Chapter1

Brief introduction of the Organization’s Business Sector

United Bank Limited is the second largest private commercial bank in Pakistan.UBL has
assets of more than Rs. 620 billion and a solid fifty-year track record, plus the
convenience of over 1,121 branches in the domestic country and 17 overseas branches.
UBL open for business November 7, 1959 with an authorized capital of Rs.20 million and
a paid up capital of Rs.10 million. In its first year, she has mobilized deposits of Rs.70
million and a profit of Rs.O.7 million. He has continued to grow rapidly, and soon
became one of the largest banks in the country. The main rationale for its growth
specimens have been introduced, in many cases for the first time in Pakistan,
professional management, computer, economic and business research, customer
orientation and all managerial practices.
UBL is a commercial bank that deals with consumer services. Overall, it focuses on
accelerated debt collection, disposal of surplus resources, improve credit systems,
operational controls, monitoring and reporting. From a practical standpoint, the use of
better technology, focusing on the appropriate market segment, and the project and
specialized financial services will facilitate rapid and sustainable

Brief History

Agha Hasan Abedi founded this bank in 1959.UBL has a long history in the United Arab
Emirates and is the second foreign bank to open its branch in Abu Dhabi, United Arab
Emirates in July 1967.UBL has presence in major centers, including Pakistan, United Arab
Emirates, Bahrain, Qatar, Yemen, United States of America, United Kingdom,
Switzerland, Oman, Egypt and Iran.
In 2002, the Pakistan government has sold at an auction open to a consortium of Abu
Dhabi Group and Best way Group. In 2002 it merged its operations in the UK with those
belonging to the National Bank of Pakistan to form United National Bank Limited, of
which it owns 55%, with the National Bank of Pakistan owning the rest.
UBL has remained in the private sector for 15 years until it was nationalized on 1 January
1974 with other Pakistani banks. In 1996, its deposits amounted Rs.105.9 billion;
advances totaled Rs.68.6 billion; Activities amounted to Rs.177 billion and the number of
branches was 1701, of which 27 foreign bran ches ..
improved service to consumers and prompt attention to customer needs are the focus of
promotional strategy of UBL. All programming is oriented and geared towards customer
service and satisfaction of different customer needs. The UBL past has been known for
its customer service and management plans to bring a new life into it. To this end,
training programs have been accelerated and improved. UBL has always been an
institution optimistic and growth-oriented, but that does not mean it has forgotten the
social responsibilities of business organizations. It 's always met its binding targets credit
for lending to priority sectors. As part of government policy to improve the technical
skills of the Pakistani workers, it has set up two computer centers in Sheikhupura and
Muzaffarabad. At the level of social services, the Bank has promoted the sport and built
a first-class sports complex in Karachi. She has partnered with the Internet and SWIFT to
provide a fast and responsive service.

.
It has big plans for staff training to provide clients with the services they expect from
leading banks and also provides customer care. The present scenario of UBL is that the
paid-up capital of the Bank is Rs.1.48 billion. It is not sufficient to fulfill the capital
adequacy ratio, but the Bank's package of state of Pakistan (Central Bank) has developed
to consolidate UBL will provide Rs.21 billion to increase the capital base. This huge
capital infusion would improve the liquidity of the Bank and strengthen public
confidence. This in turn would enable it to step up the mobilization of deposits, expand
its activities, pay the highest returns depositors and modernize technology. All this
would have an impact on profitability

Overview of the organization

2
o matter, it is engaged in commercial banking and related services from its headquarters
on the 13th floor, UBL Building, Jinnah Avenue, Blue Area Islamabad. In order to provide
services to its customers, UBL manages the loan and borrowing money, buying, selling,
discount, collection and trading of negotiable instruments such as bills of exchange,
check and promissory note.
It is also involved in the purchase, the sale of foreign currency. It also deals with stocks,
shares, bonds and receiving all types of bonds.
UBL is also existing businesses with long-term significant financing needs that can not be
met by individual lenders, both due to limits for the party or consideration of risk
diversification. It also handles highly indebted companies in cyclical industries and start-
ups with significant capital needs.

Nature of the organization

Business volume

The pattern sharehlding as required u/s 236 of Companies Ordinance, 1984 and Article
(xix) of the Code Corporate Governance given below:

Bank's Paid-up capital Rs.1.48 billion .Bank also announced cash dividend Ist March
2010, PKR 2.50 per share i.e.25%. And it has been recommended by the Board

3
Directors to issue Bonus Shares the proportion one share for every ten shares held
i.e.10%.

Product lines

Current Account:

No matter, it is engaged in commercial banking and related services from its

headquarters on the 13th floor, UBL Building, Jinnah Avenue, Blue Area Islamabad. In
order to provide services to its customers, UBL manages the loan and borrowing money,
buying, selling, discount, collection and trading of negotiable instruments such as bills of
exchange, check and promissory note.
It is also involved in the purchase, the sale of foreign currency. It also deals with stocks,
shares, bonds and receiving all types of bonds.
UBL is also existing businesses with long-term significant financing needs that can not be
met by individual lenders, both due to limits for the party or consideration of risk
diversification. It also deals with highly indebted companies in cyclical industries and
start-ups with significant capital needs
.
Basic Banking Account (BBA)
In order to meet the banking needs of low-income groups, UBL launched the basic bank
account from 25 February 2006 to its branch network throughout Pakistan. BBA has a
checking account and there is no minimum balance penalty on this bill, but all other
accounts with a zero balance for a continuous period of six months shall be terminated.
BBA customers are allowed to make withdrawals from ATMs UBL unlimited. I also
observed during my internship that the BBA initial numbers are 021. Example number of
BBA is 021-2120-3
.PLS Saving Account

PLS savings accounts can opened charitable institutions, Provident Funds and other
benevolent nature funds b local authorities, enterprises, associations, companies,

4
schools, and businesses etc. initial digits PLS savings account 100. Example number of
PLS savings account is 100-7820-3.

Loan Products:

Busines line

“It is Credit Facility against Residential Property. It is evergreen credit line that
customer can use his business expansion”
UBL Cashline
It is flexible loan provides cash up to Rs. (2 Million) without any security requirements
to salaried individual businessman.
Credit Cards
UBL offers a range innovative and exciting cards that is not only powered by security
chip but also enable account holder personalize it any way he wants.
:
 Agency services

 General Utility Services

 Underwriting loans raised by Government or public bodies and trading

corporations etc.

 Providing specialized services customers, and

 Hajj-related services.

Besides I want describe more facilities which are provide its account holders.

Demand Drafts

UBL also provides ease of application to both account holders and non-account holders.
For example, if the account holder does not want to make the payment to a department,
so the bank helps in this regard.
Now I want to set an example for this. Due to the non-payment of a partial payment at
the time of my admission VULMS account it was closed by Virtual University. Then I

5
made the payment of this amount with the help of the project application at the Virtual
University. If a person wants to make the payment with the help of the project
application up to Rs.100, 000 /, then his fee is Rs.155

Commission Free Remittance

This facility is provided only to account holders.

Now I want give example for it which I observed during my internship.

If account holder wants to send money another party with the help demand draft,but
eaccount holder has a larger amount his balance,then UBL sends the money through
demand draft without deducting charges.

Online

This facility is provided only account holders but not non account holders like demand
draft. If account holder wants send money another account holder in another city but
in same branch, then online service is made.

e. Competitors

 Allied Bank Limited

 National Bank of Pakistan

 Muslim Commercial Bank

 Bank Alfalah Limited
 Bank-al-Habib Limited
 Askari Commercial Bank Limited
 Faysal Bank Limited
 Habib Bank Limited
 Bank Islami Pakistan Limited
 Meezan Bank Limited
 Standard Chartered Bank
 My Bank (Bolan bank)

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 Organizational structure

Organizational Hierarchy Chart

PRESIDENT
PRESIDENT

SENIOR
SENIOREXECUTIVE
EXECUTIVE
VICE
VICEPRESIDENT
PRESIDENT

EXECUTIVE
EXECUTIVEVICE
VICE
PRESIDENT
PRESIDENT

SENIOR
SENIORVICE
VICE
PRESIDENT
PRESIDENT

VICE
VICEPRESIDENT
PRESIDENT

ASSISTANT
ASSISTANT
VICE
VICEPRESIDENT
PRESIDENT

OFFICER OFFICER OFFICER

OFFICER OFFICER OFFICER
Grade
GradeI I Grade
GradeIIII
Grade
GradeIIIIII

ACCOUNTANT
ACCOUNTANT

7
CASHIER PEON
CASHIER PEON/ /NAIB
NAIBQASID
QASID
Number of employees:

Currently there are 1121 Branches UBL Pakistan. Approximately 6000 employees are
working UBL including male and female.85% male and 15% female.
Main offices
Head office of UBL State Life Insurance Corp. Building #1,
I.I. Chundrigar Road, Karachi.List main offices below:

 Lahore
 Krachi
 Islamabad
 Multan
Muree
 Peshawar
 Quetta
 Faisalabad
 Rawalpindi
 Sargodha
 Sialkot
 Sukkur
 Rahim Yar Khan
 Gujranwala
 Hyderabad
 Bahawalpur
 Abbottabad

8
  Wahcantt

Introduction of all the departments

Account Opening department:

This department responsible open the accounts its customers.
I observed during my internship general procedure opening an account which I want
describe detail.
1. Account Opening Form:
The person who willing to open bank account, first he ha s fill the account opening
form. He furnishes this form according his full particulars including name address,
profession etc.
2. Reference and Inquiries:
Before opening new accounts, banker make inquiries. The banker ine light his inquiries
result can betterly judged financial status his new customer, his character social
position.
3. Requirements for Opening Account:
 Attested photocopy C.N.I.C
 Specimen Signature

Modern practice I have observed during internship is take these signatures on maps
indexed and sorted alphabetical order. The obligation the banker is verify customer's
signature on checks with his signature series in order to check whether there was
falsificationr fraud. Bankers take before the signature account holder on specimen
signature card, and then submit these signatures computers.
Operations Department:

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Remittance Department:
This department transfers funds from one branch bank another branch same bank. This
important service which UBL provides its customers.
Types of Remittance
.
Mail Transfer:In this method, transfer funds made through dak. Under such method,
office bank sends adviceo another office same bank payment. Such advice called
Inter Branch Credit Advice (IBCA).
Online Transfer:
it is modern concept for transfer of funds that I observed during my internship. The
modern concept bank only gave it new dimension which money transferred from one
place another in short time, even country to another country. The online branch
transaction facility where customers hold accounts online branches.
Bills Clearing Department:

Every bank acts two ways

i. Paying Bank

ii. Collecting Bank

Here in theory legal obligation bank to collect check established for other banks for
client. However, this is a important function abutment. Much this work is done NIFT.
NIFT is (National Institutional Facilitation Technologies), joint venture between
consortium six large banks and private sector. And 'responsible for the creation and
management of automated systems centralization Pakistan. NIFT participates actively in
the modernization payment systems Pakistan.

The following are main functions clearing department.

1. To accept transfer deliveries clearing cheques from customer of branch and to

arrange their collection.

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 2. To arrange payment of cheque drawn branch and given for collection any other
branch UBL Pakistan any other members, or sub-members local clearing area.

3. To collect amounts cheques drawn on members, sub-members the local clearing

house, sent for collectiony those UBL branches which are not represented at
local clearing area.

Types of cheques collected clearing department are follows:

Transfer Cheques

T transfer controls are controls that are collected and paid by same branch
obank.Cheque also called voucher.Credit coupon credit reason to increase its
balance.Cheque will be good credit in case check transfer from an account client
another.

Transfer Delivery Cheques

Ransfert delivery controls controls, which are collected and paid two different
branches a bank, which located the same city. For example the transfer checks
between UBL and MCB the city Kamalia.
Example: what I have observed during my internship.
I want to lead by example. Suppose that account holder has account in UBL and MCB
in city Kamalia. And 'the rule private bank that account holder can withdraw maximum
amount Rs.25,000 per day. If you withdraw more than this limit, he will pay each R.3 To
Rs.1000.If in case of urgencyt needs and wants withdraw from Rs.100.000 MCB.Then in
this situation will be hand of MCB Check for UBL save amount of tax adopt this method
no deduction made and in this way you will receive total amount Rs.100,000.Because
UBL in this case receives amount of the MCB be on his own.
Cash Department:

This department backbone of the bank. This is the sensitive department of branch. No
other person allowed enter the treasure room. As it is obvious from the name this

11
department deals with receipts and cash payments. The treasury carries out it functions
manually. For payments and receipts, he must keep some papers, books and various
books. Like all banking activity is based on the case. collections include customer
deposits, payments include cash withdrawals bills include phone collection, electricity,
gas other utility bills.
Cash department deals with
 Cash Receipts
 Cash Payments
 Utility Bills Collection
Locker’s Department:
Locker also called Deposit Volta. The main purpose of cabinet is to provide security
guard to the customer precious ornaments, jewelry documents. Almost in l branches,
cabinets are available different sizes at different speeds. To take advantage this
opportunity, customer has open his account in same branch.

Comments on the organizational structure

Flow power and designations in UBL well organized and fulfills requirements the
organization.

Plan of Internship Program

a. brief introduction branch (UBL) where I did internship

United Bank Limited Branch is oldest branch of tehsil Kamalia.It only main branch in
Kamalia no other banks like Habib Bank Limited and National Bank ofPakistan, which has
two branches of a main branch and the second is the secondary branch. This branch is
located in the commercial and competitive city (Kamalia)

qbal Bazar. Now I want to tell Iqbal Bazaar which is the longest in the city of Kamalia
bazaar, where as other banks, Muslim Commercial Bank, Allied Bank, Habib Bank, Bank
Alfalah ,, National Bank of Pakistan Town Branch and National Bank of Pakistan KB

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(Kachehry Branch) are located so as to create a rivalry between these competitors. Its
main customers are government and semi-governmental institutions, such as vocational
schools, colleges and schools etc .An advantage that has United Bank Limited, the
Municipal Committee is faced UBL, due to which many staff members have account UBL.
I also want say that the popularity Kamalia due to poultry and livestock industry
Khaddar. So business people are more UBL customers.
In that class there are 7 staff members

Starting and Ending dates of my Internship

I started internship programme 4th May 2010 and last date internship programme was
15th June2010.
Names of departments in which I got training and duration my
training
 Deposit Department
 Remittance Department
 Bills clearing department
 Operation Department
The duration my internship programme was 6 weeks.

Training program

a. Detailed description operations/activities which h performed UBL Kamalia Branch

Deposit Department:
under definition of "bank" for the purposes Banking Companies Ordinance of 1992,
section 5 (b), one of main functions of a bank is to accept a deposit. Deposits are
backbone of any bank; The other bank functions depend mainly on the type and size
deposits.
UBL Kamalia Branch accepts deposits under following three accounts:

 Current account

 Fixed (Terms) Deposits

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  PLS Saving account

To open account in UBL the customer will have to fill account opening form in front
bank officer. He has sign in all required places in front of officer.
Documents Required Account Opening are:

 C.N.I.C Copy.
 Two photograph (in case of illiterate person)

 Specimen Signature card (SS Card) (Provided By Bank)

 Account opening form (Provided by bank)

 Cheque Requisition Form (For cheque book issuing)

Types Account in UBL Kamalia Branch:

a. Individual Account
In this account single person operate account. The banker will run taccount
according rules, but if the customer gives special instructions the Bank will have follow
it.

Joint account:
In this type of account two more than two persons will open the account. The account
will operated by one account holder case of (either of the survival). If instructions not
given, account holders will have sign the check.
Nature of accounts UBL Kamalia Branch:
Current Account:
These non-profitable demand accounts. The account can opened with minimum amount
rupees 1000/. These accounts usually maintained business purpose.
Fixed Deposit Account:
In this type account certain deposited for fix period such six months; one year, or
longer. The amount can not withdrawn till expiration fixed period.

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PLS Saving Account:
This account its name suggests for those persons who want make small savings. In this
case deposit can made only up certain amount withdrawals are allowed only twice or
thrice week a not exceeding a certain amount. This type of account opened small
retailers mostly wage earners.

Remittance department:
Current trends demand fast movement from geographic end another. Latest technology
has made possible make such transactions with minutes. UBL Kamalia Remittance
Department performs following functions.
Demand Draft (D.D):
Procedure for D.D:
Purchaser asked to fill in application form duly singed applicant. Three things should
bmaintained form.
 Name of Payee

 Place of payment

 Amount of D.D

 project application negotiable instrumentt taken from branch bank another

branch of same bank. So, when a person wants do forms payment city
another city then you can payment through application project.
 UBL Bank also offers this possibility for non-account holders. They must submit
copy C.N.I.C with the application form D.D.
Pay Order:

some one wants make payment some other person he can make payment through pay
order slip. The main advantage of pay order is that can not be dishonor by bank. When
payment required make within city.

OBC (Outward Bills for Collection):

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These negotiable instrument drawn outstation branches of the bank, and issuing bank
sentt for collection on behalf of customer i.e. cheques, draft , dividend warrants,
treasury bill etc.

IBC (Inward Bills for Collection):

These are negotiable instrument which collected locally. These bills received from
outstation branches banks.

i) Against cash
ii) Against cheques
Credit Department Of UBL:

An extension of credit is the main function of a bank, for which the pace of activity is
accelerated in different sectors of the economy. The performance of the credit
department is subject to a defined policy for the credit control exercised by the SBP. SBP
influence credit decisions through the weapons of bank interest rates, open market
operations, the variables of the reserve requirements, prudential rules and selective
credit restrictions
.
Facilities offered UBL Kamalia branch
 Running Finance (For one year)
 Demand Finance (3to 5 years)

The commercial bank lend money any one more following ways:

1) Overdrafts.
2) Loans
3) Cash credit
1) Over Drafts (O.D):
In this case acustomer authorize borrow (overdraw) up an agreed amount excess othe
customers bank balance. The bank charges interest at an agreed rate amount actually
overdrawn borrower.

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2) Loans:

A loan made when bank advances fixed sum for definite period time.The amount
placed credit of borrower who can draw cheques against e sum any amount. Whether
make use of full amount, or par amount he has pay interest total amount the loan.
Loans are further divided following categories.

(a) Small Loans (b) Other Loan

Clean Secured Clean Secured

3) Cash Credit:
Seasonal advances allowed generally cash credit. This type loans given against
following:

 Against locally manufactured goods.

 Cash finance against rice paddy.
 Against pledge.
 Against commodities
Procedure for Financing from UBL
When party comesr financing, banker will ask following questions.
Purpose:
In this party mentions purpose, they want apply for the finances. No lending done
out purpose.
2. Business
The party must have specific running business i.e. general merchandise, construction
business etc.The second question arises cash flow how much flow generated party from
the current business.
3 Security:
The bank will secure itself against lending. There can two type security.

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  Commercial
 Residential
The bank prefers commercial security.. Relationship Manager (RM) mainly responsible
for relationship between ebanks party. He acts like a bridge between two.

Bills Clearing Department:

Bank can make payments open Cheques on the counter payment. Payment cross
Cheques cannot made counter its payment possible through collecting bankers.
Types of clearing:
 In ward clearing
 Out ward clearing
 Same day clearing
 Intercity clearing
In ward clearing:
In inward clearing the cheques of UBL is presented other bank it received by the UBL
through NIFT clearing.
Out ward clearing:
In out ward clearing cheques other banks are presented UBL by its customer clearing.
Same day clearing:
same day clearing cheques other branches are presented by the account holder UBL.
The bank clears those cheques through NIFT behalf his customer. All the process
completed with day.
Intercity clearing
In intercity clearing cheques other cities are presented clearing.
Operation Department:
N UBL Kamalia The operational manager branch is Mr.Atir Zulqarnain. I worked depot
department which is under control operational department. The opening new
accounts, closing zero balance accounts, the updating all operational files, etc.
Operation Department manages all departments of the bank, except credit
department. The Chief Operating Officer responsible for treasury, payment and clearing

18
transactions. Check books that issue and make entries computers checkbook
authentication, deposit slips and checks functions operational department.

Detailed description of the tasks assigned by me:

 During my internship at Kamalia branch of the UBL, I

worked storage, transfer, billing operations departments
and successfully completed tasks entrusted to me. There
are four departments in the branch, and worked an
assistant in this branch. I worked in the Department of
memory in supervisio Mr. Shahid, where I have done the
Following:

 Filling deposit slips and cheques many custome

 Due knowledge about MS Office I also fed data computer

newly account holders.
 I also got knowledge signatures newly account holders

Issuing of Cheque Books:

First I want tell that cheque book is issued case two conditions:
 At the time opening new account of customer
 When existing account holder have his cheque book.
Prior issue cheque book “Requisition Form” filled which provided UBL.
I also observed the number cheques cheque book during internship which I want
describe.
1. in profit or loss cheq book issue in 10 time
2. In case Current Account which cheque book issued ,it consists 25 cheques.
It is one most interesting tasks that learnt UBL. But cheque book should issued only
after formalities account opening forms, which have been checked branch manager.
Voucher checking:
learned about vouchers, verification vouchers essential confirm correct calculation
made. Vouchers properly sealed bind, and controlled branch manager. I also had
knowledge voucher bank staff.
Now I want describe types voucher I got from bank staff who under:

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 There are three types of Vouchers:
1. Cash Receipt Voucher
2. Cash Payment Voucher
3. Journal Voucher
I also observed during Internship that cheque called Debit Voucher also Credit
Voucher.
Debit Voucher one due which there decrease customer’s balance.
Credit Voucher
I also learnt following tasks:
 Our daly account holder and cheq books

 Give payment of post date cheqs

 Butt payment of out dated cheq of 6th monthAmount words tallies with
figures.

 Cash paid stamps duly affixed case payment cash.

Now I want tell about post dated cheque and dated cheque I observed during
Internship.

 Post dated cheque is one which future date written.

Example for Post dated cheque:

Suppose if customer represents cheque to the bank on 1st August, but date is
written cheque is 10th August. It called post dated cheque.

 Out dated cheque is one which past date is written.

Example for Post dated cheque:

Suppose if customer represents cheque to the bank on 10th August, but date
which is written on cheque is 1st August. It is called dated cheque.

Miscellaneous Tasks:

 Learned some tips about Bank which oracle based

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  Learned how make inquiry account in order get balance account holder

 Learned how post the utility bills in computer

 Learned how make DD

 Learned about different stamps

 Learned how many charges DD

 Learned what procedure make online

 Made vouchers

 Opened new accounts

 Also learned that at time opening new account illiterate customer two
pictures are required and also signs left thumb in case Male and signs
right thumb case Female. But in case literate customer C.N.I.C is
required and taken signatures.

 Learned no online charges when account holder has big balance

 Also filled “Requisition Form” in order to issue new cheque book account
holder

Structure of the Finance Department

Departmental hierarchy:

There are two types UBL’s Finance Management.

1. President
2. Assistants
There are three types of president who is vice president, vice-president and vice-
president. First Vice-President of the project and structured finance is Muhammad Umer
Khan. The Vice President of Project and Structured Finance is Hamza Ali Hasan. Project
Assistant Vice President and Structured Finance is Mehvish Virani.

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But the servers are two types that are Manager and Assistant Manager.Manager equity
and Director is Mr. Amjad and Vice equity and advisory director was Nazia Ali.

Number of employees working in the finance department:

Numbers of employee who are working in finance department are about 35% of the
total employees.

Finance & accounting operations:

First of all I will define Finance which is as under:

Finance is two types which is Cash Inflow and Cash Outflow.
 Cash Inflow means Income.
 Cash Outflow means Expenses.
 Financial management to provide a range of financial support services. These
services include financial consulting management, accounting, budgeting,
financial reporting, account management, financial systems, general accounting
and treasury management. These services are also responsible for all work
performance, income and collection services for the collection of municipal taxes
of various debts. All aspects relating to insurance and risk management
recommendations, as well as payment of suppliers to complete the range of
services through financial transactio
 .
But in Accounting operations three major statements are prepared which are
1. Income statement
2. Balance sheet
3. Cash flow

Functions of the Finance Department

Accounting system of the organization:

 UBL maintains its accounting system on the basis of generally accepted

accounting principles (GAAP). All account agents who work under the transaction
manager is present every day, weekly reports, monthly, semi-annual and annual
to headquarters. The main objective of accounting is to provide accounting
services and financial support to the Bank

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  The accounting department consists of the following divisions.
.

b. Finance system of the organization:

Finance means cash flow and cash flow. Finance is the lifeblood of any organization. The
Department of Finance is responsible for the authenticity of the controls, the
preparation of end-of-day statements, online banking, e-mail harvesting, opening and
closing accounts. At the Department of Finance, it has the following functions

.
Financial Services:
.
 Auditing:
It include internal auditing services.
 Income:
Income means inflow cash.
 Procurement:
It includes contractual matters for all departments.

c. Use of electronic data in decision making

Goal of LBM is to maximize profitability with the help of effective workers. It may be
possible, reducing operating costs by using the most modern technologies such as
computers. Informatica provides accurate results is required and high-level management
(strategic management).
Due to electronic data, three main statements are prepared, which are the following
:
1. Profit and Loss account
2. Balance Sheet
3. Cash flow Statement
.

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d. Sources of funds:

These are the major sources of fund which are as follows:

 Public Source:

The Bank’s major source of funds is from the Public.

 Government Institutions:

 This source is the corporate sector, which is a major source of funding for all
types of Banking. All large organizations, financial institutions, private and
governmental organizations are the main sources of funding
.
 Money Market:
Money market securities generally are highly liquid securities that mature in less than
one year. Money market is an informal network of dealers and investors over which
short-term debt securities are traded.

e. Allocation of funds:

It means use or advances of funds in various places in order to

get return.
Now I want to tell the types of Finance.
Short Term Finance:
Short term financing includes period less than one year.
Long Term Finance:
Long term financing includes tenure more than one year.
Sectors for Advances:
There are three main sectors for which UBL is advancing loans. These sectors are:
a. Industrial Sector
b.Commercial Sector
c.Agricultural Sector
a. Industrial loans:

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These loans are given to industrial units, including chalets and small-scale industries
recognized equal to or less than Rs.20 million. Loan period, the loans are approved for a
maximum period of five years, including a maximum of one year of grace
.
b.Commercial Sector:
of total loans MOUNT capital to a single borrower must not exceed Rs.0.3 million,
including loans to dependent family members. maximum period is 3 years.
c.Agricultural Sector:
loan give to those formers who has certified land
Production Finance:
This finance is advanced to farmers for inputs they need to land that fertilizers,
pesticides, seeds, etc. It 'also called short-term loan. The amount of advance with
interest is repayable within one year in a lump sum. The loans can be advanced for the
customer for his credit worthiness
.
Development Finance:
Questi prestiti sono avanzati agli agricoltori per lo sviluppo del territorio o per altri scopi
di sviluppo appartiene al settore agricolo, ad esempio, per i trattori, Thrashers, tubo-
pozzi. Questi possono essere a lungo termine, a medio termine o prestiti a breve
termine.
restituzione del prestito sono periodiche, trimestrale, semestrale o programmi annuali.
La terra dei mutui è utilizzata come garanzia per lo sviluppo di prestito
nt.

15. Critical analysis

a. Financial Analysis

1. Ratio Analysis

a) Liquidity Ratios

Liquidity ratio company meet its legal obligation

These include:
Current Ratio = Current Assets / Current Liabilities
This report shows the company's ability to pay its short-term debts by those assets that
should be converted to cash in the near future.

25
These loans are advanced to farmers for land development or other development
purposes it belongs to the agricultural sector, for example, for tractors, Thrashers, tube-
wells. These can be long-term, medium-term or short-term loans.
loan repayments are periodic, quarterly, semi-annual or annual programs. The land is
used as collateral for mortgage financing for development
.

(Rupees in ‘000’)

Year 2007 2008 2009

Current Assets 308,271,290 378,293,973 362,079,596
Current Liabilities 483713620 554222342 558156110
Current ratio 0.64 0.68 0.06

Interpretation:
Standard ratio for current ratio is 2:1 .all the year current ratio is not sufficently.we can
say ubl is doing efficiently work.

Acid Test Ratio

= Liquid or Quick assets /current liabilities
Liquid assets = cash and marketable securities

Year 2007 2008 2009

Liquid assets 57,622,360 50,143,570 61,252,772
Current liabilities 483713620 554222342 558156110
Acid Test Ratio 0.12 0.09 0.11
Interpretation:
Standard ratio for Acid Test Ratio is 1:1.
1:1.all the year current ration is not satisfiend
Sales to Working Capital:
Sales to Working Capital = Sales / Working Capital
Indication of the sale turn over.

Year 2007 2008 2009

Sales 41,962,131 53,097,381 61,495,472 26
Working Capital -175442330 -175928329 -196076514
Sales to Working -0.24 -0.30 -0.31
Interpretation:
This report shows the company's ability to pay its short-term debts from those assets
that should be converted into cash in the near future.
These loans are advanced to farmers for land development or other development
purposes it belongs to the agricultural sector, for example, for tractors, Thrashers, tube-
wells. These can be long-term, medium-term or short-term loans.
loan repayments are periodic, quarterly, semi-annual or annual programs. The land is
used as collateral for mortgage financing for development
Working Capital:
Working Capital = Current Assets – Current Liabilities
It is the difference between current assets and current liabilities. It is used to measure
a company's efficiency and its short-term financial health. Working capital is also called
net working capital.

Year 2007 2008 2009

Current Assets 308,271,290 378,293,973 362,079,596
Current Liabilities 483713620 554222342 558156110
Working Capital -175442330 -175928369 -196076514
Interpretation:
.
b) Leverage Ratios:
Leverage means operating a business with borrowed money.
It is a combination of assets, debts, shares and interest payments. These ratios are
used to understand a company's ability to meet long-term financial obligations.
Measurement ratios measure the degree of protection of long-term fund providers.

These include:Time Interest Earned:

Time Interest Earned Ratio = EBIT / Interest Charges
EBIT stands for Earning before interest and tax.
the interest coverage ratio tells us how many times the company can cover its interest
from its EBIT.The report is designed to understand the amount of interest due according
to the company's earnings before interest and taxes (EBIT). This ratio indicates the

27
extent to which the operating profit may decline before the company is unable to meet
its annual interest cost / expense
.

Year 2007 2008 2009

EBIT 1379 1405 -14392
Interest Charges Nil Nil Nil
EBIT ratio 1379 1405 -14392
Interpretation:
As a intenship.
charge Coverage Ratio:
Fixed Charge Coverage Ratio:
= Net Operating Income / Total Debt
The ratio shows the capacity of a firm to meet its total debt (Short and long term debts)
by its operating income/profit.

Year 2007 2008 2009

Net Operating Income 13,796,269 14,052,051 14,392,181
Total debt 65487949 56743538 49158077
Fixed Charge Coverage 0.21 0.25 0.29
R

InterpretationDebt / Total Assets.

Year 2007 2008 2009

Total debt 65487949 56743538 49158077
Total Assets 546,795,871 620,240,530 640,449,529 28
Debt Ratio 0.12 0.09 0.08
Debt to Equity Ratio:
Debt to Equity Ratio = Long term debt / Total Equity
First of all I want to define the sources of capital which are two in numbers.
1. Equity
2. Debt Generally, this report describes the company's capital structure. It provides
details about the amount of leverage (liabilities assumed) that a company has in relation
to the money provided by shareholders. The ratio of net debt gives the proportion of
company assets that are financed by debt to equity.
A high capital debt ratio implies that the company has been aggressively funding its
activities through debt and therefore must pay interest on this loan

Year 2007 2008 2009

Total debt 65487949 56743538 49158077
Total Equity 36,399,410 45,076,576 55,914,736
Debt To Equity Ratio 1.79 1.26 0.88

Interpretation:
Total debt = Short term borrowing + Long term debt.
Total equity = Share capital +Reserve +Unappropriated pro
Debt to Tangible Net worth Ratio:

Year 2007 2008 2009

Total debt 65487949 56743538 49158077

Net worth 47890938 49395663 67318363

Debt To Net Worth 1.79 1.26 0.88

29
Ratio
Current Worth / Net worth Ratio:
Current Worth to Net worth Ratio= Current Worth / Net worth Ratio
I calculate current worth and net worth by using this following formula:
Current Worth = Total Current Assets – Total Current Liabilities
Net Worth = Total Assets - Total Liabilities

Year 2007 2008 2009

Current Worth -175442330 -175928369 -196076514
Net Worth 47890938 49395663 67318363
Current to Net worth -3.66 -3.56 -2.91
Total Capitalization
Ratio Ratio:
Total Capitalization Ratio = Long-term debt / long-term debt + shareholders' equity
This ratio is used to measure the liability portion of the structure of a company, or
capitalization (ie, the sum of long-term debt liabilities and shareholders' equity) to
support the activities and growth of a company
.

Year 2007 2008 2009

Long Term debt 3261 1978 611
Long term debt + Equity 36402671 45078554 55915347
Capitalization Ratio 8 4 1

(1) worth Ratio Ratio= Net Fixed Assets/Long term funds

Fixed Assets
This ratio establishes the relationship between long term funds and fixed
assets.Since financial management advocates that fixed assets should be purchased
out of long term funds only.
Long term fund = Equity + Long term Debts

Year 2007 2008 2009

Net Fixed Assets 308,271,290 19,926,915 23,734,082

Long term funds 36402671 45078554 55915347

Fixed Assets Ratio 8.47 0.44 0.42

30
 (2) Equity Ratio:
Equity Ratio = Equity/Total assets
Equity ratio is also called shareholder’s equity to total equity/net worth to total
assets/ and also called Proprietor’s ratio.

Year 2007 2008 2009

Equity 36,399,410 55,914,736

45,076,576
Total assets 546,795,871 620,240,530 640,449,529

Equity Ratio 0.07 Times 0.07 Times 0.09 Times

Now combining the ratios from 2007 to 2009.

Fixed Asset Ratio / Equity Ratio for 2007= 8.47/0.07
=121
Fixed Asset Ratio / Equity Ratio for 2008= 0.44/0.07
= 6.23
Fixed Asset Ratio / Equity Ratio for 2009= 0.42/0.09
=4.67
Long term Assets versus Long term Debt
Long term Assets versus Long term Debt= Long Term Assets/ Long Term Debts

Year 2007 2008 2009

Long Term Assets 308,271,290 19,926,915 23,734,082
c) Long term debt 3261 1978 611
L.T Assets /L.T Debts 94532 10074 38844
Profitability
worthRatios:
Ratio
Profitability ratios measure the earning capacity of a company.

31
These reports examine the profit realized by the company and compare these figures
with the size of the company, the assets used by the company or its level of sales. The
long-term viability of a company is of vital importance for the survival of the company
and the benefits received by shareholders. These reports are used to measure the
profitability of companies and their financial performance. Now I want to analyze the
profitability ratios which are as follows:
Net Profit Margin:
Net Profit margin = Net Profit / Sales x 100
Actually Net Profit Margin gives the net income that the company is gaining for every
dollar sales.This margin indicates the profit after all expenses have been incurred shows
that the percentage (%) of the turnover comes from net result. An increase in reports
indicates that a company is producing higher net sales than before. In fact, net income is
net income after interest and taxes
.

Year 2007 2008 2009

Net Profit 9,237,015 8,445,251 9,487,952
Sales 41,962,131 53,097,381 61,495,472
Net Profit Margin 22% 16% 15%
Interpretation
Return on Assets:
Return on Assets (ROA) = Profit after Taxation / Average Total Assets *100

Year 2007 2008 2009

Net Profit 9,237,015 8,445,251 9,487,952
Average total assets 273397935.5 310120265 320224764.5
ROA 3.38% 2.72% 2.96%
Pont Return on Assets = Profit after taxation/Total
Assets x 100

Year 2007 2008 2009

Net Profit 9,237,015 8,445,251 9,487,952
Total assets 546,795,871 620,240,530 640,449,529
Dupont ROA 1.69% 1.36% 1.48%

32
Operating Income Margin:
Operating Income Margin = Operating Income / Net Sales*100
Operating income is the subscribing income that calculate the after profit

Year 2007 2008 2009

Operating Income 13,796,269 14,052,051 14,392,181

Net Sales
41,962,131 53,097,381 61,495,472

Operating Income
32.88% 26.46% 23.40%
Margin
Operating Assets Turnover = Operating Assets/ Net Sales.

Year 2007 2008 2009

Operating Assets 87644926 84610791 99036844
Net Sales 41,962,131 53,097,381 61,495,472
Operating Assets 2.08 1.59 1.61
ReturnTurnover Margin
on Operating Assets:
Return on Operating Assets = Profit after Taxation/ Operating assets*100

Year 2007 2008 2009

Net Profit 9,237,015 8,445,251 9,487,952

Operating assets 19,040,390 19,926,915 23,734,082

Return on Operating
48.51% 42.38% 39.98%
Assets

Interpretation:

Year 2007 2008 2009

Sales 41,962,131 53,097,381 61,495,472
33
Fixed Assets 19,040,390 19,926,915 23,734,082
Sales to Fixed Assets 2.20Times 2.66Times 2.59Times
Interpretation:
Its clear that 2007 and 2008 value is good
Return on Investment:
Return on Investment = Net profit before interest and tax/Capital employed*100
In the ratio capital employed is calculated with the help of following formula:
“Capital employed = Fixed Assets+ (Current Assets – Current Liabilities) Working capital”

Year 2007 2008 2009

Net profit before I &T 13,796,269 14,052,051 14,392,181
T
Capital employed -156401940 -156001414 -172342432

ROI -8.82% -9% -8.35%

Interpretation:we can say profitability ratio
Return on Total Equity (ROE):
Return on Total Equity = Profit after taxation / Total Equity*100
Total equity = Share capital +Reserve +Unappropriated profit.
Here profit after taxation means Net Profit. Return on equity measures the amount of
net income earned using each dollar of total common shares. It is the most important
"Bottom line" ratio.
During my internship at Kamalia branch of the UBL, I worked storage, transfer, billing
operations departments and completed tasks successfully entrusted to me. There are
four departments in the branch, and worked an assistant in this branch. I worked at the
Department of memory supervisio Mr. Shahid, where I did the following:
.

2007 2008 2009

9,237,015 8,445,251 9,487,952
36,399,410 45,076,576 55,914,736
25.38% 18.74% 16.97%
Interpretation:

the gross profit ratio is the ratio of gross profit to sales (sales / sales). This report reflects

34
the profit margin that a company can derive from its commercial and manufacturing
activities. It is used between companies and intra-firm comparison of business results

The gross profit ratio is 2007 2008 2009

the ratio
Gross Profit
of gross profit 13,796,269 14,052,051 14,392,181
Net sale 41,962,131 53,097,381 61,495,472
Gross Profit Margin 32.88% 26.46% 23.40%
Interpretation:
It is clear the gross profit is maxmim in 2007

d) Activity Ratios:
Activity Reports are sometimes also referred to as efficiency ratios or turnover.
The term "revenue" refers to the rotation or the use of resources in the business
process.
Reports of activities refer to measure the effectiveness of asset management. These
reports express the relationship between the level of sales and investments in various
inventories of goods, credits, etc. Activity Reports measures the ability of a company to
convert different accounts on their balance sheets in cash
.
There are four main activity ratios which are
1. Stock turnover ratio
2. Debtors/Account receivable turnover ratio
3. Creditors/Account payable turnover ratio
4. Working capital turnover ratio
Accounts Receivable Turnover:
Accounts Receivable Turnover = Annual net credit sale/Average account receivable
Annual net credit sale = Annual sale - Sales return
Average account receivable = Opening account receivable+Closing account receivable /2
Interpretation:
This report describes how many times that amount received from the account receivable
during the period of one year.
How UBL has no credits, in order to take on the credit report it can not be calculated. I
am analyzing the banking company reports (UBL) so the activity reports do not much
worry and usually use for production activities

35
Accounts Payable Turnover:
Accounts Payable Turnover = Annual net credit purchase/Average account payable

Annual net credit purchase = Annual purchase - purchase return

Average account payable = Opening account payable +Closing account payable /2

Year 2007 2008 2009

Net credit purchase 13,078,063 16,620,583 14,974,445

Average account
3043633 2605435 2583180
payable

Accounts Payable
4.30Times 6.38Times 5.80Times
Turnover

Interpretation:
activity reports are also sometimes referred to as efficiency ratios or turnover.
The term "revenue" refers to the rotation or the use of resources in the business
process.
Reports of activities refer to measure the effectiveness of asset management. These
reports expressing the relationship between the level of sales and investments in various
inventories of goods, credits, etc. activity reports measure the ability of a company to
convert different accounts on their balance sheets in cash
.
Average Payment Period:
Average Payment Period = Number of days in a year/ Accounts Payable Turnover ratio

Average Payment period for 2007:

=360/4.30

36
 =83 Days
Average Payment period for 2008:
=360/6.38
=56 Days

Average Payment period for 2009:

=360/5.80
=62 Days
Shorter average payment period is satisfactory for the Bank.
Inventory Turnover Ratio:
Inventory Turnover Ratio = Cost of goods sold/ Average Inventor.
Interpretation:
Gross profit is maxmim in 2007
Average Age of Inventory:
Average Age of Inventory = Days in the year/ Inventory Turnover Ratio
Interpretation:
The average age of the inventory will be possible in this case if the turnover rate is
possible. So in the previous scenario Ratio of inventory turnover can not be calculated.
In this way it is also impossible.
Operating Cycle:
Definition:
“Actually it is the length of time from actual outlay of cash for purchases until the
collection of receivables resulting from the sale of goods.”
It is the time period between the acquisitions of goods and final cash realization
resulting from sale and subsequent collection.
Total Assets Turnover:
Total Asset Turnover = Total Sales / Total Assets It is calculated by dividing dollar sales
by assets in dollars. Asset turnover measures the efficiency of a business to use its assets
to generate sales or revenues. The higher the number the better. Companies with low

37
profit margins tend to have high turnover rates, while companies with high profit
margins have a low turnover rate.

Year 2007 2008 2009

Total Sales 41,962,131 53,097,381 61,495,472
Total Assets 546,795,871 620,240,530 640,449,529
Total Asset Turnover 0.08 0.08 0.09
Interpretation:
In the year of 2009 Ratio is satisfactory.
Fixed Assets Turnover:
Fixed Assets Turnover = Total sales/Fixed assets
Asset turnover measures a firm's efficiency at using its fixed assets in generating sales or
revenue. The higher the number the better it is.

Year 2007 2008 2009

Total Sales 41,962,131 53,097,381 61,495,472
Fixed Assets 19,040,390 19,926,915 23,734,082
Fixed Asset Turnover 2.20 2.66 2.59

Interpretation: In the year of 2008 calculated Ratio is satisfactory.

e) Market Ratio:
It is calculated by dividing dollar sales by assets in dollars. Asset turnover measures the
efficiency of a business to use its assets to generate sales or revenues. The higher the

38
number the better. Companies with low profit margins tend to have high turnover rates,
while companies with high profit margins have a low turnover rate.
Dividend per share:
Dividend per Share = Total amount of Dividend/ Number of outstanding shares

Year 2007 2008 2009

Total amount of Dividend 1,942,500 3,945,703 1,094,748
Number of Shares 1,618,750 2023438 1,011,719
Dividend per Share 1.2 1.95 1.08

Interpretation: In the year of 2008 ratio is at maximum point which is Rs.1.95.

Earning Per Share- EPS:
Earning Per Share = Profit after Taxation/ Number of Shares

Year 2007 2008 2009

Profit after Taxation 9,237,015 8,445,251 9,487,952
Number of Shares 1,618,750 2023438 1,011,719
Earning per Share 5.7 4.17 9.38

Interpretation:

39
Earnings per share is used as an indicator of a company's profitability. Earnings per share
is generally considered to be the most important variable in determining the price of a
share. In 2009, the ratio is high
.
Market Price / Earning Ratio:
Price / Earning Ratio = Stock Price per Share/ Earning Per Share

Year 2007 2008 2009

Stock Price per Share 5 4.99 10.99
Earning per Share 5.7 4.17 9.38
Price / Earning Ratio 0.88 1.19 1.17

Interpretation: In the year of 2008 ratio is at maximum point.

Dividend Payout Ratio:
Dividend Payout Ratio = Dividend per Share/ Earning per Share

Year 2007 2008 2009

Dividend per Share 1.2 1.95 1.08
Earning per Share 5.7 4.17 9.38
Dividend Payout Ratio 0.21 0.47 0.12

40
Interpretation:
The percentage of earnings paid to shareholders in the form of dividends. More mature
firms tend to have a higher payout ratio. In 2008, the ratio is high.
Dividend Yield:
Dividend Yield = Dividend per Share/ Share Price

Year 2007 2008 2009

Dividend per Share 1.2 1.95 1.08
Share price 5 4.99 10.99
Dividend Yield 0.24 0.39 0.09

Book Value per Share:

Book Value per Share = Shareholders’ Equity/ Share Capital

Year 2007 2008 2009

Equity 36,399,410 45,076,576 55,914,736
Share Capital 8,093,750 10,117,188 11,128,907
Book Value per Share 4.49 4.45 5.02

Interpretation:
In the year of 2009 calculated ratio is at maximum point which is Rs.5.02.
f) Statement of cash flow:

41
Cash flow ratios indicate liquidity, borrowing capacity or profitability. These ratios can
give users another look at the financial health and performance of a company.
(i)Operating Cash Flow to Current maturities of long term debt and current notes
payable
= Operating cash flow / current maturities of long term debt r + (Accounts) Notes
payables

Year 2007 2008 2009

Operating Cash flow 50,482,038 1,025,033 26,774,872
Current maturities of
long term debt +AC’s 12,078,519 49,960,560 42,334,638
payables

Ratio 4.18 0.02 0.63

Interpretation:
The ratio tells the amount of long term debt and account payables in the year of 2008
and 2009.
(ii) Operating Cash Flow to Total Debt:
Operating Cash Flow to Total Debt = Operating Cash Flow/Total Debt
This ratio provides an indication of a company's ability to hedge total debt with its
annual cash flow from operations. The higher the percentage, the greater the company's
ability to raise its total debt.

Year 2007 2008 2009

Operating Cash flow 50,482,038 1,025,033 26,774,872
Total Debts 65,487,949 56,743,538 49,158,077

Operating Cash Flow/Total Debt 0.77 0.02 0.54

Interpretation:
In the year of 2009 ratio is higher which is better for the Bank.

42
(iii)Operating Cash Flow per Share:
Operating Cash Flow per Share = Operating cash flow / Total Shares

Year 2007 2008 2009

Operating Cash flow 50,482,038 1,025,033 26,774,872
Total Shares 1618750 2023438 1011719
Operating Cash Flow per share 31.12 0.51 26.46
(iv)Operating Cash Flow/Cash Dividends:

Year 2007 2008 2009

Operating Cash flow 50,482,038 1,025,033 26,774,872
Cash Dividends 1,942,500 3,945,703 1,094,748
Ratio 25.98 0.26 24.46
Interpretation:
Profit is mor then 2007 again the 2006

2. Horizontal Analysis:

L is also called the index analysis. This analysis takes into account the changes in balance
sheet items as a reference year for subsequent years to show the direction of change. In
this analysis, I assume the reference year (2007).
Computation explained = Item of any year/ Base year item (2007) *100

Horizontal Analysis
United Bank Limited
Consolidated Balance Sheet
As On Dec 31 2007, 2008 & 2009

43
(Rupees in ‘000’)
Horizontal Analysis

2007 2008 2009

ASSETS 2007 2008 2009
Cash and balances
with treasury 57,622,360 50,143,570 61,252,772 100 87.02 106.30
banks
Balances with
10,982,176 14,540,306 14,049,990 100 132.40 127.93
other banks
Lending to
financial 24,781,723 22,805,341 23,162,130 100 92 93.46
institutions
Investments 114,026,273 115,057,090 137,734,578 100 100.90 120.79

Advances 308,271,290 378,293,973 362,079,596 100 122.71 117.45

Operating fixed
19,040,390 19,926,915 23,734,082 100 104.65 124.65
assets
Deferred tax asset --------------- 2,164,148 649,814 0 0 0
Other assets 12,071,659 17,309,187 17,786,567 100 143.39 147.34
TOTAL ASSETS 546,795,871 620,240,530 640,449,529 100 113.43 117.13
LIABILITIES
Bills payable 6,087,266 5,210,870 5,166,361 100 85.60 84.87
Borrowings 59,491,253 44,749,690 37,168,277 100 75.22 62.47
Deposits and other
412,138,405 492,267,898 503,831,672 100 119.44 122.25
accounts
Sub-ordinate loans 5,996,696 11,993,848 11,989,800 100 200 199.94
Liabilities against
assets subject to 3,261 1,978 611 100 60.65 18.74
finance lease
Deferred tax
2,109,989 ---------------- ------------------- 100 0 0
liability
Other liabilities 13,078,063 16,620,583 14,974,445 100 127.08 114.50

44
TOTAL LIABILITIES 498,904,933 570,844,867 573,131,166 100 114.42 114.88
NET ASSETS 47,890,938 49,395,663 67,318,363 100 103.14 140.56
REPRESENTED BY

Shareholders Equity
Share capital 8,093,750 10,117,188 11,128,907 100 125 137.50
Reserves 11,577,342 17,256,061 21,167,954 100 149 182.84
Unappropriated
16,728,318 17,703,327 23,617,875 100 105.82 141.85
profit
Minority interest 2,115,645 2,044,589 2,279,691 100 96.64 107.75
Surplus on
revaluation of 9,375,883 2,274,498 9,123,936 100 24.26 97.31
assets
TOTAL EQUITY 47,890,938 49,395,663 67,318,363 100 103.14 140.56

Horizontal Analysis
United Bank Limited
Consolidated Profit & Loss Account
As On Dec 31 2007, 2008 &2009

2007 2008 2009 Horizontal Analysis

(Rupees in ‘000’) 2007 2008 2009
Mark-up / return /
41,962,131 53,097,381 61,495,472 100 126.53 146.55
interest earned
Mark-up / return /
17,162,817 24,303,193 28,323,272 100 141.60 165
interest expensed
Net mark-up /
24,799,314 28,794,188 33,172,200 100 116 133.76
interest income
Provision against
loans and advances – 1,690,095 5,883,778 9,644,927 100 348.13 570.67
Net
Additional (3,803,759) (1,369,230) 560,852 100 (35.90) 14.75
provisioning arising
on account of change

45
in Prudential

Regulations(Provision
against loans(2009)
Reserve for
diminution Investmnt (6,233) 1,871,589 1,187,460 100 (300) (190)

Bad debts written off 935,165 1,485,976 100 68.68 158.90

directly 6,422,78

Total Net Mark up 18,376,528 21,040,498 20,292,985 100 114.50 110.43

Net mark-up /
interest income after
provisions
Fee, commission and
5,899,632 7,298,807 6,736,356 100 123.71 114.19
brokerage income
Dividend 364,260 191,376 214,727 100 52.54 58.95
Income from dealing
893,790 1,680,870 1,275,914 100 188 142.75
in foreign currencies
Gain on sale of
851,589 254,418 699,275 100 29.80 82.11
securities
Unrealized loss on
revaluation of (15,755) (10,682) (2,582) (100) (67.80) (16.39)
investments
Other
1,614,151 1,506,146 3,396,800 100 93.30 210
income/Charges
Total non mark up 9,607,667 10,920,935 12,320,490 100 113.66 128.23
Non mark-up /
interest expense
Administrative 14,257,211 16,679,968 17,803,338 100 116.90 124.87

46
expenses
Other provisions /
236,281 468,042 642,274 100 198 271.83
write offs – net
Other charges 17,430 292,377 64,552 100 167 370
Workers welfare fund ------------------ 340,548 401,073 0 0 0
Total non mark-up /
14,510,922 17,780,935 18,911,237 100 122.53 130.32
interest expenses
Profit before
taxation 13,796,269 14,052,051 14,392,181 100 101.8 104.32

- Current 5,151,242 6,151,520 6,996,257 100 119.42 135.82

- Prior years 442,667 435,072 78,710 100 98.29 17.79
- Deferred (1,034,655) (979,792) (2,170,738) (100) (94.69) (209.80)
4,559,254 5,606,800 4,904,229 100 122.98 107.57
Profit after taxation 9, ,237,015 8,445,251 9,487,952 100 91.43 102.72
Attributable to:
Equity holders of the
8,975,280 8,355,757 9,521,546 100 93 106
Bank
Minority interest 261,735 89,494 (33,594) 100 34.19 12.85
9,237,015 8,445,251 9,487,952 100 91.42 102.72
Basic and diluted
11.09 8.26 8.56 100 74.48 77.12
earnings per share

Vertical Analysis:
It is also called common size / percentage of component analysis / static. It indicates the
size of each item of the budget in% of the total of this statement, ie assets, liabilities and
equity on the balance sheet and sales in the income statement. common budgets and
profit and loss statements can be more easily compared, both over the years for a single
company or for different companies. vertical analysis, the analyst calculates each
element in a single budget as a percentage of the total.
Computation explained = Amount of one column/ Total amount of that column *100
Vertical Analysis
United Bank Limited
Consolidated Balance Sheet
As On Dec 31 2007, 2008 & 2009

47
(Rupees in ‘000’)
Vertical Analysis

2007 2008 2009

ASSETS 2007 2008 2009
Cash and balances
with treasury 57,622,360 50,143,570 61,252,772 10.55 8.08 9.56
banks
Balances with
10,982,176 14,540,306 14,049,990 2 2.34 2.19
other banks
Lending to
financial 24,781,723 22,805,341 23,162,130 4.53 3.68 3.62
institutions
Investments 114,026,273 115,057,090 137,734,578 20 18.55 21.51

Advances 308,271,290 378,293,973 362,079,596 56.38 60.99 56.54

Operating fixed
19,040,390 19,926,915 23,734,082 3.45 3.21 3.70
assets
Deferred tax asset --------------- 2,164,148 649,814 0 .35 .10
Other assets 12,071,659 17,309,187 17,786,567 2.20 2.79 2.77
TOTAL ASSETS 546,795,871 620,240,530 640,449,529 100 100 100
LIABILITIES
Bills payable 6,087,266 5,210,870 5,166,361 1.11 .84 .81
Borrowings 59,491,253 44,749,690 37,168,277 10.88 7.21 5.80
Deposits and other
412,138,405 492,267,898 503,831,672 75.37 79.37 78.67
accounts
Sub-ordinate loans 5,996,696 11,993,848 11,989,800 1.09 1.93 1.87
Liabilities against
assets subject to 3,261 1,978 611 5.96 3.19 9.54
finance lease
Deferred tax
2,109,989 ---------------- ------------------- 0.39 0 0
liability
Other liabilities 13,078,063 16,620,583 14,974,445 2.39 2.68 2.33

48
TOTAL LIABILITIES 498,904,933 570,844,867 573,131,166 91.24 92.04 89.49
NET ASSETS 47,890,938 49,395,663 67,318,363 8.76 7.96 10.51
REPRESENTED BY

Shareholders Equity
Share capital 8,093,750 10,117,188 11,128,907 1.49 1.63 1.75
Reserves 11,577,342 17,256,061 21,167,954 2.12 2.78 3.30
Unappropriated
16,728,318 17,703,327 23,617,875 3.05 2.85 3.69
profit
Minority interest 2,115,645 2,044,589 2,279,691 0.38 0.33 0.35
Surplus on
revaluation of 9,375,883 2,274,498 9,123,936 1.72 0.36 1.42
assets
TOTAL EQUITY 47,890,938 49,395,663 67,318,363 8.76 7.96 10.51

Vertical Analysis
United Bank Limited
Consolidated Profit & Loss Account
As On Dec 31 2007, 2008 &2009

2007 2008 2009 Vertical Analysis

(Rupees in ‘000’) 2007 2008 2009
Mark-up / return /
41,962,131 53,097,381 61,495,472 100 100 100
interest earned
Mark-up / return /
17,162,817 24,303,193 28,323,272 40.90 45.77 46.06
interest expensed
Net mark-up /
24,799,314 28,794,188 33,172,200 59.09 54.23 53.94
interest income
Provision against
loans and 1,690,095 5,883,778 9,644,927 4.03 11.08 15.68
advances(Net)
Additional (3,803,759) (1,369,230) 560,852 (9.06) (2.58) 0.91
provisioning arising

49
on account of change
in Prudential

Regulations(Provision
against loans(2009)
Reserve for
diminution (6,233) 1,871,589 1,187,460 (.01) 3.52 1.93
Investment
Bad debts written off
directly 935,165 6,422,78 1,485,976

2.23 1.21 2.42

Net mark-up /
interest income after 18,376,528 21,040,498 20,292,985 43.79 39.62 32.99
provisions
Fee, commission and
5,899,632 7,298,807 6,736,356 14.06 13.75 10.95
brokerage income
Dividend 364,260 191,376 214,727 0.87 0.36 0.35
Income from dealing
893,790 1,680,870 1,275,914 2.13 3.17 2.07
in foreign currencies
Gain on sale of
851,589 254,418 699,275 2.03 0.48 1.14
securities
Unrealized loss on
revaluation of (15,755) (10,682) (2,582) (0.04) (0.02) (4.19)
investments
Other
1,614,151 1,506,146 3,396,800 3.85 2.84 5.52
income/Charges
Total non mark up 9,607,667 10,920,935 12,320,490 22.89 20.56 20.03

50
Non mark-up /
interest expense
Administrative
14,257,211 16,679,968 17,803,338 33.98 31.41 28.95
expenses
Other provisions /
236,281 468,042 642,274 0.56 0.88 1.04
write offs - net
Other charges 17,430 292,377 64,552 0.04 0.55 0.10
Workers welfare fund ------------------ 340,548 401,073 0 0.64 0.65
Total non mark-up /
14,510,922 17,780,935 18,911,237 34.58 33.48 30.75
interest expenses
Profit before taxation
13,796,269 14,052,051 14,392,181 32.88 26.46 23.40

- Current 5,151,242 6,151,520 6,996,257

- Prior years 442,667 435,072 78,710
- Deferred (1,034,655) (979,792) (2,170,738)
4,559,254 5,606,800 4,904,229 10.86 10.55 7.97
Profit after taxation 9, ,237,015 8,445,251 9,487,952 22.01 15.90 15.43
Attributable to:
Equity holders of the
8,975,280 8,355,757 9,521,546 21.38 15.74 15.48
Bank
Minority interest 261,735 89,494 (33,594) 0.62 0.17 (0.05)
9,237,015 8,445,251 9,487,952
Basic and diluted
11.09 8.26 8.56 2.64 1.55 1.39
earnings per share

4. Review of Descriptive Information for United Bank Limited:

t is also called common size / percentage of component analysis / static. It indicates the
size of each item of the budget in% of the total of this statement, that is, assets,
liabilities and net assets of the balance sheet and sales of the income statement. Balance
sheets and profit and loss accounts can be compared more easily, both over the years
for a single company or several companies. vertical analysis, the analyst calculates each
element in a single budget as a percentage of the total.
According to banking companies Ordinance of 1962, the bank is required to transfer the
twelve percent (12%) of its profit every year to the reserve fund status quo as long as
the amount of funds invested in the United Bank Limited. dividend distributions .

51
 Trend Analysis:

In trend analysis, current ratio of the company is confronted with his past and projected
reports to determine if the company's financial situation improves or deteriorates over
time. The trend analysis purpose is to verify if the ratio increases, decreases or remains
relatively constant. This helps to detect problems or look good management.
Trend Analysis
United Bank Limited
FOR THE YEARS 2007, 2008 & 2009
2007 2008 2009 Trend Analysis
Performance Area

a) Liquidity Ratios

Current Ratio Unsatisfactory

0.64 0.68 0.06
(Normal 2:1)
Acid Test Ratio Lower liquidity in
0.12 0.09 0.11 all the years
(Normal 1:1)
Sales to Working Capital Unsatisfactory
-2.87 -5.82 -0.14

Working capital Current assets

-175442330 -175928369 -196076514 are not sufficient
to meet current
liabilities
b) Leverage Ratios

Time Interest Earned Lower since 2009

1379 1405 -14392
& no interest
charges
Fixed Charge Coverage High coverage in
0.21 0.25 0.29
2009
Debt Ratio Leverage
0.12 0.09 0.08 decreases in
2009

52
Debt / Equity Ratio UBL uses little
1.79 1.26 0.88
debt in its capital
structure
Debt to Tangible Net 1.79 1.26 0.88 In 2009 UBL uses
worth Ratio low debt
Current Worth / Net Unsatisfactory in
worth Ratio -3.66 -3.56 -2.91 all the years

Total Capitalization Ratio In 2009 Ratio is

8 4 1
minimum

Long term Assets versus Higher in 2007

94532 10074 38844
Long term Debt but drop in 2008

c) Profitability Ratios

Decreasing
Net Profit Margin 37.24% 29.32% 28.60% continuously

Return on Assets Lower ROA

3.38% 2.72% 2.96% during 2008 & in
2009
DuPont Return on Assets Decreases from
1.69% 1.36% 1.48%
the year 2007
Operating Income Margin Decreases
55.63% 48.80% 43.39%

Operating Assets Lower efficiency

353.42% 293.85% 298.53%
Turnover in 2008
Return on Operating Decreasing in
48.51% 42.38% 39.98%
Assets 2009
Sales to Fixed Assets Lower in 2007
1.30Times 1.44Times 1.39Times and higher in
2008

53
Return Unsatisfactory
-8.82% -9% -8.35%
on Investment (ROI)
Return on Total Equity Decreasing
25.38% 18.74% 16.97%
continuously
Gross Profit Margin Gradually
55.63% 48.80% 43.39%
decreases
d) Activity Ratios
Accounts Payable
4.30Times 6.38Times 5.80Times Higher in 2008
Turnover
Average Payment Period 83 Days 56 Days 62 Days Higher in 2009
Total Assets Turnover 0.05 0.05 0.05 Constant
Fixed Assets Turnover 1.30 1.44 1.39 Higher in 2008
e) Market Ratios
Dividend per share Good percentage
1.2 1.95 1.08
in 2008
Earning per Share 5.7 4.17 9.38 Higher in 2009
Price/Earning Ratio 0.88 1.19 1.17 Higher in 2008
Dividend Payout 0.21 0.47 0.12 Lower in 2009
Dividend Yield 0.24 0.39 0.09 Lower in 2009
Book Value per Higher in 2009
4.49 4.45 5.02
Share
f) Statement of cash flow
Operating Cash Satisfactory in
Flow/Current Maturities 2007 but not in
4.18 0.02 0.63
of Long Term Debt and 2008
Current Notes Payable
Operating Cash Higher in 2007
Flow/Total Debt 0.77 0.02 0.54 but lower in
2008
Operating Cash Flow per Higher in 2009
Share 31.12 0.51 26.46 but lower in
2008
Higher in 2007
Operating Cash
25.98 0.26 24.46 but lower in
Flow/Cash Dividends
2008

54
.b. Future Prospects of UBL:
uture prospects of UBL for its strong customer to drive the future of the company
banking strategy. On the domestic front, the bank launched its consumer banking
business. Increased investment in the development of human resources and internal
systems to support the initiative of the aggressive consumer and the exploration of new
ways of generating income. The first step of this initiative is the launch of UBL Wallet
brand ATM cards. In addition, UBL has introduced a full range of credit products to
innovative consumer designed to capture a significant share of the credit for local
consumption market. In merchant banking, UBL recently participated as co-manager in
the receivables securitization Daewoo under a union agreement.

SWOT analysis of organization

Strength:

 UBL où j'ai obtenu un stage a un système en ligne bien réputé. Le service des
envois de fonds travaille très efficacement dans le transfert des fonds aux
peuples grâce à ce système.
 There is also improvement in corporate loans and agricultural loans.
 One employee in the bank performs many duties.
 All staff members treat their clients or general public with well behav

Weaknesses:

 There is yet no ATM machine in UBL Kamalia Branch.

 There is also lack of workplace in the Bank.
 I observed during my internship that some of the employees were burdened with
over work. So according to my point of view that the work should be distributed
according to their post.
 Due to lack of workplace, staff members as well as the general public face
disturbance in the bank.

55
  UBL has formulized a lot of products and services for its customers, but any
advertisement on electronic media has not been se

External Environment

Opportunities:

 Great opportunity of starting Islamic banking system like Bank Alfalah in Kamalia.
 UBL has an opportunity to provide the facility of Online free for their clients like
Bank Alfalah Islamic Banking System in Kamalia.
 UBL Kamalia Branch is surrounded by many competitors it has an opportunity to
aggressive marketing to increase its business.

Threats:

 UBL is facing a strong competition by its competitors in Kamalia like MCB, ABL,
and Bank Alfalah Islamic. Business of all these Banks is rapidly growing.
 Because in Kamalia UBL Branch takes online charges from their customer but
Bank Alfalah not. So due to this difference people will want to open their account
in Bank Alflah Islamic. In this way deposit in the Bank cannot be increased

Conclusion

Also pointed out That the computer system is very slow. When an account holder wants
to do online shopping, online process takes a lot of time. In this way it is possible That
Their customers will want to open accounts in other branches That have a very fast
system like Bank Alfalah and MCB in Kamalia
.

. Recommendations for Improvement

I suggested some recommendations in the light of reports and SWOT analysis. UBL has a
negative working capital in the three years from 2007 to 2009, so it is essential to
increase the current assets and reduce capital investments.

56
During my internship at LBM, I found that the weak areas that need long-term
improvements for the organization. Such suggestions and recommendations for
improvement are:
Professional Training:
The unprofessional LBM. They do not have the training to do the job effectively. To this
end, the colleges of the staff should be reorganized and their program should be
designed to help the employee understand the global economic scenario in constant
evolution.
.
Slow System:
also pointed out that the computer system is very slow. When an account holder wants
to do online shopping, online process takes a lot of time. In this way it is possible that
customers will want to open their accounts in other branches that have a very fast
system like Bank Alfalah and MCB in Kamalia
.

Credit Card:
UBL should start its operation by credit card. These cards are very useful for the ordinary
customer in general, and in particular structure. To make it more secure and to eliminate
the abuse of it, the management is required to maintain a good security against the cred

57