow a fix amount repayable in lump sum or periodically installment after expiry of a fixed period it is called loan.” Total amount is credited or put to the disposal of customer and interest is charged on the full amount. There are two types of demand finance 1. Short term (less than one year) 2. Long term (more than one year) UBL provides the following types of loans: Demand finance (packing credit) This facility is provided to exporter to facilitate export under the direction of SBP. This facility is granted to exporter at concessional rate for the export of surgical instruments carpet etc Industrial loan Given to industrial sector for purchase of machinery and other capital nature goods. Demand finance for student (Qarzae Hasna) Qarzae Hasna scheme allowed to student and teachers to obtain loan without interest or markup with recommendation of MPA or MNA. Demand finance Staff This facility is given to staff for the following purposes:

 House building loan against mortgage  Loan for purchase of vehicle  Loan against three months salary

Comprehensive Report on UBL

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3. bills collection This activity is conducted in the Bills Collection Department. Bills collection Department collects both types of bills for collection i.e. inward bills for collection and outward bills for collection.

4 Remittances UBL provide both types of remittances i.e remittances within Pakistan and Home remittance i.e remittances from abroad. To Remit money UBL has the following Product Within Pakistan



Demand Draft



Tele Graphic Transfer



Mail Transfer From Abroad



Tez Raftar



Money Gram



Click n Remit



Money Direct

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Activity 5 Operation of Clearing Department Clearing house is a place where representative of all the bank of the city get together and settle the receipt and payment of cheques drawn on each other”. Types of clearing There are two types of clearing 1. Inward Clearing 2. Outward Clearing 1.Inward Clearing “All these cheques of different branches drawn on one branch of any bank when received through the channel of clearing house it is called inward clearing”. 2.Outward Clearing “ All those cheques which has been drawn on other banks and have been deposited for collection through the channel of clearing house is called outward clearing”. Types of cheques collected by the clearing Department. 1. Transfer cheques 2. Transfer Delivery cheques 3. Clearing Cheques When the payee or endorsee (who deposit he cheques for collection) and drawer of cheques maintain account with different banks, the collecting bank can receive the amount of cheque from the paying banker by debiting his account or by sending representative to paying bank. Procedure 1. The clerks concerned collect all the cheques and enter them in the clearing register. 2. Then he affixes stamps on these cheques and sorts out cheques of different banks and prepares schedule for them.

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3. These cheques are sent to clearing house. State Bank of Pakistan has extended the services of clearing house. Where branch of state bank is not situated the National Bank of Pakistan act as the representative of the State Bank Of Pakistan. 4. In the clearing house representatives of all banks are gathered. Representatives of UBL will receive all the cheques drawn of by other bank. 5. Finally they exchange their cheques mutually and settle their accounts. 6. State Bank of Pakistan representatives will work out the balance and will settle it. The amounts of cheques are credited in the account of the depositor on the third day. If the cheques are not returned. It is understood that all the cheques are hounered but if the cheques are received on third day then entry is reversed.

Activity 6 foreign Exchange Department The main functions of the foreign exchange department are as follows: 1. To open the letter of credit to facilitate import and export. 2. Dealing with foreign currency Importance of letter of Credit The bulk of import trade now a day is mostly financed through letter of credits. The method of payment through letter of credit has greatly facilitated commercial relations between the importer and exporter. They can safely rely on the credit of the bank rather than on the credit standing of the importer. The importer too will pay for the goods only when they are shipped and the documents are received by the buyer’s bank. Definition “Letter of credit is written undertaking by an bank given to the seller, at the request and on the instruction of the buyer to pay at

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sight or at a determinable future date up to a stated amount within a prescribed time limit and against stipulated document” Parties of letter of credit The following parties involved in the letter of credit: 1. Buyer (Applicant) 2. Seller (Beneficiary) 3. Issuing bank Procedure of opening letter of credit The letter of credit is opened by filling an application with the bank and following information’s should be provided to the bank. 1. Name of Beneficiary (seller) 2. Complete address of beneficiary 3. Types of letter of Credit whether

 Revocable  Irrevocable 4. Mode and tine of payment 5. Description of goods 6. Payment of freight (paid or not) 7. Replacement or dispatch of goods 8. Detail of documents such as bill of lading, shipment certificate, clearance of goods certificate. 9. Place of shipment 10.

Whether the trans-shipment is allowed or not

11.

Whether the partial- shipment is allowed or not

12.

The date of shipment

13.

The date and expiry of credit

14.

Whether the credit is transferable or not

15.

How the credit is to be advised by mail cable or telex

etc.

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7.Activity of Account Department Generally there are two types of system for maintaining an account 1. Journal System 2. Voucher System Generally journal system is adopted by some commercial industrial institutions. In journal system entries are reported on Journal Book and then posted to main ledger. In banking voucher system is used for every transaction voucher has to be prepared. There are two types of vouchers:

 Debit vouchers  Credit vouchers Debit voucher is used for expenses and credit voucher is used for credit. They are of red and green colour respectively.

8.Activity of Cash Department The following books are maintained in the Cash Department 1. Receiving Cashier Book 2. Paying Cashier Book 3. Token Book 4. Scroll Book 5. Cash balance Book When cash is received in counter. It is entered in the Scroll Book and Receiving Cashier Book. At the close of the day, these are balanced with each other. When the cheque or any negotiable instrument is presented at counter for payment. It is entered in the token book and token is issued to the customer. The token and the Cashier make entry in the paying book and payment is made to payee. At the close of day, the Token Book and paying Cashier Book is balanced. Comprehensive Report on UBL

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The consolidated figure of receipt and payment of cash is entered in the cash balance book and drawn closing balance of cash. Opening balance of Cash + Receipts – payments = Closing Balance. This is very important department. An officer check all the books maintained in this department. Cash department prepares the utility bills sheets, which are sent by the bank to WAPDA, Sui Gas Department, and PTCL etc for their respective bills.

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At my first day in UBL CENTRAL branch KUTCHERY ROAD Mandi Baha Ud Din the Area operation manager, Mr.Manzoor Ghori has introduce me with different officers and departments of the bank. After that I visited every department one by one and observe what is happening there. They all provide me the basic information which I needed .They are all very cooperative . They also provide me various information about bank affairs, which I have not known previously. Some of my observation and experience are discused below. General information about banking affairs At first day at bank the manager inquire about what you know about bank already the bank manager has made some conversation with me and ask some question. After that he provides me the following information: 1.Banker’s customer relationship Every day different person coming through bank front door to do business with the bank however not all of those individuals will be making transactions on their own behalf. They may represent their employer, societies, club etc. Definition of banker According to banking companies ordinance 1962 Banking has been defined as accepting for the purpose of lending or investment of deposits of money form the public, repayable on demand or otherwise and withdrawals by cheque, draft, order or otherwise.

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Meaning of Customer The person who maintains account with the bank is called the customer.And the person who does not have any account with the bank is not considered the customer.it is an important difference because a bank only collects cheques for its own customer and not other persons. Relationship between banker and customer The following types of relationship exist between banker and customer. 1. Debtor and Creditor 2. Principal and Agent 3. Bailer and Bailee 4. Mortgager and Mortgagee 5. Banker as a Trustee 6. Executor, Attorney, Guarantor 1.Debtor and Creditor The general relationship between banker and customer is Debtor and Creditor. When the customer deposit amount in the bank, the customer is called the “Creditor” and the Banker is Called the “Debtor” When the Bank lends money to the customer the Bank is the “Creditor” and the Customer become “Debtor” 2.Principal and AgENT Bank receives documents from the customer like deposit cheque, drafts, dividend warrant etc for collection as a “Principal” and the bank performs various agency services such as purchasing security, making contractual payment etc.

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3.Bailor and Bailee It is a contract where one one person delivers goods to another person for some specific purpose. Bank provide lockers facility to its customers in which customer keep jewelry, bonds and other valuables. So when bank accept valuables for safe custody, the customer is called the “Bailer” and the band is called the”Bailee”. 4.Mortgagor and Mortgagee When the customer pledges a things like property, shop and things which can not move from one place to another specific with the bank as security for advance, the customer becomes the” mortgager” and the banker is the “Mortgagee”. 5.Trustee Banker keeps very important documents ,securities in the custody of bank with out knowing about them thus the bank is acting as trustee . 6.Executor, Attorney, Guarantor Bank also act as Executor of a will of the diseased person. They also provide guarantee to other person on behalf of the customer then they act as a “Guarantor”.

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Termination of Relationship By Customer The customer can terminate the relationship due to the following reasons:

 Change in the place  Not satisfied with bank Services  Death of the Customer

By Banker

 Presenting cheques after banking hours  Intimation of the death of the customer  Insanity of Customer, not honor the cheques  In case of bankcorruptacy  After assigning all the balance to the third party On receiving the Garnishee Order

 Constitutional change in the business of the firm

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Customer rights and Duties Rights

 Draw cheques upto Credit balance  Receive Statement of Account  Sue wrongful dishonour of Cheque  Sue and demand compensation if the bank fail to maintain Secrecy

Duties

 Present instrument within banking hours  Within due time from their issue (stale postdated cheques)  Keep cheque book in safe custody and in case of theft immediately report to the bank

 In case of finding any forgery in the cheque issued by him immediately report to the bank. Rights and duties of the banker Duties

 Honour customer cheques properly drawn  Abides by the standing instruction of the customer relating to the contractual and periodical payments.

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 Reasonable care of valuables depoit in the lockers.  Stop operation of account after receiving the Garnishee order (Court order Rights

 Right to setoff credit balance against a debt due.  Implied right to charge commission and interest on the services performed and loan advanced by the bank.

 Bank has general Lien on cash, bill of exchange and securities of customer for adjusting any money due to him.

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Cheques What is a cheque As a customer you keep money in the bank ,you are supposed to withdraw money when ever you want. But when you want to make some payment and you have shortage of time you can draw the cheque on the bank The bank is supposed to make payment to the payee .In this way the bank saves the time of his customer. Banks give you an option. You can order them to pay someone, on your behalf. You can do this by giving a cheque to the payee. A cheque is like an order to the bank. When the payee shows it to your bank, the bank will pay the money. This is called honoring a cheque. Definition Negotiable instrument Act 1881 “Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”. In other words “a written order of a depositor upon a bank to pay to or to the order of a designated party or to baearer, a specified sum of money on demand”. Parties of Cheque There are the three parties of the Cheque Drawer Drawee Payee

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Drawer This is the man who has an account with the bank . he has the right to issue a cheque on the bank .This is called the drawer. Drawee The person directed to pay is called the Drawee. In case of the cheque Drawee is the bank where the person (Drawer) maintain account. Payee

Payee is the person to whom the payment is to be made the name of the payee is mentioned in the cheque . Types of Cheques There are two types of Cheques Open Chequesp Cross Cheques

1.Open Cheques Open cheques are those which are payable at the counter of the bank. There are two types of open Cheques: Bearer Cheques According to instruction the payment is made to the man who holds the cheque

Drawer order the bank to make payment to the

person who hold the cheque Order Cheques Drawer orders the bank to make payment to a specified person whose name is mentioned in the cheque. The bank pays only when it satisfied about the identity of payee.

2.Cross Cheque

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A cheque with two small parallel lines is a crossed cheque. You cannot encash such a cheque across the counter. It will only be credited to a bank account. Such a cheque has to go through clearing.

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Kinds of Crossing There are two types of Crossing General Crossing Special Crossing

General Crossing The drawing up of two simple parallel transverse lines on the face of the cheque at the top left hand corner with or without the words &co, Not negotiable or Account Payee only in know as general crossing.

Special Crossing A cheque deems to be crossed especially when it bears across its face the name of the banker either with or without the words not negotiable. In case of special crossing the payment can only be made to the bank named therein the cheque.

Objective of Crossing It prevent the payment of the cheque to a wrongful holder It ensures safe payment to the concerned party It is a guard against any cheating or theft.

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Endorsement "The writing of a person’s name either on the back or the face of instrument followed by one’s signature for the purpose of negotiation is called endorsement”. Suppose you receive a crossed personal cheque. You can deposit this cheque into your bank and receive payment in 2-3 days. What if you needed the money urgently? If the cheque is simply crossed, you can endorse the cheque to a friend. The friend can give you cash against the cheque. He / she will then deposit the cheque into their account. The bearer cheque merely endorsed by delivery to another person

Working under deposit department The first department in which I have worked was the deposit department. Hare I met with an experienced banker Gulshan Amin ,incharge Deposit department.

He has provide me much information about

deposit department such as how an account is opened , what types of account , what type of bankers customers and what documents are required to open account for different persons

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Account opening The following types of accounts are opened by the bank: 1. Current Account These account are opened with a minimum amount of 3000 thousand rupees There is no profit no loss . The funds are available on demand ,customer is not supposed to give any advance call The bank normally open current account for the business need of the funds. Under this category following types of accounts are opened: Proprietorship This type of account are opened for business concern laying an individual as theirs sole proprietor Partnership In this account all the concerned partners are involved .there is a deed between all the partners who is held responsible for the operation of account and for deposits. Specific instructions are also there A letter of partnership is also obtained from all the partners so as to make them severally or jointly responsible for any liability of the concern to Bank. Joint Stock Company This type of account is opened for private or public limited company. The following documents are invariably obtained for opening the accounts. I. Memorandum and Article of Association II. Certificate of incorporation III. Resolution from the Board of Directors for opening the account. IV. List of Board of Directors. V. Certificates of Commencement of business.

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Socities/Club/Association This type of account is opened for clubs, societies and association. For opening such account it is necessary to obtain copy of Bye-laws. Profit/Loss Saving Account I. Individual Account II. Joint Stock Account III. Checking Account IV. Non-Checking Account V. PLS term Deposit This type of account is opened for a nominal rate of return .In this accounts advanced call is required ,normally 7 days notice before the encashment of money In the first category 7 days notice is required for withdrawal of investment. In the second category advance notice of 30 days is required for withdrawal and the percentage of profit for the above mention types of account. If that as may be announced by Government Annually. Necessary modifications have been made in the existing rule and procedure governing the above accidents that these confirm to requirement of PLS based operation. A separate counter shall be opened in each branch for accepting deposits on profit & loss sharing basis.

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Account Closing 1.

There is a request for closing of an account

2.

There is variation in the signature

3.

Ledger keeper with his initials writes the outstanding balance in the account on the letter. The letter is forwarded to the Manager for his approval.

4.

The Manager makes an approval to recovered the amount Rs 5 in C.D and Rs 2 PLS Account.

5.

The unused cheques leaves are destroyed, serial number of which is already mentioned on the letter.

6.

The S.S Card is taken out and is cancelled by affixing account closed stamp.

7.

The entry is made in account opened and closed register in red ink.

DORMATN.IN-OPERATIVE & UNCLAIMED DEPOSITS ACCONTS Dormant Accounts: Current accounts not operated for 6 months and saving account not operated for three years, shall be classified and inoperative accounts. Unclaimed Deposits Accounts Bank Drafts, T.Ts, Payment Orders and M.T outstanding for 3 years should be transferred to unclaimed deposit accounts to be opened in current ledger for this purpose.

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Procedure for opening and account The opening of an account is the basic step to build relationship between customer and banker .Opening of an account increases the business of the bank . The account opening form is a prime document which gives the detailed information about the customer . When a customer wants to open an account, he comes to the bank; the bank officer gives him an account opening form. The customer fills the account opening form. Only the one form is used to open all the above mentioned accounts . ALL ACCOUNTS are metionedin the form .The contents of the account opening forms are as under:



Account Number and Date.



Name of the Branch.



Type of Account.



Nature of Account.



Currency.



Particulars of Deposit.



Particulars of Account.



Operational Instructions.



Special Instructions.



Zakat Deduction.



Details of other Bank Accounts.



Personal Information. ( phone number, email, mobile number etc)



Initial amount he want to deposit

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Name of other person to whom bank can contact when the person will not available



Introducer.



Authorized Signature. Before providing the AOF the banker make a preliminary

introduction of the customer and know the reason for opening the account. After that banker gets Copy of ID card and also check the original ID card. If the customer can make signature then there is no need to obtain the Pictures of the Customer but if the customer is Illiterate or there is no flow in the signature then the banker obtain two photo copies one is pasted over the Account opening form and other is pasted over the Specimen signature card. After that the person is asked to verify the signature of introducer, a bank official make verification and put his initial over the AOF. After that new Account number is allotted and registered in the Account opening register, The customer fills the pay in slip and deposit the amount in his account. Now pass book issued to customer due to introduction of Computer in the UBL branches. One official then send letter of acknowledgment (letter of thanks to customer.

It is a mode of verification the customer address.

Chequebook only issue when the customer brings this letter. When the customer brings the letter, he fills the chequebook requisition slip and the chequebook is issued to him. The customer can know the status of its account position whenever he wants.

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Advance Department The next department where I have made training is the advance department. Here I got new information such principles of lending, types of security, types of advances, procedure of making loan etc Principles of Lending The following are the principles, which the bank follows while advancing loans.

 Safety  Liquidity  Dispersal  Remuneration  Suitability

Type of Advances UBL advances the following types of advances: 1. Running Finance (Overdraft) 2. Cash Finance (Cash Credit) 3. Demand Finance (Loan) 4. Discounting the bills of Exchange

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Types of Securities The following are the types of securities are generally accepter for advances.

Banker’ Lien It is a right used by the bank to retain the possession of the property of the customer . This right is used only when the dues are not cleare Lien gives a person only a right to retain the possession of the goods and not the power to sell.

Guarantee The bank use this right when it receives an application for granting loan but it never receives any tangible securities against its amount . Then the bank has a right to demand a personal guarantee from the applicant his right Mortgage In this procedure a bank is trying to save his amount by securing the immovable property .The person in whose favour property is transferred is known as mortgage. The man who transfers the rights is known as mortgager. Hypothecation Hypothecation is defined as” a legal transaction whereby goods may be made available as security for a debt without transferring property or the possession to the lender”. Hypothecation is very risky on two main grounds. One, as the goods are in the possession of the owner, the borrower may take out the goods without

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informing the bank. Secondly, the bank does not have a legal claim as it does not have a valid charge over the goods.

Pledge It is a security against the given amount of the lender These may be tangible things .In this case the goods of the party are under the supervision of the bank For example the keys of the godowns are with the bank. The delivery of documents of title of the good is also a valid pledge . the person delivering the goods as security is called pledger and the person to whom the the goods is delivered is called pledgee PROMISERY NOTES Sometimes the promissory note is also accepted as a security. A promissory note is an instrument n writing containing an unconditional undertaking signed by the maker, to pay on demand or at a fixed or determined future time a certain sum of money only, to or to the order of certain persons or the to the bearer of the instrument. Procedure of making an Advance When a client applies for the grant of loans the concerned branch of the bank considers his request by examining its feasibility the 3C’s reputation of the client, the audited annual accounts and then gives its own opinion and suggestion finally the bank branch recommends the case to Zonal office. The Zonal office process the case and forwards the G.M. office and then it is forwarded to head office. Actually the case is sanctioned at Head Office and then is returned to the initiating branch for disbursement. The initiating bank branch takes the security necessary for the loan and makes disbursement according to disbursement schedule.

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Work under Remittance Department Remittance department performs the following functions: 1.Mail Transfer (MT) 2.Telegraphic Transfer (TT) 3.Denmand Draft (DD) 1.Mail Transfer (MT) When a customer requests the bank to transfer his money from one branch of bank to another branch of the same bank or from city to another city to the same bank or any other bank the customer fills the form given by bank.

2.Telegraphic Transfer This type of transfer is simple. After filling in the application form the concerned officer shall fill the TT form. Then it is sent to the required bank, which on receiving it immediately makes the payment to the customer and afterwards the vouchers are sent to that bank by ordinary mail. 3. Demand Draft (DD) The Demand Draft is just like a cheque and issued when the customer wants to take cash from the branch on which issued at the place of destination. The idea behind it is to avoid the risk and burden of currency notes in huge quantity. The Demand Draft can easily be handled whatever amount it has and the money can easily be taken from the bank when it is presented.

Cash department Here I observe the following CHECKING AND PAYMENT OF CHEQUES: Before making payment on cheques, a banker should take into consideration the following points

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 Name of the Bank & Branch.  Amount in figure and words.  Date.  Signature of Drawer (verification).  Balance checking Stop Payment The instructions received by the bank in writing signed by the account holder requesting there into stop the payment of a cheque isseued by him due to certain reasons are cllled as stop payment instructions. The following points are to be observed. a) Such instructions must be in writing and signed by the account holder. b) If an intimation regarding the stop payment instructions is received on the telephone or telegram, note to that effect is made on the relevant ledger folio with red pencil. c) During the time till the stop payment instructions are not received in writing and the Cheque for which the intimation about stop payment to be made is presented for payment, the same is to be returned with the

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objection “Payment Pending requires drawer’s confirmation”. On receipt of the letter the date and time is noted down, the signatures of the account holder is verified and the letter is delivered to the ledger keeper, who checks the accounts if the said cheques has not already been paid. Thje stop payment stamp is affixed on the ledger folio and the particulars of the cheques are entered.

Customer service department Customer service is very important to attract new customers and retain existence customers. Only those banks will survive which give importance to their customers. In customer service department I have guide the strange customer and people I.e. where they want to go. I have also filled cheques, pay in slip and other such instrument which the illiterate and other persons can’t fill.

Utility bills collection I have also spend my few days of training in the collection of utility bills such as LESCO (WAPDA) PTCL and Sui Gas bills

Others department Almost I have observed all the department of the bank. In audit department I have observed that the account, which I have filled, are rechecked to analyze any deficiency. Even if there is no flow in the signature of the customer then customer is again asked to provide his photo or to make signature again.

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UNITED BANK LIMITED PROFIT AND LOSS ACCOUNT HORIZANTAL ANALYISS

(Rupees in Thousands) 2002

2001

Decrease

Mark-up/return/interest earned Mark-up/return/interest expensed Net Mark-up/return/interest income Total Provision Net Mark-up/return/interest income after provisions NON-MARK-UP/RETURN/INTEREST INCOME Total non-mark-up/return/interest income

11,527,524 (5,475,559) 6,051,965 (746,323) 5,305,642

11,468,051 (6,347,215) 5,120,836 (1,262,908) 3,857,928

59,473 871,656 931,129 516,585 1,447,714

% Percentage 0.52 (13.73) 18.18 (40.90) 37.53

3,380,701

2,914,679

466,022

15.99

Total Income (funded non funded) Total non-mark-up/return/interest expenses

8,686,343

6,772,607

1,913,736

28.26

(5,930,632) 2,755,711 25,738 2,781,449 (1,318,796) 1,462,653 (10,612) 1,452,041 (27,282,709) 25,201,680

(5,300,789) 1,471,818 (7,200,000) (5,728,182) (1,738,509) (7,466,691) (6,455) (7,460,236) (19,820,684) 0

(629,843) 1,283,893 7,225,738 8,509,631 419,713 8,929,344 (4,157) 8,912,277 (7,462,025) 25,201,680

11.88 87.23 (100.36) (148.56) (24.14) (119.59) 64.40 (119.46) 37.65

(628,988) 238,273 (390,715)

(27,280,920) 0 (27,280,920)

(97.69)

(331,672) 0 0 0 (722,387) 0.62

(1,789) 0 0 0 (27,282,709) (3.32)

26,651,932 238,273 26,890,205 0 (329,883) 0 0 0 26,560,322 4

PROFIT BEFORE EXTRA-ORDINARY ITEMS Extra-ordinary item PROFIT/(LOSS) BEFORE TAXATION Total Taxation PROFIT/(LOSS) AFTER TAXATION Share of minority interest PROFIT/(LOSS) AFTER TAXATION Accumulated loss brought forward Accumulated loss adjusted against share capital Total Surplus on revaluation of fixed assets Profit available for appropriation Transfers Transfer to Statutory reserve Capital reserve Revenue reserve Proposed cash dividend Accumulated loss carried forward Basic earnings/(loss) per share

Comprehensive Report on UBL

(98.57) 18,439.52

(97.35) (118.67)

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UNITED BANK LIMITED PROFIT AND LOSS ACCOUNT HORIZANTAL ANALYSIS

2,002

Mark-up/return /interest earned Mark-up/return/interest expensed Net Mark-up/return/interest income Provision against non-performing advances Provision for diminution in the value of investments Bad debts written off directly Total Provision Net Mark-up/return/interest income after provisions NON-MARKUP/RETURN/INTEREST INCOME Fees, commission and brokerage income Dividend income/gain on sale of investments Income from dealing in foreign currencies Other income Total non-mark-up/return/interest income Total Income(funded non funded)

2,001

11,527,524 (5,475,559)

11,468,051 (6,347,215)

6,051,965

5,120,836

(858,708)

(1,489,577)

160,289 (47,904)

242,400 (15,731)

(746,323)

(1,262,908)

5,305,642

1,797,892

1,097,148

285,900

67,879

1,086,152 210,757

1,584,894 164,758

3,380,701

2,914,679

8,686,343

6,772,607

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Administrative expenses Other provisions/write offs Other charges Total non-mark-up/return/interest expenses PROFIT BEFORE EXTRAORDINARY ITEMS Extra-ordinary item PROFIT/(LOSS) BEFORE TAXATION Taxation – Current Prior years Deferred Total Taxation PROFIT/(LOSS) AFTER TAXATION Share of minority interest PROFIT/(LOSS) AFTER TAXATION Accumulated loss brought forward Accumulated loss adjusted against share capital Net Profit Available for Provisions and Transfers Transfer from: Surplus on revaluation of fixed assets Prior years Current year Total Surplus on revaluation of fixed assets Transfer to: Statutory reserve Capital reserve Revenue reserve Proposed cash dividend Total Transfers Accumulated loss carried forward Basic earnings/(loss) per share

(5,879,027) (27,353) (24,252)

(4,668,553) (521,367) (110,869)

(5,930,632)

(5,300,789)

2,755,711 25,738

1,471,818 (7,200,000)

2,781,449 (197,675) (18,701) (1,102,420) (1,318,796) 1,462,653 (10,612) 1,452,041

(5,728,182) (253,654) (1,484,855) 0 (1,738,509) (7,466,691) (6,455) (7,460,236)

(27,282,709)

(19,820,684)

25,201,680

(628,988)

0

(27,280,920)

183,313 54,960

0 0

238,273

0

(331,672) 0 0 0 (331,672) (722,387) 0.62

Comprehensive Report on UBL

(1,789) 0 0 0 (1,789) (27,282,709) (3.32)

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UNITED BANK LIMITED VERTICAL ANALAYSIS

ASSETS 2,002

ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Total Advances Total other assets Operating fixed assets Deferred tax assets Total Assets

2,001

15,642,055

15,095,234

18,750,563

20,995,855

3,627,557

4,370,006

67,506,369 28,578,561 75,795,024 79,780,718 8,641,263 2,641,471 2,864,018 2,831,534 8,297,500 5,026,459 191,821,032 168,623,155

2002

2,001

Percentage

Percentage

8.15

8.95

9.78

12.45

1.89

2.59

35.19

16.95

39.51

47.31

1.38

5.12

1.48

1.70

2.62

4.92

100.00

100.00

Increase Decrase vertical anlysis 2002 2001

ASSETS Cash and balances with treasury banks 8.15 Balances with other banks 9.78 Lending to financial institutions 1.89 Investments 35.19 Total Advances 39.51 Total other assets 1.38 Operating fixed assets 1.48 Deferred tax assets 2.62 Total Assets 100.00

2002-2001

8.95 12.45

(0.80) (2.68)

2.59 16.95 47.31 5.12 1.70 4.92 100.00

(0.70) 18.24 (7.80) (3.75) (0.22) (2.30)

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UNITED BANK LIMITED VERTICAL ANALAYSIS

LIABILITIES

2,002

2,001

1,847,025 5,347,349 162,166,385 0 81,548

1,540,592 12,875,351 141,316,174 1,539,800 92,386

861,935 9,083,064 0

923,273 7,884,140 0

179,387,306

166,171,716

LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities Deferred Others Deferred tax liabilities

Total

LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities Deferred Others Deferred tax liabilities

Total

vertical Analysis 2002 1.030

2,001 0.927

increase Decrease 2002-2001 0.10

2.981 90.400 0.000

7.748 85.042 0.927

(4.77) 5.36 (0.93)

0.045 0.000 0.480 5.063 0.000

0.056 0.000 0.556 4.745 0.000

(0.01) 0.00 (0.08) 0.32 0.00

100.000

100.00 increase

Comprehensive Report on UBL

Percentage Percentage % % 2002 2,001 1.030 0.927 2.981 7.748 90.400 85.042 0.000 0.927 0.045 0.056 0.000 0.000 0.480 0.556 5.063 4.745 0.000 0.000 100.000

100.00

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UNITED BANK LIMITED VERTICAL ANALAYSIS

CAPITAL 2002 Share capital Reserves Accumulated losses Minority interest Surplus/(deficit) on revaluation of assets Total net assets

5,180,000 4,258,947 (722,387) 1,271,700 2,445,466 12,433,726

2001 22,481,680 3,960,453 (27,282,709) 1,168,264 2,123,751 2,451,439

Increase 2002 % Share capital Reserves Accumulated losses Minority interest Surplus/(deficit) on revaluation of assets total net assets

41.66 34.25 (5.81) 10.23 19.67 100.00

Comprehensive Report on UBL

Vertical Analysis 2002 2,001 % % 41.66 917.08 34.25 161.56 (5.81) (1,112.93) 10.23 47.66 19.67 86.63 100.00 100.00

Increase 2,001. (Derease) % 2002-2001 917.08 (875.42) 161.56 (127.30) (1,112.93) 1,107.12 47.66 (37.43) 86.63 (66.96) 100.00

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UNITED BANK LIMITED HORIZANTAL ANALYSIS BALANCE SHEET

ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Total Advances Total other assets Operating fixed assets Deferred tax assets

Total Assets LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities Deferred Others Deferred tax liabilities

Total Liabilities Net Assets

total net assets

Percentage % 2002-2001

2002

2001

15,642,055

15,095,234

18,750,563 3,627,557 67,506,369 75,795,024 2,641,471 2,831,534 5,026,459

20,995,855 4,370,006 28,578,561 79,780,718 8,641,263 2,864,018 8,297,500

546,821 (2,245,292) (742,449) 38,927,808 (3,985,694) (5,999,792) (32,484) (3,271,041)

3.62 (10.69) (16.99) 136.21 (5.00) (69.43) (1.13) (39.42)

191,821,032

168,623,155

23,197,877

13.76

1,847,025 5,347,349 162,166,385 0

1,540,592 12,875,351 141,316,174 1,539,800

306,433 (7,528,002) 20,850,211 (1,539,800)

19.89 (58.47) 14.75 (100.00)

81,548

92,386

(10,838)

(11.73)

861,935 9,083,064 0

923,273 7,884,140 0

(61,338) 1,198,924 0

(6.64) 15.21

179,387,306 12,433,726

REPRESENTED BY Share capital Reserves Accumulated losses Minority interest Surplus/(deficit) on revaluation of assets

Increase (Derease) 2002-2001

166,171,716 13,215,590 2,451,439 9,982,287

7.95 407.20

5,180,000 4,258,947 (722,387) 1,271,700

22,481,680 3,960,453 (27,282,709) 1,168,264

(17,301,680) 298,494 26,560,322 103,436

(76.96) 7.54 (97.35) 8.85

2,445,466

2,123,751

321,715

15.15

12,433,726

2,451,439

9,982,287

407.20

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UNITED BANK LIMITED EVALUATION BALANCE SHEET

ASSETS SIDE 2002-2001

ASSETS

Increase

Percentage

Dcrease

%

2002-2001

Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Performing Non-Performing net of provision Total Other assets Taxes recoverable Others Total Operating fixed assets Deferred tax assets TOTAL ASSETS

2002-2001 EVALUATION

546,821

3.62

(2,245,292)

(10.69)

Deteriorated

(742,449)

(16.99)

Deteriorated

38,927,808

136.21

Improved

2,088,363

3.07

Improved

(6,074,057)

(51.41)

Improved

(3,985,694)

(5.00)

Deteriorated

(5,031,264)

(94.11)

Improved

(968,528)

(29.39)

Improved

(5,999,792)

(69.43)

Improved

(32,484)

(1.13)

Deteriorated

(3,271,041)

(39.42)

Deteriorated

23,197,877

13.76

Comprehensive Report on UBL

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Improved

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UNITED BANK LIMITED EVALUATION BALANCE SHEET

LIABILITIES AND CAPITAL SIDE 2002-2001 LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities Deferred Others total Deferred tax liabilities Total Net Assets REPRESENTED BY: Share capital Reserves Accumulated losses Equity Minority interest Surplus/(deficit) on revaluation of assets Net Assets

306,433

19.89

(7,528,002)

(58.47)

Improved

20,850,211

14.75

Improved

(1,539,800)

(100.00)

Improved

(10,838)

(11.73)

Improved

(61,338)

(6.64)

Improved

1,198,924

15.21

Deteriorated

1,137,586

12.92

Deteriorated

0

Deteriorated

Constant

(17,301,680)

(76.96)

298,494

7.54

Improved

26,560,322

(97.35)

Improved

9,557,136

Deteriorated

(1,136.97) Improved

103,436

8.85

Improved

321,715

15.15

Improved

9,982,287

407.20

Improved

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UNITED BANK LIMITED PROFIT AND LOSS ACCOUNT

EVALUATION 2002-2001 (Rupees in Thousands)

Mark-up/return/interest earned Mark-up/return/interest expensed Net Mark-up/return/interest income Total Provision Net Mark-up/return/interest income after provisions Total non-mark-up/return/interest income

Total Income (funded non funded) Total non-mark-up/return/interest expenses

Increase Decrease 59,473 871,656 931,129 516,585 1,447,714 466,022

Percentage % 0.52 (13.73) 18.18 (40.90) 37.53 15.99

1,913,736

28.26

PROFIT BEFORE EXTRA-ORDINARY ITEMS Extra-ordinary item PROFIT/(LOSS) BEFORE TAXATION Total Taxation PROFIT/(LOSS) AFTER TAXATION Share of minority interest PROFIT/(LOSS) AFTER TAXATION Accumulated loss brought forward Accumulated loss adjusted against share capital

(629,843) 1,283,893 7,225,738 8,509,631 419,713 8,929,344 (4,157) 8,912,277 (7,462,025) 25,201,680

11.88 87.23 (100.36) (148.56) (24.14) (119.59) 64.40 (119.46) 37.65

26,651,932 238,273 26,890,205 0 (329,883) 0 0 0 26,560,322 4

(97.69)

Total Surplus on revaluation of fixed assets Profit available for appropriation Transfers transfer to Statutory reserve Capital reserve Revenue reserve Proposed cash dividend Accumulated loss carried forward Basic earnings/(loss) per share

Comprehensive Report on UBL

EVALUATION Improved Improved Improved Improved Improved Improved Deteriorated Improved Improved Improved Improved Improved Improved Improved Improved

(98.57)

Improved Improved

18,439.52

Improved

(97.35) (118.67)

Improved Improved

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Ratio analysis Introduction There are many different ways in which we can determine the financial standing aan position of any concern, however the most efficient and widely used method for this is the ratio analysis. This analysis can be derived either from the balance sheet or from income statemnt

The importance and significance of this analysis varies according to the type of the analysis done. The nature of the business in respect of the particular group to whose needs the analysis taken into consideration.

For example the creditors of the company have special

interest in profitability of the company to pay current obligation and thus requiring information concerning the ration of current assets to current liabilities. Stockholder both present and future are concerned with the dividends that the company declares and the period after which is does so and earnings per share that will form the basis for the declaration and payment of dividend. On the other hand the management is concerned with the liquidity of the company and also about the future of the business.

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The following are the parties interested in ratio analysis

1. Shareholders 2. Creditors 3. Management 4. Present and prospective shareholders 5. Government

Types of ratio analysis Ratio analysis is not merely the application of a formula to financial data to calculate a given ratio.

More important is the

interpretation of ratio then calculation of value.

Two types of ratio comparison can be made 1. Cross sectional analysis 2. Time-Series Analysis

Cross Sectional analysis Under this ratio entity financial ratio are compared with the ratio of other entity at the same point in time. For example if we calculate ratio of UBL then we compare it other banks financial ratios then it is called Cross Sectional Analysis.

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Time Series Analysis When we compare current financial year ratios with the past yarer it is called Time-Series analysis.

Here we want to know that

either this year ratio has been improved or decreased. There are two types of Time-Series analysis 1. Horizontal analysis 2. Vertical analysis Combined analysis Under this ratio analysis both Cross sectional and Time series analysis is conducted and then compared with industry average. RATIO ANALYSIS To analyze the performance of UBL, the ratios have been divided into the following Category: 1. Liquidity ratios 2. Profitability ratios 3. Long term solvency ratio 4. Bank affairs (activity) ratios 5. Analysis of advances

Liquidity Ratios (Solvency Ratios) These are the ratios, which measures the short-term solvency or financial position of a company. Ratio 1. Current Ratio 2. Working Capital

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Current Ratio Formula: Current Assets Current liabilities

Current Assets Current liabilities

2002

2001

34,392,618

36,091,089

7,194,374

14,415,943

4.78

2.50

Ratio

2002

2001

4.78:1

2.50:1

Contents Current assets

current assets

2,002

2,001

Cash and balances with treasury banks

15,642,055

15,095,234

Balances with other banks

18,750,563

20,995,855

Total

34,392,618

36,091,089

Current liabilities

current liabilities

2002

2001

Bills payable

1,847,025

1,540,592

Borrowings from financial institutions

5,347,349

12,875,351

Total

7,194,374

14,415,943

Comments Current ratio tells the company ability to meets its current obligation with its current assets

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Despite of huge losses in the past UBL has satisfactory current ratio 4.78 in 2002 and 2.5 in 2001. The standard current ratio is considered 2:1, UBL current ratio is above then standard. Working Capital Formula Current assets - Current liabilities Calculation Current Assets Less

Current Liabilities

Working Capital

2002

2001

34,392,618

36,091,089

7,194,374

14,415,943

27,198,244

21,675,146

Comments The bank working capital ratio is also favorable. It has increase in the current year Net working Capital is the safety cushion to creditors. Higher the net working capital greater the company creditors satisfied.

2.Profitability Ratios An indication of good financial health and how effectively the firm is being managed is the company ‘s ability to earn a satisfactory profit and return on investment. Ratios Return on total Assets Formula Net profit (Loss) after Tax Average total assets

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Calculation:

Net Profit( Loss)After Tax Divided by Average Total Assets Ratio

2002

2001

1,462,653

(7,466,691)

180,222,094

168,623,155

0.81

-4.43

(Percentage)

Contents: 1.Net profit after tax 2.Average total assets Average total assets

2002

2001

Assets

191,821,032

168,623,155

Average assets

180,222,094

168,623,155

Comments: Return on assets which is usually called return on investment (ROI) that measure the overall effectiveness of management in generating profit with its available assets. The higher return on total assets is considered best. UBL return on total assets has improved in the year 2002 due to increase in profit but there was a loss in the previous year.

In this

year both profit and assets has been increased which is a favourable sign.

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Earning per Share Formula: Net profit after tax Number of Ordinary Shares Calculation:

Net Profit (Loss) After Tax Weighted average number of ordinary shares

Earning Per Share

2002

2001

1,462,653

(7,466,691)

2,339,810,449

2,248,168,000

0.63

(3.32)

Contents 1.Net profit after tax 2.number of ordinary Shares Comments: The Bank’s earning per share (EPS) is generally of interest to present or perspective shareholders and management. It represents the amount earned on behalf of each outstanding share of common stock. The Earning per share of UBL has improved slightly. This ratio is very low because of heavy losses . in the year 2002 profit has increase but Shares outstanding has also increase .

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Book Value or Break Value of Share Formula:

Net Assets Number of share outstanding Calculation 2002

2001

12,433,726

2,451,439

2,339,810,449

2,248,168,000

Net Assets Number of ordinary shares

Book value per Share

5.31

1.09

Comments Book value per share represent the net assets available to shareholders after paying all liabilities current or fixed. Book value per share also improve greatly in year 2002. the main reason is that there wase much increase in net assets so when net assets increase book value of share also improve. Solvency is a company ability to

Long term Solvency Ratios meet its long term obligation as the become due. It is also called leverage ratios. Further solvency is dependent upon profitability since in the long run a firm will not be able to meet its debts unless it is profitable. When debt is excessive additional financing should be obtained primarily from equity resources.

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Management might also consider lengthening the maturity of debt and staging the debt repayment dates. The important solvency ratio are as follows

Debt Ratio

Formula

Total liabilities less subordinated loans Total Assets Calculation 2,002

2,001

Liabilities less subordinated loan

179,387,306

164,631,916

Total Assets

191,821,032

168,623,155

93.52

98

Debt Equity Ratio

Sub ordinate loan represent loan from directors and other internal loans Contents Total liabilities less subordinated loan Total assets Total liabilities less subordinated loan

Liabilities

2002

2001

179,387,306

166,171,716

0

1,539,800

179,387,306

164,631,916

Less Subordinated Loans

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Comments: Debt ratio measure the proportion of total assets financed by the creditors The higher the ratio , the greater the amount of others money used in an attempt to generate profit. Hare in the year 2002 debt equity ratio has increase which mean that equity has increase. The main reason for improvement in this ratio is no subordinated loan in 2002 and increase in assets so both the assets base and equity base increase.

Assets Turnover Ratio

Formula

Profit Before Extra ordinary items Total Assets Calculation Increase 2001(Decrease)

2002 Profit Before Extra Ordinary items

2,755,711

1,471,818

1,283,893

Total Assets

191,821,032

168,623,155

23,197,877

Assets Turnover Ratio %

1.436605241

0.872844539

0.564

Comments

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This ratio measures the company efficiency to utilize its total assets to earn profit In the year 2000 UBL assets turnover ratio has slightly improve . Both profit and assets has been increased but the table shows that increase in assets more than the increase in profit therefore ratio has improve but very little.

Bank Affairs(activity ratio) There are two main activities of the bank receiving deposits and lending . Bank is an intermediate party between lenders and depositor. It borrow from one party and lend to others. It borrows at less rate and lends at higher rate the difference between the two rate is known as spread. There are basically two types of deposits 1.Current Deposit 2.Fixed Deposit There are also two types of Advances 1.Short term 2.Long Term

When bank advance it keep in mind the principle of lending, saetey liquidity, dispersal, Collateral, Remuneration. But in spite of great effort there are still some loan become nonperforming which means that either interest or principal is due but not paid. Here some important activity ratios are discussed:

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Average advance to average deposit Formula:

Average Advances Average Deposits Calculation:

Average Advances Average Deposits Percentage

2002

2001

RS in millions

Rs in millions

78,856.50

77,839.50

152,400

135,656

51.74

57.38

%

Contents

Average Advances A advances 2002

2001

2000

Rupees in Millions UBL

72,426

85,287

70,392

Average Deposits RS in millions

Comments:

2002

2001

2000

162,166

142,633

128,679

This ratio tells how much bank has given advances from its

deposits. This ratio during the tear 2002 has reduced by 6% which is quite satisfactory because bank deposits increase much but in the current year non performing advances reduced and performing advances increase. Therefore the ratio reduced little. Note: For calculating average advances, Advances under Export refinance scheme of SBP has Excluded.

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Foreign currency deposit to total deposit

Formula:

Foreign currency deposit

Total deposits Calculation: 2002

2001

(Rs in Thousands) Foreign Currency Deposit Total Deposit Ratio %

38,527,922

37,778,096

162,166,385

141,316,174

23.76

26.73

Comments The purpose of this ratio is how much percentage of foreign currency deposit in the total deposit. In the year 2002 both foreign currcy deposit and total deposit has increased but foreign currency deposit has increased less than total deposits. The main reason for decreasing Foreign currency deposit is reduction in the rate of interest on these deposits. Rate of interest on these deposit are determined by SBP. So when interest decrease deposit also decrease. But the total deposit has increased due to progressive step taken by the bank for introducing new deposit schemes.

Non-performing Advances to total advances

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Formula: Non-performing Advances(Gross) Total Advances

Calculation: 2,002

2,001

Rs in Thousands Non performing Advances gross

24,134,955

32,179,380

Advances

75,795,024

79,780,718

31.84

40.33

Ratio

%

Contents Non-performing advances gross 2002

2001

Rupees in Thousands Non-performing net of provision

5,739,798

11,813,855

Provision against non-performing advances

18,395,157

20,365,525

Non performing advances gross

24,134,955

32,179,380

Comments: The purpose to calculate this ratio is to analyze whether non-performing advances has increased or decreased. The above table shows that non-performing and total advances have been decreased. But non-performing advances reduced 8 millions while total advances reduced 4 millions therefore this ratio decrease which shows the efficiency of bank’s management.

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Performing advances to total advances

Formula:

Performing advances Total Advances

Calculation: 2002

2001

RS in Thosands Performing Advances

70,055,226

67,966,863

Advances

75,795,024

79,780,718

92.43

85.19

Ratio

Comments: This ratio indicates percentage of performing advances to total advances. The above table shows that this ratio improved in the year 2002 by 7%. Reason is that performing advances increase and total advances reduced. Total advances reduced due to decrease non- performing advances. Category of non-performing advances: 2002

%

RS in Thhousands

Percentage

1,137,774

3.97

Substandard

405,305

1.42

Doubtful

316,389

1.10

26,776,246

93.51

28,635,714

100.00

Other Assets Especially Mentioned (OAEM)

Loss Total

(only holding Company)

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Comments: The above table shows that almost 93% of non-performing advances have been categorized as loss. The main reason for this is Yellow cab scheme and other past schemes of Government. Therefore UBL take much care while advancing loans. The efficiency of management reveals in year 2002 i.e. reduction in non- performing advances.

Analysis of Advances Advances are the one of the main activity of the bank and most important source of bank income. Almost 50% revenue generate by this activity. But bank has dispersed its debts to all the sectors of economy and not only to single sector. Because if the bank gives all or major advance only to a single sector then there are more chances to become this debt doubtful and loss. Therefore the bank has to give advance to all sector of economy. At this point we will analyze the advances provided by UBL to some specific sectors of the economy.

Textile sector advances to total advances 2,002 Rs in Thousands Advance to Textile Sector

27,009,493

Total Advances

75,795,024

Percentage %

35.63

Chemical and pharma Ceutical advances

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share of advance in Chemical and pharma ceutical

2002

Sector

RS in thousands

Advance to chemical Sector

2,557,619

Total advance

75,795,024

Percentage %

3.37

Credit exposure in Government /Public Sector 2002 RS in Thousands Advance to Public/Government

19,320,749

Total advances

75,795,024

Percentage %

25.49

The above analysis indicate that 35% of the total advances is given to textile sector. The main reason is that textile industry is export oriented industry and it demand huge finance which is provided by the bank

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Advances and Deposits by Sector

ADVANCES

DEPOSITS Amount

Sector

%

Amount

RS in Thousands

%

RS in Thousands

Chemical and Pharmaceuticals

2,557,619

2.6

2,110,713

1.3

Agribusiness

8,845,012

8.9 11,913,252

7.4

Textile

27,009,493

27.2

1,207,000

0.7

Cement

444,116

0.4

491,504

0.3

Sugar

538,805

0.5

426,281

0.3

Shoes and leather garments

1,695,714

1.7

1,231,557

0.8

Automobile and transportation

5,755,482

5.8

3,041,198

1.9

Financial

2,761,727

2.8

8,015,250

4.9

0

0

2,444,089

1.5

Electronics and electrical appliances

2,835,290

2.9

1,143,700

0.7

Energy production and transmission

4,061,263

4.1 10,941,433

6.7

Individuals

12,768,294

12.9 105,471,753

65

Others

29,943,507

30.2 13,728,655

8.5

Insurance

Less: Provision for bad debts

-18,395,157

0

Less: Interest suspense account

-5,026,141

0

Total advances

75,795,024

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UNITED BANK LIMITED Evaluation of ratios 2002-2001 2002

2001

Increase (Decrease) 2002-2001

Evaluation 2002-2001

Liquidity Ratios Current ratio Working Capital

4.78 27,198,244

2.5 2.28 21,675,146 5,523,098.00

Improved Improved

Profitability ratios Reutn on total assets Earning per Share (EPS) Book value (Break up Value)

0.81 0.63 5.31

-4.43 -3.32 1.09

5.24 3.95 4.22

Improved Improved Improved

93.52 1.437

98 0.873

(4.48) 0.56

Improved Improved

51.74 23.76 31.84 92.43

57.38 26.73 40.33 85.19

(5.64) (2.97) (8.49) 7.24

Deteriorated Deteriorated Improved Improved

Long term solvency Debt equity ratio Assets Turnover

Bank Affairs or Activity Ratios Average Advances to average deposits Foreign currency deoisit to total deposit non performing advances to total advances performing advances to total advances

Analysis of Advances Textile sector advance to total advances Chemical and pharma ceutical Credit exposure in Government Sector

35.63% 3.37% 25.49%

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During my two internship in United Bank Limited. I get some knowledge about banking system. Here, I deeply observed the functioning of the branch. In the light of these observations, I suggest the following recommendations for further progress of the Aziz Bhatti road branch, sheikhuipura.These suggestions are: 1) Branch Premises Branch working environment should be improve and renovated with latest furniture and interior decoration. External look of the branch is not seemed to be attractive so it should be clean and well designed. Sufficient seating arrangements for customer is not available here, so sufficient service area and seating arrangements must be provided for customers. 2) Staff Behavior Staff behavior in term of customer dealing should be uniform for all

customers,

without

any

favoritism

and

nepotism

that

discourage the other client. 3) Lengthy Procedure The book keeping system and filling system of the bank is so lengthy and time taking. So staff’s document processing time, should be reduced to improve working efficiency through proper training.

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4) Proper Check During two months of my training, I feel that their cheques payment service and other bills receiving service is very slow, in this way they deliberately waste the time of their customer. Therefore, their should be a proper check of manager on them so that then can recognize and understand their responsibilities. 5) To Be Conscientious It is usually observed that staff members waste lot of valuable time while performing their duties. During my training period, I feel that all staff members make a lot of unnecessary telephone calls to their relatives while dealing with their customers. In this way they not only waste a very precious time of their customers, but also waste the wealth of the country. So I feel that staff members are very irresponsible in performing their duties. So, staff member should be conscientious. 6) No Proper Security System During my training, I feel that security system to safeguard the cash deposits of bank is not book. The gunman of the bank is often busy in doing some irrelevant job. So bank should take steps to improve its security system. Other Suggestions

 New blood should be injected and young professionals should be recruited on merit to induce enthusiasm in the bank. Customers should be focus of all activities to boost up the business.

 New marketing strategies should be developed to attract new customers.

 Maximum automated machines should be used.

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 Security should be strengthening to minimize the chances of “decaties”.

 The workers should be given a sense of teamwork and the manager should be trained to manage the team as good leader.

 There should be a proper check on staff member so that they become punctual and conscientious.



Business promotional activities should be increased to

enhance the business.

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