AlliedBankLtd.pdf - Originating from modest beginning Allied Bank has transformed into a dynamic and innovative organization overcoming a multitude of

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Unformatted text preview: Originating from modest beginning, Allied Bank has transformed into a dynamic and innovative organization, overcoming a multitude of challenges with resolve and fortitude over its illustrious history. The Year 2017 marked a historic event for the Bank, as the entire ABL team celebrated the successful completion of providing 75 years of banking services to the nation, and being recognized as ‘Bank of the Year – Pakistan 2017’ by the prestigious ‘The Banker Magazine, UK’. With the initiation of digital transformation that will assist in shaping the future for decades to come, Allied Bank is proud to celebrate its evolution for a new age. Allied Bank Limited AWARDS AND ACCOLADES Bank of the Year 2017 (Pakistan) – The Banker Magazine (UK) A A B C D E F G B C D E Top Issuer of PayPak Cards - 1 Link Best Corporate and Investment Bank (Pakistan) - Asia Money Magazine Corporate Excellence Award - Management Association of Pakistan Best Emerging Bank in Islamic Finance - Global Forum on Islamic Finance 2nd Position Best Corporate Report Awards - ICAP & ICMAP Best Corporate and Institutional Bank (Domestic, Pakistan) & Best Loan Adviser - The Asset Magazine Ranked Amongst Top 25 Companies - Pakistan Stock Exchange F G 01 Annual Report 2017 Partition of India and Pakistan 1993 Nationalized and renamed as Allied Bank of Pakistan Limited (ABP) with a Network of 353 branches 2000 2003 ABP started operations in United Kingdom and opened 4 branches Bank continued to grow with new branches being opened in both West and East Pakistan Background: Head Office of Australasia Bank; Aiwan Shah Chiragh Building, Lahore 2005 1980S 1950-60S YEARS JOURNEY Recapitalization of Allied Bank of Pakistan Limited and handing over of Management to Ibrahim Group Separation of East Pakistan (now Bangladesh) resulted in loss of 51 branches 1970S 1974 51% shareholding by AMG 1990S 1971 26% shares of ABP disinvested by the Government. Management, control and administration transferred to employees backed Allied Management Group (AMG) 2004 1947 1991 Establishment of Australasia Bank at Lahore with Rs. 0.12 million Share Capital 2000-03 1942 1940S 02 State Bank of Pakistan took over the management of ABP State Bank of Pakistan initiated restructuring of ABP Organizational re-structuring and re-branding to “Allied Bank Limited” Listing on all the three Stock Exchanges of Pakistan Merger of Ibrahim Leasing Limited with Allied Bank Limited First Dividend payout after recapitalization at Rs. 2.5/share Allied Bank Limited Implemented in-house work-flow based Loan Origination System Merger of First Allied Bank Modaraba with Allied Bank Limited Upgradation of Allied Direct – Internet Banking Agreement with Temenos for acquisition of “T-24” banking solution Launch of Pay Anyone domestic remittance service Ranked amongst top 3 Primary Dealers by State Bank of Pakistan License to establish representative office in Beijing, China Achieved milestone of opening 1,000th branch during the year Launched Islamic Banking Introduced internet banking “Allied Direct” Established branch in Export Processing Zone-Karachi Start of Operations of “Wholesale Banking Branch – Bahrain” Implementation of Oracle Hyperion Planning (EPM/BI) Launched “Allied SMS Banking” Services Launched Visa Debit Card Ranked among the Top 1,000 banks of the world by “The Banker”, UK Background: Existing Head Office of Allied Bank Pioneer launch of Pakistan’s first PayPak Debit Card 2016 Rebranded personal internet banking platform to ‘myABL’ from ‘Allied Direct’ Upgradation of Oracle Financials Enterprise (Version R-12) Installation of five Cash Deposits Machine Established Asset Management Company Limited (AMC) - Wholly owned subsidiary 2015 2014 2013 2012 2011 Dedicated “Customer Care” & “Complaint Management” Units established Achieved milestone of Rs. 1,000 billion in terms of Total Assets First Bank in the industry to have EMV capability on both acceptance and issuance of chip based debit cards Establishment of Islamic Banking Group 2010 2009 2008 2007 2006 AMC launched its first Open Ended Mutual Fund, ABL Income Fund Successful migration of all branches to state of the art Temenos T24 core banking software Partnership with Mobilink to promote financial inclusion through enabling of domestic remittance services 2017 Implemented Oracle Financials Enterprise General Ledger Established representative office in Dubai, UAE License from Central Bank of Bahrain for “Wholesale Bank Branch” Corporate motto envisioned Achieved Primary Dealer status for dealing in government securities from State Bank of Pakistan Achieved milestone of surpassing 1,000 ATMs with industry leading up-time Launched Allied EZCash prepaid debit card Launch of “Business Internet Banking” for institutional and commercial customers Relaunched Bancassurance Launched Allied Car Finance Established representative office in Beijing, China Re-branding of Islamic Banking 03 04 Annual Report 2017 75 YEARS CELEBRATION Allied Bank Limited 05 06 Annual Report 2017 HIGHLIGHTS 2017 17% GROWTH TOTAL ASSETS TOTAL ADVANCES GROWTH TOTAL DEPOSITS 2017: 1,246 2016: 1,069 Rs. in Billion 13% 10% 6% GROWTH TOTAL CURRENT DEPOSITS 2017: 884 2016: 805 Rs. in Billion GROWTH 25% TOTAL EQUITY -12% 2017: 107 2016: 101 Rs. in Billion 2017: 18 2016: 20 Rs. in Billion 17% 11.12 100 RETURN ON EQUITY EARNING PER SHARE BRANCHES 2016: 20% 2016: 12.60 Rupees 2017: 698 2016: 590 Rs. in Billion DECLINE NON PERFORMING LOANS 2017: 372 2016: 330 Rs. in Billion 2017: 1,250 2016: 1,150 Number GROWTH TOTAL INVESTMENTS 2017: 316 2016: 254 Rs. in Billion GROWTH 18% 12.73 PROFIT AFTER TAX 2016: 14.43 Rs. in Billion NEW 91 ATMS 2017: 1,241 2016: 1,150 Number NEW Allied Bank Limited HUMAN RESOURCES 10,637 85:15 10,246 1,326 Total Permanent Staff Male to Female Ratio Number of Graduates New Recruitments 1,489 892 7,652 91% Training Days Training Programs Staff Trained in Service Employee Retention Ratio SERVICE DELIVERY 97% Up 25% Up 17% EMV (21.5 million) COMPLIANT ATM Uptime ATM POS Based Spent No. of ATM Acquired Transactions ATM Card Security 513,000 257,000 308,377 160,168 New to Bank Customers No. of Asaan Accounts Opened No. of Debit Cards Issued No. of PayPak Cards 121,953 97% 5,044,116 746,090 myABL Registered Users Number of Customer Complaint Resolutions Website Visits Social Media Fan/ Followers (12,168) 07 08 Annual Report 2017 CONTENTS 10 Corporate Profile 12 Board of Directors 16 Board Committees 18 Corporate Structure 19 Management Committees 20 Chairman’s Message 24 Director’s Report 32 Management Team 34 CEO’s Review 48 Group’s Review 58 Information Technology Governance 60 Key Performance Indicators 61 Risk & Opportunity Report 63 Stakeholder’s Engagement 64 Performance Highlights 68 70 72 73 74 75 76 77 78 83 93 94 94 Horizontal Analysis Vertical Analysis Statement of Value Addition Cash Flow Maturities & Concentration Profile Quarterly Financial Results Graphical Presentation (BS & PL) Share Price Sensitivity Analysis Products & Services Corporate Sustainability Corporate Social Responsibility Policy Investor Grievance Record Management 95 96 97 98 99 100 102 103 104 Managing Conflict of Interest Business at Last AGM Notice of 72nd AGM Statement of Compliance with Code of Corporate Governance (CCG) Review Report to the Members on Statement of Compliance with CCG Statement of Ethics & Business Practices Statement of Internal Controls Whistle Blowing Policy Report of the Audit Committee Unconsolidated Financial Statements Consolidated Financial Statements 107 Auditors’ Report to the Members 217 Directors’ Report on Consolidated 108 Statement of Financial Position Financial Statements 109 Profit & Loss Account 218 Auditors’ Report to the Members 110 Statement of Comprehensive Income 219 Statement of Financial Position 111 Statement of Cash Flow 220 Profit & Loss Account 112 Statement of Changes in Equity 221 Statement of Comprehensive Income 113 Notes to the Financial Statements 222 Statement of Cash Flow 194 Annexure I 223 Statement of Changes in Equity 196 Annexure II 224 Notes to the Financial Statements 199 Annexure III 205 Annexure IV 302 Pattern of Shareholding 308 Glossary 313 Form of Proxy FINANCIAL CALENDAR 2016 2017 1st Quarter results issued on April 26, 2016 1st Quarter results issued on April 26, 2017 2nd Quarter results issued on August 10, 2016 2nd Quarter results issued on August 17, 2017 3rd Quarter results issued on October 21, 2016 3rd Quarter results issued on October 24, 2017 Recommendation of Annual Results by the BOD February 09, 2017 Recommendation of Annual Results by the BOD February 21, 2018 71st AGM approved the Annual Results March 28, 2017 72nd AGM scheduled for approval of Annual Results April 09, 2018 Allied Bank Limited 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 STRATEGIC OBJECTIVES »» Enhancing brand image and creating shareholders’ value through sustainable performance, while optimizing return against acceptable risk appetite. »» Augmenting financial inclusion of unbanked population through innovative and diversified technologies, building customers’ confidence through convenient delivery channels and product designs. »» Continuous re-engineering of policies, procedures, SOPs, SLAs and TATs, ensuring operational efficiencies through effective management of key resources. »» Instilling a culture of ethics and responsibility among human resource and becoming an ‘Employer of Choice’ for the Top Professionals. CORE VALUES Integrity High Performance Excellence in Service Innovation and Growth 09 10 Annual Report 2017 CORPORATE PROFILE Who We Are Board of Directors Registered & Head Office Allied Bank Limited started its operations in Lahore by the name Australasia Bank before independence in 1942; upon nationalization in 1974, it was merged with 3 other banks (Sarhad Bank Limited, Lahore Commercial Bank Limited and Pak Bank Limited) and the name was changed to Allied Bank of Pakistan Limited. In August 2004, SBP under Scheme of Reconstruction transferred its ownership to a consortium of Ibrahim Group; consequently the new management renamed the entity as Allied Bank Limited in 2005. Mohammad Naeem Mukhtar (Chairman) 3 Tipu Block, New Garden Town, Sheikh Mukhtar Ahmad Lahore - Pakistan Postal Code 54000 Muhammad Waseem Mukhtar Abdul Aziz Khan Mubashir A. Akhtar Dr. Muhammad Akram Sheikh Zafar Iqbal Muhammad Raffat Tahir Hassan Qureshi (CEO) Auditors Audit Committee of the Board Zafar Iqbal (Chairman) KPMG Taseer Hadi & Co. Chartered Accountants Dr. Muhammad Akram Sheikh Mubashir A. Akhtar Human Resource & Remuneration Committee Abdul Aziz Khan (Chairman) Muhammad Waseem Mukhtar Tahir Hassan Qureshi Parent Company Shariah Board Ibrahim Holdings (Private) Limited Mufti Ehsan Waquar (Chairman) Subsidiary Company Company Secretary Legal Adviser Mandviwalla & Zafar Advocates Shares Registrar Central Depository Company of Pakistan Limited (CDCPL) Website & Email Mufti Mahmood Ahmad Mufti Muhammad Iftikhar Baig ABL Asset Management Company Limited [email protected] Entity Credit Rating Telephone Number AA+ Long Term A1+ Short Term (+92-42) 35880043 Corporate Governance Rating CGR9+ UAN: 111-225-225 Social Media Links twitter.com/ablpk Allied Bank Limited EXPANDING OUTREACH Serving our valued customers across & 127 Districts 492 Cities/Towns Domestic Branches (Conventional) Domestic Branches (Islamic) Overseas Branches 1,131 117 2 Bahrain-Wholesale Banking Branch Karachi-Export Processing Zone Branch Representative Offices 2 United Arab Emirates-Dubai People’s Republic of China-Beijing Branches ATMs Punjab Province-wise Network: 648 680 Sindh 269 278 Khyber Pakhtun Khawa 145 121 Balochistan 42 28 Federal Capital 63 90 Azad Jammu and Kashmir 62 38 FATA & PATA 11 - Northern Areas 9 6 Sub-branch 1 Overseas (Bahrain) Booths 19 Total 1 - 1,250 1,241 11 12 Annual Report 2017 BOARD OF DIRECTORS Sitting from Left to Right Sheikh Mukhtar Ahmad Mohammad Naeem Mukhtar Abdul Aziz Khan Allied Bank Limited Standing from Left to Right Mubashir A. Akhtar Muhammad Waseem Mukhtar Tahir Hassan Qureshi Dr. Muhammad Akram Sheikh Zafar Iqbal 13 14 Annual Report 2017 BOARD OF DIRECTORS Mohammad Naeem Mukhtar Sheikh Mukhtar Ahmad Muhammad Abdul Waseem Mukhtar Aziz Khan Chairman / Non-Executive Sponsor Director Non-Executive Sponsor Director Non-Executive Sponsor Director Non-Executive Director He is Chairman of the Board of Allied Bank since 2004. He has completed MBA from Cardiff Business School UK, Post Graduate diploma in Textiles from UK and Chartered Textile Engineer (CText ATI) from The Textile Institute in Manchester UK. He has over 32 years of experience of finance and industrial manufacturing. Besides Chairman of Board of Directors of Allied Bank Limited, he is also Chief Executive Officer/ Director of M/s. Ibrahim Fibres Limited and M/s. Ibrahim Holdings (Pvt.) Limited, Director on the boards of M/s. Ibrahim Agencies (Pvt.) Limited, ABL Asset Management Company Limited, Karachi Education Initiative, Pakistan German Business Forum and Member Board of Governors of National Management Foundation, the parent body of Lahore University of Management Sciences (LUMS), Representative of Pakistan Business Council. He is also Industry Co-Chair Banking Sector of NUST Corporate Advisory Council (CAC) and Senior Fellow of NUST Global Think Tank Network (GTTN). He started his business career immediately after migrating from India at the time of independence of Pakistan in 1947 and contributed to the industrial and business growth of Pakistan through his entrepreneurship skills and business acumen. He has over 56 years of experience in establishing and successfully managing various industrial and financial companies. He has been on the Board of Directors of Allied Bank Limited since 2005 and is a “Certified Director” from Pakistan Institute of Corporate Governance. He is also Chairman of the Board of Directors of M/s. Ibrahim Fibres Limited, Ibrahim Holdings (Pvt.) Limited, Ibrahim Agencies (Pvt.) Limited and ABL Asset Management Company Limited. He is MBA from the University of Chicago Booth School of Business, Illinois, USA. He also holds a Master’s degree in Total Quality Management (TQM) from University of Glamorgan, Wales, UK, and has 20 years of diversified experience of Finance, IT and Industry. His strategic guidance played a vital role in technological up-gradation of the Bank. He has been on the Board of Directors of Allied Bank Limited since 2004 and is a “Certified Director” from Pakistan Institute of Corporate Governance. He is also Director on the Boards of M/s. Ibrahim Fibres Limited, Ibrahim Holdings (Pvt.) Limited, Ibrahim Agencies (Pvt.) Limited, ABL Asset Management Company Limited, HUB Power Company Limited and Arabian Sea Country Club. He has enriched and diversified experience of more than 54 years in the fields of General Banking, Credit, Lease Finance, Business Development and Administration including 9 years of international banking; holding key positions in different countries including Switzerland. He also remained CEO of M/s. Ibrahim Leasing for 11 years. He is on the Board of Allied Bank Limited since 2004. Allied Bank Limited Mubashir A. Akhtar Dr. Muhammad Akram Sheikh Zafar Iqbal Tahir Hassan Qureshi Non-Executive Director Independent Director Independent Director Chief Executive Officer He is a law graduate and has 51 years of banking experience in local and international markets. His extensive international banking experience includes key assignments in Turkey, Qatar and UK. He is a Financial Consultant of Asian Development Bank (ADB) and remained actively involved in various assignments of ADB especially on capital markets development and reforms of NBFIs in Pakistan. Dr. Muhammad Akram Sheikh (Hilale-Imtiaz) has over 52 years of work experience in the public and private sectors. At present, he is associated with National University of Sciences and Technology (NUST) as Professor Emeritus, Founder and Co-Chair of Global Think Tank Network (GTTN), Founding Co-Chair of Corporate Advisory Council (CAC), Director on the Boards of Quality School Foundation and Tricon Boston Consulting (Pvt.) Limited (a subsidiary of Sapphire Textile Mills Limited). He has 32 years’ experience in senior management positions in financial and power generation sector. He was the Managing Director/ CEO of Pak Oman Investment Company Limited, a DFI owned jointly by the Governments of Pakistan and Sultanate of Oman. During his 8 years stay at Pak Oman he led the company in becoming the leading DFI in its peer group. Over the past 25 years, he has served on the Boards of number of listed and non-listed companies and financial institutions. He is a Fellow member of Institute of Chartered Accountants in England & Wales (ICAEW) and the Institute of Chartered Accountants of Pakistan (ICAP). He is a “Certified Director” from Pakistan Institute of Corporate Governance. He specialized in Investment Banking, Corporate Finance, Capital Markets, Leasing, Aircraft Financing and Energy & Power Generation. Presently, he is associated in advisory business and extensively travels within Middle East, South Asia, Europe and North America for business negotiation. He is on the Board of Directors of Allied Bank Limited since August 2015. He is a seasoned professional banker and Fellow member (FCA) of the Institute of Chartered Accountants of Pakistan (ICAP) with a diversified experience of more than 29 years including over 24 years of experience in the banking industry where he has held senior management positions. He has served on various Committees of the ICAP and Pakistan Banks’ Association. Before Joining Allied Bank Limited he held senior management positions in The Bank of Punjab, Habib Bank Limited and MCB Bank Ltd. He joined Allied Bank Limited in 2008 and served as Chief, Audit & Risk Review (A&RR), Chief Financial Officer and Chief Operating Officer (COO). Apart from attending various seminars and conferences locally and internationally, he also represented Allied Bank Limited on World Economic Forum’s annual meetings of the New Champions. He is ‘‘Certified Director’’ from the ICAP and is Bank’s nominee on the Board of Directors of Habib Allied Holding Limited UK, ABL Asset Management Company Limited and Council of the Institute of Bankers Pakistan. He is serving as CEO Allied Bank Limited since January 2017. He is also fellow member of Institute of Bankers in Pakistan (1989), Institute of Chartered Secretaries and Managers (1993) and Institute of Marketing Management (1999). He has been on the Board of Directors of Allied Bank Limited since 2006 and is a “Certified Director” from Pakistan Institute of Corporate Governance. He has held prestigious senior positions like Federal Minister/Head of Planning Commission, Federal Secretary of the Ministries of Communication, Water & Power and Industries & Production, Managing Director and Chairman of some of the largest public sector industrial establishments. During the period from 1998 to 2008, he also spearheaded many strategic policy initiatives including Medium Term Development Framework and Vision 2030 which lays down strategic directions for the future of the Country. He is on the Board of Directors of Allied Bank Limited since February 2015. 15 16 Annual Report 2017 BOARD COMMITTEES Audit Committee of the Board Terms of Reference: Primary responsibilities of Audit Committee of the Board (ACOB) are to determine appropriateness ...
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