NATIONAL COLLEGE OF BUSINESS

ADMINISTRATIVE & ECONOMICS

MULTAN

Impact of Current Market Scenarios on Allied Bank Ltd

By

Salman Ahmad

MASTERS OF BUSINESS ADMINISTRATION

October, 19

i
Impact of Current Market Scenarios on
Allied Bank Ltd

Impact of Current Market Scenarios on Allied Bank Ltd

BY
SUMAIYA ABRAR

A dissertation submitted to School of Business Administration, in partial

fulfillment of the requirements for the degree of
MASTERS OF BUSINESS ADMINISTRATION

Dissertation Committee:

Chairman

Member

Member

Pro-Rector
National College of Business
Administration & Economics Multan
iii
 DECLARATION

This is to certify that this report work has not been submitted for obtaining similar

degree from any other university/college.

Salman Ahmad
October, 19
NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS
MULTAN CAMPUS
11/B, Gulgasht Colony, Bosan Road Multan

COURSE COMPLETION CERTIFICATE

Ref. Dated:

It is certified that course requirements of Mr. Salman Ahmad Registration No…………

for the program MBA (Executive .) has been completed and her current CGPA is 3.3

Prof. Dr. Farkhand Shakeel Prof. Dr. G. R. Pasha

Director (R&D) Pro-Rector
 REPORT COMPLETION CERTIFICATE

It is certified that the Report work contained in this thesis entitled “Impact of
Current Market Scenario on ABL” has been carried out and completed by Salman
Ahmad under my supervision during her MBA (Executive) program.

(Raisham Hayee)
Supervisor
 Acknowledgement

Almighty ALLAH is the entire source of knowledge and wisdom endowed to

mankind, and His dearest Hazart MUHAMMAD (PBUH) is a torch of guidance and

knowledge for humanity as a whole.

Everyone has a long list of individuals to whom he is indebted. We firstly, with

humble gratitude bow our heads before Almighty ALLAH for giving me strength,

courage, patience and inspiration, and enabling us to complete such report in Allied

Bank Limited. We acknowledge our dependence with thanks and admiration on all of

my teachers for their co-operation. We feel great pleasure and honors to express our

gratitude from the citadel of hearts to our respected and dignified instructor

Mam Raisham Hayee

Without her guidance it would have been difficult for us to achieve our objectives He

provided us, her in-depth approach of the subject

“Accounting “

And taught us a lot of financial analysis techniques which we have applied during

data analysis. Her sympathetic behavior has an ever lasting impression on the page of

our memory.

7
 DEDICATED

TO

“My beloved Parents and teacher (Mam Raisham) who had always
been a source of inspiration for me”

8
 Summary

The first chapter provides an introduction of the study as well as

background, study significance. This chapter provides the introduction of ABL,
liquidity, profitability and ratio analysis. The next chapter two provides a critical
analysis of the literature review. After the literature review, chapter three
contains the research methodology. The fourth chapter describes the financial
statement and ratio analysis comparison. The fifth chapter presents the data
analysis results, the conclusion based on the research outcomes, and the
recommendation based on the interpretations and discussion of the empirical
findings.

9
Contents
Chapter- 01...................................................................................................................13
INTRODUCTION....................................................................................................13
1.2 Objectives of study:........................................................................................13
1.3 Scope of study:...............................................................................................14
1.4ABL Vision and Mission................................................................................14
1.5 Departments of ABL......................................................................................14
1.6 Board of Directors:.........................................................................................15
Executive Committee:..............................................................................................17
1.8 Core Values of ABL.......................................................................................17
1.9 Products Offered by ABL..............................................................................18
1.10: Lockers:.......................................................................................................18
1.11: Safe Deposit Lockers Insurance:.................................................................19
1.12: Cheque Books:............................................................................................19
1.13: Allied Cash + Card:.....................................................................................19
1.14: Demand Draft:.............................................................................................20
1.15: Pay Orders:..................................................................................................20
1.16: Link Network:.............................................................................................20
1.17 Structure of ABL..........................................................................................22
1.18: Branch Structure:........................................................................................23
CHAPTER 02...............................................................................................................24
LITERATURE REVIEW.........................................................................................24
2.1.1Keywords:....................................................................................................25
CHAPTER 03...............................................................................................................26

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 RESEARCH METHODOLOGY.............................................................................26
3.1 General Overview..........................................................................................26
3.2 Data Collection Method.................................................................................26
3.3 Ratio Analysis................................................................................................26
CHAPTER 4.................................................................................................................28
FINANCIAL ANALYSIS.......................................................................................28
Liquidity Ratios:...................................................................................................28
4.1.1 Current Ratio..........................................................................................28
Quick Ratio:.........................................................................................................29
4.2 Profitability Ratios:....................................................................................30
4.2.1 Gross Profit Margin................................................................................30
4.2.2 Net Profit Margin...................................................................................30
4.2.3 Return on Total Equity (ROE):..............................................................30
4.3 Valuation Ratios:............................................................................................31
4.3.1 Earning Per Share...................................................................................31
4.3.2 Book Value per Share Ratio:..................................................................32
SWOT ANALYSIS..................................................................................................33
Internal Analysis:.................................................................................................33
Strength:...............................................................................................................33
Weaknesses:.........................................................................................................34
External Analysis:................................................................................................34
Opportunities:.......................................................................................................34
Threats:.................................................................................................................35
CHAPTER 05...............................................................................................................36
CONCLUSION........................................................................................................36
5.1 Problems:........................................................................................................36
5.2 Recommendation:......................................................................................36
References....................................................................................................................38

11
 List of Tables

Table 1..........................................................................................................................12
Table 2..........................................................................................................................21
Table 3..........................................................................................................................22
Table 4..........................................................................................................................23
Table 5..........................................................................................................................23
Table 6..........................................................................................................................24
Table 7..........................................................................................................................25
Table 8..........................................................................................................................31
Table 9..........................................................................................................................31

12
 Chapter- 01
INTRODUCTION
Banking Sector is of the leading sector in economy of Pakistan it almost
contributes 30% in total economy to the management of current assets and current
liabilities of a company. Due to its dire importance it is important for Banks to
maintain a reasonable amount of their assets in the form of cash in order to meet their
short term obligations and also to maintain deposit for profitability of not only bank
but to support government well.
ABL was established in Lahore before independence in December 3, 1942 as
Australasia Bank at Lahore with capital of 0.12 million. In August 2004 the Bank was
restructured and the ownership was transferred to IBRAHIM group.
August 14, 1947 all the branches in India were closed and new Branches were
opened in Karachi, Rawalpindi, Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and
Kasur. Later its network spread to Multan & Quetta.1970’s was a difficult decade for
all Banks of Pakistan. In 1971 East Pakistan was separated and Australasia Bank lost
its 51 branches and a lot of capital as well.
In 1974 all the Banks were nationalized including Australasia Bank. On 1st
July 1974 the new entity was renamed as ABL of Pakistan Limited. Then it started its
operations as Public sector financial institution.
Over 1991, 745 branches were there in all over the Pakistan. From 2013 to 2013
ABL is now one of the largest banks in Pakistan with a network of 893 branches in
over 350 cities and towns offering real time online banking. The bank leads the way
by having the largest network of more than550 ATM’s in more than 145 cities and
towns across Pakistan. Currently ABL possesses 932n.dposition in the world. The
management has a vision to move forward and to be one of the world’s leading banks.
into the bank and get profit against their cash.

1.2 Objectives of study:

The main purpose of the study is

13
  To evaluate the performance of the Company by using the annual financial
statement of ABL for Ratio Analysis.

1.3 Scope of study:

In this study, I have done ratio analysis of ABL and I found many
significances of this study some of them are given below.
1. This study is important for investors
2. Also important for managers for decision making (financial Decisions)
3. Also important for future plans regarding investments.
4. This study is helpful in managing the operative, financing & investing
activities

1.4ABL Vision and Mission

Vision
“To become a dynamic and efficient bank providing integrated solutions in order to

be the first choice bank for the customers”

Mission

 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

1.5 Departments of ABL

There are few departments on which general or day to day banking of ABL
composes. There details are as under:
 Deposit department

14
 Clearing Departments
 Inland Remittance Department and Bills Departments
The main functions of this department is to deal in following:
1. Outward bills for collection (OBC)
2. Inwards bills for collection (IBC)
 Advances Departments
 Cash department
 The cash department is the most important department of the bank, it receives cash
from the customer and then deposit it into the accounts of the customer and maintain
their balances.
 Credit Department
The function of credit department is to lend money in the form of clean
advances against promissory notes, as well as secured advances against tangible and
marketable securities. The bankers prefer such securities that do not run the risk of
general depreciation due to market fluctuations.
 Foreign Exchange Department
The main function of this department is to facilitate the imports and exports by
opening up of letter of credit the banks provide.

Branches of ABL:
• It has more than 1300 branches at domestic level.

1.6 Board of Directors:

“The people who draw the picture of the organization on the broader canvas of

strategy and planning, the pioneers of prosperity and world of wisdom that paves the

path to long term success”

Following are the names of the Chairman, Chief executive officer, and Board of

Directors of ABL

15
CHAIRMAN:
Mohammad Nameem Mukhtar

CEO: MOHAMMAD AFTAB MANZOOR MR KHALID A SHERWANI

(PRESIDENT&CEO)
DIRECTORS:
 Pervaiz Iqbal Butt

 Farrakh Qayyum

 Abdul Aziz Khan

 Sheikh Jalees Ahmad

 Muhammad Waseem Mukhtar

 Sheikh Mukhtar Ahmad

 Tasneem M. Nooranai

 Nazrat Bashir

 Mubashir A. Akhtar

16
Executive Committee:

 Mr. Khalid A. Sherwani President & (CEO)

 Mr. M. NaveedMasud Senior Executive Vice President

 Mr. Akhter Ali Khan Head Credit

 Mr. TahirSaeed Effendi Head I.T & Financial Officer

 Mr. Mohammad Yaqoob Head Islamic Banking & Planning Div

 Mr. Masud A. Sidique Head Human Resource

 Mr. Anwar Zaki Head Treasury

 Mr. Khalid Mehboob Head Business Promotion

 Mr. SayedMutabaGiallaniani Head Spec Vigilance Unit

1.8 Core Values of ABL

ABL is firmly grounded with a corporate philosophy that incorporates five

solid values which each individual associated with the bank abides.
Awards
2019
• Best Bank in Pakistan

• Best Work Place

Humility
ABL encourages a culture of mutual respect and treats both their team
members and customers with humility and care.
Integrity
For them, integrity means a synergic approach towards abiding their core
values. United with the force of shared values and integrity, they form a
network of a well-integrated team.
Meritocracy
At every level, from selection to advancement, they have designed a consistent
system of human resource practices, based on objective criteria throughout all

17
 the layers of the organization. ABL is therefore, able to achieve a specific
level of performance at every layer of the organization.
Teamwork
Their team strives to become a cohesive and unified force, to offer the
customer, a service beyond his expectations. This force is derived from
participative and collective endeavors, a common set of goals and a spirit to
share the glory and the strength to face failures together.
Culture of Innovation
Their aim is to be proactively responsive to new ideas, and to respect and
reward the agents, leaders and creators of change.

1.9 Products Offered by ABL

Branch offers products towards the customers. The following products are available

for the customers:

 Lockers

 Cheques Book

 Allied Cash+ Card

 Demand draft (DD)

 Payment order (PO)

 Online Banking

1.10: Lockers:

ABL 0184 branch given its customers the facility of lockers, so that they can secure

their important things in the lockers, for example gold, important documents or

anything which a person wants to keep safely. ABL lockers are available in three

different sizes large, medium, and small on a yearly fee. There is no need to open

account to get the facility of lockers.

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1.11: Safe Deposit Lockers Insurance:

The bank has already informed its safe deposit locker holders through half yearly

statement of accounts.

Maximum insurance ceiling provided for each category of lockers is mentioned

hereunder:

Table 1

Serial Locker size Annual locker rent Maximum loss

number (current) coverage/Limit
1: Small Rs. 1500/- Rs. 500,000

2: Medium Rs. 2000/- Rs. 1,000,000

3: Large Rs. 4000/- Rs. 1,500,000

1.12: Cheque Books:

Cheque book issued according to the nature of account .There are two types of cheque

books, the first one is of 25 leaves and the second one is of 50 leaves. For current

account 50 leaves book we issued and for saving account there are 25 leave books.

The charges will be rupees 125 for 25 leaves and 50 leaves cheque book charges are

250 rupees. Cheque book issued after one week for opening of account, the first

cheque book is free and if customer wants to reissue next cheque book.

1.13: Allied Cash + Card:

Allied bank ATM Debit card, also referred to as Allied Cash+, can be used to

withdraw cash and may also be used as a debit card at merchant locations / service

outlets having ORIX POS terminals and displaying the ORIX logo. Through this card

you can have an experience of Cashless shopping at thousands of merchant locations.

Get instant cash and check balances. Here is what they have to offer:

19
• Round-the-clock cash withdrawals

You can make withdrawals up to Rs: 50000 in a day (depending upon your deposit)

• Balance inquiry and mini statement of account

The ATM screen will reveal the balance in your account. A mini statement

Comprising last 8 transactions can also be obtained from the ATM.

• Pin change

You can now easily change your Pin at regular basis to maintain security.

• Utility bill payment facility

You can easily paid telephone, electricity bills from the branch ATM’s without

wasting time.

• Funds transfer facility

You can easily transfer cash from ATM machine within seconds.

1.14: Demand Draft:

Demand draft is one of the most popular banking instrument in the trade circles to

settle business deals and transferring funds from one place to another. 0184 provide

this facility to their customers

1.15: Pay Orders:

Pay Order is a bank instrument issued by a bank in Pak rupees at the request of a

customer through banking channel.

1.16: Link Network:

In continuation of ALL TIME BANKING SERVICES, with the country wide

network of 893 branches, ABL has also enhanced ATM services by joining the 1-

LINK SWITCH which has following member banks.

 Al Baraka Islamic Bank

20
 Allied Bank Limited

 Askari Commercial Bank Limited

 Atlas Bank Limited

 Bank Al Allied Limited

 Bank Alfalah Limited

 Bankislami Pakistan Limited

 Cresent Commercial Bank Limited

 Dubai Islamic Bank Pakistan Limited

 Emirates Global Islamic Bank Limited

 Faysal Bank Limited

 First Dawood Islamic Bank Limited

 Allied Bank Limited

 Kasb Bank Limited

 Meezan Bank Limited

 National Bank Of Pakistan

 Soneri Bank Limited

 Standard Chartered Bank Pakistan Limited

 United Bank Limited

 Mybank Limited

The card holders of ABL are thus able to access member banks ATM’s for balance

inquiry and can withdrawal simultaneously vice versa. The card holder’s member

banks can access ABL’s ATM machines.

Every ATM which is connected with 1-LINK SWITCH has a logo which indicates

that 1-LINK SWITCH member can access the ATM.

21
1.17 Structure of ABL

PRESIDENT

ASSEISTANT VICE PRESIDENT (AVP)

SENIOR VICE
PRESEDENT

SENIOR EXECTIVE VICE

PRESEDENT

CEO

EXECTIVE VICE PRESEDENT (EVP)

OG-I OG-II OG-III

SUPPORTING STAFF

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1.18: Branch Structure:

BRANCH MANAGER /BDM

CUSTOMER SERVICES MANAGER /BSM

CUSTOMER SERVICES
MANAGER /BSM

TELLER
BSO CSO

LOWER STAFF

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 CHAPTER 02

LITERATURE REVIEW

Bhunia(2010) states that a traumatic response frequently entails “Liquidity plays vital
role in determining the effectiveness of firms. Thus it is necessary for firms to
maintain a balanced liquidity ratio in order to meet their short term liabilities. Due to
its relationship with the day to day operations it is imperative for both internal and
external analysts to study liquidity”. It analysis is typically done to make sense of the
massive amount of numbers presented in company financial statements. It helps
evaluate the performance of a company, so that investors can decide whether to invest
in that company.
Raheman et al(2007) Liquidity and Profitability has got tremendous importance in the
cooperate world. Liquidity refers to the management of current assets and current
liabilities of a company. He states that the Profitability Ratio Analysis of Income
Statement and Balance Sheet Ratio analysis of the income statement and balance
sheet are used to measure company profit performance. He said the learn ratio
analyses of the income statement and balance sheet. The income statement and
balance sheet are two important reports that show the profit and net worth of the
company. It analyses shows how the well the company is doing in terms of profits
compared to sales.
Khan(2016) the most commons are conventional and Islamic. Customers evaluate
these systems before they decide in invest. The prime aim of this study is to assess
and compare the financial performance and growth of conventional banks operating in
Pakistan.
Velnampy (2013) in his investigation on corporate governance and firm’s
performance taking twenty-eight companies sample for four years from 2007–2011
stated that the determinants corporate governance has no relation with the firm’s
performance. After applying regression, the result showed that ROE and ROA were
not affected by corporate governance. Thus the findings revealed that corporate
governance measures have no relation with performance measures.

24
Don (2009) while comparing relative importance of both states that liquidity is more
important than profitability, because it determines the survival of the company. The
current ratio measures the company’s ability to pay back its short-term debt
obligations with its current assets. He thinks a higher ratio indicates the company is
better equipped to pay off short-term debt with current assets. Wherefore, the acid test
ratio or quick ratio, measures quick assets against current liabilities. Quick assets are
considered assets that can be quickly converted into cash. Generally, they are current
assets less inventory. One can relate the financial variables given in financial
statements in a meaningful way which will suggest the actions which one may have to
initiate to improve the firm’s financial condition.
Eljelly(2004) found that there is significant negative relationship between the firm’s
profitability and liquidity when it is measured by current ratio. The study also found
that at industry level, however, cash gap is important to measure the liquidity than
current ratio that affects profitability. For Example, they can compute the percentage
of net profit a company is generating on the funds it has deployed. All other things
remaining the same, a company that earns a higher percentage of Profit compared to
other companies is a better investment option. In his research article on financial
performance he has pointed & suggested that the financial statement analysis involves
analyzing the financial statements to extract information that can facilitate decision
making. It is the process of evaluating the relationship between component parts of
the financial statements to obtain a better understanding of an entity’s position and
performance.

2.1.1Keywords:

ABL financial statement analysis, Short-term (Operating) Activity Analysis, leverage/

Long-term Deb Liquidity, profitability, current ratio, quick ratio, gross profit margin,
net profit margin.

25
 CHAPTER 03

RESEARCH METHODOLOGY
3.1 General Overview
These area endeavors have been made to cover all pertinent viewpoints of the
budgetary execution of ABL. Additional time comparison and Common
Measure investigation are carried out with the see to extricate concrete
conclusion to portray monetary standing and execution of the bank.

3.2 Data Collection Method

Both primary and auxiliary data were utilized in compilation of the annual
report (2017-2017). Methodological apparatuses utilized were:
i. Primary Information:

Primary data is data that is collected by a researcher from first-hand sources,

using methods like surveys, interviews, or experiments. It is collected with the
research project in mind, directly from primary sources.
 Personal Perceptions.
 Discussion with Bank Faculty.
ii. Auxiliary Data (Secondary Data):
Primary data is data that is collected by a researcher from first-hand sources,
using methods like surveys, interviews, or experiments. It is collected with
the research project in mind, directly from primary sources.
 Brochures/ Manuals of the bank.
 Annual Report
 State Bank Remote Trade Manual
 Bank internship reports on ABL accessible in library.
 Journals, daily papers and books.
 Internet.

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3.3 Ratio Analysis

Ratio analysis is exceptionally accommodating to the administration of the

organization as well as for the financial specialists and banks. Financial
specialists keep an eye on the bank’s budgetary explanation and make choices
whether to contribute stores in that bank or not. So also a lender moreover
examination the monetary articulations and makes choices whether to give
advance or not.
There are some very important ratios
1- Liquidity Ratio
2- Profitability Ratio
3- Valuation Ratio
4- Leverage Ratio

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 CHAPTER 4

FINANCIAL ANALYSIS
Introduction:

These segment efforts have been made to cover all significant angles of the budgetary
execution of ABL. Additional time comparison and Common Measure investigation
are carried out with the see to extricate concrete conclusion to depict monetary
standing and execution of the bank.

Liquidity Ratios:
The ratio between Investment and total assets shows investment activity with
reference to its total assets. It indicates the portion of total assets used for investment
in various venues
i. Current Ratio
ii. Quick Ratio

4.1.1 Current Ratio

5. Current ratio shows firm’s ability to cover its short term liabilities. It is the
ratio of current assets to
6. current liabilities. Higher the ratio greater will be the ability of organization to
pay current liabilities.
7. Formula:
8. Current Ratio= Current Assets / Current Liabilities
9. Current ratio shows firm’s ability to cover its short term liabilities. It is the
ratio of current assets to
10. current liabilities. Higher the ratio greater will be the ability of organization to
pay current liabilities.
11. Formula:
12. Current Ratio= Current Assets / Current Liabilities
13. Current ratio shows firm’s ability to cover its short term liabilities. It is the
ratio of current assets to
14. current liabilities. Higher the ratio greater will be the ability of organization to
pay current liabilities
15. Current ratio shows firm’s ability to cover its short term liabilities. It is the
ratio of current assets to
16. current liabilities. Higher the ratio greater will be the ability of organization to
pay current liabilities
17. Current ratio shows firm’s ability to cover its short term liabilities. It is the
ratio of current assets to

28
 18. current liabilities. Higher the ratio greater will be the ability of organization to
pay current liabilities
Current ratio shows firm’s ability to cover its short term liabilities. It is the ratio of
current assets to current liabilities. Higher the ratio greater will be the ability of
organization to pay current liabilities.
Formula:
Current Ratio= Current Assets / Current Liabilities
Table 2

Year Current Ratio

2015 1.13

2016 1.13

2017 1.12

2018 1.13

Interpretation:
Current ratio measures the business ability to pay its short term liabilities. Short term
creditors have interest in current ratio. ABLs Current ratio for 2017 is 1.12.It means
current assets are slightly more than current liabilities. It is not a good ratio. Last year
current ratio was also 1.13. There is a very small change in the ratios. Reason is that if
the assets increased in 2017 and 2018, liabilities also increased. Due to this the ratio
remains same in 2017 and 2018.

Quick Ratio:

Current Assets: Cash and balances with treasury and other banks + lending to
financial institutions + Investment + Advances
Current Liabilities: Deposits & other Accounts + Borrowings from financial
institutions + Sub-ordinate loans + Bills Payable

29
Formula: Quick Ratio = (Current Assets –Inventories) / Current
Liabilities
Table 3

Year Quick Asset Current Liabilities Quick Ratio

2014 845,160,279 755,756,909 1.10

2015 845,158,125 757,352,835 1.11

2016 847,158,125 758,342,915 1.12

2017 743,177,137 658,793,028 1.13

2018 678,210,966 595,856,854 1.14

Interpretation:
Presents Quick ratio of five years from 2013 to 2017. In the above ratios the bank
Quick ratio of 2013 is 1.09, 2014 is 1.12, 2015 is 1.12, 2016 is 1.13 and 2017 is 1.14
it shows us the bank liquidity is normally good with small increasing of growth side.

4.2 Profitability Ratios:

4.2.1 Gross Profit Margin

Gross profit margin is a financial metric used to assess a company's financial health
and business model by revealing the proportion of money left over from revenues
after accounting for the cost of goods sold (COGS).
-Formula: Gross Profit Margin = (Gross income / Total Revenue) × 100

4.2.2 Net Profit Margin

30
 Net Profit Margin is the percentage of revenue remaining after all operating expenses,
interest, taxes and preferred stock dividends (but not common stock dividends) have
been deducted from a company's total revenue.
Table 4

           
YEAR 2018 2017 2016 2015 2014
           
Net 2.89 2.95 3.61 4.17 3.84
Interest
Margin

4.2.3 Return on Total Equity (ROE):

Return on equity (ROE) is a measure of profitability that calculates how many dollars

of profit a company generates with each dollar of shareholder’s equity. 

Table 5

YEAR 2018 2017 2016 2015 2014

           
Book Value 93.71 93.2 87.92 77.95 70.64
Book Value 0.55 6.01 12.79 10.35 22.19
Growth
Equity To Assets 7.94 8.54 9.41 9 9.6
Ratio
Price To Book 1.06 1 1.07 1.32 1.58
Value Average
Price To Book 1.17 1.31 1.37 1.49 1.95
Value High
Price To Book 0.94 0.82 0.94 1.16 1.18
Value Low
Return On 0.95 1.02 1.35 1.52 1.78
Assets
Return On 0 0 0 0 0
Capital
Employed
Return On Equity 12 11.93 14.33 16.94 18.56

31
4.3 Valuation Ratios:

Valuation is the financial process of determining what a company is worth.

Valuation ratios put that insight into the context of a company's share price,
where they serve as useful tools for evaluating investment potential.
 Earnings per Share
 Book Value per Share

4.3.1 Earning Per Share

Earning per share means how much one share will get from the income of the
company. Shareholders have prime interest in earning per share.
Formula:
Earning Per Share = Net income after tax / No. of Shares Outstanding

Table 6

         
YEAR
2018 2017 2016 2015 2014
           
Earning Growth 1.15 -11.74 -4.58 0.7 2.54
Earning Per Share 11.25 11.12 12.6 13.2 13.11
EPS
Price To Earning 8.84 8.38 7.46 7.81 8.51
Ratio P / E Average

Price To Earning 9.77 10.97 9.53 8.79 10.48

Ratio P / E High
Price To Earning 7.81 6.9 6.57 6.82 6.34
Ratio P / E Low

4.3.2 Book Value per Share Ratio:

32
A measure used by owners of common shares in a firm to determine the level of safety associated
with each individual share after all debts are paid accordingly. Should the company
decide to dissolve, the book value per common indicates the dollar value
remaining for common shareholders after all assets are liquidated and all debtors are
paid. In simple terms it would be the amount of money that a holder of a common share would get if
accompany were to liquidate.
Book Value per share = common equity/Shares outstanding
Table 7

YEAR 2018 2017 2016 2015 2014

           
Book 93.71 93.2 87.92 77.95 70.64
Value

SWOT ANALYSIS

The acronym SWOT stands for a firm’s internal Strengths and Weaknesses and its
external Opportunities and Threats. The purpose of such analysis is to build on
company’s strengths in order to exploit opportunities and counter threats and to
correct company’s weaknesses. SWOT analysis is based on the assumption that if
managers carefully review such strengths, weaknesses, opportunities, and threats, a
useful strategy for ensuring organizational success will become evident.
Strengths and weaknesses typically relate to the internal environment of an
organization, whereas opportunities and threats are brought about by the external
environment of an organization. In the following section, both internal and external
analyses of ABL are outlined:

33
Internal Analysis:

Internal analysis of a firm is the analysis of its strengths and weaknesses. Unless a
firm has internal strengths and controls its weaknesses, it cannot take advantage of
opportunities and escape threats which the external environment presents. Following
are the main strength and weaknesses of ABL.

Strength:
Strength can be defined as an area where a company is best at doing something or a
feature that puts the company at an advantage in comparison to its competitors. ABL
enjoys the following strengths:
1. Allied BANK is a well-established bank enjoying long history of over 65
years of experience and profitable operation.
2. ABL was the first privatized bank that gives it an edge over other nationalized
banks as it can develop any strategy consistent with the demand of market
and free from any political or bureaucratic influence.
3. ABL is the largest private bank in Pakistan now and people trust is very high.
4. It has the largest branch network among private banks of Pakistan.
5. ABL is the market leader in introduction of e-banking and it has the largest.

Weaknesses:
A weakness is defined as an area in an organization where the organization is not as
good at doing something as its competitors or a thing which an organization lacks thus
putting the organization at disadvantage in comparison to its competitors. Based on
the above definition, ABL has the following weaknesses.
1. Mission of ABL is not well defined.
2. Though ABL is second largest bank in Pakistan, yet the fact remains that it is
not market leader as NBP. Its total assets are always less than NBP total
assets.
3. Now as it is a privatize bank that is why GOVERNMENT support to ABL
decreased as it was in past.
4. Employees at branch level are not properly motivated to work by heart. They
take the all routine activities as a boring job.
5. Most of the employees lack managerial training as they are not properly
educated. Due to seniority, they have moved up on the hierarchy line to
Grade- I, II or III positions having hardly bachelor degrees. This type of senior

34
 staff cannot apply the modern and innovative techniques of management in
decision making almost computer knowledge.

External Analysis:
An organization has to monitor its environment constantly to keep up with new
developments and changes in the environment. A change in the external environment
may be either an opportunity or threat.

Opportunities:
An opportunity can be defined as a change in external environment which if properly
exploited with the organizational strengths will result in enhanced sales, market share,
or income. Using its strengths, ABL can avail the following opportunities:
1. It can introduce debit card system or may convert the existing ATM cards into
a complete debit card.
2. New products like personal loans, mortgage and auto leasing and cash
management which diversify credit risk and add to revenue generating
products, are currently provided in big cities like Lahore, Islamabad, Karachi,
and Rawalpindi, these products may be tested for success in other small areas
of PAKISTAN in different provinces.

Threats:
Threat can be defined as a change in external environment which if not met with
proper strategies will result in loss of revenues, market share, or income. In the
context of ABL’s external environment,
The following potential threats exist:
1. The frequent reduction on 6-month and 12-month Treasury Bills discount rates
by SBP may create pressure on the banks profitability.
2. Foreign banks operating in Pakistan are playing a significant role by
incorporating new technologies and providing better quality services thus
creating a threat to the local banks especially to ABL which tries to develop
core competence in electronic based products. Policies of privatization,
foreign exchange reforms, and structural adjustments have increased the
inflow of foreign resources through direct and portfolio investment.

35
36
 CHAPTER 05
CONCLUSION

During my Nine weeks stay in (ABLChowk Rashiabad Multan) I found various

problems, which I think, so should be resolved for the better functioning of the Bank.
Some of these problems are of such nature that their solution will help the Bank and
its workers in cooping in this complex world of globalization.

5.1 Problems:

These problems are: -

1. There is a lack of on-line information in the Bank about the changes taking
place in the world of Banking.
2. A customer cannot find any kind of journal or newspaper there.
3. In early days of month there is a great rush of customers, which cause
inconvenience for the officer concerned and cashier as well.
4. Separate cabins are not available for the staff.
5. A separate counter for ladies is not maintained there.

5.2 Recommendation:

It has been empirically proved through analysis that liquidity has positive relationship
with profitability, and has considerable impact on the profitability of Allied banks in
Pakistan. With the growing liquidity level to a certain limit the profitability also
increases.
Every ratio of liquidity shows positive relation with all the ratios of liquidity.
Hence, this research indicates that liquidity has positive relationship with profitability.
Therefore, it is suggested that banks should keep considerable amount of their liquid
assets in order to get higher rate of profit. Moreover,

Bank’s earing growth of Abl is declining as you can see in below table,

37
Table 8

         
YEAR
2018 2017 2016 2015 2014
           
Earnin 1.15 -11.74 -4.58 0.7 2.54
g
Growth

Which company need to focus on her earning. But dividend rate of said bank is
showing some good results

Table 9

YEAR 2018 2017 2016 2015 2014

           
Dividend 8 7 7.25 7 6.5
Dividend 1.41 1.59 1.74 1.89 2.02
Cover
Dividend 14.29 -3.45 3.57 7.69 23.81
Growth
Dividend 8.04 7.52 7.72 6.79 5.83
Yield
Average
Dividend 9.11 9.12 8.75 7.77 7.82
Yield High
Dividend 7.28 5.74 6.04 6.03 4.73
Yield Low
Payout Ratio 71.12 62.95 57.54 53.01 49.57

38
 References

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48-61..

Khan, R. A., & Ali, M. (2016). Impact of Liquidity on Profitability of Commercial Banks

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