Académique Documents
Professionnel Documents
Culture Documents
Prepared by:
Name:
AZEEM JAFFERY
Class:
M. Com.
Roll No.:
xxxxxxx
Session:
2014-2016
Registration No.:
2014-GCUF-xxxxx
COLLEGE OF COMMERCE
GOVERNMENT COLLEGE UNIVERSITY, FAISALABAD
Student Name:
AZEEM JAFFERY
Class:
M. Com.
Roll No.:
xxxxxx
Session:
2014-2016
Registration No.:
2014-GCUF-xxxx
Signature:
Date:
DEDICATION
ACKNOWLEDGEMENT
All praise to Almighty Allah, the most merciful and compassionate, who give me skills and
abilities to complete this report successfully I am grateful to my parents who are always been
a source of encouragement for me throughout my life and from start to the end of this report I
am grateful to all my staff members so Bank Alfalah Islamic Limited, National Silk Mills
Branch.
I found every one very co-operative and helpful for providing me the Theoretical as well as
practical knowledge about the function and operation of the bank. I express my greatest
gratitude to my kindhearted Supervisor Mr. Sohail Akbar.
Who was the Person who made me able to write this report, His enthusiasm shows the way
forward to me to achieve this success and who kept me in high spirit through his
appreciation. He helped me a lot each time I went up to him.
Table of Contents
SR. No.
Contents
1
Chapter No. 1
Organization Introduction
1.2
Brief History of Banking in Pakistan
1.2.1
History of Bank Alfalah
1.2.2
Bank Alfalah Today
1.3
Vision Statement
1.4
Mission Statement
1.5
Corporate values of Bank Alfalah
1.5.1
Objectives of Bank Alfalah
1.5.2
Bank Alfalah Credit Ratings
1.6
Branch Network of Bank Alfalah
02
Chapter No. 2
Organizational Structure & Hierarchy
2.1
Organizational Structure
2.2
Organizational Hierarchy
03
Chapter No. 3
Products and Services
3.1.1
Car financing
3.1.2
Home Financing
3.1.3
Rupee Traveler Cheques
3.1.4
Credit Cards
3.1.5
Online Banking
3.1.6
ATMs
3.1.7
Islamic Banking
04
Chapter No. 4
Own Work
4.1
Departments worked
4.1.1
Accounts opening Department
4.2
Major deposit accounts products
4.3
Internal Codes of BAL
4.4
Account opening requirements
4.5
Major work done by account opening department
4.6
Conclusion
4.7
Operations Department
4.8
Major work done by operations department
4.9
Car Finance Department
4.9.1
Alfalah Car Finance
4.9.2
Required documents for car loan
4.10
Eligibility
Page No.
01
02
03
03
04
04
05
05
05
05
06
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11
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13
13
13
14
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19
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23
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29
29
32
34
4.11
4.12
4.13
4.14
4.14.1
4.15
4.17
05
5.1
5.2
5.3
5.4
5.5
06
6.1
6.2
6.3
7
8
Special Features
Procedure of Car financing
Conclusion
Accounts Department
Accounts
Functions
Conclusion
Chapter No. 5
SWOT Analysis
Introduction
Strengths
Weaknesses
Opportunities
Threats
Chapter No. 6
Financial Statement Analysis
Ratio Analysis
Horizontal Analysis
Vertical Analysis
Chapter No. 7
Conclusion
Chapter No. 8
Suggestions and Recommendations
CHAPTER No. 1
INTRODUCTION
34
35
35
36
36
38
39
40
40
40
42
43
43
45
47
54
57
60
61
Year of Foundation
Authorized Capital
0698202-6
1700981301164
Business Nature
Organization/Company Type
Principal Activity
Major Product(s)/Service(s)
Mailing Address
Phone No.
Fax
Website
www.bankalfalah.com
Sohailakbar@bankalfalah.com
www.facebook.com/bankalfalahislamic
National Bank of Pakistan. The NBP was wholly government owned but prominent merchant
families established the other three. In 1948, the State Bank of Pakistan (SBP) was formed. It
assumed that the supervisory and monetary policy powers of the State Bank of India. From
1960 to 1970, a number of specialized Development financial institutions (DFIs) such as
Industrial Development Bank of Pakistan and the Agricultural Bank emerged. These DFIs
were either controlled directly by the state or through the SBP, and were intended to
concentrate on lending to long-term projects in specific priority sectors.
In 1974 Government of Pakistan nationalized all the private sector banks. In addition to
managing the monetary policy, SBP also oversees the entire financial system and has
institutionalized the procedure for appointment of chief executive officer (CEO) and Board
of the Nationalized Commercialized Banks and DFIs.
Banking and Financial services sector in Pakistan comprises the commercial banks and the
non-banking financial institutions, including the development finance institutions (DFIs),
leasing companies, modarabas (Islamic Mutual Funds) and investment banks. These are
controlled and regulated by the SBP. Pakistan is in the process of adopting an Islamic
(Shariah) financial system, under which interest-based banking is not allowed. Since 1990
the Government of Pakistan has introduced various reforms in the financial services sector
enhancing the level of autonomy enjoyed by the SBP.
Privatization program that began in Pakistan in 1991, two of five NCBs and DFIs were
privatized and 11 new private banks were setup. The number of banks operating in Pakistan
has increased, which in turn has resulted in increased competition. During previous five
years, the combined total assets of domestic banks, showed an average annual increase of 22
percent, while combined deposits have recorded an increase of 27 percent per annum. A total
of forty-six commercial banks, including twenty-one foreign banks, are operating in Pakistan.
Additionally, sixteen Investment Banks, twenty-nine Leasing Companies and fifty-three
Modaraba Companies provide a mix of financial services.
Opportunities for new foreign banks exist in consumer banking, corporate bonds, investment
banking, leasing and housing finance sectors. Good reputation enjoyed by the existing
foreign banks will be helpful for new entrants. Some challenges, however, do exist in the
form of weak economic conditions in Pakistan and the turnaround possibilities in NCBs
through privatization.
consortium, and of Warid telecom, his Highness Sheikh Nahayan Mubarak Al-Nahayan was
the chief guest of the ceremony. Under this Strategic alliance agreement, Ericsson will
provide Warid telecom a complete turnkey state of the art network GSM online.
To provide the new and more innovative products than the other banks.
To take and manage the ideas of the valuable customer for the Bank
To deliver high quality and quick services to the customers, who are keep great value
Bank Alfalah tries to promote those activities which give the fruitful result to the
bank was established. B continuously recognizing the importance of corporate values, the
individual contributions from all employees has made the bank what it is today. In addition to
the corporate values, bank urges to provide all those having interest in the bank with a
number of criteria by which they can access the bank.
1.5.1 OBJECTIVES OF BANK ALFALAH LIMITED
Create diversified and sound portfolio for utilization of idle funds and their investing
in the existing and new venture especially in the pioneering of high tech agro based, export
oriented and engineering projects to ensure maximum return
1.5.2 BANK ALFALAH CREDIT RATING
Pakistan Credit Rating Agency the leading credit agency in the country has rated
Bank Alfalah very favorably. The Bank has been awarded an AA- (double A minus) and an
A1+ (A one plus) in the long and short term respectively. These ratings denote very high
credit quality and very low expectation of credit risk.
1.6 BRANCH NETWORK OF BAL
Since the privatization in 1997, Bank Alfalah Limited has remained consistent in its mission
to excel in providing innovative products and services to its customers. As a result of that, the
yare 2007 has been most favorable for bank inspite of varying market conditions. The Bank
recorded significant increase in its business volumes coupled with the broadening of network
and clientele base.
The Bank is fully aware that the branch network has direct implications on the service that it
provides to its customers. In the year 2007, commercial banking branches have reached to
166 and Islamic branches to 23. So in 2007, Alfalah network extend the coverage to 189
branches covering 74 cities nationwide and bank has also six international branches in four
countries. Bank Alfalah is confident that a well-integrated branch network offers greater
potential for serving a larger client base through high value products.
CHAPTER No. 2
ORGANIZATIONAL STRUCTURE & HIERARCHY
2.1 ORGANIZATIONAL STRUCTURE
Board of Directors
Chairman
CEO
Executive
incharge IT
Executive
Incharge Credit
Branch Manager
Executive
Incharge
Operations
E.I strategic
planning
E.I Personal
Training
Branch Manager
Guards
Assistants
CHAPTER No. 3
PRODUCTS INTRODUCTION
3.1 PRODUCT & SERVICES
With the mission to provide all-encompassing banking services to the customers, Bank AlFalah has a uniquely defined menu of financial products. Currently it is one of the most
comprehensive portfolios of personalized financial solutions that are custom-tailored to serve
the requirements not only of conventional customers but also fulfill the needs of the
corporate sector:
Car Financing
Online Banking
Credit Cards
ATMs
Home Financing
Islamic Banking
Lowest Mark up
Lower Insurance
Quick Processing
Lower Down Payment
Major features of Bank Alfalah Home Financing are Lowest Mark-up, Quick Processing,
Multiple Repayment Options and Free Valuation. It has been bifurcated in terms of Home
Buyer, Home Construct, Home Improver, Home Balance Transfer Facility.
Financing Limit:
uptoRs.10,000,000/-
Tenure:
Equity Participation:
Upto 20Years
30% Borrower / 70% Bank
accepted at more than 840,000 ATMs and 13million retail outlets around the world, making it
the most acceptable Debit Card available in Pakistan.
3.1.4.5 ONLINE BANKING
To provide enhanced and value added products to customer bank is constantly striving for
additional facilities. Bank provide fully automated on-line telephone banking facilities to its
customers enabling them to carry out banking transactions like balance inquiries, statement
requests, product information and exchange rate.
3.1.4.6 AUTOMATIC TELLER MACHINE
The bank offers 24 hours self service banking facilities to its customers on country wide basis
through deployment of Automated Teller Machine. This system allows the banking facilities
such as cash withdrawals, cash deposits, funds transfer, balance inquiries, account
statements. All ATMs are linked through a state-of-the-art Satellite Based Communication
System which offers 24 hours real time service.
3.1.4.6 ISLAMIC BANKING
A separate division is a recently initiated, which operates as separate branch. It offers Shariah
Compliant products through a network of five branches, which will increase to 50 by the year
2007. Islamic Banking has launched following products.
Al-Falah Masharaka Homes
Murabaha Finance
Aflalah Car Ijarah
3.1.4.7 CORPORATE AND STRUCTURED BANKING
The portfolio concentrates on all aspects of conventional banking as well as the financial
needs of corporate sector including dynamic and high value product.
CHAPTER No. 4
OWN WORK DONE DURING INTERNSHIP
4.1 DEPARTMENTS WORKED DURING INTERNSHIP
With an intention of grooming the best executives of the future, Our institute Government
College University Faisalabad has organized a comprehensive internship-training program.
All of us were placed in leading organizations of business arena to gain firsthand knowledge
and insight into their management and working. So, when I was given the chance of selecting
an organization, I opted for Bank Al-Falah .Getting a chance of working in Bank Al-Falah
proved to be very beneficial for me. I think that I gained comprehensive insight into the
working of a bank. But nothing could have been possible without the co-operation and
guidance of the officers of BAL.
I did my internship at Bank Al-Falah Limited National Silk Mills Branch,, for a total duration
of Eight weeks. It is relatively a small branch with a limited number of departments. Total
number of employees in this branch is eleven.
The Branch is running smoothly under the leadership of Mr. Rizwan Akhtar Awan, who is the
branch manager of Bank Al-Falah National Silk Mills Branch,. The departments that I
worked during this time are as follows:
Departments
Duration
Accounts Opening
2 Weeks
Operations
2 Weeks
Car Financing
2 Week
Accounts
2 Week
In account opening department I was under supervision of Mr. Yasir Arafat Zahoor & Mrs.
Numaira Akhtar Awan, incharge of this department. They were very co-operative persons.
Their management style is of collaborative type. They offers a helping hand to all his
subordinates and other department fellows. They deals and resolves conflicts with an
effective way of communication and negotiation. There is a great deal of value placed on
openness and directness. Both have a great ability to effectively negotiate and use persuasion
when necessary to ensure the smooth working of his department and success of the
organization.
4.2 MAJOR DEPOSIT ACCOUNT PRODUCTS
Borrowing funds from different sources has become an essential feature of todays business
enterprises. But in the case of bank borrowing funds from outside parties is more vital
because the borrowed capital of a bank is much greater than their own capital. Bank
borrowing is mostly in form of deposits. These deposits are lent out to different parties such
deposit creation is done through open an account in the bank.
4.2.1 CURRENT ACCOUNT
Current Accounts are non interest bearing accounts that have a minimum account opening
requirement of Rs 1000. No zakat is deducted on the accounts balance. Furthermore all
current account holders receive a Hilal debit card and there are no restriction on the number
of withdraws or deposits made to and from the account.
4.2.2 PROFIT& LOSS SAVING ACCOUNT
Profit& Loss saving accounts can be opened with a minimum balance requirement of Rs
5,000 and profit is credited on a half yearly basis. There are no restrictions on the number of
deposits and withdrawal made to and from the account and all account holders receive a Hilal
debit card as well. Profit and loss saving account cannot be opened by a business corporation,
however can be jointly opened by individuals. Profits are paid at 2% on all account balances.
4.2.3 BASIC BANKING ACCOUNT (BBA)
Basic Banking Account was introduced by banks on an order by the State Bank of Pakistan
and is current in nature. There is no minimum balance requirement for BBA, however initial
deposit must be Rs 1000.Maximum two withdrawals and deposits are allowed by cheque,
while there is no restriction on ATM withdrawals.
4.2.4 ROYAL PROFIT ACCOUNTS
Royal profit accounts are opened with a minimum balance requirement of Rs 50,000. The
basic aim of this account is that the higher the balance the higher the return, as profit is
credited on a monthly basis. The profit paid to account holders is as follows:
Amount
2.50%
3.50%
Negotiable
TDR pays 7%, paid at maturity and gives an additional advantage of giving monthly school
fee of the childrens if the breadwinner of the family dies.
4.2.8 AL-FALAH KAMYAB KAROBAR
Bank Al-Falah presents Al-Falah Kamyab Karobar (KK) - a structured, branded, tier-based
current account that caters to your banking needs& aspirations. This product will provide you
the opportunity to enjoy free services alongside state of the art banking facilities, linked
directly to the deposit balances in your KK account. Al-Falah KK Account can be opened
with minimum deposit requirement of Rs 25,000, while the degree of free services will be
dependent onthe minimum thresholds of respective tier. Its will give you the power to choose
from different tiers and avail banking facility from any of the Al-Falah branches PAN
Pakistan. KK Accounts have strategically been tailored into 3 different tiers, allowing you to
choose the allotted free service to your benefit. The three tiers are as following:
Silver
Gold
Platinum
The unique tier based structure ensures that you can avail smooth &cost efficient facilities
based on your current level of deposits i.e. Higher the deposit, higher the number of free
services. Some of the Salient features include (tier-based):
availability of particular foreign currency with the bank and the prevailing directives of the
state bank of Pakistan. The bank may decline to accept the foreign currency notes for deposit
in foreign currency account. The foreign currency deposit will be automatically renewed
upon the expiry of maturity date at the prevailing rates as prescribed by the bank for that
period, unless the bank receives a written request from the customer three days before expiry
date that he does not wish to renew the account.
4.2.10 JOINT ACCOUNTS
If the account is opened by two or more people, the balance to the credit shall belong to both
of them jointly, or to the survivor (surviving depositor), only when it is clearly written in the
instructions EITHEROR SURVIVOR. When the account is operated by a single operator,
the bank shall honor and pay to the debit of joint account all cheques, drafts and orders
signed by the single authorized signatory. If the bank prior to acting the instructions received
from authorized signatory receives a contradictory statement /order from other signatory, the
bank may refuse to act on either of them and insist upon instructions of all the joint account
holders.
4.2.11 MINORS ACCOUNT
In case of an account opened by a minor, bank is entitled to act upon the instructions received
by the guardians. Bank will continue to follow the instructions irrespective of the instructions
provided by the guardian unless or until the guardians or appropriate authority gives written
instructions.
4.2.12 SAFE DEPOSIT LOCKERS
Bank Al-Falah also provides safe deposit locker facilities to its customers for safe keeping of
their valuables like documents, securities and jewelry etc. Important features of locker
facility are as follows:
Various sizes to choose from small, medium, large and extra large.
Annual locker rent ranges from Rs.1, 000/- to Rs.4, 000/-
Some of the major account opened at Bank Al-Falah Jaranwala road and their internal codes
are as follows:
Account type
Code
5000
0100
020
0189
029
018
Authorized signatories to operate the account. This resolution must bear Company
Seal which must be signed by the two directors (as per the clause in MOA).
Memorandum and Article of Association. (It belongs to the internal & external
dealing by firms. In include the information regarding capital, paid in capital, shares
of firm, who operate this account etc).
operate account.
This resolution must bear Trust Rubber Stamp, which must be signed by the trust
Secretary.
First of all when a new customer walks into the bank and wants toopen an account, he/she is
asked to fill a Bank Al-Falah account opening form, which contains all the required
information that must be taken by the customer for his/her respective details and later on to
provide the security of their accounts. There are few essential documents like
SSC (Specimen signatures cards)
Sign verification
New sign (if accounts sign differs from CNIC account)
There are lists of documents which are required for opening a new form that is attached later
on with the report. When the report is completed it is then sent to BAL Head Office Karachi,
which is confirmed from there and if there is any document missing in the form, it is asked
by the concerning branch to provide, but one thing to mention clearly here that the account is
opened (account number is allotted) instantly to the customer within 4-5 minutes and the
customer can use his/her account instantly, which is really a big advantage for the customers.
4.5.2 MAINTAINING OLD ACCOUNTS
This includes continuous updating of the previous customers accounts including change in
any of their personal/business/employment/studies/signature details they are continuously
monitored and updated by the department heads and assisting personnel. If there is any
request is received from the customer to update his/her account then it is carried out instantly
without any wastage of time which is again a big plus point and a solid proof for the
dynamism of the bank.
4.5.3 ISSUANCE OF THE CHEQUE BOOK
When a new account is opened, the customer receives a Letter of Thanks from the Head
Office Karachi. This is the confirmation and proof that the customer is holding an account in
the BAL. When this letter is showed in the account opening department they confirm the
letter and then sends request for the cheque to Head Office Karachi. The cheque book is
received by the respective branch within 1-2 days outmost. When the customer comes in to
collect the cheque book he signs a letter that he/she has received the cheque book at the
Mentioned date. If the customer is old and needs a new cheque book the process is almost the
same. One thing is important to mention here is that when the cheque book is received by the
bank and the customer doesnt comes to receive the book within 90 DAYS or the account of
the customer is closed due to any reason the cheque book is destroyed under the supervision
of concerning authorities.
4.5.4 ATM / DEBIT CARDS
In the terminology of the BAL debit or ATM cards are known as Hillal-Cards. The process
for the Hillal cards is very simple. When you are filling the form for opening an account then
there is a leaflet which is actually the application for the Hillal card. You just have to enter
your CNIC, name, Address and initialize it and you receive the card at your door step.
4.5.5 WITHDRAWALS
Withdrawals from the account shall be made only by using cheque books supplied by the
bank at the request of the customer or by using ATM cards (if allowed)The bank reserves the
right to withdraw the cheque book facility without notice if in the opinion of the bank the
account is not being maintained or operated in accordance with terms and conditions or for
any other reason The customer shall exercise care when drawing cheques and agree that
cheque will not be drawn ina manner which may enable a cheque to be altered in a manner
which is not readily detectable. The customer shall ensure safekeeping of the cheque book
and shall not allow access the cheque book to any unauthorized person. In case of loss or
theft of the cheque book or any cheque leaf, the customer shall promptly notify the bank in
writing, if fails to give such notice to the bank, the customer shall himself be solely
responsible for any loss arising out of any fraudulent use of lost or stolen cheque book
/cheque leaf.
4.5.6 STATEMENT OF ACCOUNTS
The bank shall quarterly or at such other interval as it may deem fit sent to the customer
statement of account and the customer shall check the entries made there in. In case of any
discrepancy or error in the statement of account the customer shall notify the bank with in
14days of receipt of statement of account, failing which the customer shall have no right to
contest the correctness of any entries made there in. The bank shall ensure that debit and
credit entries are correctly recorded in the account, but in case of any mistake or error, the
bank shall have the right to rectify the mistake or error by making the correct adjusting
entries without notice and recover any amount wrongly paid or credited. The bank shall not
be liable for any loss or damage due to such errors/mistake.
4.5.7 HOLD MAIL FACILITY
Upon written request of the customer, the bank may in its sole discretion provides a (hold
mail facility) whereby the bank shall retain for periodic collection by the customer, or his
duly authorized agent, all communications and statements of the account relating to the
customers account. The customer hereby waives his rights to question any detail appearing
in the hold mail communication or statement of account irrespective of their actual receipt.
The customer accepts all risks and responsibilities in this regard.
4.5.8 STOP PAYMENT
If a customer looses their cheque book, then that customer will have to come to the bank and
firstly report the loss and then stop payment, by telling the series of cheque he has lost. By
stopping payment, the customer is guaranteed that no illegal payment is made from their
account. The process for stopping payment, after the customer tells that he has lost is cheque
book is that he fills a Form B, which is same as a cheque book requisition form and an
indemnity form, stating no responsibility on behalf of the bank if any illegal payment is made
before the time of announcing a cheque book lost. As part of my internship, I was to assist a
customer towards the whole process of stopping payment.
4.5.9 BANK STATEMENTS AND BANK BALANCE
A bank statement tells the whole activity of a bank account over a period of time. Customers
often come and want their bank statements and have to fill a form, relating to the time period
for which the bank statement is needed. As part of my internship, I was to assist the customer
to fill the Bank Statement Form and produce the statement through the banks software and
print it as well. Often customers want to know their accounts balance over the phone and thus
I had to tell them their account balances using the banks information system Bank Smart.
4.6 CONCLUSION
During my 2 week work in Account opening department of Bank Al-Falah, I experienced the
environmental and cultural gloom of corporate world of Pakistan. I was quite able to
understand the operations. I experienced that the communication is the key weapon of any
manager that could lead him to resolve/explore any conflict / situation with great ease.
I learned the process of opening and closing of different types of account, dormant accounts,
issuance of cheque book, customer dealing, balance statement. In this department, I learned
how to operate bank smart. I helped my supervisor in collection of zakat declaration forms
from customers which were needed in the process of zakat deduction.
Clearing
Transfers
Remittances
Cash Transfer
In large branches of Bank Al-Falah, all these jobs are done by different departments, but as
Bank Al-Falah Jaranwala Road is a small branch, all these jobs are done by one department,
known as operations. Operations department is sometimes also known as the Transact
department.
4.8.1 Clearing
The clearing department is responsible for the clearing of all cheques that the bank receives
daily and the different types of clearing cheques that come in the bank are:
Inward Clearing
Outward Clearing
Online Clearing
Outward Bills for Collection
amount.
Original Cheques are attached to these letter and sent to the main Bank Al-Falah
4.8.2 TRANSFERS
Transfers are conducted by Bank Al-Falah National Silk Mills Branch,, using its software
Bank Smart. There are two types of transfers:
1. Internal Transfers
2. Online Transfers
4.8.2.1 INTERNAL TRANSFER
Internal transfers take place when a Bank Al-Falah National Silk Mills Branch, account
holder draws a cheque in favor of another Bank Al-Falah National Silk Mills Branch, account
holder. The process for internal transfer is as follows:
1. Officer of the bank receives the cheque and determine if the cheque is an internal
transfer by looking at the branch code, if they are same then it is an internal transfer
2. The officer will post entries by credit the account in favor of whom the cheque was
drawn and debit the account that drew it in the banks software.
3. The cheque will be sent for supervision to the operations manager for authentication
of the entries
4. When supervised, the cheque will be affixed with the official stamps and kept with
the bank.
4.8.3 REMITTANCES
There are two main types of instruments that are used to transfer money, which are as
follows:
Pay order: Used to transfer money within the city
Demand Draft: Used to transfer money outside the city
4.8.3.1 PAY ORDERS
Pay orders are made to transfer money within the city and this is a safe way to transfer
money as the person who makes the transfer through pay order pays in advance. The
procedure that is carried out in transferring money through pay order is as follows:
PROCEDURE FOR TRANSFERRING MONEY THROUGH PAY ORDER
The customer will come to the bank and fill in the pay order application, giving in the details
to which account the money is being transferred, the amount etc and attach a cheque to pay
for the pay order. Pay orders can also be made through cash but mainly it is made through
cheque. The officer checks all the details in the application, makes out the charges for the
transfer that the customer will pay and then make the pay order for the customer and pass the
following entry:
Customer A/c
Pay order payable
When the customer in favor of whom the pay order was made gives the pay order to his
branch, the entries passed are:
Pay order payable
Customer A/c
4.8.3.2 DEMAND DRAFTS
Demand Draft is another way in which customers can transfer money outside the city. There
are two types of situations for transfer of money through demand drafts:
4.8.3.2.1
OUTWARD DDS
When a customer comes to Bank Al-Falah to make a DD to transfer money outside the city is
known as outward DD. The customer will fill the details in a DD application form, and will
attach a cheque or pay cash as he wish. Then the officer will check all the details and make a
demand draft for the customer and pass the following entries:
For Cheque
Customer A/C
Head Office A/C
For Cash
Sundry A/c
Head Office A/C
Another type of remittances is foreign exchange transfer from another country to a Bank AlFalah account in Pakistan, through SWIFT. Bank Al-Falah for foreign exchange transfers
takes the help of Citi Bank for routing.
PROCEDURE FOR FOREIGN TRANSFERS
The customer will come to Citibank to transfer money to Pakistan. The entries passed will
be:
Customer A/c
Citibank A/c
Citibank will then transfer that money to Bank Al-Falah Karachi. The entries are:
Citibank A/c
Bank Al-Falah Nostro A/c (khi)
Later Bank Al-Falah will transfer the Nostro A/c money into the demand account.
Nostro A/c Bank Al-Falah
Demand A/c
Now when the customer will come to take his money, the following entries will be made:
Demand A/c
Customer A/c
4.8.4
CASH TRANSFERS
The cash transfers in the transact department are responsible with the cash deposits and
withdraws made by Bank Al-Falah National Silk Mills Branch, account holders. There are
two types of cash withdraws and deposits. The first is when a Bank Al-Falah National Silk
Mills Branch, account holder either deposits or withdraws cash, while the second one is when
a Bank Al- Falah account holder, with an online account can withdraw or deposit money to
his account from the National Silk Mills Branch.
CONCLUSION
My third and fourth week was full of learning and understanding of the functions and
operations of the clearing department. I got familiar with the process of clearing and its types
i.e. inward clearing, outward clearing and intercity, IBC and OBC. I learned about different
types of crossing on cheques and about demand drafts, pay orders and telegraphic transfers.
As part of my internship, I was responsible to collect cheques from the customers that they
deposited, put the official stamps on the different kinds of cheques, register the return
cheques in a register and make OBC schedules.
4.9
of
Mr.
Yasir
Arafat
Zahoor.
He is a kind manager who is full of enthusiasm, with a bounce in their step, with a can-do
attitude. He is well committed to his goals and expresses this commitment through optimism.
He has a very clear vision about his departments goals and has the ability to articulate it in
accordance to the organizations goal and vision. Small actions lead to big picture; he is
skillful at doing both: thinking big while also paying attention to details.
4.9.1 AL-FALAH CAR FINANCE
Car financing has become one of the most selling financial products of almost all banks.
People prefer getting their cars financed rather than paying upfront because it is convenient
and lessens the burden of paying a huge sum of money upfront. Bank Al-Falah offers you the
most convenient and affordable loans in Pakistan. Whether its funds for a home renovation or
purchase of your first car. Al-Falah car financing is specially designed for you with easy,
affordable and flexible installments. There is a special software for leasing or financing your
car, that gets all your information required and makes a computer generated plan for our your
car that suits your choice and your best fits your financial position. Some of the features of
Bank Al-Falah Car Financing are:
The mark up rates for all locally build new cars is a follows:
Financing Product
1Yr
2Yr
3Yr
4Yr
5Yr
No hidden charges
Minimum down payment
Complete repayment at any point of time
Balance transfer facility [BTF] for existing as well as new clients from other banks.
Tenor period ranging from 1 to 7 years.
Financing of all brand new locally assembled vehicles.
Financing limit ranging between Rs.200, 000/- to Rs. 4,000,000.
Rate of Insurance
4.5%
EFU Insurance
5.5%
Atlas Insurance
3.9%
Various car types are insured at a different rate, but for cars above 2,000 cc trackers
4.9.1.5 MARKUP
Offering lowest rate of markup of 13.5%, (per annum), BAL has captivated a major market
share and so is the plan for future. This markup is only for the customers who want to get its
car financed or leased for One year only, as the duration of financing increases, the markup
increases as well, for the car leased for 7 years (Suzuki Liana) the markup is 16 % P.A. Bank
AL-Falahs Markup rates are as follows;
Pak Suzuki Cars
11.9%
12.9%
Import Cars
12.9%
4.9.1.6 REPAYMENTS
Easily affordable installments on monthly basis in the form of postdated cheques will set you
free of depositing your rental cheques every month. BAL is offering a very comfortable and
affordable repayment plans that can be customized with the requirement of every customers
need. For example is a customer cannot pay heavy installments then the there can be a easy
installment plan with high down payment, so that the customer doesnt can easily pay back
the loan. Another facility BAL is giving is that, you can pay back the entire loan (But not
before 1 year after disbursement) at any time with the Plenty of just 5 % of the total amount
outstanding.
4.9.1.7 SECURITY
Hypothecation of vehicle in the name of the Bank Al-Falah Limited, when the car is
delivered to the customer, on the registration book, BAL marks a lien and this entitles the
bank to use his all rights in case of nonpayment of loans. Customer has already signed in the
legal documents regarding hypothecation, so bank can take all the legal actions. Secondly,
the duplicate key of the car is in custody of the bank, and if in any case of taking the vehicle
back, bank has all the rights to use the duplicate key. When the loan is paid up, its the
responsibility of the bank to return back the Original Papers of the car and the duplicate key.
4.9.1.8 CO-BORROWER
Acting as a co borrower, will enables your family members (spouse, children -18 years and
above) to avail the financing facility and can get the car registered in their names as well.
This is another a vital facility which is being provided by the bank to entitle is customers a
more comfortable business with the bank. CO-borrower is a very important concept and has
vital significant like and the most important is that if a person is not eligible to get a car by its
own, he/she can contact any person (usually close relative) on his/her documents and
statement, and most importantly the name on the Registration book is of that co-borrower.
Copy of NIC
photographs bank statement last 6 months
Salary certificate (3-months)
NTN
Partnership Deeds
Copy of NTN
Form C or firm Regulations certificate
Balance sheet
Copy of NICs of all partners
Copy of Utility bills (PTCL)
Partnership declaration form
Income Statement
Copy of NTN
Balance sheet
Copy of NIC
Copy of Utility bill
Bank Declaration form
4.10 ELIGIBILITY
Yes now people get a car loan from Bank Al-Falah to purchase a brand new car if we are:
Pakistan National Identity Card holder
Over 20 years of age (maximum 60 years in case of salaried and62 in case of a
business person at the time of maturity of the loan)
Salaried , Business man of self employed
The loan can be availed from 1 year to 5 years with early adjustments facility at any
cars(Unregistered)
You can get a car loan from Bank Al-Falah to purchase a Brand new car if you are
Pakistan National Identity Card Holder
Over 20 years of age (maximum 60 years in case of salaried and 62 in case of a
Pakistani
assembled manufactured
document signed by the customer, by writing in detail about the car, the financing period and
witnesses pertaining to the agreement etc.
4.13 Conclusion
This department keeps an all in all fascination for me. It is totally a different category from
other departments of those I got experience. In this department I got the opportunity to make
practice of some most important topics of finance that I have learned in my university and to
exercise those concepts in real corporate world like amortization table, determination of
interest rate etc.
4.14.1 Accounts
Most important department of the bank is concerned with
1)
2)
3)
4)
Revenues
Expenses
Assets
Liabilities
The accounts department is supervised by Mr. Sohail Akbar and assisted by Miss Roma
Kanwal and Miss Numaira Akhtar Awan. In this department, all the vouchers are posted
during one day are sent to Accounts department next day. These vouchers are already posted
to computer by the concerned department. The accounts department has to tell that all the
vouchers are posted under the right head. Amount, date, stamps, signatures all the
requirements for cheques and vouchers are fully checked. If any kind of renovation or
construction or rebuilding is done, all is paid from the Accounts department. Like petrol for
the car, stationary charges, medical allowances, etc are all paid by this department.
4.14.2 Major Activities
Accounts department is totally a backend department and is not linked to customers at all. All
the days transactions inside, outside the branch and for other banks are handled with this
department. This is one of the most sensitive departments because the customers account are
credited and debited solely by this department so there is a very strict check and balance
system for this department and each transaction is monitored and rechecked at least twice and
supervised even by Manager Operations if amounts are high. Major activities in accounts
department are;
Monitoring daily activities include each and every transaction from all customers accounts
including, ATM transaction, International remittance, local remittance, inward and outward
transactions etc. The responsibilities in the accounts department are to debit and credit each
and every transaction, monitor it, supervise it and special transactions which require
supervision by higher authorities should be supervised.
4.15 FUNCTIONS
Following are some functions of Accounts department;
4.15.1 Reports
It generates reports like Statement of Account Activity (a report on the activity of all
accounts at Bank Al-Falah National Silk Mills Branch) Statement of Affairs (a report on the
assets and liabilities of Bank Al-Falah National Silk Mills Branch) Statement of Foreign
Exchange (a report on the foreign exchange currencies at the bank) and Statement of Profit &
Loss (are port on the income and expenditures of Bank Al-Falah National Silk Mills Branch).
These reports can be generated at daily, weekly, monthly, quarterly or yearly basis as required
by the bank.
4.15.2 Income and Expenses
The department also needs to calculate the revenues and expenses, control expenditure and
forecast profits every month.
4.15.3 Budget
Formulation of yearly budgets & targets in consultation with the branch manager is also done
by the accounts department.
4.15.4 Storage of Records
Accounts Department also has the duty to store vouchers and system generated reports.
4.15.5 Payments
The accounts department is responsible to pay vendors on behalf of the bank with
authorization from the branch manager. It also has to amortize large payments and calculate
depreciation of branch assets.
4.15.6 ACTIVITY CHECKING
In the accounts department, I had to do daily activity checking and there are four stages in
which activity checking takes place:
1.
2.
3.
4.
4.16 Conclusion
During my sixth week of internship I learned the process of checking, maintaining, and
record keeping of accounts i.e. all operation of the branch, income from operations and
expenses and reporting to the area office about all the operations.
CHAPTER No. 5
SWOT ANALYSIS
5.1 INTRODUCTION
A scan of the internal and external environment is an important part of the strategic planning
process. Environmental factors internal to the firm usually can be classified as strengths (S)
or weaknesses (W), and those external to the firm can be classified as opportunities (0) or
threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching the firms resources and
capabilities to the competitive environment in which it operates.
5.2 STRENGTHS
Bank Al-Falah is considered to be a very sound bank in the financial circles. The bank,
Where the customers can safely keep their money as long as they want. I am pointing some
of the major strengths of the bank.
5.2.1 Compassionate customer services
The officers of BAL are considered as one of the most able professionals in the banking
world (some belong to BCCI). However, they have added some local flavor in accordance
with their targeted segmented. Especially, in Circular Road Branch, I observed that they
interact with their clients as if they are their personal friends and discuss about their problems
as their own.
5.2.2 Goodwill and Trust
As a result of the compassionate and personalized services of the officers, the clients
perception for BAL is very high. They have trust and feel themselves to be secure while
banking with BAL.
5.2.3 Location
Bank Al-Falah has opened all its branches at commercial areas so that the customers or
clients face no problems in reaching to the bank. For example, Circular Road branch for
being situated in business and commercial hub of Lahore has second largest volume in trade
finance.
5.2.4 Foreign Trade Business
The bank is focusing on Trade Financing; it attaches great significance to the development
and maintenance of healthy correspondent relationships with other banks and financial
institutions. Towards this pursuit, BAL has developed excellent business relations with
foreign banks, whose support in terms of lines of credit extended to the bank, has enabled it
to handle the ever-growing trade volumes. During year2000, the bank handled foreign trade
business in excess of PKR 30.6billion, representing an increase of 92% over the previous
year.
5.2.5 Wide Branch Network
Bank Al-Falahs objective has been to expand its branch network to meet clients needs. It is
heartening to note that in just three years, which is considered the infancy stage in the
industry, the bank has increased the branch network from 3 to 23. And, due to the growing
business requirements, there are 10 proposed branches in different cities. The expansion
program is strategically important to increase customer base and to approach different
customer segments.
5.2.6 Computerized System
BAL has got a reliable and easy to use internal computer system. Every information
regarding the transactions in customers deposits has been computerized. Currently,
bankexel is being practiced for this purpose but very soon; a new program named
banksmart will start functioning (it has started functioning in Clifton branch).
5.2.7 Reputation
BAL has a very good reputation for its auto finance, home finance and agriculture finance.
They have been the pioneers of auto finance and have carved a name for them selves in this
field.
5.2.8 Credit Rating
BAL has been rated as AA- (double A minus) and Al + (A one plus) in the long run and short
run respectively. These rating donate high credit quality and very low expectations of credit
risk.
5.2.9 Better Environment
BAL has got a very friendly environment and the surroundings are also very pleasant. The
clients are treated as guests and are given proper place to sit and discuss different issues.
5.2.10 Better service
BALs management pays a lot of attention to customer service. They make sure that the
customers are treated in a nice way and their complaints and suggestions are always
welcomed.
5.3 WEAKNESSES
Perfection is only the claim of Allah Almighty. No other being living or dead can say this for
itself. Similarly, Bank Al-Falah also has some shortcomings that need to be mentioned:
5.3.1 Advertisement
BAL has formulized a lot of products and services for its customers, even more than other
commercial banks, but any advertisement on electronic media has not been seen. Since,
BALs major competitor Union Bank Limited has started large media campaign, so keeping
in view these threats; Bank Al-Falah should emphasize more on its advertisement.
5.3.2 Problems of Employees
I observed during my internship that some of the employees were burdened with over work.
So I think that the work should be distributed according to their post and capabilities.
5.3.3 Lack of Commitment
The staff members are not very committed to their position in auto finance department. Most
of the officers show negligence to customers complaints and often delay the delivery of the
vehicle due to inefficient working.
5.3.4 Insurance Company
The bank makes the deal with insurance company on behalf of the customer but once the car
is financed the customer comes in contact with insurance company which makes the
customer go through a lot of problems faced by the virtue of the insurance company thus
damaging the image of the bank.
5.4 OPPORTUNITIES
Bank Al-Falah has grown up its business with a very high pace and it has got tremendous
popularity, even with in a very short span of time. There are many opportunities for the bank
and by availing that it can stand amongst the top foreign banks.
5.4.1 Information Technology
All the opportunities of the 21st century are to be availed in the information technology.
Information technology is the future. Therefore BAL should emphasize much on IT,
especially the E Banking. Bank can design a universal account like other foreign banks, to
enhance online facilities.
5.4.2 Extension of Branch Network
Bank Al-Falahs growing business requires an extensive branch network. There are great
opportunities for BAL for the expansion of its business.
5.4.3 Growth in Deposits
BAL has introduced a number of financial schemes including special royal accounts. These
accounts have their unique features (discussed earlier). During the last three years, BALs
deposits have been increasing @ 30%, which is a very healthy sign. Therefore, with the
commencement of new schemes there can even be a greater increase in its deposits.
5.4.4 Strong Promotional Campaign
BAL is already the market leader and has brought its rate down to 8.5%. So the market
department should increase its potential and get as much customers as possible through
corporate deals, discounts for organizations and promotional campaign. They can utilize their
image to maintain their image.
5.4.5 Insurance Agent
The bank should have an involving agent who should deal with the complaints of the
customer from the insurance company and should help the customer in solving their problem.
5.5 THREATS
5.5.1 Economic Conditions
Despite the difficult circumstances that confronted the banking sector in particular and the
country in general, Bank Al-Falah has been still highly profitable.
But, the facts cant be denied and there might been adverse impact of such situation.
5.5.2 Competitors
Bank Al-Falah is facing a strong competition by its major competitors; Union Bank and
Askari Commercial Bank. Business of these banks is also growing with very high pace.
The SWOT analysis of the bank signifies that its strengths overcome its weaknesses and its
opportunities are more than its threats. This is a positive sign for any organization.
5.5.3 Insurance Problems
The attitude and performance of insurance companies are bothering the customers a lot and
people are regretting to have financed their car from BAL. because they come in contract
with insurance company through BAL so they consider BAL for all the mishaps.
CHAPTER No. 6
FINANCIAL STATEMENT ANALYSIS
6.1 Financial Analysis
Financial analysis involves the use of various financial statements. These statements do
several things. First, the income statement summarizes the revenues and expenses of the
company over a particular period of time, again usually a year or a quarter. Next the balance
sheet summarizes the assets, liabilities and owners equity of a business at a moment in time,
usually the end of a year or a quarter.
2015
2014
2013
61,458
55,378
43,961
28,648
21,873
(2,287)
(1,534)
16,895
20,340
(1,054)
15,841
provision
Non Markup/ Interest income
8,876
8,279
8,841
12,604
8,514
6,807
Taxation
(5,081)
(2,873)
(2,131)
7,523
5,641
4,676
Rs. In Million
Description
2015
2014
2013
62,369
50,516
61,205
16,552
12,332
34,764
53,629
18,313
2,522
Investments Net
397,097
324,319
219,690
Advances Net
327,298
290,597
260,780
Fixed Assets
17,242
15,740
14,835
1,204
Other Assets
28,421
31,311
16,427
Total Assets
902,607
743,128
611,428
Bills Payable
9,734
11,758
9,543
172,393
55,233
23,115
640,189
605,963
525,526
Subordinated loans
9,983
9,987
9,991
1,824
853
LIABILITIES
Other Liabilities
15,131
14,515
11,351
Total Liabilities
849,254
698,309
579,526
NET ASSETS
53,353
44,819
31,902
Represented by
Share Capital
2015
15,898
2014
15,872
2013
13,492
Reserves
14,164
12,338
7,274
Unappropriated profit
12,363
9,613
7,500
Shareholder's Equity
42,425
37,824
28,266
6,995
3,636
44,819
31,902
6.1.
53,353
Ratio Analysis
To evaluate a firms financial condition and performance, the financial analyst needs to
perform checkups on various aspects of a firms financial health. A tool frequently used
during these checkups is financial ratio or index.
1.1 LIQUIDITY RATIOS
Liquidity Ratios help us understand if we can meet our obligations over the short-run. Higher
liquidity levels indicate that we can easily meet our current obligations.
We can use several types of ratios to monitor liquidity.
1.1.1 Current Ratio
It measures the ability of the firm to meet the current debts with currents Assets. OR It shows
the short-term debt-paying ability of an organization.
Current Ratio = Current Assets / Current Liabilities
2015:
856,944 / 822,316
= 1.042: 1
2014:
696,077 / 672,954
= 1.034: 1
2013:
578,962 / 558,184
= 1.037: 1
Interpretation
This means that bank Alfalah has Rs.1.042, 1.034 and Rs.1.037 Respectively in its Current
Assets to meet its every Rs.1 Current Liabilities in the years 2015, 2014 and 2013
respectively.
ANALYSIS
The ratio has increased in 2015 by Rs.0.008 due to increase in Current Assets and less
increase in Current Liabilities, While situation in 2014 is vice versa. It has resulted due to the
following reasons.
i.
ii.
iii.
iv.
Any how the bank Alfalah is in a good position to pay its short term liabilities.
1.1.2 Absolute Liquidity Or Super Quick Ratio
It shows the the comparison of the absolute liquid assets of a firm to current debts. Absolute
liquidity is represented by cash and near cash items.
Absolute Liquidity Ratio = Absolute Liquid Assets / Current Liabilities
2015
= 78,921/ 822,316
= 0.096: 1
2014
= 63,848 / 672,954
= 0.095: 1
2013
= 95,969/ 558,184
= 0.171: 1
INTERPRETATION
This means that bank Alfalah has Rs. 0.096, 0.095 and Rs. 0.171 as absolute liquid Assets to
meet its every Rs.1 current debts in the years 2015, 2014 and 2013 respectively.
ANALYSIS
The ratio has increased in 2015 by Rs.0.001 because increase in cash and near cash items is
more as compared to increase in Current Liabilities. This shows an increased liquidity of
bank Alfalah limited. It has resulted due to the maintenance of high level of cash at BAL.
But when we compare liquidity in 2014 with 2013, we found situation is vice versa BAL has
much decreased level of liquidity in 2014 as compared to 2013.
2. LEVERAGE RATIOS
Another important group of detail ratios are Leverage Ratios. Leverage Ratios measure the
use of debt and equity for financing of assets
2.1. Debt-to-Equity
It indicates the extent to which the debt financing is used relative to Equity financing. This
ratio is used to determine an entitys long-term debt-paying ability. It helps to determine how
well the creditors are protected in case of insolvency of a company. It compares the funds
provided by creditors to the funds provided by shareholders.
Debt to Equity Ratio = Total Debt / Share holders Equity
2015
= 849,254 / 42,425
= 20.01: 1
2014
= 698,309 / 37,823
= 18.46: 1
2013
= 579,526/ 28,266
= 20.50: 1
INTERPRETATION
This means that for each Rs.1 brought by shareholders, the Creditors brought Rs.20.01, 18.46
and Rs.20.50 during the years 2015 and 2014 and 2013 respectively to finance the BAL.
ANALYSIS
The debt to equity ratio of BAL is high which shows a great risk for creditors in case of
insolvency and also not a good sign for BAL in case of attracting and satisfying the creditors.
The ratio has decreased in 2015 by Rs.1.55 due to the fact that the increase in the debts is less
as compared to increase in Share Holders Equity due to decrease in bills payable and tax
liabilities. While looking at 2014, this ratio has been increased as compared to 2015 and
2013.
2.3 Debt-To-Total-Assets
The Debt to total assets Ratio measures the level of debt in relation to our investment in
assets. The Debt Ratio tells us the percent of funds provided by creditors and to what extent
our assets protect us from creditors. A low Debt Ratio would indicate that we have sufficient
assets to cover our debt load. Creditors and management favor a low Debt Ratio
Debt to Total Assets = Total Debt / Total Assets
2015
= 849,254 / 902,607
= .9401: 1
2014
= 698,309 / 743,128
= 0.9396: 1
= 579,526 / 611,428
= 0.9478
2013
INTERPRETATION
This means that for each Rs 1 invested in the Total Assets of the BAL,
Rs 0.9401, 0.9396 and Rs 0.9478 have been brought by the creditors during the years 2015,
2014 and 2013 respectively.
ANALYSIS
A low Debt Ratio would indicate that we have sufficient assets to cover our debt load.
Creditors and management favor a low Debt Ratio, whereas here we see that the BAL debt
ratio is high somehow.
The Increase of 0.0005 in 2015 has occurred due to the fact that out of the total assets has
been provided by the creditor while low investment by the share holders, so the ratio is high
in 2015 because of low investment by shareholders and ratio is decreased in 2014 because of
high investment by shareholders as compared to 2015, and in 2013 it was increased as
compared to 2014.
3. PROFITABILITY RATIOS
Profitability Ratios measure the level of earnings in comparison to a base, such as assets,
sales, or capital. Analysis of profit is of vital concern to stockholders as they derive revenue,
in the form of dividends, when paid from profit. Profits are also important to creditors as they
are source of funds for debt coverage.
3.1 Net Profit Margin
Profit Margin measures the percent of profits you generate for each dollar of sales. Profit
Margin reflects your ability to control costs and make a return on your sales.
Management is interested in having high profit margins.
Net Profit Margin = (Net Profit / Net Sales or total income) * 100
2015
= 11.80%
2014
= 9.57%
2013
= 9.023%
INTERPRETATION
This means that the BAL earned Rs.11.80, 9.57 and Rs. 9.023 as net profit for each Rs 100
for 2015, 2014 and 2013 respectively.
ANALYSIS
The ratio has got down tremendously by 2.23 % in 2015; it may be due to the following
reasons;
i.
ii.
= 7,523 / 902,607
= 0.00833: 1
2014
= 5,641 / 743,128
= 0.00759: 1
2013
= 4,676 / 611,428
= 0.00764: 1
INTERPRETATION
This means that BAL is able to earn Rs. 0.00833, 0.00759 and Rs.0.00764return on its each
Rs.1 invested capital in 2005 and 2006 respectively.
ANALYSIS
In 2015 the ratio has increased by 0.00074 but, in 2014 the ratio has decreased by 0.00005,
while in 2013 this ratio is better than 2014.
It is due to the following reasons;
i.
ii.
iii. While net profits have not been increased as much as assets increased, so assets have not
been efficiently utilized.
3.3. Return on Equity
It measures the earning power on shareholders book value investment. A high return on
equity often reflects the firms acceptance of strong investment opportunities and effective
expense management.
Higher the ratio more the risk for entity, and more returns for shareholders.
= 17.73 %
2014
= 14.91 %
2013
= 16.54 %
INTERPRETATION
This means that BAL has been able to grant a return of 17.73%, 14.91% & 16.54% to all
shareholders on their equity during, 2015, 2014 & 2013 respectively.
It is a high return for shareholders & thus too much attractive for investors.
ANALYSES
In 2015 the return for share holders is highest as compared to past 2 years, so it will be quite
attracting for investors.
In 2014 the ratio has got down by 2.82% as compared to 2015 and 2013, it is due to the
following reasons;
i.
ii.
The management has simply assumed higher risks thus resulting in higher returns.
There is too much less increase in net profits as compared to owners equity in
2015 due to inefficient control on costs, higher administrative and selling
iii.
4. OTHER RATIOS
4.1 Cash to Deposits Ratio = (Cash / Deposits) *100
2015
2013
= 9.74 %
= 11.65 %
= (327,298 / 640,189)*100
= 51.12 %
2014
= (290,597 / 605,963)*100
= 47.95 %
2013
= (260,780 / 525,526)*100
= 49.62 %
= 8.33 %
2015
= 62.02 %
2014
= 53.52 %
2013
= 41.80 %
years.
BAL advances Rs 0.5112, 0.4795 and 0.4962 for its each Rs. 1 deposit in 2015, 2014
and 2013 respectively. The advances to deposits ratio has increased by 3.17% in the
year 2006. It means that BAL focus is more on advancing loans than opening
5. GROWTH RATIOS
5.1 Assets Growth Ratio = (Current year assets previous year assets / previous year
assets) * 100
2015 = (902,607 - 743,128 / 743,128) * 100 = 21.46 %
2014 = (743,128 - 611,428 / 611,428) * 100 = 21.53 %
2013 = (611,428 536,568 / 536,568) * 100 = 13.95 %
5.2 Investment Growth Ratio = (Current year investment previous year invest /
previous year invest) * 100
2015 = (397,097 - 324,319 /324,319) * 100 = 22.44 %
2014 = (324,319- 219,690 / 219,690) * 100 = 47.62 %
2013 = (219,690 189,487 / 189,487) * 100 = 15.93 %
5.3 Advances Growth Ratio = (Current year advances previous year advances /
previous year advance) * 100
2015 = (327,298 - 290,597 /290,597) * 100 = 12.63 %
2014 = (290,597- 260,780 /260,780) * 100 = 11.43 %
2015
2015
Vs 14
2014
2014 2013
Vs13
2013 2012
Vs12
11%
55,378
26%
43,961
-5%
46,080
interest earned
Mark-up / return / (32,811)
-2%
(33,505
24%
(27,066
-2%
interest expensed
Net Markup/ Interest 28,648
31%
)
21,873
29%
)
16,895
(27,500
)
-9%
18,580
49%
(1,534)
46%
Income
Provisions And write- (2,287)
offs
Net Markup/ Interest 26,361
-70% (3,559)
30%
20,340
28%
(1,054)
15,841
provision
Non Markup/ Interest 8,841
0%
8,876
7%
8,279
14%
7,281
income
Non Markup/ Interest (22,598)
9%
(20,702
20%
(17,313
12%
(15,519
)
income
expenses
5%
15,021
after
12,604
48%
8,514
25%
6,807
0%
6,783
Taxation
(5,081)
77%
(2,873)
35%
(2,131)
-4%
(2,227)
7,523
33%
5,641
21%
4,676
3%
4,556
INTERPRETATION
From the above statement, it is observed that BAL has controlled its expenses as compared to
previous years and has good grip on its revenues. The rate of profit before taxation is also
increased to the extent of almost 23%. BAL is getting better in profit earnings as compared to
previous years, net profits have been increased 18% & 12% in 2014 and 2015 respectively.
This indicates that the overall profitability of the organization is good.
B) Horizontal Analysis
Balance Sheet Statement
As on 31st December 2015
Rupees in Million
Description
2015
2015
2014
2014
Vs 13
2013
2013
Vs 12
2012
-17%
61,205
5%
58,044
12,332
-65%
34,764
30%
26,721
193% 18,313
626%
2,522
188%
877
22%
324,31
48%
219,69
16%
11%
0
260,78
189,48
7
11%
6%
0
14,835
233,93
3
8%
13,748
Vs 14
23% 50,516
Treasury banks
Balances With
34%
Banks
Lendings
to
Other 16,552
Financial 53,629
Institutions
Investments Net
397,09
Advances Net
7
327,29
13%
9
290,59
Fixed Assets
8
17,242
10%
7
15,740
28,421
902,60
-9%
21%
-100%
91%
22%
1,204
148%
16,427 24%
611,428 14%
486
13,273
536,56
8
-17% 11,758
212% 55,233
23%
139%
9,543
23,115
13%
9%
8,431
21,228
Financial Institutions
3
Deposits
&
Other 640,18
6%
605,96
15%
525,52
15%
Accounts
9
Subordinated loans
9,983
Deferred Tax Liabilities 1,824
0%
114%
3
9,987
853
0%
-
6
9,991
-
457,04
4
70%
-
5,875
-
Net
Other Liabilities
15,131
4%
14,515
28%
11,351
-19%
13,931
Total Liabilities
849,25
22%
698,30
20%
579,52
14%
NET ASSETS
4
53,353
19%
9
44,819
40%
6
31,902
506,50
9
6%
30,059
7
LIABILITIES
Bills Payable
Borrowings
31,311
743,12
8
9,734
From 172,39
INTERPRETATION
From the above Balance sheet statement it has been observed that assets has been increased
by 8% in 2014, but in 2015 Assets decreased by 1% because of low investment and more
lendings to other financial institutions. While coming to Liability side we have observed that
in 2015 deferred tax liability of BAL has been highly increased as it was 0% in last two
years, moreover BAL has borrowing more from other financial institutions which increased
BAL liability in 2015. BAL is maintaining its assets as 6%, 40% and 19% in 2013, 2014 and
2015 respectively. This indicates that BAL should need to focus on controlling its liabilities
by reducing its deferred tax liabilities and also borrowings from other financial institutions to
increase its Assets.
2013
2012
87%
55,378
86%
43,961
84%
46,080
-47%
(33,505
-52% (27,066
interest expensed
Net Markup/ Interest 28,648
41%
)
21,873
34%
Income
Provisions And write- (2,287)
-3%
(1,534)
-2%
Particulars
2015
)
16,895
offs
Net Markup/ Interest 26,361
37%
20,340
32%
(1,054)
15,841
13%
8,876
14%
8,279
income
Non Markup/ Interest (22,598)
-32%
(20,702
-32% (17,313
13%
)
6,807
expenses
Profit before taxation
12,604
18%
)
8,514
Taxation
(5,081)
-7%
(2,873)
-4%
7,523
11%
5,641
9%
-52% (27,500
)
32%
18,580
-2%
(3,559)
30%
15,021
16%
7,281
-33% (15,519
)
13%
6,783
(2,131)
-4%
(2,227)
4,676
9%
4,556
INTERPRETATION
In the above statement, it is observed that BAL as compared to previous years has good grip
on its revenues. The rate of profit before taxation is also increased to the extent of almost 5%
as compared to 2013 & 2014 respectively. BAL is getting better in profit earnings as
compared to previous years, net profits have been increased 2 in 2015 as compared to 2014
& 2013 while net profit in previous years was just 9%. This indicates that the overall
profitability of the organization is good.
B) Vertical Analysis
Balance Sheet Statement
As on 31st December 2015
Rupees in Million
Description
2015
Cash and Balances With 62,369
%
7%
2014
50,516
%
7%
2013
61,205
%
10%
2012
58,044
Treasury banks
Balances With
Other 16,552
2%
12,332
2%
34,764
6%
26,721
Financial 53,629
6%
18,313
2%
2,522
0%
877
44%
324,31
44%
219,69
36%
36%
9
290,59
39%
0
260,78
189,48
7
43%
2%
3%
100%
7
15,740
31,311
743,12
2%
4%
100%
0
14,835
1,204
16,427
611,428
233,93
3
2%
3%
100%
13,748
486
13,273
536,56
8
Banks
Lendings
to
Institutions
Investments Net
397,09
Advances Net
7
327,29
Fixed Assets
Deferred Tax Assets
Other Assets
Total Assets
8
17,242
28,421
902,60
7
LIABILITIES
Bills Payable
Borrowings
9,734
From 172,39
1%
19%
11,758
55,233
2%
7%
9,543
23,115
2%
4%
8,431
21,228
Financial Institutions
3
Deposits
&
Other 640,18
71%
605,96
82%
525,52
86%
Accounts
9
Subordinated loans
9,983
Deferred Tax Liabilities 1,824
1%
-
3
9,987
853
1%
-
6
9,991
-
457,04
4
2%
-
5,875
-
Net
Other Liabilities
15,131
2%
14,515
2%
11,351
2%
13,931
Total Liabilities
849,25
94%
698,30
94%
579,52
95%
NET ASSETS
4
53,353
6%
9
44,819
6%
6
31,902
506,50
9
5%
30,059
INTERPRETATION
From the above Balance sheet statement it has been observed that assets has been increased
by 1% in 2015 and net assets are 6% in 2014 & 2015, While it was 5% in 2013. BAL
increased its investment over last 2 years 2013 & 14 respectively. While coming to Liability
side we have observed that in 2015 deferred tax liability of BAL has been highly increased as
it was 0% in last two years, moreover BAL is borrowing more from other financial
institutions which increased BAL liability in 2015. BAL is maintaining its net assets at 6%,
since last 2 years.
This indicates that BAL should need to focus on controlling its liabilities by reducing its
deferred tax liabilities and also borrowings from other financial institutions to increase its
Assets. Overall organization is in a good condition to meet the current challenges of business.
CHAPTER No. 7
CONCLUSION
BANK ALFALAH (BAL) under the leadership of Sheikh Nahayan Mabarak Al-Nahayan has
made significant in building of strengthening both the corporate and retail banking sectors in
Pakistan.
BANK ALFALAH views specialization and service excellence as the cornerstone of its
strategy. The people of bank innovation, creativity, reliability, customized services and their
execution are the key ingredients for their future growth. Based on this approach, their
Treasury Division and the Structured Finance Unit have been geared to provide specialized
services to the Corporate customers. Revenues from these activities have started yielding
dividends and they expect significant growth in these areas in the coming years. While
building on their in-depth familiarity with their customers needs and anticipated
developments in the banking industry, the Retail and Corporate areas of their operations will
continue to provide a strong and stable base to the business of the Bank.
They are aware that they have stepped into the 21st century and they must meet its challenges
by acquiring the highest levels of Technology. They will thus be accelerating their enable
them distribute their products and services through most efficient and high-tech means. Their
programme to launch real time on line Banking Services and introduction of ATMs at
strategic locations have been firmed up and it will be fully operational during the year 2001.
Their focus would be to constantly seek out growth opportunities through increased quality
assets and by offering a wider range of products and services to their esteemed customers.
There are significant growth opportunities for BANK ALFALAH and they are confident in
their ability to grasp them. They are committed to enhancing the shareholders value and look
forward with greater optimism to a prosperous future for BANK ALFALAH.
Based on the profit of Rs.354 million, the Board has proposed that a cash dividend at a rate
of Rs. 2.00 per share i.e. 20% of share capital be distributed among the shareholders.
CHAPTER No. 8
SUGGESTIONS AND RECOMMENDATIONS
8.1 Suggestions
The Human Resource Management given are primarily based on the analysis for the
improvement of banks efficiency, if these were followed it will give positive effects on the
profitability, and the role it plays in the development of the province of the bank.
8.1.1BETTER TRAINING PROGRAM
It has been notified that the training programs of BAL is not adequate. Special marketing
training should be given to employees for motivating customers. The training programs of
bank should include modern techniques to improve decision-making and inter-personal as
well as individual needs of an employee.
8.1.2 ENHANCED CUSTOMER SERVICES
Constant improvement in customers services is needed in todays competitive environment.
Personalized banking should be introduced to attract more customers. Equal respect should
be given to all customers.
Computerized Telephone Banking System
The satisfaction with convenient, secure and time saving way of banking. Just on phone call
the customers can always remain in touch. This latest computer service, which truly brings
banking to home, offices and can ensure the security of account by providing with a user ID.
With the help of this facility one can get the facilities of account balance, transaction history
and foreign currency exchange rates etc by just one phone call.
8.1.3 BETTER COMMUNICATION
The management of BAL should concentrate on improving upward communication to have
better feedback system involvement in bank operations.
Introduction of Management by Objectives (MBO)
The concept of MBO should be introduced in the bank where the subordinates should be
expected to formulate objectives for themselves.
This will ensure the setting up of objectives according to the capabilities of individuals. In
addition to this, it will also help in achieving the goals because they are involved in the
process of goal setting.
8.1.4 PROPER JOB ANALYSIS
A detailed and systematic study of the job should be done to know the nature and the
characteristics of the people to be employed. This will help in identifying the training needs,
evaluating the job and in appraising the performance of the employees.
8.1.5 ELECTRONIC DATA PROCESSING AUDIT
In BAL no audit is carried out on the bank computer system. There should be Electronic Data
Processing (EDP) audit so that any material discrepancies resulting from fraud or error can
be deducted.
As a matter of personal policy, personnel department should prepare a career plan showing
their future growth potential, depending on the job performance and evaluation which should
be made known to the employees. In this regard, the employee should be given opportunities
to show their performance.
The working area is comparatively smaller as compared to the needs of the branch. As a
result there is a lesser working space provided to employees. They have to work about eight
hours and sometime even longer. The congested place effects their efficiency at work. It is
suggested that better working conditions should be provided for effective and efficient
output.
8.1.6 PROMOTION AND PUBLICITY
BAL relies heavily on personal banking, thus it does not give proper attention to the more
sophisticated methods of promotion. Although billboards are displayed in different parts of
the city, yet no proper advertisements have ever appeared in the dailies. The web site too
does not give complete information and unique features, which give its edge over the market.
So they should adopt strong strategies for promotion and publicity of their services they
offer.
International Banking
BAL should expend its branches not only in Pakistan but also outside the country to fulfill
their mission statement.
8.1.7 MARKET VISITS
A very useful mode of contact is through personal market visits. Such visits have other
important by products such as information about the customer financial and business
position, about his market reputation and creating a feeling of importance in the mind of
client. Such visits should be properly planned and documented with regularity and
consistency. The BAL assigns this task to its new recruited employees and rely on their
reports. But market specialists should also be send to market for analysis.
8.1.8 SEPARATION OF ACTIVITIES
There is no separation of activities as such. A function of clearing is partially done in deposit
department and partly in account department. This creates confusion and conflict in decisionmaking. To avoid such confusions, the functions of clearing be done in one department. This
separation of activity will help greatly in reducing confusion also added in efficiency and
effectiveness.
8.1.9 USE OF MOTIVATORS
To motivate employees, individuals must have a job with a challenging content that is a job
with responsibilities for achievement, recognition, advancement and growth. Such motivators
should be used for efficient working.
Latest software and hardware should be introduced in the bank so that the data processing
speed of the computers can be enhanced.
Along with big depositors, small depositors should be given proper attention and care to
encourage saving in the country.
Awareness to Employees
All employees of BAL at every level must be aware of basic mission, values & objectives of
the organization, so that they can perform best to their abilities and ensure that BAL continue
to be recognized favorably at home & abroad.
A big portion of the home remittance is send by Pakistan working capital through BAL. A big
portion of that amount is wasted by purchasing luxury items. BAL should motivate the
people towards savings by offering the deposits through various investment schemes & the
rate of profit should be increased by 1% to 2% then other banks. This will be a profitable step
for the bank.
8.1.10 EMPLOYEES TRAINING AND DEVELOPMENT
Refresher courses for the staff are most important in any international organization. Every
employee should have these courses according to their requirement. Foreign experts can also
be called for this purpose.