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INTERNSHIP REPORT

Allied Bank Limited (ABL)

ISLAMABAD, PAKISTAN

Submitted By

Syed Ahsan Ali Zaidi

Mcxxxxxxxxx

Session 2009 – 2011

Submission Date 12th Jan 2012

Virtual University Of Pakistan


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………All vu39 member’s especially my cute little sweet fellows who

told me that report is nothing but a “sir dard” :D ….

I did nothing as I did my efforts,

&

Special Thanks Goes To

Mr. Lonely

:p red alert

The people who helped me out

Hibba, Sohnie, Seph, ayisha, sweety cuteey, fizza pervaiz

THANK YOU SO MUCH!


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First of all, I want to express all my humble thanks to ALLAH who is very sensitive about each

and every activity of all his men and without whose help, I am unable to accomplish any

objective in my life. All respect to his Holy Prophet HAZART MUHAMMAD (Peace Be Upon

Him) who brought the light of knowledge when the humanity was wandering in the desert of

ignorance.

Secondly, I am grateful to my prestigious institute that made his learning opportunity a part of

our education, especially. Internship coordinator MR. Imran who not only guided me well but

also helped me in finding such an excellent place for internship. I am also thankful to all other

teachers as the knowledge imparted by them enables me to gain knowledge of the organization in

best way.

I would also thank to all the staff of Allied Bank, particularly Mr. Rana Riaz Ahmad who gives

me an opportunity to work in the bank and gave me a chance to explore my knowledge.

I submit my earnest thanks to my affectionate parents, who always remains at my back to

support me, I can never give the return of their un tired struggle for me, but I can only prove

myself as they expect from me. And I am also grateful to all other family members and all my

friends for their moral boosting and spiritual support during my study and especially in this

internship program. I went to pay gratitude to all persons, who had helped me in completing this

support.

Muhammad Chatta


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MBA (Finance)

EXECUTIVE SUMMARY

This report is about my internship program with Allied Bank Limited. In this comprehensive

report, I have discussed about every major aspect of the bank, which I observed and perceived

during my internship program. In this report you will find the detail about the bank right from its

incorporation to the current position. Along with it, the processes, policies and procedures of the

bank are also discussed in detail.

During my internship program, I mainly worked in General Banking & Finance. All the

departments have been discussed in detail and all the policies and procedures have been

described thoroughly.

As the main purpose of internship is to learn by working in practical environment and to apply

the knowledge acquired during the studies in a real world scenario in order to tackle the

problems using the knowledge and skill learned during the academic process, In this report the

detailed analysis of the organization has been done and all the financial, technical, managerial

and strategic aspects have been evaluated to analyze the current position of the organization.

Along with it, the background analysis, the prevailing competition analysis, the business process

analysis, and the internal environment and external environment of the organization have been

discussed and the recommendations for the improvement have been made wherever required.

In the end the learning and experiences section consists of all the policies, processes, practices

and procedures which I have undergone through and learned during my internship program. This

report also contains my perceptions about the employees’ satisfaction, motivation level and the

working environment of the organization.


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Index Description Page

1 OVERVIEW OF ORGANIZATION

BREIF HISTORY OF ORGANIZAITON 9

HIERACHY CHART OF THE ORGANIZATION 13

BUSINESS VOLUME 14

PRODUCT LINES 15

COMPETITORS 16

INTRODUCTION OF ALL THE DEPARTMENTS 17

COMMENTS ON THE ORGANIZATIONAL STRUCTURE 33

2 PLAN FOR THE INTERNSHIP 34

3 TRAINING PROGRAM 35

DETAIL DESCRIPTION OF TASKS ASSIGNED 36

4 RATIO ANALYSIS 38

Bank Ratios DFIs

1) Net Profit Margin 2) Gross Spread Ratio 3) Non Interest Income to Total Income Ratio 4) Spread Ratio 5) Return on Assets (ROA) 6) Du Pont Return on Assets Ratio 7) Return on Total Equity (ROE) 8) Debt Ratio 9) Debt / Equity Ratio 10) Times Interest Earned Ratio 11) Advances / Deposits Ratio 12) Operating Cash Flow Ratio 13) Dividend per Share


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14) Earning per Share 15) Price/Earning Ratio

5 FUTURE PROSPECTUS 55

6 CONCLUSION 56

7 RECOMMENDATION FOR IMPROVEMENTS 57

8 REFRENCES & SOURCES USED 58

9 ANNEXES


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OVERVIEW OF THE ORGANIZATION

A. The Brief History Organization

Allied Bank is the first Muslim bank, to have been established on the territory that became

Pakistan.established in December 1942 as the Australasia Bank at Lahore with a paid-up share

capital of Rs. 0.12 million under the Chairmanship of Khawaja Bashir Bux, the Bank had

attracted deposits, equivalent to Rs. 0.431 Million in its first eighteen months of business. Total

assets then amounted to Rs. 0.572 million. Today Allied Bank's paid up Capital & Reserves

amount to Rs. 10.5 billion, deposit exceeded Rs. 143 billion and total assets equal Rs. 170

billion. The Allied Bank's story is one of dedication, commitment to professionalism, adaptation

to changing environmental challenges resulting into all round growth and stability, envied and

aspired by many.

The Pre Independence History (1942 to 1947)

In the early 1940s the Muslim community was beginning to realize the need for the active

participation in the field of trade and industry. The Hindus had since the late 1880s established a

commanding presence in these areas and industry, trade and commerce in the undivided Sub-

continent was completely dominated by them. Banking, in particular, was an exclusive enclave

of the Hindus and it was widely believed, and wrongly so, that Muslims were temperamentally

unsuited for this profession. It was particularly galling for Khawaja Bashir Bux to hear the gibe

that “Muslims could not be successful bankers”. He decided to respond to the challenge and took

lead in establishing this first Muslim bank on the soil of Punjab that was to become

Australasia Bank (1947 to 1974)

Australasia Bank was the only fully functional Muslim Bank on Pakistan territory on August the

14th, 1947. It had been severely hit by the riots in East Punjab. The bank was identified with the

Pakistan Movement. At the time of independence all the branches in India, (Amritsar, Batala,


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Jalandhar, Ludhaina, Delhi and Angra (Agra)) were closed down. New Branches were opened in

Karachi, Rawalpindi, Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and Kasur. Later it

network spread to Multan & Quetta. The Bank financed trade in cloth and food grains and thus

played an important role in maintaining consumer supplies during riot affected early months of

1948. Despite the difficult conditions prevailing and the substantial set back in the Bank’s

business in India, Australasia Bank made a profit of Rs 50,000 during 1947-48. By the end of

1970 it had 101 branches. Unfortunately it lost 51 branches in the separation of East Pakistan.

The bank did well in despite losing lot of its assets. By the end of 1973 the bank had 186

branches in West Pakistan.

Allied Bank (1991 to 2004)

As a result of privatization in September 1991, Allied Bank entered in a new phase of its history,

as the world’s first bank to be owned and managed by its employees. In 1993 the “First Allied

Bank Modaraba (FABM) was floated.

Allied Bank (2005 to date)

In May 2005 Ibrahim Leasing Limited was amalgamated by transfer to and vested in with and

into Allied Bank Limited. ILL shareholders were issued ABL shares in lieu of the ILL shares

held by them. Application for the listing of ABL shares in all the Stock Exchange Companies of

Pakistan was made. ABL was formally listed and trading of the shares of the Bank commenced

w.e.f. the following dates.


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V i s i o n

To become a dynamic and efficient bank providing integrated solutions in order to be the first

choice bank for the customers

M i s s i o n

� To provide value added services to our customers

� To provide high tech innovative solutions to meet customers’ requirements

� To create sustainable value through growth, efficiency and diversity for all stakeholders

� To provide a challenging work environment and reward dedicated team members

� according to their abilities and performance

� To play a proactive role in contributing towards the society


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B o a r d o f D i r e c t o r s

C o m p a n y I n f o r m a t i o n

Board of Directors

� Mohammad Naeem Mukhtar Non-Executive Director

Chairman

� Sheikh Mukhtar Ahmad Non-Executive Director

� Mohammad Waseem Mukhtar Non-Executive Director

� Abdul Aziz Khan Non-Executive Director

� Farrakh Qayyum Non-Executive Director

Government Nominee

� Nazrat Bashir Non-Executive Director

Government Nominee

� Tasneem M. Noorani Independent Director

� Mubashir A. Akhtar Independent Director

� Pervaiz Iqbal Butt Independent Director

� Sheikh Jalees Ahmed Executive Director

� Mohammad Aftab Manzoor Executive Director

Chief Executive Officer


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B. Organizational Hierarchy Chart

The management hierarchy represents the different positions and designations in the hierarchy of

the ABL. However, this is not the reporting hierarchy but merely represents the positions and

grades on the basis of seniority and grades.


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C. Business Volume

The business volume of bank comprises on deposits and advances of any bank so ABL Business

Volume Figures are as under for the year 2008 to 2010:

During 2010, the Group successfully embarked upon its strategy of increasing the proportion of

low cost deposits. Deposits grew by 13% to reach Rs. 371 billion as at December 31, 2010 over

the previous year with share of CASA improving on average volume basis from 53% during

2009 to 55% in 2010, thereby managing. The cost of funds in contributing to improved

profitability.


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D. Product Lines

ABL facilitates its customers by providing different types of services of deposits, advances,

foreign exchange and other general services. Here is the list of services provided by bank:

� Current Account

� Allied Business Account

� PLS Saving Deposits

� Allied Basic Banking Account

� Foreign Currency Deposits

� PLS Term Deposit Account

� Allied Munafa Account

� Behtar Munafa account (BMA)

� Behtar Munafa Term Deposit (BMTD)

� Mahana Aamdani Package

� Allied Bachat Scheme (ABS)

� Allied e-Savers Accounts (ESA)

� Home remittances

� Remittance

� Hajj services

� Utility bills

� Lockers

� Agriculture finance

� Import Export business/Trade finance

� Allied bank rupee traveller cheques

� Seasonal finance

� Running finance

� Cash finance

� Demand finance

� Corporate leasing

� All time banking

� On line banking

� Internet banking

� Visa credit card

� ATM Net Work

� Helpline


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E. Competitors

The following are the competitors of Allied Bank Limited which stands in cause of competing

with its diametrically opposed products

� National Bank Of Pakistan

� Bank Al Falah

� United Bank Limited

� Muslim commercial bank

� Citibank

� Habib Bank Limited

� Faysal Bank

� Prime Commercial Bank

� Abn Amro Bank

� Saudi Pak Commercial Bank

� Indus Bank

� Soneri Bank

� The Bank Of Khyber

� Metropolian Bank

� Standard Chartered Bank

� Askari Bank


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F. Brief Introduction Of All Departments

1. General Banking Department

The general banking department performs functions of account opening, deposits of cheque,

demand draft, telegraphic transfer, clearing, collection of utility bills etc. it consists of following

departments to perform its functions.

� Cash department

� Accounts department

� Remittance department

� Clearing department

2. Cash Department

It provides its users with following facilities:

a) Accept deposits:

When a customer wants to deposit any amount in its account it goes to the relevant

officer who accept deposit and give a receipt to the customer. The cashier in cashier

long book enters the amount deposited by the customer on its credit side.

b) Collection of utility bills:

The branch also provides the facility of utility bills collection of electricity,

gas and telephones. The branches collect utility Bills during banking hours. Bills can

be paid through cash or cheques.

3. Accounts department

One of the important functions of bank is to accept deposits from general public. Following are

the types of accounts provided by the bank:

1. Current accounts.

2. Pls saving accounts.


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3. Pls term deposit.

4. Special notice deposit.

The classification is based on the duration and purpose for which the deposits are kept at the

bank. Following are the features of these accounts.

4. Remittance Department

One of the major functions of bank is remittance. This department provides this facility through

following instruments.

1. Demand draft

2. Telegraphic Transfer

3. Payment order

4. Deposit at call

5. Clearing Department:

When the branch receives cheques of other banks than one process of getting payment

against these cheques is that you sent a person who will take money on your behalf but in these

cities where State bank exist this function is performed by clearing. In State bank of Pakistan

there is a clearinghouse. It involves two clearing procedures,

• Outward Clearing Register:

• Inward Clearing Register:


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G. Comments on Organizational Structure

The Allied Bank Limited department’s structure is well managed and capable of enhanced

services. They provide their shareholders the very best performance. The ABL is capable of

while building further limits of the organization potential. The Finance department plays vital

role in arranging its superior contagious financial statements in conformity with generally

accepted accounting principles. All the departments are required to make certain estimates,

judgments and assumptions that affect the reported amounts of assets and liabilities at the

date of the financial statements and the reported amounts of revenues and expenses during

the periods presented. Most of them based estimates on historical experience, available

information and various other assumptions they believe to be sensible under the

circumstances and they evaluate estimates; however, actual results may differ from these

estimates under different assumptions or conditions. The accounting policies they believe

require management’s most difficult tasks to accomplish and complex judgments are most

critical to their reporting of results of operations and financial positions.


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1. Plan of Internship Program:

The ABL Bank Limited deliberated as an immense part to get know-how in field of Finance

specialization to polish or to groom my skills. The whole banking staff is so well managed and

forthcoming for the internees. I observed that the workforce contains all those qualities to be a

financial independent, successful, self-assure, and respected from fellow staff.

2. Internship starting & Ending Dates:

The Internship is considered to be a compulsory practical training. My internship program

arranged from 1st Nov, 2011 to 30th Dec, 2011.

3. Name of Departments & time duration where I got training:

No Departments Duration

1 Accounts 6 Weeks

2 Remittance 1 Week

3 Cash 1 Day

4 Clearing 4 Day


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I got training in the General Banking & Finance department compliance to there tremendous

work under T24 accounting software at 0722-kashmir road branch. The employees there had

bright chances to get promotion as they provide many attractive opportunities to employees

and internees.

Focusing the dimension of Finance, therefore this reputable banking environment suited me up

to the best of my satisfaction. In the period of one month, I was assigned the task to work in the

General Banking department of ABL Bank Limited. I was assigned the task to maintain the

accounts under single entry and double entry system and also be familiar with account opening,

deposits of cheque, demand draft, telegraphic transfer, clearing.

During my training program I get familiar with all finance department activities. It is

beneficial for me to understand the account controlling and cash flow procedures. They guide

me how to deal customer when he deposit money in account, the deposit slip is needed to put

account number and further details to get authorized by the MTO’s to accomplish the

prerequisite.

My duty was under the Accounts department for six weeks, under Remittance department to

maintain pay-orders; demand drafts (DD) for one week also to be familiar with term Pak

account, one day at Cash department and the remaining four days at Clearing department.


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In addition, the amount both in words and figures should be mentioned with signature

authority. The sorting of cheques maintaining debit and credit vouchers. They told me how

to respect our customer’s values, beliefs, culture and history. We value the equality of gender

and diversity of experience and education that our employees bring with them because we

create an environment where each individual is enabled to succeed. I learnt about mutilated,

crossed cheques, inward and outward clearing accomplishing the whole task related to

finance department general banking system.

I also noticed the types of accounts and closing of an account for which the form of

undertaking is filled by the customer to close his account acquiring the further intimation to

acknowledge the customer for closing of his account having approval to close account on a

certain cause.

THE TASKS ASSIGNED BY THE FINANCE DEPARTMENT

They assigned me informative task according to my qualification to manage the accounting

data in the finance department. I was assigned to sort all kinds of expense vouchers, cheques of

the finance department and recording of the transaction in journal and tax deduction charges

prior to the recent bank circular.

1. Cash Department:

In cash department I learnt how to make payments on cheques, accepts deposits and

collection of utility bills. The parties to cheque must be considered while


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acknowledging the person who is ordering for payment, the bank who has to pay the

amount and finally the payee who is receiving the payment. The cheque is the most

important, convenient and well established medium of modern banking used for

withdrawal of funds and settlement of debts by an account holder i.e a drawer. While

taking cheques from customers the verification of signatures must be kept in mind be

checked according to the signature card. I observed that when cheque is posted it is

supervised to know the effect of posting and if the cheque is ‘ok’ it is forwarded to

the cashier for payment. Further more, when a customer wants to deposit any amount

in its account it goes to the relevant officer who accept deposit and give a receipt to

the customer. I learn when a customer wants to deposit any amount in its account it

goes to the relevant officer who accept deposit and give a receipt to the customer. The

cashier in cashier long book enters the amount deposited by the customer on its credit

side. Another facility provided to customers the utility bills collection of electricity,

gas and telephones. The bank collects utility Bills during banking hours. Bills can be

paid through cash or cheques.

2. Accounts Department:

Under accounts department they assigned me the task to accept deposits from general

public which is the main task of accounts department. I identify with continued

addition of new accounts is an important functional activity of a bank because it not

only builds up its deposits base, but also increases its profitability, it is very necessary

for its survival. All deposits are opened with a fixed minimum cash deposit. It is

checked carefully that account opening form is complete in all respects and signed by

the account holder and introducer. I checked carefully whether the account opening

form is complete in all respects and signed by the account holder introducer. I

recognized to get an additional precaution attested copy of national identity of


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account holder and introducer will be obtained. In addition, the opening account

relevant information is recorded in account opening register. I observed that the

continued addition of new accounts is an important functional activity of a bank

because it not only builds up its deposits base, but also increases its profitability, it is

very necessary for its survival. All deposits are opened with a fixed minimum cash

deposit.

3. Remittance Department:

In remittance department they assigned me the task to handle the instruments like

Demand draft, Telegraphic Transfer, Payment order, Deposit at call etc. The Draft is an

order cheque drawn by the one branch of the same bank to pay sum of money to drawer

on demand. It is payable on demand. During my stay in the remittance department I

resolute the bank demand draft must have the Payee’s name, Date of issue, Amount in

words and figures, Drawee, Branch’s name code, Address and Serial number. I filled out

and made entry by recording in DD- demand draft registers. I observed when a Demand

draft is received and paid than an entry is made in Demand draft payable register. Further

more, I come to know about deposit at call are kept as security when a tender is submitted

by a person to a company. If the tender is approved than these are payable to that

company but if person fails to get approval of tender than these are cancelled and will be

refunded by the person. There is no limit of the period of deposit at call.

4. Clearing Department:


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In clearing department the branch receives cheques of other banks than one process of

getting payment against these cheques is that you sent a person who will take money on

your behalf but in these cities where State bank exist this function is performed by

clearing. I recorded clearing payments in outward registers considering the receiver,

drawer, drawee, cheque number, account number and the amount. In the same way when

payment is received from the other bank than I entered in inward clearing register. The

representatives of local banks meet there at 9:00o’clock and exchange there cheques and

other instruments with each other. Than they come to their bank and check these

instruments that these are ok or not. The representative again meet at 12:00 o’clock in the

clearance house and the cheque which are ok get payment against these and the cheque

that cannot be cashed these are again exchanged.


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1. Net Profit Margin Ratio

i. Ratio Formula:

Net Profit after taxation x 100

Net Sales

ii. Calculation:

Year 2010 Year 2009 Year 2008

8225332 / 44992696

= 18.28%

7122167 / 41121503

= 17.32%

4156686 / 30570540

= 13.60%

iii. Graphical Representation:


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iv. Interpretation of Ratio:

This ratio indicates the percentage of net profit margin the bank in year 2010

shows us the profit margin the efficiency of the bank is in safety as compared

to year 2008 and 2009

i. The risk extending as actual profit of the bank getting low predicts the

decline of sales or low margin of safety but the overall the profit is

growing up from 13.60% to 18.28%.

ii. As the turnover is increasing the profit of the ABL same as declining

from 2010 to 2008

iii. The bank performance as calculated in year 2010 is better than 2008

because of its turnover.

2. Gross Spread Ratio

i. Ratio Formula:

Net Markup Income x 100

Gross Markup Income

ii. Calculation:


22565044 / 24153445

= 93.42%

18699809 / 20160239

=92.76%

13297816 / 15038730

=88.42%



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This ratio indicates the percentage of net mark-up / interest income over gross

mark-up income the bank in year 2010 shows us the net mark-up of the bank

is in standard position.

i. The net mark-up income depicts that in year 2010 the higher

percentage of mark-up established as the 93.42% that of

88.42 in the year 2008 financial analysis from un-

consolidated statement.

ii. The net mark-up income is maximized at 2010 while

minimized in 2009 and 2008.

iii. The bank gross spread ratio as calculated in year 2010 is

better than 2009 because of its gross income.

3. Non Interest Income to Total Income Ratio

i. Ratio Formula:

Non Interest Income x 100

Total Income


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ii. Calculation:


24,153,445 /42,635,104

= 56.65%

20,160,239 /34,362,444

= 58.67%

15,038,730 / 25,180,545

= 59.72%



This ratio indicates the percentage of non interest income to total income the

bank in year 2008 shows us the net mark-up of the bank is in standard

position.

i. The net mark-up income depicts that in year 2010 the higher

percentage of mark-up established as the 59.72% that of

56.65% in the year 2010 financial analysis from un-

consolidated statement.

ii. The income is maximized at 2008 while minimized in 2009

and 2010.


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iii. The non interest to total income ratio as calculated in year

2008 is better than 2010 because of its total income.

4. Return on Assets (ROA)

i. Ratio Formula:

EBIT x 100

Total Assets

ii. Calculation:


24,153,445/449,931,526

= 2.74%

20,160,239

/418,374,331

=2.52%

15,038,730 /

366,695,669 = 1.67%

iii. Working:

EBIT = Profit before tax + interest expense

In year 2010,

EBIT = 12,343,106 + 11,810,339 = 24,153,445

In year 2009,

EBIT =10,536,120 + 9,624,119 = 20,160,239

In year 2008,

EBIT = 6,120,940 + 8,917,790 = 15,038,730

iv. Graphical Representation:


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v. Interpretation of Ratio:

This ratio indicates the percentage of non ROA of bank in year 2010 shows.

i. The return on assets depicts that in year 2010 the higher

percentage of assets established as the 2.74% that of 1.67%

in the year 2008 financial analysis from un-consolidated

statement.

ii. The income is maximized at 2010 while minimized in 2008

and 2009.

iii. The Return on assets ratio as calculated in year 2008 is better

than 2010 because of its total assets.

.

5. Du Pont Return on Assets Ratio


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i. Ratio Formula:

Net Markup / Interest Income x 100

Total Assets

ii. Calculation:


22,565,044 /

449,931,526

= 5.02%

18,699,809 / 418,374,331

=4.47%

13,297,816 / 366,695,669

= 3.63%



This ratio indicates the percentage of non ROA of bank in year 2010 shows.

i. The Du Pont on assets depicts that in year 2010 the higher

percentage of assets established as the 5.02% that of 3.63%

in the year 2008 financial analysis from un-consolidated

statement.


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ii. The Du Pont on assets is maximized at 2010 while

minimized in 2008 and 2009.

iii. The Du Pont on assets ratio as calculated in year 2008 is

better than 2010 because of its total assets.

6. Return on Total Equity (ROE)

i. Ratio Formula:

Net Markup / Interest Income x 100

Total Equity

ii. Calculation:


22,565,044 /31,166,452

= 72.40%

18,699,809 / 25,891,278

=72.22%

13,297,816/ 20,805,117

= 63.92%

iii. Working:

Total Equity = Share capital + Reserves + un-appropriated profit

In year 2010,

Total Equity = 7,821,009+ 7,516,910 + 15,828,533 = 31,166,452

In year 2009,

Total Equity = 7,110,008+ 6,582,845 + 12,198,425 = 25,891,278

In year 2008,

Total Equity = 6,463,644+ 5,804,776 + 8,536,697 = 20,805,117


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iv. Graphical Representation:

v. Interpretation of Ratio:

This ratio indicates the percentage of ROE of bank in year 2010 shows.

i. The ROE depicts that in year 2010 the higher percentage of

equity including share capital, reserves and un-appropriated

profit established as the 72.40% that of 63.90% in the year

2008 financial analysis from un-consolidated statement.

ii. The ROE is maximized at 2010 slightly difference in 2009.

iii. The ROE ratio as calculated in year 2010 is better than 2008

because of its total equity.

7. Debt Ratio

i. Ratio Formula:

Total Liabilities x 100

Total Assets

ii. Calculation:


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413956669 / 449931526

= 0.92 times

388414353 / 418374331

=0.93 times

344340055 / 366695669

= 0.94 times



This ratio indicates the percentage of debt ratio of bank in year 2008 shows.

i. The debt ratio depicts that in year 2008 the higher established

as the 0.94 times rather than in year 2009 and 2008 based on

un-consolidated financial statements.

ii. The debt ratio is maximized at 2008 somewhat variation in

2009 and 2010.

iii. The Debt ratio as calculated in year 2008 is better than 2010

because of its total assets effect.


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8. Debt / Equity Ratio

v. Ratio Formula:

Total Liabilities

Equity

vi. Calculation:


413956669/ 31,166,452

= 13.28 times

388414353/ 25,891,278

=15 times

344340055/ 20,805,117

= 16.65 times

vii. Graphical Representation:

viii. Interpretation of Ratio:

This ratio indicates the percentage of debt to equity ratio of bank in year 2008

shows.


35

i. The Debt to equity ratio depicts that in year 2008 the higher

established as the 13.28 times rather than in year 2009 and

2008 based on un-consolidated financial statements.

ii. The Debt to equity ratio is maximized at 2008 somewhat

variation in 2009 and 2010.

iii. The Debt to equity ratio as calculated in year 2008 is better

than 2010 because of its total equity effect.

9. Times Interest Earned Ratio

i. Ratio Formula:

Earnings before interest and taxes(EBIT)

Interest Expense

ii. Calculation:


24,153,445 / 11810339

= 2.05 times

20,160,239 / 9624119

= 2.09 times

20,160,239 / 8917790

= 1.69 times

i. Working:

EBIT = Profit before tax + interest expense

In year 2010,

EBIT = 12,343,106 + 11,810,339 = 24,153,445

In year 2009,

EBIT =10,536,120 + 9,624,119 = 20,160,239


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In year 2008,

EBIT = 6,120,940 + 8,917,790 = 15,038,730



This ratio indicates the percentage of times interest earned ratio of bank in

year 2009 shows.

i. The times interest earned ratio depicts that in year 2009 the

higher established as the 2.09 times rather than in year 2008

and 2010 based on un-consolidated financial statements.

ii. The times interest earned ratio is maximized at 2009

somewhat variation in 2008 and 2010.

iii. The Debt to equity ratio as calculated in year 2009 is better

than 2008 because of its interest expense.


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10. Advances / Deposits Ratio

i. Ratio Formula:

Advances x 100

Deposits

ii. Calculation:


268530/ 371284

= 72.32%

249887/ 328875

= 75.98%

223640/ 297475

= 75.18%




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As ratio is going higher and higher as compare to previous years which

explains that. The advances to deposits ratio in its operation in Year 2008

and Year 2010 was slow; however it is double in Year 2009.

11. Operating Cash Flow Ratio

i. Ratio Formula:

Operating Cash Flow

(Current Maturities of Long term debts+ Notes Payable)

ii. Calculation:


36199585/ 22565

= 54.70%

10811077/ 18700

= 56.34%

563633/ 13298

= 46.03%



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This ratio indicates the percentage of net profit to the Mark-up earned and

expensed and the Bank’s overall profitability. The above graph shows that in

the year 2009 the net profit in relation to the Interest earned is highly

increased due to an unusual increase in the other income. On the other hand,

the net profit in the year 2010 and 2008 has been decreased as compare to the

year 2009.

12. Dividend per Share

i. Ratio Formula:

Dividend Paid

Number of bonus shares in issue

ii. Calculation:


2979352/ 3577722

= 0.83 times

2073173/ 2866721

= 0.72 times

1753971/ 2220357

= 0.79 times



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This ratio indicates the percentage of earning per share is much low in 2009

while on the other hand bit increased in 2008 and remained excellent in 2010.

13. Earning per Share

v. Ratio Formula:

Net Income - Dividends on Preferred Stock

Average Outstanding Shares

vi. Calculation:


2979352/ 3577722

= 0.83 times

2073173/ 2866721

= 0.72 times

1753971/ 2220357

= 0.79 times


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vii. Graphical Representation:

viii. Interpretation of Ratio:

This ratio indicates the percentage of earning per share is much low in 2009

while on the other hand bit increased in 2008 and remained excellent in 2010.

14. Price / Earnings per Share

ix. Ratio Formula:

Market value per Share

EPS

x. Calculation:


2 / 0.83

= 0.19 times

2 / 0.72

= 0.22 times

1 / 0.79

= 0.19 times


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xi. Graphical Representation:

xii. Interpretation of Ratio:

This ratio indicates the percentage of price to earning per share is much low in

2008 while on the other hand bit increased in 2010 and remained excellent in

2009.


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The macroeconomic outlook remains vulnerable on account of inflationary pressures, difficult

fiscal management and uncertainty attached with the global outlook. Meanwhile, severe energy

shortage is expected to impact the overall industrial output and economic activity. The

borrowers’ repayment capacity is likely to remain stressed under these challenging times,

thereby leading to risk of further rise in NPLs. Your Bank being watchful of the given

environment would continue with its strategy of cautious lending by deploying resources in

selected avenues following stringent risk management policies. Meanwhile, focus would remain

on improving the mix of cost effective core deposits and optimizing cost efficiencies. The

cornerstone of Your Bank’s philosophy would remain on improving service quality standards

and providing state of the art banking services through leveraging technology.


44

After doing this internship I acquired partially the skills of analyzing & observing the system &

corporate culture, values, norms.

It was really an excellent experience for me as it polishes my analytical skills & enhances my

visions. I become more confident, punctual, regular & responsible.

I learn how to deal with customers and your behaviour must be cooperative towards customer.

How to behaves to your peers and help your peers if any one has some difficulty.

How to behave to the upper and lower level of hierarchy of management.

Now I think that I can work more effectively & efficiently in a group/team with the ability to

mange all levels.

During my internship training at ABL Dubai chowk branch, I have learned a lot. It was a geed

experience for me. In Decembe3, 1942, the, ABL became the first Pakistan’s Muslim bank. After

privatization, the profitability and performance of the bank has increased. Today ABL represents

a bank that has grown with time.


45

Allied Bank was first Muslim bank to be established on Pakistan soil in December 1942 and

serving towards the financial and economic progress of the country. Allied Bank is the one of the

largest and prominent bank of Pakistan. Allied Bank is providing with its customers with value,

quality and distinctive level of service and high ethical standards in all dealings with them. But

there is always need for improvement and need to identify any lacking if they are present. Here

some of these identified by me are stated.

� As compared to other competitions of Allied Bank its deposits and advances percentage

is less so there is a desperate need that to adopt such policies that will help to increase

these deposits and advances attract more and more customers by winning their

confidence.

� There is a desperate need for Human Resource Development by hiring professionals and

competent persons and training the existing force. It will contribute a lot more in progress

of bank.

� All these three segments should be run separately by the competent persons to enhance

performance and quality of work.

� Although ATM and online banking is started in accordance with bank’s branch network

not even half of its branches are equipped with these facilities so need to modernize

whole bank to attract more customers.

� There is also need to provide facility of car financing. In housing and car finance the

bank has edge over the newly established private banks having large network of branches

all over the Pakistan and if they enter in to this segment of market they can earn a lot.


46

All of the references and sources from where the data gathered for this report are mentioned

herewith for your kind concern

Web Links:

• http://www.abl.com/thebank/financials.asp

• http://www.abl.com/thebank/pdf/annual_report_2010/Annual_Report_2010.pdf

• http://www.abl.com/thebank/pdf/annual_report08/abl-annual-report-2008.pdf

• http://www.abl.com/thebank/pdf/annual_report_2009/complete_annual_report/annual

_report09.pdf

• http://www.google.com

• http://www.abl.com/commercial/

Handouts or Books Consulted:

• Charles, H., & Gibson. (2008). Financial Reporting Analysis (10th

ed.). : South-

Western College.

• Lyn M. Frazer, & Aileen Ormiston. (2009). Understanding Financial Statements (7th

ed.). : Prentice Hall.


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Come & Join Us at VUSTUDENTS - Ningapi.ning.com/.../FINI619AlliedBankInternshipReport.pdf · 1 INTERNSHIP REPORT Allied Bank Limited (ABL) ISLAMABAD, PAKISTAN Submitted By Syed Ahsan