Mazhar Islam Final Internship Report

8/6/2019 Mazhar Islam Final Internship Report

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No Power Whatever Over the Grace of Allah

Qur'an 57:28-29 Surah Al-Hadid (The Iron)

O ye that believe! fear Allah and believe in His apostle and He willbestow on you a double portion of His Mercy: He will provide for you

a light by which ye shall walk (straight in your path) and He will

forgive you (your past): For Allah is Oft-Forgiving. Most Merciful:

That the People of the Book may know that they have no power

whatever over the Grace of Allah that (His) Grace is (entirely) in his

hand to bestow it on whomsoever He wills. For Allah is the Lord of

Grace abounding.
http://www.harunyahya.com/Quran_translation/Quran_translation_index.php


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Dedicatio

n

Dedicated toMy LovingParents, and allthose whoalways pray forme


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Lett

erofTran

smitta l

ShoukatMalik

Director

Citycampu

s(IMS)

BZU

Multan.

DearSir,

AsIwasassignedbyyo

u,atasko

fpreparing

aninternshipreporto

f

UnitedBan

kofPakista

n.Ihavecompletedth

istaskbyd

evelopinga

briefreport

ofUBL.I

amhighlyo

bligedtoyou,that

with

yourhelp

and

motivation

Ihavesuccessfullycom

pletedthis

task.Ihav

eplanned

designedan

danalyzed

thereportaccordingt o

therequir

ements.Ih

ope

youwilladmiremyeff

ort.

MazharIs

lam

MBC-08-33


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PREFACE

The ever-changing complex business environment requires us to

be up to date in order to manage a business successfully. So

energetic, practical and qualified managers are the need of the

time. Institute of Business Administration is playing a major role

in producing such managers who are fully equipped to meet the

challenges of the modern business environment.

In order to make the students familiar with the practicality of the

business environment institute of business administration

requires them to conduct internship-training program, in any

organization. The idea behind is to orient the entrance towards

business atmosphere and broaden the vision.

In this regard I was assigned to conduct my internship training

at UBL Multan cantt.

This report is based upon my observation and training. acquired

at UBL. In completing this report, I tried my level best to

arrange the various facts and observation in such a way that will

help the reader to maximum understanding towards the

functioning of UBL..


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Working on report writing may be very confining but finishing them is a civilization

effort: it calls for certain interdependence, like patronage, encouragement, and

logistic support. Acknowledgements are thus not formal but a genuine expression

of gratitude.

In this context I want to mention Mr. Shoukat Malik. Had it not been the

generous and stimulating environment of the institute and his personal interest in

the project, my task would have been uphill. My deep gratitude also goes to

United Bank Limited staff.

Mr. Irfan Ahmed (Head RCAD- Multan Cantt)

Mr. Abdul Waheed (Documentation Officer)

Mr. Farhan Qadri (MIS Officer)

Mr. Asif (Processing Officer)

Mr. Dost Muhammad (Documentation Officer)

They guided me a lot and felt free to be challenged by their insights and their

assistance in developing various case-related materials and in other aspect of

manuscript preparation. Perhaps most important in their ability to keep me

on track.. They form the basic of the project. And help me to save my efforts

during pressure time.

Thanks

Mazhar Islam

SMBC-08-33

Acknowledgments`


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Executive Summary

UBL is the second largest bank of Pakistan with assets of over Rs. 550 billion

and a solid track record of forty six years - in addition to the convenience of over

1400 branches serving its customers throughout the country and also at several

overseas locations.

In this 6 weeks internship program, I have worked in Regional Credit

Administration Departments (MIS section, Processing section, Documentation

section) of this high class bank of Pakistan where, I have learned about bankingfrom experienced managers running these sections.

During my internship, I have found that in banking sector concentration and

consistency is of utmost importance. Your little mistake can create a big problem.

I have been worked in credit administration department for eight weeks, two

weeks in Processing section, and two weeks in Documentation section and four

weeks in MIS section.

This report contains the information and learning about UBL that I learnt during

the 6 weeks internship period in United Bank limited. This report deals with Credit

Administration Department where, I worked.

UBL also have centralized information system through CARS (Credit Analysis

Reporting System) and CREAMS (Credit Risk Environments Administration

Management System).

At the end of this report, on the basis of my observations during internship,

financial analysis and SWOT analysis of UBL is provided. Suggestions are also

recommended as per learning from analysis. This report will provide a better and

brief learning about United Bank Limited.
http://www.ubl.com.pk/locations/http://www.ubl.com.pk/overseas/http://www.ubl.com.pk/locations/http://www.ubl.com.pk/overseas/


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Introduction of United Bank Limited


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Introduction to United Bank Limited

UBL was established in 1959 and is one of the major commercial banks

of Pakistan. The Bank is making every effort to meet the up-coming

challenges through strategic planning and making the best use of the

resources at its command. A professional team was appointed in the

mid of 1997 to restructure the banks and to commence rightsizing.

The management is also in the process of rationalizing the branch

network and identifying and recovering its doubtful and classified

portfolio. It has planned to institute major improvements in customer

services and internal systems to improve efficiency. It also intends to

launch innovative products. The bank is increasing resource

mobilization through regular deposit campaigns and accelerating the

process of recovery of outstanding advances and non-performing

assets.

UBL is the second largest bank of Pakistan with assets of over Rs. 550

billion and a solid track record of forty six years, in addition to the

convenience of over 1400 branches serving you throughout the

country and also at several overseas locations.

Date Established

November 7, 1959

Chairman

His Highness Shaikh Nahayan Mabarak Al Nahayan
http://www.ubl.com.pk/locations/http://www.ubl.com.pk/overseas/http://www.ubl.com.pk/locations/http://www.ubl.com.pk/overseas/


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Branches

1400 Domestic, 19 Overseas Branches (Ten countries)

Representative Offices

Tehran

Subsidiary

United Bank AG Zurich, Switzerland United National Bank Limited, UK

(Joint venture with NBP) UBL Fund Managers Limited

Associated Company

Oman United Exchange Company, Muscat

Offshore Banking Unit

Export Processing Zone, EPZ Branch, Karachi, Pakistan

Head Office

State Life Insurance Corp. Building #1,I.I. Chundrigar Road, Karachi, Pakistan

P.O. Box No.: 4306

Phone: (92-21) 111-825-111

Gram: "UNITED"

Fax: (92-21) 2413492


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AWorld-Class

BankW

hereYouCom

eFirst

ThevisionofUBLis

AWorld-ClassBankWhereYouComeFir st

whichmea

nsthatwe

believetha

tourcusto

mers

need

scomefirst.It

isthisYou

Firstcu

lt ureweare

creatingatUBL

tot ru

lybecom

ea

world-class

bank

wh

ich

takes

care

ofits

custo

mers

and

provides

them

withw

orld-class

services&

products.

UBLisfoc

usingon

bringingthe

nextleve

lofco

nsum

erbankingin

Pakistan,e

mphasizin

gon

itsY

ou

Firstvision.

UBL

aimsto

offer

products

that

will

change

the

industr y

no

rms

by

provid

ing

innovations

,options

a nd

flexibility

unmatc

hed

s

ofar

by

any

other

bankduetotheinve

s tmentmad

einthes

tate-of-the-artsystem

sat

UBL.UBL

plans

to

expand

the

market

by

itsva

stdistribu

tion

network.UBLsprod

u cts&

servi c

esarebe

ingde

velopedkeepin

gin

view

the

increasedle v

elofconsumerawa

renes

sdu

e

toincreased

accessibilit y

of

info

r mation,

an

d

hence

the

dema

nd

for

be

tter

productsan

dservice

swithoption

s.

2.3 Vision Statement


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To

provide

ex

ceptionalvalue

to

allours

takeholder s

by

providing

superior

serv

ice,

innovative

products

and

high

est

level

of

professiona

lism

basedoncustom

erorienta

tion,team

work,creat iv

ity

andoperat io

nalexcel le

ncewhilemaintaini

nghigheth

icalstanda

rds

asasociallyre

sponsib

lecorpora

tecitizen.

2.4 Mission Statement


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BOD

Presi

dent

Country

HeadPresident

Secretariat

Operation

Head

DIVISION

Fina

nceMark

eting

HR

D

Treasury

Opera

tions

Islamic

Bankin

gdiv.

AuditInspect

ion

R.C. E.

(RHQ)

AM

(HUB)

Manager(Spoke

Branch)

ROH

(RHQ)

AOM

(HUB)

BOM

(SPOKE

BRANCH)

Organizational Structure


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Non-clericalstaff

ClericalStaff

Grades ofBank

SEVP

ESEV

P

SVP

VP

AVP

Grade-

1

Grade-

2

Grade-

3

Assistants


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Main Branch Functional Chart

Area manager

Operational manager

Credit department

Computer department

Account opening

Bills and remittance

legal department

Cash department

Foreign currency dept

Clearing department

Finance department

Audit department

Employees working


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Operational Structure

UBL operates 1073 domestic and a subsidiary viz. united executors

and trustees company Ltd. as on 30/6/2004 .It has 20 overseas

branches situated in the UK, USA, UAE, Yemen, Bahrain and Qatar. It

also operates one offshore branch in export processing zone, Karachi

and it has representative offices in Cairo-Egypt and Tehran-Iran. It

also has joint venture Oman united exchange Co., Oman Muscat anda subsidiary United Bank A.G. Zurich, Switzerland set up in 1968. It

has 21 ATMs with 8 in UAE, 3 in Bahrain, one in Doha, 7 in Islamabad

and 2 in Karachi.

UBL has assets of over Rs.282 billion, capital and reserves of

over Rs. 5 billion and solid track record of 45 years- in addition to the

convenience of over 1000 branches serving you through out the

country and also at several overseas locations


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BRANCHES LOCATIONs

WITH an integrated network of over 1000 branches in Pakistan as well as

Overseas, UBL gives you direct access to a comprehensive range ofbetter banking facilities to help you monitor your business locally as well

as internationally.

Overseas branches

United States of America

Qatar

UAE

United Kingdom

Bahrain

Republic of Yemen

Zurich
http://www.ublny.com/http://www.ubl.com.pk/overseas/qatar.asphttp://www.ubl.com.pk/overseas/uae.asphttp://www.ubl.com.pk/overseas/uk.asphttp://www.ubl.com.pk/overseas/bahrain.asphttp://www.ubl.com.pk/overseas/yemen.asphttp://www.ubl.com.pk/overseas/zurich.asphttp://www.ublny.com/http://www.ubl.com.pk/overseas/qatar.asphttp://www.ubl.com.pk/overseas/uae.asphttp://www.ubl.com.pk/overseas/uk.asphttp://www.ubl.com.pk/overseas/bahrain.asphttp://www.ubl.com.pk/overseas/yemen.asphttp://www.ubl.com.pk/overseas/zurich.asp


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Number of Branches

Regional Office Location Computerized Total

Abbot bad 9 22

Bahawalpur 21 39

Faisalabad 32 69

Gujranwala 23 36

Hyderabad 37 59

Islamabad 67 100

Karachi 104 104

Lahore 67 67

Mardan 16 32

Mirpur (AK)

16 56Multan 37 63

Peshawar 49 61

Quetta 36 36

Sargodha 10 35

Sialkot 20 42

Sukkur 14 34

Total 558 1400

Formation of Regional Headquarters

The provincial chiefs of Punjab, Sindh, NWFP, and Baluchistan are ceased to

function and in their place nine regional chief executives started functioning in the

nine major cities. The new segmentation of UBLs branches on the basis of

regions can be looked from the following:

Province Wise Region Allocation

Provinces Regions


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Business volume

Punjab

Islamabad

Lahore

o Lahore East

o

Lahore West Faisalabad

Multan

Sindh

Karachi

Hyderabad

NWFP Peshawar

Baluchistan Quetta

Azad Kashmir Muzaffarabad


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Pattern of Share holding


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Share holders No of shares Percentage

Holding

State Bank of

Pakistan

252,194,323 48.69

Bestway Group 132,090,000 25.5

Abu Dhabi Group 132,090,000 25.5

Government of

Pakistan

1,419,447 0.27

National Bank of

Pakistan,

Trustee Group

70,702 0.01

State Life

Insurance

corporation

of Pakistan

53,262 0.01

Sui Southern Gas

Company Limited

50,197 0.01

Investment

Corporation

of Pakistan

29,260 0.01

Metropolitan Steel

Corporation

1,646 -

Privatization

Commission

727 -

Pakistan 435 -


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DEPARTMENTS OF UBL


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Departments

Account department

Deposit department

credit department

Remittances department

Clearing department

Human resource department

Bills department

Lockers department

Control and Compliance department(CCD)


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INTRODUCTION OF DEPPARTMENT IN WHICH I WORKED AS

INTERNEEE


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Team Members

Mr. Irfan Ahmed Head RCAD- Multan Cantt)

Mr. Abdul Waheed (Documentation Officer)

Mr. Farhan Qadri (MIS Officer)

Mr. Asif (Processing Officer)

Mr. Dost Muhammad (Documentation Officer )

Credit DEPARTMENTThere are two types of advances, which UBL provides:

1. FUND BASE ADVANCES2. NON- FUND BASE ADVANCES

1. FUND BASE ADVANCESThese are those advances in which actual payment of funds is

involved. These funds again have been dividend into two types.

Running Finance or Cash Finance

This is a loan, which is provided only to the running businesses

to meet their working capital requirements. The bank decides limit on

continuing bases. It means that the customer can draw the amount as

much he is required as approved by the bank. He can deposit and

withdraw the amount on his account. The markup is payable on the

outstanding amount only.


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DEMAND FINANCE FACILITY

The bank on demand provides this facility. It means that the

bank pays the full amount to the client and mark up is also payable on

the full amount. The bank considers the full amount outstanding.

The bank provides also facility of loan to its own employees

against the security of their immovable property. The rate of

mark up on these advances is lesser as compared to the rate of

mark up on the other advances.

LOAN DEPARTMENT Agriculture finance

Seasonal finance

Commercial finance

AGRICULTURE LOANS

UBL's agricultural loans on easy terms and conditions to small-scaleland owning farmers boost the country's economy and yield greener

harvests. UBL enables farmers to buy good quality seeds, fertilizers,pesticides and agricultural implements.

Through the Government's Loan Schemes for Haris, UBL lets your

crops prosper and your dreams materialize, making Pakistan'seconomy stronger

3 terms of loan:1-short term:

duration of 1 year

production loans are short term loan2-medium term :


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limit up to 5 years3-long term:

up to 7 years

Developments loans are long term loans.

TYPES OF LOAN:1-PRODUCTION PURPOSES

2-DEVELOPMENT PURPOSES

PRODUCTION LOAN:

for the purchase ofseed,fertilizer,pesticides,diesel for the purchase of feed for live

stock(poultry dairy)

duration of 1 year or less

DEVELOPMENT LOAN:

tractors, tube wells, agriculture implements for

land leveling, construction for shed, cold storages,wells,cylos

there installments are eithermonthly,quaterly,halfs yearly or yearly

depends upon the parties cash

flow

they are long term loans

PRODUCTIONS LOANSTwo types are of production loans:

1-demand finance

2-cash finance (running finance)

DEMAND FINANCE:

non agree demand finance(NIADF)

for 1 year

disbursement for only one time

after recovery,renewl every year

once in a season can be given

markup at maturity

markup based on bargaining


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Business Process Analysisb) Demand Finance.c) Cash Finance

When the credit facilities are approved then work of credit administration

department starts up. It performs two functions:

o Pre-dispersal function (before advancing facility)

o Post-dispersal Function (after credit facility is dispersed)

It keeps three sections named as:

o Processing Section

o Documentation Section

o MIS (Management Information System) Section

Relationship managers (RMs) bring cases (credit packages) from customers and

present to RCAD. RMs have direct contact with customers. credit packages first

come to Processing Officer who checks the necessary prudential requirements if

so then case is forwarded to Risk Management Department (RMD) otherwise

send back to ( RM) to fulfill necessary requirements. Risk Management

Department (RMD) verifies attached documents and send back documents afterrisk analysis and mention how much loan is to issue (under SBP limitations).

Documentation Officer verifies the originality of documents attached and finally

DAC (disbursement authorization certificate) is issued to the customer. MIS

keeps record of the customers in computer. And customer account is opened in

the UNI bank (it is also software which keeps record that how much loan the

customer has availed). Under mentioned process flow diagram present the right

picture.


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Process Flow Diagram of Loan Disbursement


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If Verified

Rejected

If

approved

Rejected

Rejected

Ifapproved

Customer

Relationship

Manager

Processin

g Section

CA Package

Preparation

CRM

Documentatio

n Section

DAC Issued

Customer

Receives Loan


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Duties Performed as an internee in UBL


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1st Week June 01, 2009-June 06, 2009

We started our internship in UBL form Monday 1st of June 2009.on the

first day of our internship we were introduced by the other officemembers. Next day were introduced by the RCAD branch in which we

are doing the internshipRCAD is basically( regional credit administrative division) in this

department or branch basically the scrutiny of credit documents

happens credit application are checked , moved forward after approvalof the credit the customers are informed about the approvals, further

proper documentation is maintained in that branch .

In the second day of our internship we were introduced by the various

document like

Approval convex memo

NIFC (non interest cash finance)

Simplified credit application form

Next we were briefed with details about very important documentof UBL which is

SCA, different terminologies in the SCA form like risk rating criteria,how the customers are graded, waivers, Deferrals SBP prudential

regulations, Customer banker relationship, Ancillary Business.Markup terms and conditions and others were discussed.

Next day were told about the term and conditions of providingcredits. UBL provide credit taking support securities which are

o Hypothecation

o Mortgage

o Pledge

We were told what is difference in the above three how these are

implemented in the credit decisions.

Next day were introduced with there other important documents

which were

DAC (disbursement authorization certificate)

COD (certificate of deposits)


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Facility appendices.

In the last day of this were given the a case study of customer inwhich he has applied for the credit, all documents in the case study

were there like

BBFS

CIBCALL REPORT AND VISIT REPORT

FINANCIAL

MARKET SME REPORTVALUATION REPORT

INSURANCE REPORTSTOCK INSPECTION REPORT

2nd

Week June 08, 2009 June 13, 2009

in the first day of second week we were given another approval convexmemo. This time the memo was a case study of agriculture loan.

The agriculture approval memo consists of different documents whichare

Credit proposal specifically called process management sheet.Second was agriculture loan application package. In this package

detailed information about the customer is there like from which

branch he has applied, his personal information, detailed income fromvarious sources, relationship with bank, details of agri-loan.

We were told about various terms and conditions different provisionsof agreement were briefed to us.

Next day were told about different communications to different parties,these were letters addressed to district manager and others concerned

parties. We were told when these letters are required, how this lettershould be written,

In the given case study, a letter was there which was written by

Relationship manager to the district manager for temporary release ofpass book.

Next day we were told about next part of approval memo which was

about the proof of ownership of the asset which was taken as supportsecurities by the bank. These were ownership transfer letter and

registration document of these assets taken as securities.


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In the fourth day of this week we were told about a very importantdocument of credit administration which is DAC which is disbursement

authorization certificate.

DAC is so important for the credit organizations so that they maintain

their registers as well as they maintain it in excel sheet.In the DAC register there is detailed record of all credit relating things

like date of document received, hub name, branch name, name ofborrower, segment of business, type of facility, amount, dac issued

date, DAC number, document saved in, remarks.

In last two working days of week our focus was on a very important

document of credit administration, which is safe in safe out register,we learnt that the objective of this register is to maintain the record of

permanent release of credit documentation, credit documents are

whole and soul for any credit organization because these documentsare proof of credit lendings.

3rd Week June 15, 2009 June 20, 2009

In the third week of our internship our focus was on the preparation ofCAD periodicals, and the format of these periodicals. How these

periodicals are prepared. When we asked about our documentationofficer Mr. Abdul Waheed he told us that form the last year to

onwards, SBP has recommended the format of these periodicals, and

instructed how these document should be prepared, what should bethere format, SBP provided detailed formats of each and every

document which has to be followed buy each credit department ofevery bank.

For guiding us a detailed folder was given to us who contain allinformation about these report, format of these reports and specimen

of reports were also there in the folder.

4th Week June 22, 2009 June 27, 2009


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I was assigned week long assignment of almost four hundred

accounts. Work assigned over these accounts was as following

First to check whether account is individual, sole proprietorship,

partnership or limited companies (both private and public)

Company status is checked from templates already updated

Individuals and sole proprietorships are then tagged with

6160777

Partnerships and limited companies (both private and public) are

tagged with sate bank provided group subgroup codes

After tagging, information regarding customer is inputted in theCARS (software)

Then blue form is taken from reporting, an option is given in the

CARS. Blue form is then saved for record

I checked almost 75 accounts. Whose information was provided to me,

their blue forms were generated.

5th Week June 29, 2009 July 04, 2009

First day of week I told about L.C (Letter of Credit), its essential

elements, procedure of opening and banks role in dealing with parties.

I checked different types of L.C in CA Package.

Second day I was told about facility exposures. These are of basically

two types

o Fund-based

o Non fund-based


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First, the processing officer told me about above mentioned things and

then gave me task to check the things that Relationship officer

misinterpreted in the exposures. I checked CAS (Credit application

Forms), whether securities mentioned in the CAs were correct. There

was only single one showing confliction.

In The last three days I was told about account tagging. In UBL

individual and sole proprietorship account is tagged with 6160777.

While partnership, public and private limited accounts are tagged

with State Bank of Pakistan (SBP) provided group and subgroup codes.

Templates were provided to me from whom I could check whether the

account falls under individual or private limited option. After

confirming from templates account is tagged under their respective

heads.

RM (Relationship Managers) when record information of customers,

they tag the account of the customers as

aged with tetra eight

Tagged without tetra eight Wrongly tagged

Individual

Final tagged

RM (Relationship Managers) dont know exact account number so they

tag them by above mentioned ways.

6th Week July 06, 2009 July 11, 2009


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Duties Accomplishment

This was my second week to work with processing officer. Last week, I

was briefed CA (Credit Application Package) types and kind of facilities

provided against different kind of securities. Today I was briefed

Prudential Regulations. These are the regulations provided by State

Bank of Pakistan (SBP). Process officer review the whole CA under the

light of these prudential regulations and UBLS credit policies. A credit

Application package consists of the following documents:

Credit Approval (CA)

Obligor Risk Rating Form

Basic Information Report

Management Assessment Form

Financial Spreads

Financial Projections (For Term Financing)

Credit Memorandum

CIB checking

Bank/Market checking

I was told other essential documents which were a part of CA Package.

These documents are as following

Financial Spread

Credit Memorandum

Financial Projections

I reviewed different CAs regarding above mentioned things. I was

introduced with CREAS (credit risk environments administration and

management system). In CREAMS whole detail of customers exposure

and its type is entered. I was told its working day by day. I also

entered many entries


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During my Six week internship, I fulfilled my assigned duties with integrity. I

fulfilled all my duties before the assigned time. At the accomplishment of each

duty, my work was appraised by my boss. The duties, which I accomplished

during my internship tenure, are as under

Construction of blue forms at CARS

Individuals and sole proprietorships account tagging at CARS

Partnerships and limited companies account tagging at CARS

Stock reports reviewing

Insurance policies checking

CA Package reviewing under prudential regulations of SBP

CIB report checking

Entering facility in CREAMS

Parent and child facility entering procedure in CREAMS

FRN (facility reference number) tagging in CREAMS


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Learning and Class Room Application

New Knowledge Acquired

I worked in Credit Administration Department and learn too many things relating

to modern and typical banking. The knowledge I acquired during my internship

includes following things.

Credit Approval Package (CA)

CA Package is a complete document in which RM describes true position of the

company. This form once completed summarizes the aggregate credit risk being

approved, description of individual credit lines, and details of security obtained

against each line.

Credit application has two parts, in the first part we define the facilities which we

provide to the customer. Like

NICF (Hypo)

NICF (Pledge)

LC (Letter of credit)

LG (Letter of Guarantee)

FE

Second part of credit application consist of ten contents which describe the way,

we are providing felicities to customer.

Industry / Strategy

Financial Analysis

Security Support


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Probability of Default

Sources of Repayment

Key Risks along with mitigating factors

Relationship Strategy

Conclusion

Approvers Comments / Observations

Borrower Basic Fact Sheet (BBFS)

Its the responsibility of relationship manager at credit department to collect as

much information about customer as possible at the time of initiation of a

relationship. BBFS consist of true information about the customer, board of

directors and their residential addresses.

Basic information Report (BIR)

It consists of industry information. If it is a group of companies, partnership or

private limited then it consists its business code. It also provides actual business

address, phone number, industry name etc. MIS officer consider BIR while

putting information in CARS (Credit Analysis and Reporting System).

Obligor Risk Rating Form (ORR)

This form enables to weigh all United Bank Limited credits regardless of type,

nature, or location of the borrower. Risk ratings are assigned on an obligor level

on a scale of 1 to 10, 1 being the lowest quality risk and 10 being the highest.

Risk Ratings are assigned and approved when credit is initially extended and is

updated annually. Risk rating is also reviewed immediately and accordingly

adjusted. Whenever there is a material adverse event such as adverse

classification of the credit facilities.


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Financial Spreads

Purpose of this form is to meet financial analysis requirements. This form

consists of five pages, which are developed on Excel system. A summary of

financial statements is automatically generated which also provides key financial

indicators, growth historic patterns, and ratio analysis. Relationship manager

analyzes three years historic audited-financial statements as well as the recent

financial statements.

Financial Projections

Financial projections are prepared by customers, which forecast their

performance in near future. Financial projections help credit department to

determine the expected assets and liabilities position and cash generating ability

to repay debts.

Credit Memorandum

Credit decisions are made on the basis of the contents presented in thisdocument. Credit memorandum is prepared with precision and accuracy of

information. A well-structured credit memorandum usually evolves around the

following topics:

Purpose of presenting the credit memorandum

Relationship background of borrower with United Bank Limited

Relationship profitability

Relationship strategy

Management assessment

Financial Analysis


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Covenants Check-off

In term lending, multiple covenants; financial as well as qualitative are imposed

by lenders. At the time of annual review of the term facilities, it is checked that if

borrower adheres to these covenants. Steps involve in Credit advancement

process includes

Customer relationship (customer must open current account with the

bank) Customers facility request

Credit application

Facility offer

Guarantees

A guarantee is the promise by one person called the guarantor to another foranswering the present or future debts of a second person called the principal

debtor.

Types of Guarantees

UNITED BANK LIMITED issues the following types of guarantees depending on

the needs of the customers

Tender Guarantees (Bid bonds)

Performance Guarantees

Advance Payment Guarantees

Financial Guarantees


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CREAMS

CREAMS (Credit Risk Environments Administration & ManagementSystem)

UBL is from few Pakistani Banks which keeps centralized information system. A

CREAM is one ofthem. A CREAM is highly customizable and parameterizes able

software. A CREAM is developed with the ideology that it can operate in all parts

of the world. Certainly there are different operational, monitoring and regulatory

requirements depending upon the region where the bank is operating. Further

more; a single bank may operate in more than one region of the world.

Parameterization lets CREAMS behave according to the requirement of the

region.

This customization is a one time initiative and once CREAMS has the requisite

information, it will behave according to the banks requirement. This section will

explain the all CREAMS setup screens one by one. It must be noted the once the

Parameterization phase is completed by bank then bank must lock this section.

That is only authorized person (Mostly Credit Head) can enter to this section, not

every one who is using CREAMS application. All the Screens below have some

common buttons which is going to be explaining here once with their short cut

keys.

Action Buttons

Add Button (Alt + A): Used to add a new record

Edit Button (Alt + E): Used to edit an existing record.

Delete Button (Alt + D): Used to delete a record

Cancel Button (Alt + C): Used to cancel a ongoing action of add, edit.


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Navigation Buttons

First Button (Alt+F): Used to see First record.

Next Button (Alt+N): Used to see the next record of the existing opened record

Previous Button (Alt+P): Used to see the previous record of existing opened

record.

Last Button (Alt+L): Used to see the last record.

Print Button:

Exit (Alt+X): Used to exit from the current screen.

If any one of action buttons (ADD / Edit / Delete) is disable on any screen then it

means that the user dont have a right of that action.

Working of CREAMS

Its working is mainly divided into three parts

Part-1Setup( Parameterization) Section

Part-II

Post Granting Section

Part-III Transaction Section

Part-1Setup (Parameterization) Section)This part consist of many set ups but most prominent are country, region, branch,

currency, about credit policy, Collateral setup etc.

About Document Linkage Screen

Path: SetupDocumentationDocument Linkage Screen

It is the main screen we define that against which entity (like Facility, collateral)

what document we require. It depends on the banks policy and varies from bank

to bank. For example if a bank says that for the facility FE-25, they require the


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Field Name Description

Document Name Not Given by user here. Populated here

from Document Setup

(SetupDocumentation

SetupDocument Setup.).select the

document from the list

Critical If the disbursement is not possible

without receiving this document then

marks it as a critical here.

Legal status If a document required against the legal

status (Customer type like public limited

company) of a customer then select the

type as Legal status. When we select the

legal status then it will show the entire

type name on the right. So from there the

user have to select the type name.

Facility If a document required against the facility

then select the type as facility. When we

select the facility then it will show the all

facilities on the right. So from there the

user have to select the Facility name

Collateral If a document required against the

Collateral then select the type as

Collateral. When we select the facility

then it will show all collaterals on the

right. So from there the user have to

select the collateral name

General If there is a general type of document

Note that the selected Type

must be Always on the top. So

click the arrow after selecting


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then select it as general.

Linkage Actioninsertion It means the document is required only

once.

Linkage Actionrenewal Do you u need this document on renewal

of customer if yes then also select it.Linkage ActionEnhanced Do you need this document on

enhancement if yes then select it also

Linkage-Manual Insertion Tick this check box of if you want

manually insert this document

Linkage Action OTT Do you need any document on OTT if

yes then also select it.


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Path: Post granting Approval Package Approved Facilities


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Part-III Transaction SectionWhen the User will select the action of Extension or Extending Current Expiry of

an Approval

Effects of this Action

Current Expiry in Approval Record screen will be changed to New Expiry which

you will enter using this screen.


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View of the Screen When Action is blocked

Field Description

Action Taken Extension

Approval Authority Selection of the Name of Approval

Authority

Action Date Date on which Approval Action isperformed on this Approval

Approval Action Code Its an informative field

Action Description User can provide any extra information

related to this transaction

Approval Current Expiry] Old Expiry CREAM will retrieve its Current Expiry

from the database

New Expiry Date User will provide new expiry date


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About Document Transaction Screen

Path: Transaction General Documentation Transaction

User can do the following actions against the documents which we have already

defined against the entities Customer type, Collateral Type, Facility & General

Field Description

Action On Facility Select the action from the drop down

menu list as Blocked

Action Date The date of action.

Action Description Give description if any about this actionCustomer Facility Action Code An informative field

Facility Name & Description An informative Filed. It will show the

Name of Facility and its Description

.Comes here from Customer Facility

Screen.


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CARS

4.3.8 CARS (Credit Analysis & Reporting System)

Consumer blue forms are generated for individual and sole proprietorship

accounts.

I worked in CARS (business software). At initial stage, I worked over consumer

blue forms and entered consumers record in the software. I was assigned work

to enter record of various customers in the software and I fulfilled my duties

diligently. Following details should be entered in the software. If a single of them

is missing, blue form is considered incomplete keeping insufficient data;

New and old NIC

There are the Elements andCovenants which we have alreadydefined in documentation Setup

Will show Received andObsolete Documents


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Financial Results


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UNITED BANK LIMITED BALANCE SHEET FOR FOUR YEARS RUP IN THOUSANDS

Items 2008 2007 2006 200

5

2

0

0

4

Current Assets

Cash

Balance

h Treasury

Bank

50069665

57,526,451

48,939,840

34,062,679

23844435

ance with

her Banks

7,497,174

4,191,128

14,034,476

12,729,207

17699334

ading To

inancial

stitution

22,805,341

24,781,723

29,572,070

17,867

,552

162

62504

al Current

Assets

803,372,180

86,499,302

92,546,386

64659

438

578

06272

stment

Net

116,328,288

115,585,646

67,260,338

63,026,944

54953728

ances Net

371,139,675

299,354,736

247,309,893

204,810,470

144,151,055

Operating Fixed Assets Total

Operating Fixed Assets

al Operating

d Assets

18,021,445

16,943,950

247,309,893

4,449,32

4

3969006

er Assets

17,154,985

11,740,697

10,062,466

7,829,77

0

4,439,58

0

rred tax

ts

2,055,609

--- 906,661

al Assets

605,072,482

530,124,331

423,320,207

347,

048,951

272

612663


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Liability and Equity

Current Liability

Item 2008 2007 2006 2005 2004

Deposit And

Accounts 483,560,062

401,637,816 335,077,873289,226,299 230256627

Borrowing From

Other Banks 44,195,886

59,103,350 38,490,586

21,790,480 11975684

Bills Payable

5,194,4496,079,341 4,560,649

4,159,964 3811284

Total Current

Liability 532,950,497

466,157,230378,129,108

315176743 246043595

Other Liability

28,259,326 21,545,697 15,273,37810203938 9205037

Total Labiality

561,209,823487,702,927

393,402,486

325,380,681 255248632

Equity

Share Capital

10,117,188 8,093,750 6,475,0005,180,000 5180000

Reserve Funds

&Other Reserve

15,501,51310,261,958 8,298,873

6,225,461 5915928

Inappropriate

Profit(Accumulated

loss)

16,604,076 15,653,703 12,429,8537,350,813 +3274439


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Total liabilities and

equities

605,072,482

530,124,331 4 23,320,207 347,048,951 272612663

UNITED BANK LIMITED PROFET AND LOSS ACCUONT FOR Five Years

(Rupees in 000)

Restated

Item 2008 2007 2006 2005 2004

Markup

/Return/Interest

Earned

52,253,36141,045,543

32,991,603 20,158,86

09233881

Fees, Commission &

brokerage Income

6,304,927 5,165,066 4,435,4652,543,739 1654475

Dividend Income

822,488 1,382,294 1,114,862 583,9821102510

Income From

Dealing in Foreign

Securities

1,819,250 827,328 659,726675,109 668085

Total

Revenue61,200,026

38,420,231

39,201,656 21661690

1265895

1

Less: Mark up

/Return /interest

Expended

24,117,70216,936,187 12,126,809 6,045,948 1732760

Gross Profit 37,082,324 21,484,044 27,074,847 15615742

1092619

1


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Operating Expenses

Item 2008 2007 2006 2005 2004Administrative

Expenses15,519,634 13,420,977 10,952,27

5

7,874,013 6702709

Worker welfare

funds336,999 ----- ------- 1,277,002 435414

Prevision Against

Loans Advances4,509,956 5,493,226 1,972,936 112,666 (100381)

Prevision for

Diminution in

The Value Of

Investment

2,219,815(6,303) 74,573 335,409 (34422)

Other Previsions 450,390 236,281 226,313 38,140 3841

Bed Debts

written off

Directly

1,367,514 935,123 269,349 9637230 7007161

Less: Total

Operating

Expenses

24,404,308 20,079,304 13,495,446

5978512 3919030

Operating Profit 12,678,016 11,404,740 13,579,401

1,210,202 1,072,756

Add: Other

Income1,454,729 1,617,564 738,330 7,066 10456

Less: Other

Charges258,321 17430 25,980

Profit Before

Taxation13,874,424 12,996,324 14,291,75

1

9,481,648 4889728

Les: Taxation

5,541,304 4,602,383 4,823,5243,532,616 1188184

Profit after

Taxation8,333,120 8,402,590 9,468,227 5,949,032 3701544


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Calculation of Ratios


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Ratio Type Formula 2008 2007 2006 2005

Rupees in Million

Profitability

ratios

Net profit

after tax EAT/IE

8333/5225

3

= 16%

8403/4104

6 =20.47%

33628/9468

=28.16%

20687/6168

=40.62%

Gross

spread Ratio NMI/GMI

28135/522

53

= 53.84%

24108/410

46

=58.73%

21499/33628

=63.93%

14531/20687

= 70.24%

Income

Expense

ratio T.I/O.I ------

33115/174

38 =1.90

28788/11664

=2.45

19891/8424

=2.36

Return on

Equity ratio

(ROE) EAT/TSE

8333/4386

2

= 18.99%

8403/3400

9 =24.71%

9468/28735

=32.95%

6168/19790

=31.17%

Return on

Asset ratio

(ROA) EAT/T.A

8333/6050

72

= 1.3%

8403/5302

84 =1.58%

9468/435890

=2.17%

6168/358056

= 1.7%

Loan/deposit

ratio

Loan/De

posits

371,139/48

,356

=76.75%

299335/40

1638 =

74.53%

247301/3350

78 = 73.80%

210153/2964

99 = 70.88%

Activity

ratios

Total asset

turnover NS/T.A

52253/605072

=8.63

41046/530

284 = 7.7

33628/43589

0 = 7.71

20687/35805

6 = 5.78

Fixed Asset

Turnover T.A/F.A

52253/180

=21 530284/16

919 = 31

435890/6362

= 68.51

358056/5440

= 65.82

Market

Ratio

Earning per

share (EPS) EAT/TOS

8333/1011.

7

=8.23

8403/809.4

= 10.38

9468/647.5

= Rs. 14.72

6168/518 =

9.39

Book Value

per share TSE/TOS

422222/10

11.7

= Rs.

41.73

34009/809.

4 = Rs.

42.02

28735/647.5

= Rs. 44.38

19790/518 =

Rs. 38.20

1639/1011. 8412/809.4


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Financial Ratios

Three Years Progress 2008 2007 2006 2005Profitability Ratio

Net Profit Margin After Tax 16% 20.47% 28.16% 40.62%

Gross Spread Ratio 53.84% 58.73% 63.93% 70.24%

Income Expense Ratio ---- 1.90% 2.45% 2.36%

Return on Equity Ratio (ROE) 18.89% 24.71% 32.95% 31.17%

Return on Asset (ROA) 1.3% 1.58% 2.17% 1.70%

Loan/Deposit Ratio 76.75% 74.53% 73.80% 70.88%Activity Ratio

Total Asset Turnover 8.63% 7.74% 7.71% 5.78%

Fixed Asset Turnover 2.89% 31.34% 68.51% 65.82%

Market Ratios

EPS After Tax Rs.8.23 Rs.10.38 Rs. 14.72 Rs. 9.39

Book Value Per Share

Rs.

41.73 Rs. 42.02 Rs. 44.38 Rs. 38.20

Revaluation Per Share Rs.1.62 Rs. 10.39 Rs. 4.12 Rs. 5.64

Financial Leverage Ratio

Debt-T-equity Ratio 104.67% 174% 135% 115%


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Graphical Representation

Profitability Ratio

Earning after tax andgross spread ratio are

decreasing in the last

four years which is not agood sign for any

organization althoughthis can be because of

new investment and

business expansions.

Returns on Asset and Equities

It is the prime objective of any organization to maximize its

returns on asset as well as equities like wise the earning after tax ratio

0

5

10

15

20

25

30

35

40

2008 2007 2006 2005

ROE

ROA

0%

10%

20%

30%

40%

50%

60%

70%

80%

2008 2007 2006 2005

EAT

GSR


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returns on asset and equities has decreased as well in 2008 , it was athighest point in the 2005.

Loan to Deposit Ratio

67%

68%69%

70%

71%

72%

73%

74%

75%

76%

77%

2008 2007 2006 2005

loan to

deposit ratio

Loan to deposit ratio is a ratio that is focused more in banking sector

it s quite satisfactory for UBL that its loan to deposit ratio is increasing

in the last four years and it is at highest point in 2008.

Activity Ratio

Total Asset Turn Over

0

2

4

6

8

10

2008 2007 2006 2005

Total Asset

Turnover


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Activity ratios show that how efficiently organization is using its resources.

United Bank Limited after facing the shock of Nationalization hasshaped its

financial base well after being privatized.

For UBL toat asset turnover has increased in the last for yaers which means

UBL in efficiently utilizing its resources.

Market Ratio

EPS Ratio

0

2

4

6

8

10

12

14

16

2008 2007 2006 2005

EPS

As we have discussed earlier that the earnings of UBL has decreased

in the last few years so EPS ratio also decreased . EPS was at highestpoint in the 2006.

Book Value Ratio

The

firms

37

38

39

40

41

42

43

44

45

2004 2005 2006 2007 2008 2009

Book value Ratio


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earning per share has increased at a marginal rate in 2006,07 but lower in 2008.

It was just 9.39 in 2005 but increased to 14.72 in 2006. This shows a heavy

return to shareholders which has not only increase the repute of the bank but

also the share price of UBL. But lowered down to 10.38 in 2007. The firms

Market/ Book ratio has increased over the year 2005-2006.

Debt to Equity Ratio

The debt-to-equity ratio tells how much the firm assets are financed by its debts

in relation to equity. While total debt ratio shows the total debt which is backed byassets.

In summary, the firm appears to be growing and has undergone an expansion

in the assets, financed through the use of debt. United bank limited sales

increases but net profit remains steady due to the payment of large amount of tax

of the pervious year. Return on assets and Return on common equity shows

good performance of the company and the increased value of Price/Earning

ratio and Market/Book ratio has shown the confidence of the investors in the

future performance of the firm. In short, the firm seems to have done well in

2008. only last quarter went bad due to political instability.

0%

20%

40%60%

80%

100%

120%

140%

160%

180%

2008 2007 2006 2005

Debt-Equity Ratio


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SWOT Analysis

3.2.1External environment Analysis-

Opportunity matrix

1. UBL develops innovative products

by the experienced and qualified

staff which could compete its

competitors in the market

2. UBL enhances its overseas

operations to capture foreign

markets

3. UBL capitalizes on IT and run

business on the web throughout

Pakistan

4. UBL develops CRM System to get suggestions from potential customers

High Low

High

Low

Success Probability

Att

rac

tiven

ess

1

3 4

2


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Threat Matrix

1. Foreign competitors may reduce UBLs share by taking the advantage of

their existing brand names

2. Old employees and old branch network may create hurdle for UBLS

sustainable growth in future

3. SBP prudential regulations may hamper UBLS growth

4. Political and economic instability may default the bank

High Low

High

Low

Probability of occurrence

Seri

ousn

ess

21

43


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Internal environment Analysis

Performance Important

Marketing Major

Strength

Minor

Strengt

h

Neutral Minor

Weakne

ss

Major

Weakne

ss

Hi Me

d

Lo

w

Company

Reputation

Market

Share

Customer

Satisfactio

n

Customer

Retention

Product

Quality

Service

Quality

Pricing

Effectivene

ss

Distribution

Effectivene

ss

Promotion

Effectivene

ss

Sales

Force

Effectivene


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ss

Geographi

cal

coverage

FinanceAvailability

of capital

Cash flow

Financial

Stability

Services

Facilities

Economies

of scale

Organizati

on

Visionary,

capable

leadership

Dedicated

Employees


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Observations Suggestions And Recommendations


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Recommendations

On the basis of SWOT analysis we see that the Banks strengths are more than

its weaknesses but still there is room for a lot of improvement and innovations.

Following are some of the suggestions and recommendations that I want to

make:

A regular contact with the customers should be maintained in personally.

Because there is an era of retaining the customers. So I recommend that

there should be CRM to get feed back from customers

Mostly all the big branches of UBL are computerized. Programs are

installed by the head office and programmers work like operators. Theyare strictly prohibited to see the programs. In case of default, the analyst

comes from head office and removes the fault. It takes more time.In order

to overcome this problem, it is necessary that computer cells should be

established in all big cities in Pakistan for providing the immediate service.

These will also helpful in decreasing the expenses of air tickets and TADA

of analyst

Satisfied employee can only satisfy the customer, due importance should

be given to all the employees to encourage them. It is observed by me

that old employees are not given appraisal or bonuses. So there low

motivation is also a real problem to UBL

Today in banking market competition is quiet tough. New banks paying

much importance to branch renovations and online banking. So UBL

should also renovate its all branches as soon as possible. It should also

broaden its ATM networking

There is no facility for students to get mark free loan in this bank. So, this

bank should provide free of mark up or easy terms and conditions loan to

students and deserving persons on merit. I hope this scheme will be

successful in producing intelligent, intellectual and brilliant students


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References

a. UBL Annual Report 2006-2007 (n.d) Retrieved August 20, 2008,

fromhttps://www.ubl.com.pk/aboutus/financial_report/report_2007/

b. UBL Annual Report 2005-2006 (n.d) Retrieved August 20, 2008,

from

https://www.ubl.com.pk/aboutus/financial_report/report_2006/

c. The Heretical Press. (n.d) Retrieved August 8, 2008, from

http://www.heretical.com/miscellx/usury.html

d. History of Banking. (n.d) Retrieved August 8, 2008, from

http://en.wikipedia.org/wiki/History_of_banking

e. JCR VIS Credit Rating. (30-06-08) Retrieved August15, 2008,

from

https://www.ubl.com.pk/aboutus/credit_rating/

f. Introduction to Company. (n.d) Retrieved August15, 2008, from

http://www.privatisation.gov.pk/Finance/ubl/UBL.asp?q=intr-ubl

g. UBL Manual: guide to UBL, 20-08-08

h. Philip Kotler & Kevin Lane Keller; Marketing Management; SWOT

Analysis Grid; [Retrieved information on 15-08-08]

i. UBL products and Services. (30-06-08) Retrieved August 15,2008, from

j. http://www.ubl.com.pk/consumer

k. CREAMS Manual of UBL 2004

l. CARS Manual of UBL (2004)

m. dagda.shef.ac.uk/study/citation.html

n. library.sullivan.edu/CSS/cssapa.htm
https://www.ubl.com.pk/aboutus/financial_report/report_2007/https://www.ubl.com.pk/aboutus/financial_report/report_2007/http://www.heretical.com/miscellx/usury.htmlhttp://en.wikipedia.org/wiki/History_of_bankinghttps://www.ubl.com.pk/aboutus/credit_rating/http://www.privatisation.gov.pk/Finance/ubl/UBL.asp?q=intr-ublhttp://www.ubl.com.pk/https://www.ubl.com.pk/aboutus/financial_report/report_2007/https://www.ubl.com.pk/aboutus/financial_report/report_2007/http://www.heretical.com/miscellx/usury.htmlhttp://en.wikipedia.org/wiki/History_of_bankinghttps://www.ubl.com.pk/aboutus/credit_rating/http://www.privatisation.gov.pk/Finance/ubl/UBL.asp?q=intr-ublhttp://www.ubl.com.pk/

Mazhar Islam Final Internship Report

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