INTRODUCTION
History of Bank
Before talking about the history of bank. I want to explain the origin of the word “bank.”
The word bank has originated from an Italian word “Banco” which means bench. In olden times, the Italians used, to sit on special benches to conduct their business of money. Afterwards, this word passed through different stages and ultimately became popular as “Bank.”
If these businessmen failed in their business, people used to break their benches and called them “bankrupt”. A bank can be defined as an institution, which deals with the business of money. It deposits the saved money of the people and then provides loan to the needy people from this deposited amount, which use this borrowed amount for their productive and non-productive purposes.
The bank deposits money at lower interest rate and lends money at higher interest rates, to earn profit. The origin of banking is a very interesting story. In olden days, it was felt very dangerous to keep the saved money in the house, because of the fear of the theft. That is why, the people either preferred to spend this saved money or buried it underground, which sometimes decayed and became useless.
Similarly, goldsmith, dealing with the business of gold and silver had to face the danger of theft. To solve this problem they started using iron almirahs to store their gold and silver. Afterwards they provided the facility of storing the saved money of the people, in their iron almiras, also. In Return these goldsmiths took some charges from the people for providing them this storage facility.
When goldsmiths realized that people did not withdraw all their money at the same time, they started lending it to the needy people on interest basis.
At the time of depositing the silver or gold, the goldsmiths issued a receipt to the depositor and it was accepted as a means of exchange in the day to day business of the people.
Today, the notes, drafts, and cheques are the developed forms of this receipt. As the time passed, the goldsmiths opened the institutions for depositing and lending the gold and silver in the people. The commercial banks are the developed forms of those institutions.
As the receipts issued by these institutions, were accepted by the people without any hesitation, these institutions were initiated to issue greater number of receipts as compared to actually deposited money.
The government realized that the issuance of greater number of receipts was destroying the country’s economy. In order to improve this situation, the government took back the authority of issuing these receipts from all those institutions and delegated it to one institution. Later this central institution was given the name of central bank. This is how the banking system started and with the passage of time, it developed and reached to the present stage.
History of UBL
UBL has assets of over Rs. 155 billion, capital and reserves of over Rs. 4 billion and a solid track record of 43 years – in addition to the convenience of over 1000 branches serving you throughout the country and also at several overseas location.
Since November 7, 1959, UBL has been providing quality banking services to the nation. Our global network of more than 1100 branches nationwide and worldwide ensures easy accessibility to a wide range of products and services. Additionally we are establishing more than 350 UBL counters at post offices all over Pakistan for your convenience. Visit your nearest UBL branch for assistance in seeking the right product to match financial needs.
Chairman’s Review
On behalf of the Board of Directors, we are pleased to welcome you to the Forty Fourth Annual General Meeting. We are privileged to present the Annual Report of the Bank for the year 2002.
Economy
Pakistan’s economy over the past few years has gradually but noticeably recovered. Increased home remittances and return of savings from abroad have helped build the country’s foreign exchange reserves, now over US$ 10 billion. Credit expansion remains a challenge. The SBP policy of lowering interest rates will stimulate credit and bring prosperity in the long run.
Given that Pakistan has an agrarian based economy, performance in the agriculture sector has been encouraging. The 2.7% growth target for the sector may well be exceeded and with recent country-wide rains, all round bumper crops are expected. The Bank will continue to focus on promoting this sector through joint venture activities that will benefit farmers by providing them with access to credit, advice and services through branches located closer to the rural agricultural market.
The recovery of global economies will present uncertainties. However, with increased remittances, a stable currency, lower inflation, and a narrowing fiscal deficit, the future presents a positive outlook.
Banking Sector
The transformation of state owned banks has been at the heart of the transition process of the banking sector of Pakistan. The banks have focused on organizational restructuring and loan recovery; whereas the State Bank of Pakistan has introduced regulatory and supervisory initiatives to focus on setting in place a sound financial system.
In 2002, the single biggest challenge faced by the banks was a declining asset book driven by excess liquidity from unprecedented growth h inward remittances. Profitable growth in the asset book in diversified market and customer segments will be the critical success factor for the coming year. The pressure on margins will be increasingly more acute as a result of declining rates. Consumer Business has been on the increase in the recent past and we will be developing aggressive strategies in this area. Customer service, cost effective improvement in the branch network and providing technology based conveniences to retail customers will become essential to meet customer expectations.
Code Of Corporate Governance
The Bank adopted the Code of Corporate Governance during the year. Although the Bank had always believed in good governance this Code brings to the forefront good practices and disciplines that we are now proud to adopt and have confirmed this in a Statement of Compliance, included in the Annual Accounts for 2002.
Vision & Strategies
We are glad to inform you that the Board has decided to carry out a comprehensive and far reaching review to develop a strategic plan & vision for the bank. This in our view is essential to establish a blueprint for the development of a dynamic financial institution with best practices that could contribute positively to the country’s economic growth and create value for its shareholders. We have recently carried out a manpower plan, which will help us segregate customer facing staff from customer acquisition teams, not only to improve customer satisfaction levels but to increase market share. This approach we hope would help us develop strong, forward-looking and technology-driven units, ready to take on the challenges of globalisation and liberalisation.
As a strategic aim, the Bank seeks greater diversification in its revenue base. We plan to further consolidate our core business and competencies. We are seeking to diversify and focus our energies towards consumer financing and retail banking so as to leverage our capabilities towards greater corporate strength, synergy, and profitability.
We believe that a strong, powerful global capability is important in today’s inter-connected world. Significant investment is planned in technology, premises and infrastructure to improve customer service. We remain committed to have an outstanding global capability to serve both our domestic and overseas clients.
The Bank takes cognisance of the importance of human resource development, creativity and knowledge-acquisition in the new banking environment. We will improve compensation, training and accountability for our staff in order to increase motivation productivity and customer service. Thus, the attention is towards changing mindsets and developing quality personnel with leadership attributes through provision of challenging career and learning opportunities.
Future Outlook
Your Bank is geared to meet the challenges of an economic revival through both its internal consolidation measures and far reaching changes that are being formulated through a strategic re-direction.
Over the years through our well-structured customer network we have developed an extremely large clientele, majority of who have already established a sound track record of reliability and trust with us. We will continue to act in a manner, which will further strengthen this relationship. Every task of ours will be to optimize customer satisfaction whilst profit generation, enhancing shareholder value and meeting mandatory and statutory requirements will also be in the priority list.
We will develop strategies to face challenges and make best use of the opportunities that come in our way in the short and medium term. We will transform the opportunities to a positive force. Our clientele comprises people from all segments of population. These include the low, middle and high-income category. While responding the varying needs of these segments, we will make every endeavor to transform the low-income category to the middle -income and the middle category to the high-income category,
Managing change in any organization is always a challenging and a demanding task, especially for a large institution like UBL. Without people of the highest calibre, dedicated to the speedy and efficient achievement of agreed goals, the job cannot be done. The Bank is fortunate to have in abundance of these resources, represented through both management and staff in every region of its operations. The Bank owes to its employees, its heartfelt gratitude for the remarkable changes already achieved. With their continuing enthusiasm and commitment to the task ahead, we are confident that the Bank’s future prosperity and the ultimate realization of its Vision – to be the premier and innovative bank- would be fulfilled. We would also take this opportunity to present our sincere felicitations to the Government and assure them that the confidence and trust that they have reposed in the Abu Dhabi Group and Bestway Group would grow deeper with the passage of time. We remain committed to make the Bank a premier financial institution. It will play its role as one of the largest private banks in the development of the financial sector and will continue providing its active support to the progress and prosperity of Pakistan’s economy. In addition, we would like to express our appreciation to the Ministry of Finance and State Bank cf Pakistan for their continued support.
His Highness Shaikh Nahayan MabarakAl Nahayan Chairman
Senior Management
| Amar Zafar Khan
M. A. Mannan Nauman Hussain Mansoor M. Khan Shaharyar Ahmed Shahid Waqar Mehmood Aman Aziz Siddiqui Ali Sameer Risha Moheyuddin Khalid Munawaruddin Mehboob A. Karim Karim Muhammad Ejazuddin Rukhsana Asghar Aameer Karachiwalla |
NAME DESIGNATION
| President & CEO
Deputy CEO Director Operations & Utilities Head Corporate Banking Group Head Investment Banking Group Head Commercial Bank Head International Operations (Dubai) Chief SAM (Domestic) Global Treasurer Head Credit Policy Supervision Country Operations Head Audit Chief Global Head Human Resources Chief Financial Officer / HCA |
Board of Directors
His Highness Shaikh Nahayan Mabarak Al Nahayan Sir Mohammad Anwar Pervez, QBE, HPk
Chairman Deputy Chairman
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Directors’ Report to the Members
The Directors are pleased to present the 44th Annual Report to the members, together with the Audited Accounts and Auditor’s Report thereon for the year ended 31st December 2002.
Compliance with Code of Corporate Governance
United Bank Limited recognizes the importance of and is committed to high standard of Corporate Governance. Good Corporate Governance principles have been adopted by the Company and your directors report that:
- The financial statements present fairly the state of affairs of the Company, the result of its operations, cash flows and changes in equity.
- Proper books of account of the company have been maintained.
- Appropriate accounting policies have been consistently applied in preparation of financial statements and. accounting based on reasonable and prudent judgment.
- International Accounting Standards, as applicable to Banks in Pakistan have been followed in the preparation of the Accounts of financial statements without any departure there-from.
- The system of internal control in the Company is sound in design, and effectively implemented and monitored.
- There is no reason whatsoever to doubt your Company’s ability to continue as a going concern.
- There has been no material departure from the best practice of Corporate Governance, in accordance with the relevant regulations.
- Your Board has appointed the following four Committees with defined terms of references,
Board Executive Committee
Ø Board Credit Committee
Ø Board Human Resources & Compensation Committee
Ø Board Audit Committee
- A summary of key operating and financial data of the last ten years is annexed to the audited accounts.
- The Bank operates five post retirement schemes. Pension, Gratuity, Benevolent, Provident Fund and Post Retirement Medical. The details and asset values are given in notes 20 and 36 of the audited financial statements of 2002.
Operational Performance 2002 Results
Operational Performance2002 Results |
Rs in million |
| Operating profit before provisions/write offs
provisions/write offs |
3, 583
(852) |
| Profit before taxation
Taxation |
2.731
(1,317) |
| Profit after Taxation | 1,141 |
| Basic Earnings per share | Rs. 0.60 |
The operating profit before provisions and write offs increased by 11% to Rs. 3.6 billion from Rs. 3.2 billion last year, whereas the profit before tax and extraordinary items increased by 87% as compared to last year. The increase was mainly attributed to 14% increase in the net revenue from funds (NRFF), 10% increase in fee and brokerage income and 41% reduction in write offs/provisions for non-performing assets as compared to last year.
Low cost deposits of your Bank recorded a growth of Rs. 12.4 billion (15%), whereas, expensive deposits increased by Rs. 7.6 billion (12%) compared to last year.
Performing advances increased by Rs 2 billion as compared to last year. Net non-performing advances decreased by 35% compared to last year. The net non-performing loans constitute 7.4 % of the total loans portfolio of your Bank as compared to 14.6 % last year.
The branch network was further rationalized during the year, through closure and mergers of marginal and loss making branches. The braches as a result decreased to 1112 from 1117 last year.
Your Bank handled over Rs. 96 billion of import and export business during the year, an increase of 24. 7% as compared to last year.
Change in Management Structure
On October 19, 2002, the Government of Pakistan sold 51% of their shareholding to the consortium of Abu Dhabi Group (UAE) and Bestway Group.
Pattern of Shareholding
The pattern of shareholding as required u/s 236 of the Companies Ordinance, 1984 and Article (xix) of the Code of Corporate Governance is given below
Shareholders |
Shareholding |
% |
| State Bank of Pakistan | 252,194,323 | 48,69 |
| Bestway Group | 132,090,000 | 25,50 |
| Abu Dhabi Group | 132,090,000 | 25,50 |
| Government of Pakistan | 1,419,447 | 0,27 |
| National Bank Pakistan, Trustee Department | 70,702 | 0,02 |
| Sate Life Insurance Corporation of Pakistan | 53,262 | 0,01 |
| Sui Southern Gas Company Limited | 50,197 | 0,01 |
| Investment Corporation of Pakistan | 29,260 | - |
| Metropolitan Steel Corporation | 1,646 | - |
| Privatization Commission | 727 | - |
| Pakistan Reinsurance Company Limited | 435 | - |
| Securities and Exchange Commission of Pakistan | 1 | - |
| 518,000,000 | 100,00 |
Services of UBL before and after Privatization
Services of UBL Before Privatization
1. Haj Services
2. Daily Profit Account
3. Hamrah Rupee Traveler Cheque
4. Loans
5. Foreign Currency Account (Unizar Plus)
6. PLS Saving Account
7. ATM
Haj Services
In order to meet the varied consumer needs UBL offers Hajj Scheme, which is primarily focused on providing convenience and financial assistance to the intending hajjis.
Hajj Mali Sahulat Scheme
UBL is the pioneer and the only Bank that offers Hajj financing up to Rs. 25,000. salient features of the scheme are as under:
Ø Interest free
Ø Loan up to Rs. 25,000
Ø Personal guarantee of a person acceptable to the Branch Manager
Ø Repayment of loan in 45 days from the data of disbursement or before departure for Hajj, which ever is earlier?
Daily Profit Account (UniSaver)
UBL UniSaver Account is an innovative way of serving your banking needs. Be it trade, business or personal finance, the UBL. UniSaver allows you maximum flexibility, yet gives optimum returns. Special features are:
Ø Daily profits on your daily balance
Ø Higher returns on higher balances
Ø Attractive rate of return
Ø Minimum balance for UniSaver Account is Rs. 100,000/-
Hamrah Rupee Traveler Cheque
In today’s competitive business environment, inability to fulfill commitments on time can make all the difference between success and failure.
UBL Hamrah Rupee Travelers cheque enables you to make swift payments when you need to.
Ø No bank commission
Ø Secure – Refundable in case of theft or loss
Ø Nation – wide network for convenient encashment
Ø Not necessary to maintain an account with UBL
Ø Easily transferable by one signature only
Loans
Agricultural Loans
A range of loans for all kinds of agricultural related businesses. UBL provides loans for the following to aid farmers in meeting their financial needs.
Ø Fertilizers, insecticides, pesticides, seeds and seed
Ø Tube-well, tractors and agriculture related machinery
Ø Cattle farming
Ø Poultry farm, milk plants, fish farming and dairy farming
Ø Storage of agricultural feeds.
Ø Fertility land and plantation of forests
Ø Production of agricultural exportable products.
Loans against Liquid Securities
In order to meet your short-term financial need, UBL provides funded and non-funded credit facilities against liquid securities, where by you can get a speedy credit at a very competitive rate.
1. Funded Credit Facilities
- NIDF – Non-interest Demand Finance
- NICF – Non-Interest Cash Fianance
Export Refinance Part I & Part II
2. Non-Funded Credit Facilities
- Letter of Credit
- Letter of Guarantee
Following liquid securities are accepted as collateral:
- Treasury Bills (T-Bills)
- Defense Saving Certificates (DSC)
- Special Saving Certificates (SSC)
- US Dollar Bonds (Issued by Government of Pakistan)
- Deposit with UBL
- Cash Margin
Foreign Currency Account (Unizar Plus)
UBL Unizar Plus, a highly lucrative foreign currency account offers the following features:
Ø Accounts can be opened in US Dollars, Pound Sterling or Euros
Ø You can maintain current, saving or term deposit accounts
Ø No restriction on the transfer of funds to anywhere in the world
Ø Attractive rate of return
Ø Resident or non-resident Pakistani’s, firms and companies are eligible to open these accounts
Ø Minimum Balance required: USD 1,000 or GBP 750
Ø Exempt from Zakat
Ø Withdrawals allowed in foreign currency.
PLS Saving Account
Ø No limitation on withdrawals
Ø Personalized banking
Ø Attractive rate of return
Ø Profit paid semi – annually
Ø Network of more than 1100 branches provide instant money
Ø Transfer facility through demand draft, pay order, RTC and telegraphic transfer.
PLS Term Deposit
Ø Personalized baking
Ø No limit on denominations
Ø Attractive rate of return
Ø Profit paid in cash or credited to account
Ø O limitation on premature withdrawal
Ø Network of more than 1100 branches provide instant money transfer facility through demand draft, pay order, Rupee traveler cheque and telegraphic transfer
Ø Credit rating – AAA Rated Bank by JCR-VIS Credit Rating agency for medium and long term investments
Ø Maturity: 1 moth, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years or 5 years.
Current Accounts
Ø No limitation on withdrawals
Ø Personalized banking
Ø Network of more than 1100 branches provide instant moey transfer facility through demand draft, pay order Rupee traveler cheque and telegraphic transfer
Automatic Teller Machines ATM
For instance cash at any time of the day or night, without the hassle of queues and tokens, use one of our many ATMs in Pakistan or Overseas.
In the UAE we have connected all our Automatic Teller Machines (ATMs) to the UAE ATM Switch, giving access to over 550 third party ATMs throughout the region to all our customers.
| City | ATM Branches |
| Islamabad | 5 |
| Rawalpindi | 2 |
| Karachi | 1 |
| Baharain | 3 |
| Doha, Quarter | 1 |
| UAE | 8 |
Services of UBL after Privatization
1. UBL Online
2. Money Gram
3. UniRemote
4. United Money Market Fund
What is UBL Online
It is an internet based service for account access/information.
Alerts can be received through.
A. Email
B. Mobile phone
C. Both on email and mobile phone
D. Alert services is not available
UBL can be accessed through
A. A PC having internet connection
B. A mobile phone with WAO service
C. Personal digital assistant (Pocket PC)
Receive Customized Alerts
You can receive alerts regarding your account (e.g. realization of amount of a cheque) through incoming SMS or an e-mail.
Transfer Account Statement into Different Formats
MS Excel, Lotus 1-2-3 (All versions), XML, dbase III/IV, MS Money, etc. are all compatible.
MoneyGram
Receive remittance from 136 countries in 10 minutes. United Bank Limited, together with MoneyGram, the internationally recognized worldwide transfer service provides overseas Pakistanis the benefit of a fast and reliable remittance service.
- Speed
Money transfer time from any foreign country to Pakistan is only 10 minutes
- Convenience
UBL authorized branches, in Pakistan, are linked to 36,000 MoneyGram agents in 136 countries.
- Security
Professional expertise and experience of UBL & MoneyGram guarantees the safety of your money transfer.
- Flexibility
The service does not require you to be a UBL account holder.
What is UniRemote
UniRemote system is designed to perform transaction between any two UBL branches over WAN (wide area network). UniRemote is not in direct access of the customers but in the system between branches where they can make online transaction with each other on behalf of UBL customers.
This system is integrated with UniBank. Transaction / facilities presently permitted in UniRemote are as follows:
Ø Cash Deposit
Ø Cheque Encashment
Ø Stop Payment
Ø Account Statement
Ø Funds Transfer
This system will enable UBL customer to operate his / her account and avail above services from any Unir4eemote designated branch in Pakistan.
Why UniRemote
v Fast changing financial environment and it’s shifting towards automation.
v Market competition.
v Customer demand as increasing public interest in e Banking (Electronic Fund Transfer).
v Innovative Banking.
United Money Market Mutual Fund
The open fund constantly issues new units when people buy, or redeem existing unites when people sell.
The transaction always takes place between the funds and its units holders and not among the unit holders.
What does NAV stand for? What does it indicate?
i) Net asset value
ii) It indicates =
The Key Benefits of UMF to the Customers
i) Safety
ii) Liquidity
iii) Profitability
Secondary Data Analysis
ANALYSIS OF PROFIT & LOSS
|
ANALYSIS OF ASSET
| ASSET | 154450457 | 155211116 | 160852206 | 183003466 |
| YEAR | 1999 | 2000 | 2001 | 2002 |
ANALYSIS OF ADVANCES
| ADVANCES | 61714410 | 64156421 | 78492649 | 74117401 |
| YEAR | 1999 | 2000 | 2001 | 2002 |
Analysis of deposit & A/C
| Deposit & A/C | 127133204 | 128679245 | 134961054 | 154914619 |
| Year | 1999 | 2000 | 2001 | 2002 |
ANALYSIS OF CASH FLOW FROM OPERATING ACTIVITES
| CASH FLOW FROM OP. ACTIVIT | 2273367 | 13110978 | 3662415 | 22198674 |
| YEAR | 1999 | 2000 | 2001 | 2002 |
ANALYSIS OF CASH FLOW FROM FINANCE ACTIVIT
| FINAN CE. ACTIVITY | 1823374 | (2483353) | 1507772 | 6304706 |
| YEAR | 1999 | 2000 | 2001 | 2002 |
ANALYSIS OF CASH FLOW FROM INVESTING ACTIVITY
| INVESTING ACTIVITY | 2541148 | 11051410 | 4440508 | 30880781 |
| YEAR | 1999 | 2000 | 2001 | 2002 |
Primary Data Analysis
Questionnaire
Q No. 1 What is your designation?
_____________________
Q No. 2 When are you appointed?
(a) Before change in leadership
(b) After change in leadership
Q No. 3 If you are appointed before privatization, you get financial benefit now or before?
(a) Yes
(b) No
Q No. 4 What of the following conditions have been improved after privatization?
(a) Salary
(b) Services
(c) Schemes
(d) Any other
Q No. 5 Is there any change in recruitment process after privatization?
(a) Yes
(b) No
Q No. 6 If “Yes” what type of changes?
(a) Interview
(b) Entry test
(c) Any Other
Q No. 7 Due to change in leadership what impact on your customer account?
(a) Increase
(b) Decrease
(c) Same
Q No. 8 What is the behaviour of new management with staff?
(a) Excellent
(b) Good
(c) Normal
Q No. 9 Do the new management have shown preference to promote the IT?
(a) Very High
(b) High
(c) Moderate
(d) Low
Q No. 10 What is the impact of privatization on overall performance?
(a) Increase
(b) Decrease
(c) No Change
TOTAL SAMPLE SIZE (25)
Q1. DESIGNATION NUMBER
1 REGIONAL OPERATIONAL HEAD ( 1 )
2 AREA OPERATIONAL MANAGER ( 3 )
3 BRANCH MANAGER ( 4 )
4 OFFICER ( 7 )
5 IT PROFFESSIONAL ( 3 )
6 CLERICAL STAFF ( 7 )
| A | B | C | D | |
| Q # 1 | ||||
| Q # 2 | 20 | 5 | ||
| Q # 3 | 16 | 4 | ||
| Q # 4 | 3 | 10 | 5 | 2 |
| Q # 5 | 20 | |||
| Q # 6 | 6 | 9 | 5 | |
| Q # 7 | 20 | |||
| Q # 8 | 13 | 7 | ||
| Q # 9 | 14 | 6 | ||
| Q # 10 | 20 |