Commercial & Retail Banking
Despite numerous challenges both on economic as well as political fronts, year 2012 was a significant year for Commercial & Retail Banking Group (CRBG) in terms of deposit mobilization. The overall deposit book of Your Bank increased to Rs 515 billion from Rs 400 billion in 2011, showing a growth of 29%. This growth is considerably higher than the industry average of 14%. In addition to the accomplishment of core objectives of high volume growth and improvement in market share, CRBG’s strategic focus has been on continuously developing new and personalized banking products and services.
During the year, Your Bank launched a new ‘Platinum’ deposit product which caters to the entire needs of all customer segments. It is available with an option of either term deposit or chequing account and received a very positive response from our target market. Your Bank also launched its pilot projects of ‘Extended Hours’ and ‘Saturday Banking’ during the year. Your Bank extended countrywide footprint by adding 38 new branches and 17 more ATMs during the year 2012 to reach a total of 875 branches and 618 ATMs.
In addition to the new branches, extensive branch improvements are being continuously carried out to provide a pleasant ambiance to our customers. Besides, the group is continuously monitoring the network performance and wherever deemed necessary, relocation of branches is being pursued to enhance network access, convenience to the customers and Your Bank’s profitability.
Considering the significance and role of Agriculture and SME sectors in the economy, Your Bank offers a wide range of products and services to this segment. Having the best available technology, structured product programs and a network spread across the country, Your Bank is well positioned to become a preferred provider of total banking solutions to these vital segments. In order to meet the challenges associated with agriculture lending, Your Bank has a dedicated and qualified field force of Agriculture Credit Officers and more than 150 designated branches. Your Bank continues to adopt a cautious approach towards its consumer lending segment and actively markets its consumer finance products to its existing customers having acceptable track record via cross sell.
During the year, Your Bank also launched a new consumer lending product, ‘Allied Personal Finance’, targeted mainly towards corporate and institutional employees. This product is very helpful in cementing our existing institutional relationships. Your Bank has also re-branded its credit card powered by VISA. The product is being offered at a mark up rate far lower than the competition thus facilitating the customers.
CRBG has further enhanced the niche customer volumes by extending our unique concept models such as ‘Women Branches’ and ‘Youth Branches’. CRBG remains committed to the overall vision of Your Bank including financial inclusion of the large unbanked population in the country in a phased manner. The year 2012 also witnessed the launch of Your Bank’s newly upgraded corporate website to enhance customers’ online experience. Being an interactive electronic touch-point, the website further improves end-user experience, introduces interactive segmentation and provides comprehensive information on our products and services. It further builds network of online visitors by incorporating social media channels.
Your Bank’s engagement on Social Media platforms like Facebook and Twitter has contributed to deliver a coherent and diversified communication with online traffic coming from within and outside Pakistan. This real-time interactivity is further augmented by the integration of Allied Live Chat facility, for customer feedback, into the website. Another key initiative during 2012 was of repositioning Your Bank’s brand identity.
Going forward, the entire CRBG team is geared towards enhancing its customer base, bringing considerable improvement in its deposits mix, higher service quality standards and developing innovative products and services to cater to banking needs of its target market.
Corporate & Investment Banking
The Corporate and Investment Banking Group (CIBG) maintained its position as one of the leading player of the industry for providing structured financial solutions and advisory services to premier corporate entities. During the year 2012, Your Bank won numerous international and domestic awards for its superior performance in the industry. These include: Best Investment Bank in Pakistan – 2012 by EUROMONEY Magazine, UK; Best Domestic Investment Bank, Pakistan – 2012; Best Debt House, Pakistan – 2012 and Best Deal, Pakistan – 2012 by the Asset Magazine, Hong Kong; Deal of the Year (Infrastructure and Project Finance) – 2012 by The Banker Magazine, UK and Transaction of the Year – 2011 by CFA Society, Pakistan. These awards are recognition of CIBG’s endeavors in providing valuable solutions to our corporate clientele.
Considering the difficult environment at hand, the Group’s focus remained on the quality of its loan book, gearing up of portfolio monitoring efforts to identify issues with the borrowers at an early stage and speeding up recovery efforts in respect of the infected portfolio. CIBG followed a strategy of increasing exposure to premier corporate clientele, having strong business fundamentals and tested re-payment track record by extending further facilities while exiting from or reducing exposure to weak borrowers.
Treasury & FX Management
Being cognizant of the developments on economic front during the year, Treasury played a pivotal role to ensure optimum profitable utilization of Your Bank’s funds both in money market and foreign exchange. In collaboration with other groups, Treasury also played its part in growing volumes of trade related business activities. The year 2012 witnessed continued volatility in the foreign exchange market as Rupee depreciated by the same 5.03% in 2012 as it depreciated in 2011. During the year, Treasury continued to serve Your Bank’s clientele, advising them about market trends and expectations resulting in volume growth for Your Bank and also further strengthening the relationship with the customers.
Further, major shifts occurred in SBP’s Monetary Policy stance for managing the challenges faced by the economy. Treasury took a proactive approach and re-profiled Your Bank’s investment portfolio to hedge future earnings against downward shift in the yield curve, thereby locking higher return on Your Bank’s investment portfolio.
Special Assets Management (SAMG)
The negative economic indicators, internal security threats and energy crises were the major factors contributing to burgeoning bad loans in Pakistan during the last few years. These factors continued to adversely impact business and industry in particular and banks in general during 2012.
However, the management adapted a focused approach during the year 2012 to keep the Non-Performing Loans (NPL) to a minimum level. The coherence and team work amongst the Business Groups and SAMG enabled Your Bank to make recoveries and regularization of over Rs 3 billion for the fourth consecutive year and retaining its position among the banks with the lowest infection ratio amongst the peers and far below the industry average.
Going forward, all the Business Groups in coordination with the SAMG are monitoring the weaker sectors in the economy to remain vigilant against future NPLs in any industry or business within the economy. We expect to further reduce the loan portfolio infection ratio in the coming years.
One of the basic features of Islamic economics system is an equitable distribution of wealth among the different factors of productions, thereby discouraging concentration of wealth in few hands and efficient flow of money within the economy. Islamic Banking is, therefore, seen as a pivotal step to achieve the economic and social goals under Islamic Shariah.
Islamic banking industry in Pakistan has witnessed substantial growth from its launch in 2002 to achieve a network of about 1,000 branches and over 500 windows across the country by 2012. Its assets share constitutes 8% of the country’s entire banking system (September 2012). The future outlook of Islamic Banking is also quite positive with its rapidly
growing acceptability both amongst the providers and users of financial services and is projected to further increase its share in the banking system in the coming years. Consequently, Your Bank has decided to actively participate in the overall growth of Islamic banking industry.
Your Bank has recently established its Islamic Banking Group (IBG) with a vision “To be the first choice Sharia Compliant Financial Services Provider for the customers”. With this vision and prospects, a well experienced team has been formed. IBG setup will not only provide Sharia compliant value added banking solutions to our existing customers but will also focus on establishing new relationships for Your Bank.
Islamic banking is expected to start full-fledged operations in 3rd quarter, 2013 and our long term strategy is to gradually invest and expand our Islamic banking outreach and become a major player in this business segment.
Your Bank recognizes importance of its human capital and considers it a key asset and an essential contributor in fulfilling its growth strategy. Human Resource Group (HRG) remained actively involved to ensure that Your Bank remains as one of the best places to work in Pakistan by providing a challenging work environment, rewarding the dedicated team members for their performance and assisting the organization towards accomplishment of its vision.
HRG continued to induct fresh post-graduates in the disciplines of banking, economics and information technology through induction of fresh batch of management trainee officers. Similarly, training of current employees remained one of the focus areas of HRG by offering banking, general management and soft skills programs at our three Management Development Centers (MDCs) at Karachi, Lahore and Islamabad throughout the year. A total of 12,578 participants attended 801 courses in different batches throughout the year.
Selected employees were also provided opportunity to attend overseas training programs in different countries. Your Bank also launched an e-Learning Portal providing an open gateway to a world of continuous learning and development for all of its employees. It shall encourage employees to enhance their understanding in a variety of functional and professional development areas via online programs.
Total training investment made on employee development in 2012 is over Rs: 81 million. In 2012, HRG’s main focus was to strengthen Your Bank’s human capital base by acquiring best available human resource talent and providing them fast
career growth opportunities. This is in line with Your Bank’s aim to become an ‘employer of choice’ by offering market based competitive salary packages, imparting best training, providing cross functional rotation and entrusting young leadership by assigning them key responsibilities.
Being an equal opportunity employer, Your Bank persisted with its commitment to gender equality and making female employees an effective contributor in the economic activities. Female employment ratio at Your Bank reached to 13% of the total employees in the year 2012. A comprehensive organization wide exercise of organizational restructuring was carried out too.
To ensure the implementation of Your Bank’s service mission, the core objective of Service Quality (SQ) is to strengthen service culture, by ensuring that services at all customer touch points are delivered above the prescribed bench marks. Being a change agent, SQ plays a pivotal role in building a strong relationship with our customers.
SQ’s Quality Assurance team plays an important role in facilitating business and support segments. Their aim is to build a service culture across all segments of Your Bank by institutionalizing and monitoring service standards to reduce service delivery turnaround time not only to meet the regulatory requirements but to surpass customers’ expectation. Our Service Excellence unit is responsible for gauging ‘voice of customer’ through satisfaction surveys and mystery shopping exercises, both in-house and through external agencies.
To ensure that customers are provided with superior services and to assess first hand customer experience, a new platform of ‘Web Based Satisfaction Survey’ has also been made available on the corporate website, where customers can provide feedback on their overall banking experience.
In line with Your Bank’s desire to exceed customer expectations, SQ has a dedicated Complaint Management team, which is responsible to address customer grievances proficiently and identify areas needing improvement. Your Bank has provided its customers with different channels to voice their concerns. A new platform i.e. Complaint & Suggestion Form has recently been introduced and placed at all branches. It provides customers with a convenient mode for registration of their complaints and suggestions. Our service channel of Allied Phone Banking, available 24/7, is also providing a host of personalized and secured banking services to our customers.
Risk Management involves setting the most appropriate course of action under uncertainty by identifying, assessing, understanding, communicating and addressing risk issues. We recognize management of risks as a vital component of our strategy. Your Bank’s Risk Management Group (RMG) is actively measuring, monitoring, controlling, reporting and managing risks. Modern analytical tools are used in combination with conventional practices to assess credit, operational, market and liquidity risks.
Risk appetite in the form of regulatory capital allocation has been determined for the above mentioned risk components. During the year under review, RMG focused on automation of key processes and robust implementation of policies and procedures to reinforce risk management practices in all domains. RMG has been cognizant of newly emerging domains of risk components and putting its best efforts for managing the same most effectively.
In this perspective Your Bank has successfully achieved permission from SBP to initiate Parallel Run for Alternate Standardized Approach (ASA) for Basel II – Operational Risk Capital Charge Reporting, which signifies readiness of the Bank to move to advanced approach of Basel II framework. Further, RMG developed a comprehensive Reputational Risk Management Framework in order to initiate and implement a Reputational Risk Assessment process at Your Bank, and comply with Basel II requirements.
Considering the inherent risks involved in financing against pledge of seasonal commodities, RMG has also initiated and implemented a pilot project of Bank controlled and operated warehouse for Pledge Financing. Automation of credit approval processes also remained on priority, and in line with this objective, our Loan Origination System (LOS) has
been upgraded by automating various credit application workflows for SME and Seasonal Financing Obligors to enhance the efficiency and effectiveness of credit assessment process.
In line with our strategic focus, Your Bank is continuously embarking on various initiatives to optimally utilize the core banking and other operating systems to provide the most efficient customer service experience. In line with this strategy, Your Bank had 272 branches operating on Temenos (T-24) Core Banking solution as at the close of 2011 and targeted to migrate additional 300 Unibank branches to the new T-24 system by the end of 2012. Your Bank surpassed the target and successfully implemented the T-24 Core Banking solution at additional 383 branches during 2012. Your Bank at the close of 2012 has migrated 655 branches on the new T-24 system and through this continuing transformation process, T24 system will be implemented on the remaining branches during 2013.
In order to facilitate customers, Your Bank has taken the initiative to upgrade the existing infrastructure to ensure smooth running of branch operations. As of 31 December 2012, infrastructure of approximately 765 locations has been upgraded with dual communication infrastructure by utilizing industry’s best available communication media.
To protect against Money Laundering activities, Your Bank has implemented a state of the art Anti Money Laundering solution to comply with the internal and external requirements. In order to strengthen the internal processes and to shorten the decision making process, Your Bank has automated various approval processes and workflows, bringing efficiencies in the system. An automated system and application monitoring mechanism, in addition to network monitoring system, has also been implemented, which generates alerts to the concerned staff, before reaching critical level. This has been helping Your Bank to keep the uptime of the system and services as high as possible.
Alternate Delivery Channels
In pursuit to enhance technological savvy image, Your Bank has been keenly involved in putting efforts to add new channels to its existing Alternate Delivery Channels. Your Bank maintained its ATM network performance by achieving industry’s highest ATM Uptime and by extending Cash withdrawal acquiring facility to other banks’ customers to the tune of 42% of total ATM cash disbursement through an extensive network of 618 ATMs located across the country. This has not only resulted in higher fee based income stream but has further strengthened the Bank’s strong standing as the top acquirer in the industry.
Another landmark has been achieved by Your Bank with a growth of 23% during 2012 to reach a total number of 1,080,429 Debit Cards in circulation.
Banking Services Group (BSG) continued to enhance systems and processes aimed at bringing further improvements in customer services and internal controls. Centralized end to end Account Opening was further extended, bringing 643 branches under the process.
BSG was also engaged in continuous efforts to increase Your Bank’s network outreach by completing various infrastructure projects in addition to the standardized offices and branches with consistent corporate outlook and modern working environment.
The Compliance Group worked diligently in ensuring strict adherence to the regulatory requirements and the Bank’s internal policies and procedures. Specific training sessions were held to apprise the field functionaries as to Anti Money Laundering (AML) and Know Your Customer (KYC) policies and procedures. To further enhance its capabilities, the Group has implemented the most advanced AML and KYC modules of Financial Crime & Compliance Management (FCCM) System during 2012 to replace the legacy system.