This document provides an overview and strategic analysis of Allied Bank Limited (ABL) in Pakistan. Some key points: 1) ABL is one of Pakistan's largest banks with over 800 branches across the country. It has the largest ATM network and online branch network in Pakistan. 2) An internal assessment examines ABL's strengths like its large branch network and employee ownership model, as well as weaknesses like limited rural coverage and high non-performing loans. 3) An external assessment reviews competitors like HBL, UBL and MCB, and opportunities in Islamic banking and privileged customer services. Threats include political influence and increasing competition. 4) The document performs various strategic analyses on

1. Allied Bank Limited
Strategic Management Case Study

2. Presented by:
Rizwan Qamar
M. Phil Fellow at Faculty of Contemporary Studies,
National Defence University,
Islamabad

3. Outline
• INTRODUCTION • External Assessment
• Pakistani Banking Industry • Interest Rates
• Industry Overview Comparison
• ABL‟s Introduction • List of Competitors
• ABL Today • External Industry
Comparison
• Mission, Vision Statements • EFE Matrix
• Existing • Competitive Profile Matrix
• Why change? • Porter's Five Forces
• Proposed Model
• INPUT STAGE • MATCHING STAGE
• Internal Assessment • SWOT Matrix
• Map Locating ABL‟s • BCG Matrix
Operations • SPACE Matrix
• Size of Financial Position • The IE matrix
• Investments • Grand Strategy Matrix
• Profit and Loss • Strategy Analysis
Composition • DECISION STAGE
• ROE & ROI • QSPM
• Shareholder‟s equity • Possible Alternative
• Cash Flows Analysis Strategies
• Profitability Analysis • Recommendations
• Strengths and Weakness • References
• IFE Matrix

4. Pakistani Banking Industry
 At present there are 41 scheduled banks,
 The Commercial Banks comprise of 3
nationalized banks,3 privatized banks, 15 private
sector banks, 14 foreign banks, 2 provincial
scheduled banks, and 4 specialized banks.
 There are 17 Listed and 4 unlisted Banks
 Banking Industry still remains the most favorite in
Pakistan
 Domestic Banks are in surplus liquidity
 The Largest 5 local Banks (Also knows as Big-5)
includes, HBL,UBL, MCB, ABL and NBP
 Out of them NBP is a State Owned Bank

5. Pakistan Banking Industry in
Brief

6. Pakistan Banking Industry in
Brief

7. Pakistan Banking Industry in
Brief

8. ABL Introduction
 Allied Bank with its Registered Offices in Karachi and
Lahore is one of the largest banks within the country
 It has 830 branches connected to an online network.
 It was the first Muslim Bank Established in Pakistan
before Partition (1942) with the name of Australasia
Bank at Lahore.
 Australasia Bank was the only fully functional Muslim
Bank on Pakistan territory on 14th August
 At the time of independence all the branches in India,
(Amritsar, Batala, Jalandhar, Ludhaina, Delhi and
Angra (Agra)) were closed down.
 New Branches were opened in Karachi, Rawalpindi,
Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and
Kasur
 By the end of 1970 it had 101 branches but
unfortunately it lost 51 branches in the separation of
East Pakistan which became Bangladesh.

9. ABL Introduction……………….
Cont‟d
 The bank did well in despite losing lot of its assets
and by the end of 1973 the bank had 186 branches in
West Pakistan
 In 1974, the Board of Directors of Australasia Bank
was dissolved and the bank was renamed as Allied
Bank of Pakistan.
 Same year Sarhad Bank Ltd, Lahore Commercial
Bank Ltd and Pak Bank Ltd were also merged in it
 From 1974-91 (Nationalization), bank made a rapid
progress and branches network increased to 748 with
three branches in UK
 As a result of privatization in September 1991, Allied
Bank entered in a new phase of its history, as the
world’s first bank to be owned and managed by its
employees

10. ABL Today
 Now a days ABL has the largest network of online
branches in Pakistan which counts over 800 and located
in almost 150 cities and towns.
 The bank offers a full range of retail, commercial and
corporate banking services with a focus on service delivery
through technology.
 Additionally, it also provides general banking services to
agricultural, industrial and individual customers throughout
Pakistan.
 Almost 89% of bank's deposit base is composed of
deposits from the urban areas.
 The bank's fundamental strength lies in its strong lending
capability, as well as providing a variety of financial
services
 The bank also conducts international operations in UK
whereby it caters to the needs of the bank's domestic
corporate and other customers in financing import and
export transactions.

11. ABL Today…………………………
Cont‟d
 ABL has highest number of ATMs, which increased to
601 at December 31, 2011 covering 145+ cities
whereby, making it the widest geographical coverage
for ATM-based service amongst all the banks in
Pakistan.
 It has a completely online network of 830 branches.
 This accounts for 12% of the market share amongst
the online branches in the country.
 Allied Bank has also been adjudged as "best bank" of
2009 by CFA Association of Pakistan in its 7th Annual
Excellence Awards.
 It has also been ranked 1st in Pakistan and 9th
globally by the Banker Magazine, UK for yielding best
profits on capital.

12. Financial Highlights in 2011

13. ABL VISION
Actual Proposed
“To become a dynamic “To become a leading
and efficient bank and efficient Financial
providing integrated Institution providing
solutions in order to be integrated solutions in
the first choice bank for order to be the first
the customers” choice of customers”

14. ABL‟s Mission Statement (Actual)
 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

15. Characteristics of ABL‟s Mission
Characteristics of Mission Statement ABL Mission
Statement
Broad in scope Yes
Less than 250 words Yes
Inspiring Yes
Identify the utility of a firm‟s product No
Reveal that a firm is socially responsible Yes
Reveal that the firm is environmentally friendly No
Include nine components of mission statements No
Enduring No

16. Components of ABL‟s Mission
Components of Mission Statement ABL Mission
1) Customer Yes
2) Product No
3) Market No
4) Technology Yes
5) Concern for survival , growth and profitability Yes
6) Philosophy Yes
7) Self Concept No
8) Concern for public Image Yes
9) Concern for employee Yes

17. ABL‟s Mission Statement (Proposed)
“We are committed to provide with
efficient high tech innovative Financial
Solutions to our customers in Pakistan
and create sustainable value through
growth, efficiency and diversity for all
stakeholders. We provide a challenging
work environment and reward according
to their abilities and performance and to
play a proactive role in contributing

18. Input Stage
Internal Assessment
Internal Factor Evaluation (IFE) Matrix
External Assessment
External Factor Evaluation (EFE) Matrix
Competitive Profile Matrix (CPM)

19. INTERNAL ASSESSMENT

20. Map Showing Operations of ABL in
Pakistan

21. Internal Assessment

22. Internal Assessment

23. Internal Assessment

24. Internal Assessment

25. Internal Assessment

26. Internal Assessment

27. Internal Assessment

28. Internal Assessment

29. Internal Assessment

30. Internal Assessment

31. Internal Assessment

32. Internal Assessment

33. Internal Assessment

34. Internal Assessment

35. Internal Assessment
Revenue Divisions
PKR „000‟
Income Category 2011 2010
Interest Income 25,171,039 22,565,044
Fee, Commission and Brokerage Income 2,730,686 2,491,200
Dividend Income 2,681,218 1,118,270
Income from dealing in Foreign Currencies 643,058 418,524
Total………………………. 31,226,001 26,593,038

36. Revenue Divisions
30,000,000
25,000,000
20,000,000
15,000,000
2011
10,000,000 2010
5,000,000
0
Interest Income
Fee, Commision and
Brokrage Income Dividend Income
Income from dealing in
Foreign Currencies

37. Internal Assessment
Growth in Revenue Divisions 2011
(%)
Growth (%)
Income Category Growth
140
120
100
Interest Income 11.54881 80
60
Fee, Commission and 40
Brokerage Income 9.613279 20
0
Dividend Income 139.7648
Income from dealing in
Foreign Currencies 53.64901

38. Internal Assessment
STRENGTHS
 ABL is the first Muslim Bank of the world, which is owned and
managed by its own employs.
 Strength is the high motivation of employees to their work
because they know that what so ever they do, it will be in their
own benefit.
 Salaries are very reasonable, so the employees are not
financially disturbed and they devote their selves fully to their
work.
 They have wide area network in all over the Pakistan, so that
they cover a lot of portion of cash transactions and make
customer satisfied.
 The bank's fundamental strength lies in its strong lending
capability, as well as providing a variety of financial services
 ABL has highest number of ATMs, which increased to 601 at
December 31, 2011 (14% of the industry
 ABL covers 145+ cities whereby, making it the widest
geographical coverage for ATM-based service amongst all the
banks in Pakistan.

39. Internal Assessment
STRENGTHS………….. Cont’d
 It has also been ranked 1st in Pakistan and 9th globally by the
Banker Magazine, UK for yielding best profits on capital.
 Deposits of the bank grew by 17.2% and stood at Rs 372,254
million as at March 31, 2011 compared to deposits of Rs 317,742
million at March 31, 2010
 Gross Advances, keeping in line with prudent lending strategy
were Rs 257,249 million as at March 31, 2011, a growth of 7%
over the gross advances of Rs 240,359 million as at March
31, 2010.
The balance sheet size stands at Rs 450,308 million as at March
31, 2011, while the equity of the Bank as at March 31, 2011
registered a growth of 30.7% over March 31, 2010 level to reach
Rs 39,547 million.
 Profit before tax of ABL increased by 43.5% to reach Rs 3,851
million during three months period ended March 31, 2011 as
compared to Rs 2,683 million in the corresponding period of
previous year.
 Profit after tax also rose by 41.3% to Rs 2,511 million compared

40. Internal Assessment
WEAKNESS
 No entertainment facilities are available in the Bank when
customer goes to the Bank and wait for a longer time.
These facilities can be the newspaper, magazines, TV etc.
 Advertisement of ABL is not such goods as of other banks.
 Outlook of the ABL branches is not attractive to the people.
 The non-interest expenses of the bank increased by 22.7%
due to the increase in all the expenses including the
administrative expenses, provisions and other charges.
 The cost of funding also increased by 6%.
 The earning assets to deposits ratio has declined.
 Less staff in branches which leads to a long wait for their
turn of customers.
 Nonperforming loans to the Govt. sector due to Govt.
influence on the bank.
 There is no consumer banking services offered by the
bank.

41. Internal Factor Evaluation (IFE)
Matrix
Weigh Rate Weighted
Key Success Factors t Score
STRENGTHS
Largest Online braches network 0.09 4 0.36
Largest Nation-wide ATM network 0.06 4 0.24
Strong lending ability 0.08 3 0.24
Ranked 1st in Pakistan and 9th globally by the
Banker Magazine, UK 0.04 3 0.12
Higher employee motivation in comparison with
Competitors 0.05 4 0.2
Over 17% growth in Deposits where as industry
stands at 13% 0.06 3 0.18
Profit after tax has increased by 41.3% in last 0.06
year 4 0.24
Employee training and development 0.05 3 0.15
ABL covers 86% of the Country's urban area 0.08 4 0.32
Owned and managed by its employees 0.04 3 0.12

42. Internal Factor Evaluation (IFE)
Matrix
Weigh Rate Weighted
Key Success Factors t Score
WEAKNESS
No entertainment facility for the customers 0.05 1 0.05
Very Less Advertisement 0.05 2 0.1
No consumer banking services offered by the 0.07
bank 2 0.14
Limited coverage of rural areas (Only 14%) 0.04 1 0.04
Outlook of the branches 0.03 2 0.06
High non-performing loans 0.08 2 0.16
The cost of funding also increased by 6%. 0.03 1 0.03
Less customer service care 0.04 2 0.08
Total………………………. 1.00 2.83
IFE Matrix Score of ABL is 2.83 which is higher than the bench mark of
2.50

43. EXTERNAL ASSESSMENT

44. External Assessment

45. External Assessment
List of Major Competitors
ABL’s Major Competitors includes:
 Habib Bank Limited (HBL)
 United Bank Limited (UBL)
 MCB Bank Limited (MCB)
 National Bank of Pakistan (NBP)

46. External Assessment
External Industry Comparison
 ABL has 13% share of the ATM Market
 12% market share among the online branches
 The increase in the net interest income of the company is
higher than the average for industry, which was 8%.
 Deposits grew by almost 13%, which equals the industry
average of the banking sector
 The advances grew by 7.5 % as compared to FY09, which
was way higher than the industry average of just 1%.
 Allied Bank's deposits account for 7.3% of the total
deposits of all the banks whereas its advances account for
7.6%.
 ABL's total assets constitute 6.6% of the total assets of the
banking industry.
 Despite of economic issues in the country ABL has been
able to maintain its profitability.

47. External Assessment
OPPORTUNITIES
 The policies of the new government to uplift the economy
and pursue financial sector reforms are expected to yield
positive results in the banking industry of the country.
 As a result of the different steps taken by the Government
regarding the betterment of the economy, small borrowers
are attracted to get the financing and start small
businesses.
 So, the ABL has an opportunity to attract the customers by
giving them attractive schemes.
 They have wide area network in all over the Pakistan, if
ABL can make it possible the fast delivery of fund from
abroad through online banking, it can cover the major
market of Pakistan which still is capturing by Hundi.
 Diversification towards Islamic Banking Services
 Provide Privileged or Preference banking like MCB and
UBL

48. External Assessment
THREATS
 First threat is that of political influence. Three boards of directors
are of government. So that they can influence on the decisions of
the ABL.
 The biggest threat in the banking sector is the continuous
downfall of the country‟s economy since the last few years.
 New Privates Bank coped with emerging new Technology of IT
and with huge investments.
 Increase in the withholding tax by the Govt. on transactions.
 The higher discount rates offered by the SBP
 The Law and order situation disturb the economic situation and
hence the Banking Industry
 Power shortage brutally hinders the performance of Industrial
sector which get loans from Banks.
 Tight monetary policy and high interest of 15% by the SBP
reduce the interest of people to get expensive loans from Banks.
 The high inflation rate due to deficit financing by the Govt. is also
a big threat to ABL.

49. External Factor Evaluation (EFE)
Matrix
Weigh Rate Weighted
Key Success Factors t Score
OPPORTUNITIES
Govt. reforms to up lift economy 0.10 4 0.40
Can Capture Hundi market by providing fast
cash transfer 0.07 3 0.21
Diversification towards Islamic Banking Services 0.06 4 0.24
Provide Privileged or Preference banking like
MCB and UBL 0.07 3 0.20
Micro Finance to the farmers and house hold
Industry 0.07 3 0.21
SME Financing 0.05 4 0.20
Personal loans and consumer banking 0.04 3 0.12
Expansion in the rural area of the country 0.06 4 0.24
International expansion through joint ventures or

50. External Factor Evaluation (EFE)
Matrix
Weigh Rate Weighted
Key Success Factors t Score
THREATS
Political influence on the Bank‟s activities 0.07 1 0.07
Continuous downfall of the economy 0.08 2 0.16
The higher discount rates offered by the SBP 0.05 1 0.05
Law & order situation damaging economic
activities 0.08 2 0.16
Tight monetary policy and high interest of 15%
by the SBP 0.06 2 0.12
The high inflation rate due to deficit financing by
the Govt. 0.04 1 0.04
Power shortage brutally hinders the
performance of Industrial sector 0.06 2 0.12
EFE Matrix Score of ABL is 2.66 which is higher than the bench mark of
Total……………………………. 2.50 1.00 2.66

51. Competitive Profile Matrix (CPM)
Competitors HBL ABL MCB
Critical Success Factors W Rate WS Rate WS Rate WS
Financial Position 0.16 4 0.64 4 0.64 4 0.64
Service Quality 0.14 3 0.42 3 0.42 3 0.42
Market Share 0.09 4 0.36 2 0.18 3 0.27
Customer Loyalty 0.10 2 0.2 4 0.4 4 0.4
Bank Charges/ Fees 0.12 2 0.24 4 0.48 3 0.36
Advertising and Promotion 0.08 3 0.24 2 0.16 2 0.16
Work force motivation 0.07 2 0.14 3 0.21 3 0.21
Online/ATM Services 0.11 3 0.33 4 0.44 4 0.44
Geographic Coverage 0.13 4 0.52 3 0.39 4 0.52
Total…………….. 1.0
0 3.09 3.32 3.42
The CPM value of ABL is 3.32 which shows good competitive position

52. Porter‟s Five Forces Model

53. # Forces Intensity
1 Rivalry among competing High
firms
2 Entry of New Competitor Low
3 Development of Substitute Low
Porter’s Five Products
4 Bargaining Powers of Low
Forces Suppliers
Model 5 Bargaining Power of High
Consumers
External Assessment

54. Matching Stage
SWOT Matrix
BCG Matrix
SPACE
IE Matrix
G S Matrix

55. STRENGTHS WEAKNESS
SWOT 1.
2.
Strong lending position
Largest online branches
1.
2.
No entertainment
Non performing loans
3. Largest ATM network 3. Increasing lending cost
Matrix 4.
5.
Solid Financial position
Fastest growth rate
4.
5.
Urban area focus only
No branch
6. Motivated workforce attractiveness
7. High profit Margin 6. No consumer Banking
7. No Customer Care
System
OPPORTUNITIES SO STRATEGIES WO STRATEGIES
1. Micro Financing 1. Use Strong financial 1. Take offer any Islamic
2. Islamic Banking and lending position to Bank and reduce and
3. Govt. reliefs for capture SME and Micro lending NPL (W2, W3, O2,
O1)
Economy Financing (S1, S, S6,
2. Benefit from Govt. relief
4. SME Sector O1, O4) and start focus on SME,
5. Preference Banking 2. Use its network for Micro and preference
6. Rural economy Islamic, preference banking with attractive
banking (S2, S3. S5, setup (W1, W5, W6, O3,
O2, O5, O6) O4, )5)
THREATS ST STRATEGIES WT STRATEGIES
1. Foreign Banks 1. Invest in Power sector 1. Prudent lending to avoid
2. Power shortage to boost economy (S1, NPL (W2, W3, W6, T5,

56. BCG Matrix (Table)
PKR „000‟
% % %
Revenue Division Revenues Revenu Market Growth
es Share Rate
13.7%
Interest Income 25,171,039 80.60923 11.54881
Fee, Commission and 15.6%
Brokerage Income 2,730,686 9.744911 9.613279
17.3%
Dividend Income 2,681,218 9.586492 139.7648
Total 31,226,001 100%

57. BCG Matrix
Relative market share position in the
High 1.0 industry Medium .50 Low 0.0
Low -3
High +20
Dividen
d
Income
Industry growth rate
Fee, Com
mission
Medium 0

58. Boston Consulting Group (BCG) Matrix
Relative Market Share
• Dividend • Fee, Ban
Income k
Charges
Market Growth
• Interest
Income

59. Space Matrix (Score Table)
Financial Strength Rating Environmental Rating
Return on Asset 3 Stability
Leverage/Debt 2 Inflation Rate -4
Net Income 3 Technological Changes -3
Earnings Per Share 4 Competitive Pressure -4
Net Profit Margin 2 Barriers of Entry -2
Total 14 SBP Policy -3
Total -16
Industry Strength Rating Competitive Advantage Rating
Growth Potential 3 Market Share -1
Financial Stability 3 Service Quality -2
Ease of Entry in the 3 Customer Loyalty -4
industry
Technological -2
Resource Utilization 5 Knowledge
Profit Potential 2 Online Network/ATMS -4
Total 16 Total -13

60. x-axis = IS + CA = 3.10 - 2.60 = 0.50
y-axis = FS + ES = 2.80 - 3.20 = -0.40
SPACE Matrix
FS
Conservative Aggressive
+6
+5
+4
+3
+2
+1
CA IS
-6 -5 -4 -3 -2 -1 -1 +1 +2 +3 +4 +5 +6
-2
-3
-4
-5
Defensive Competitive
-6 ES

61. The Internal-External Matrix
IFE Score is 2.83 and EFE Score is 2.66 hence ABL lies in Quadrant V
Note: IE Matrix is constructed on the basis of IFE and EFE Score only due to less available date

62. Grand Strategy Matrix
Rapid Market Growth
Quadrant 2 Quadrant 1
Weak ABL Strong
Competitive Competitive
Position Position
Quadrant 3 Quadrant 4
Slow Market Growth

63. Alternative Strategies SPAC BCG IE Matrix
INT B/Co Div GS Count
E m s
Forward Integration X X 2
Backward Integration X 1
Horizontal Integration X X 2
Matrix Analysis
Market Penetration X X X X 4
Market Development X X X X X X 6
Product Development X X X X X X 6
Diversification X X X X 4
Joint Venture X 1
Retrenchment X 1
Divestiture X 1
Liquidation 0
Mergers & Acquisition X 1
STRATEGY ANALYSIS

64. Decision Stage
Quantitative Strategic Planning Matrix
Alternative Strategies
Recommendations

65. Quantitative Strategic Planning
Matrix
Key Factors Weight Strategy-I Strategy-II
INTERNAL FACTORS AS TAS AS TAS
Govt. Intervention in bank‟s matters 0.12 4.00 0.48 3.00 0.36
High Growth rate 0.14 4.00 0.56 3.00 0.42
Trained and motivated work force 0.09 3.00 0.27 4.00 0.36
Strong financial and lending capability 0.11 2.00 0.22 3.00 0.33
Largest online and ATM networks 0.10 4.00 0.40 2.00 0.20
EXTERNAL FACTORS
SBP Monetary Policy and Regulations 0.08 3.00 0.24 2.00 0.16
High Inflation Rate 0.06 3.00 0.18 4.00 0.24
Power Crisis in the country 0.10 4.00 0.40 3.00 0.30
Law and Order Situation 0.07 3.00 0.21 2.00 0.14
High discount rates and lending
restrictions 0.08 4.00 0.32 2.00 0.16
Less savings of the people 0.05 3.00 0.15 4.00 0.20
Total……………………….. 1.00 3.43 2.87

66. Possible Alternative Strategies
 Strategy-I (Product Development)
 Introduce new services within existing set up of the
bank
 Provide consumer Banking services
 Take initiative of Islamic Banking
 Fast and innovative & secure methods of Cash
transfer
 Diversify and enhance Bank A/C types and other
services
 Strategy-II (Market Development)
 Expand banks operations geographically
 Banking services may be provided in rural areas
 Those customers must be identified and attracted
who have capacity but never used bank services

67. Possible Alternative Strategies…….
Cont‟d
 Strategy-I has 3.43 Total Attractiveness Score
(TAS)
 And Strategy-II has 2.87 TAS
 So Strategy-I is recommended for the Bank
according to QSPM
 Strategy-I is the product development. Hence
Bank should diversify its services and introduce
new innovative, secure and high tech methods of
Financial Transitions with the convenience of the
customers
 SME sector may be focused more for lending

68. Recommendation
 Internal & External Audits (concept of financial
discipline, accountability, good corporate governance,
professionalism and impartiality)
 Communications Skills. No ambiguity should be left.
Clear and comprehensive instructions at all levels of
hierarchy
 Transparency in all matters especially in financing,
lending, recovery etc.
 Lending focus must be on private sector instead of
public sector
 SME sector must be given priority in all financial
matters
 Aggressive marketing strategies in retail and
commercial banking
 Institutionalization of Human Resource Management
(best man should be posted to best assignment,
refreshing courses, seminar on emerging banking and

69. Recommendation…………..
Cont‟d
 Research and Development facilities (Domestic
market research, economic analysis, strategic insight
of major economic and financial accords, international
markets knowledge, rigorous planning and
development, loss & prevention mechanism)
 There should be central compliant cell in ABL in order
to reduce people‟s complaints and foster the ratios of
productivity.
 Commonness of E-commerce with the help of Internet
banking should allow flourishing in all branches.
 Scope of Investment Banking is very much there and
bright as said by finance minister. Concrete efforts
should be made to initiate investment-banking
operations.

70. References
 David, Fred, R “Strategic Management” Concepts
and Cases´ 10th and 13th Edition. Prentice Hall
International 2009.
 www.abl.com.pk (Accessed on May 14, 2012)
 http://www.mediamonitors.net/biopakbymuhkhan.
html (Accessed on May 14, 2012)
 www.sbp.gov.pk (Accessed on May 14, 2012)
 Retrieved May 15, 2012 www.yahoo.com/images
 Retrieved May 15, 2012
http://www.google.com.pk/imghp?hl=en&tab=wi
 www.finance.gov.pk (Retrieved May 15, 2012)
 ABL Retrieved May 15, 2012
http://en.wikipedia.org/wiki/Allied_Bank_Limited

71. Questions and Further
Discussion ?

72. Have a nice weekend