Internship Report Dubai Islamic Bank:

ACKNOWLEDGEMENT

First of all I am thankful to "ALMIGHTY ALLAH" Who gave me the strength, patience, courage
and enthusiasm needed to write and complete this report, and countless salutations to upon the
Holy Prophet Muhammad (PBUH), the sea of knowledge who has guided His Ummah to seek
knowledge from cradle to grave.
Then to my friends who assisted me in this effort and we worked daylong to accomplish this
assignment. I have a debt of gratitude to all my teachers who taught me throughout my academic
career.
The preparation of this report was a massive undertaking but the highly competent and
experienced bankers of DIBPL, F-10 Markaz Branch Islamabad provided me with all assistance,
information, advice and suggestions that I needed which contributed importantly to this report.

1. EXECUTIVE SUMMARY
As per the requirements for the degree of MBA at UOS M.B.Din campus, I got an opportunity to
get eight weeks internship exposure. Dubai Islamic Bank, F-10 Markaz, Islamabad provides me
the chance to have this experience with a prestigious institution. During my internship I was
rotated in the various departments in order to get in depth idea of how the bank functions. This
report thoroughly outlines and explains my observations, findings and analysis and my
knowledge of the banking sector in general and Dubai Islamic Bank in particular.
In this report, there is an introduction of Dubai Islamic Bank. In introduction, there is history of
Dubai Islamic Bank, strong commitment and loyal service, highly trained professionals, and
credit rating. The report also includes the details of the products offered by DIBPL which
includes Takaful plan and other Islamic Compliance products. This report also focuses the
general banking of DIBPL which includes Cash department, Remittances section, Account
opening, Debt cards etc.
Subsequent to it this report contains my experience and learning that what I have learned from
this internship and what was my experience regarding this internship. The report also contains
my analysis that I scrutinize in the organization by using two method SWOT and Financial
analysis. With the help of these methods I have some suggestions and recommendations to
improve the performance of the Bank, which also mentioned in this report. By following these
suggestions bank can improve their product market and can easily gain the attraction and
satisfaction of customers. Not only the customers, bank also can improve the satisfaction and
performance level of its employees by these suggestions.

2. OBJECTIVES OF STUDYING THE ORGANIZATION

Overview
After the completion of degree MBA (Banking & Finance) I want to enter and check the
practical work according to my specialization. For that purpose I selected the banking sector
because I have done specialization in banking and finance.
Second and next main objective of studying organization; I want to enter in practical field and
want to learn that which discipline is required for leading a successful future life. I think I am
very lucky person that I selected Dubai Islamic Bank as my learning organization.

Objectives that I want to achieve

Objectives that I want to achieve by studying the organization are as follows:

First of all I want to check the practical work according to my degree specialization.
During my internship in Dubai Islamic Bank I have learnt that how to use the knowledge in
practical field.
Secondly I want to learn that how to manage an organization and how to manage the
finance for a financial organization, as my degree is related to Financial Management and
Banking and Finance.
Customers dealing is another major objective that I want to achieve. During my
internship I learnt that how to deal with customer.
Financial institution is a place where every type of businessmen visits, so during my
internship in DIBPL I met with many businessmen and learnt that how different businesses run.
And another main objective that I want to achieve that how an organization consist with
different departments and how different functions are done in different departments of an
organization.
Through this internship I learned many things. It was a great experience for me to comprehend
the working environment. During this period I face different types of working conditions, which
will help me to know that, how to handle these conditions in future. Through this internship I am
able to do work in all departments of Bank because I know all rules, policies, and
responsibilities, which mentioned in DIBPL departments and products of these departments so I
achieved 80% of my objective
3. OVERVIEW OF THE ORGANIZATION
Dubai Islamic Bank is the leading Islamic bank operating in Pakistan. Its balance sheet size is
improving with the passage of time. It has redefined its role and has moved from a public sector
organization into a modern Islamic bank. The Bank's services are available to individuals,
corporate entities. While it continues to act as investor of public funds and it has diversified its

business portfolio and is today a lead player in the debt equity market, corporate investment
banking, retail and consumer banking, treasury services and is showing growing interest in
promoting and developing the country's small and medium enterprises and at the same time
fulfilling its social responsibilities, as a corporate citizen.
In today's competitive business environment, DIBPL need to redefine its role and shed the public
sector bank image, for a modern Islamic bank. It is listed in Securities and Exchange
Commission of Pakistan in 2006.
Dubai Islamic Bank is today a progressive, efficient, and customer focused institution. It has
developed a wide range of consumer products, to enhance business and cater to the different
segments of society. Some schemes have been specifically designed for the low to middle
income segments of the population.
It has taken various measures to facilitate overseas Pakistanis to send their remittances in a
convenient and efficient manner. More recently it has started Electronic Home Remittances
Project. This project introduces technology based system to handle inward remittances
efficiently, by ensuring that the Bank's branches keep a track of the remittance received from
abroad till its final receipt. A number of initiatives have been taken, in terms of institutional
restructuring, changes in the field structure, in policies and procedures, in internal control
systems with special emphasis on corporate governance, adoption of Capital Adequacy Standards
under Basel II framework, in the up gradation of the IT infrastructure and developing the human
resource. Dubai Islamic Bank has built an extensive branch network with 36 branches in
Pakistan. The Bank's financial performance has been remarkable. In 2006, total assets are
estimated at Rs 8434280000, while deposits have grown to nearly Rs 4322621000. The increase
in profit was achieved through strong growth in core banking income. The Bank maintains a
sound loan portfolio diversified in nature to counter the risk of credit concentration.

3.1 HISTORY OF DUBAI ISLAMIC BANK PAKISTAN LTD.

Thirty years ago Dubai Islamic Bank created history by becoming Worlds first Islamic Bank.
Today Islamic Banking has become one of the fastest growing economic sectors with over 300
financial institutions; with assets estimated over at 300 billion US Dollar providing Islamic
Financial Services. Despite huge growth to the sector DIB is continued to be the pioneer and
leader to date. Since its inception DIB has evolved retail bank to a fully-fledged bank catering to
almost all the requirements of the customers in providing to Sharia Compliant solutions locally
and internationally. It has constantly upgraded its services to individuals and companies who
always remain a valuable asset.
By combining the best Islamic traditional values with high standards technology and innovation,
DIB is committed to comply with not only fully transactions of financial dealings. DIB is also
committed to provide customer-satisfaction oriented job.
For its outstanding performance and contribution for Islamic financing, DIB received the best
Islamic Bank award in the Middle East Award 2006; by both Euro moneys Islamic Finance

Weekly and Gulf Wealth Forum. DIB has also awarded the bank of the year 2006 Banker
Awards.
DIBPL has started its operations since 2005. At that time the scale of business and number of
branches were very short. But just within the time period of five years, now DIB has an
extensive network of branches, a wide range of Islamic Compliant Products, well-managed
communication system and good return from operations.
3.2 NATURE OF THE ORGANIZATION
Dubai Islamic Bank Pakistan Ltd. is a public Organization. It implements the policies of SBP. Its
basic objective is to maximize the profit. It has major impacts on Pakistan economy with special
emphasis on fostering Pakistan's economic growth through aggressive and balanced lending
policies, technologically oriented products and services offered through its network of branches.
It deals with Revenue, collection and payments of salaries. It is a complete Islamic, retail and
corporate bank as well.
The Dubai Islamic Bank is an Islamic institute which offers a variety of products according to
the Sharia principles and instructions. All the products and services are regulated by Sharia
Board. If they find someone violating the rules, they penalize. The Dubai Islamic Bank makes
different adjustments to update business operations.
The Bank has also played an important role in financing the countrys growing trade, which has
expanded through the years as diversification took place. Dubai Islamic Bank Pakistan Ltd.
maintains its position as Pakistan's one of the premier bank determined to set higher standards.

3.3 BUSINESS VOLUME

Dubai Islamic Banks business volume is expanding day by day and now it becomes leading
bank of the Islamic Banking Sector. The authorized capital of the Bank is Rs.6776 million
divided into ordinary shares of Rs 10 each. The Bank is a subsidiary of Dubai Islamic Bank
PJSC, UAE (The holding Company).
FIVE YEARS PERFORMANCE OF DIB
Table: Business Volume

Years

2005

2006

2007

2008

2009

497

8434

21308

32050

35368

Deposits (Rs in Million)

4322

16114

25459

27981

Advances (Rs in Million)

3274

11348

18074

20590

Investments

833

2974

3019

2823

418

3917

5126

6018

6776

Pre-Tax Profit/ (Loss) (Rs in Million)

-633

-568

-272

352

After-Tax Profit/ (Loss) (Rs in Million)

-412

-369

-182

277

Total Assets

Shareholder' Equity

Earning Per Share (Rs)

-2.09

-0.89

-0.35

0.38

Number of Branches

10

17

25

36

120

225

350

470

722

Number of Employees

DIBPL top line (operating revenue) is 352 million in 2009 which is showing a unique
achievement of this organization. In 2008, the DIB was suffering loss of 272 million due to
heavy investment in infrastructure and other resources. DIB has improved its growth by over
200%. In 2007, the bank was suffering a loss of 568 million which is more than twice from 2008.
These trends show that how efficiently and effectively working and improving its standards by
offering a wide variety of Islamic Compliant products and by bringing innovations. Despite of
profitability trends, here we can also see the flow of deposits, advances and investment. The
earning per share loss is recovered by the bank with very rapid approach.

3.4 NUMBER OF EMPLOYEES

DESIGNATION
NO OF EMPLOYEES
President
1
Senior Executive vice president
1
1
Executive vice president
1
Vice president
1
Assistant vice president
36
Branch Manager
36
36
Manager Operations
15
Credit Manager
36
Manager Finance
20
Manager Marketing
15
36
Manager Foreign Exchange
80
Manager Consumer Finance
75
Legal Advisor
50
IT Officer
68
94
Cash Officer
95
Accounts Officer
_______

Clearing Officer

722

BDO
Teller
TOTAL

ORGANIZATION CHART OF DUBAI ISLAMIC BANK PAKISTAN LTD.

DESIGNATION FOR HIGHER LEVEL OFFICE
PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE

VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

GRADE I OFFICER

GRADE II OFFICER

GRADE III OFFICER

3.5 PRODUCT LINES & SERVICES

3.5.1 PRODUCTS OF DIBPL:

Products of bank include all those services which a customer can use effectively in his general
and business. Dubai Islamic Bank Pakistan Ltd. F-10 Markaz branch offers a wide range of
banking services to public and private sector corporations, partnerships, individuals and others.
3.5.1.1 Current Account
Dubai Islamic Bank Pakistan Ltd. is offering current account facility for its valued customers.
This type of account is suitable for businessmen and those customers who need financing with
regular intervals. Because they make receipts and payments in large quantity.
3.5.1.2 Regular Savings Account
DIBPL is offering another type of account which is named by regular savings account. DIBPL is
paying profit on this type of account according to volume of deposit. And another attracting
option is that profit is offered on monthly, quarterly, semi-annually and annually basis.
3.5.1.3 Saving Plus Account
Another type of account which DIBPL is offering is saving plus account. On this type of account
DIBPL is giving profit on comparatively higher rates than regular.
3.5.1.4 Saving Special Account
This is another type of account is offering by DIBPL to facilitate its valued customers. This type
of account has some special characteristics as compared to regular and plus. The profit margin is
higher than other types of accounts.

3.5.1.5 Fixed Deposit/ Term Deposit

DIBPL is offering fixed deposit account according to the Sharia principles. Here in fixed deposit
account deposited amount is invested and finally share of profit or loss is distributed between
bank and customer.
SERVICES OF DIBPL

Services are output of the firm, which are in intangible form and the back bone of any
organization to earn profit. However, there are some basic services which DIBPL, F-10 branch at
present offers to his customers include:
Receipts of customer's deposits
Collection of his cheques drawn on other banks
Making payments through cheques drawn on it
Making remittances
Foreign trade service

3.5.2 International Banking

Dubai Islamic Bank Pakistan Ltd. is at the forefront of international banking in Pakistan, which
is proven by the fact that DIBPL has its branches in all of the major financial capitals of the
world. Additionally, we have recently set up the Financial Institution Wing, which is placed
under the Risk Management Group. The role of the Financial Institution Wing is: To effectively manage DIBPL exposure to foreign and domestic correspondence manage the
monetary aspect of DIBPLs relationship with the correspondents to support trade, treasury and
other key business areas, thereby contributing to the banks profitability.
3.5.2.1 DEMAND DRAFTS:
It is a safe, speedy and reliable way to transfer money; customers can now purchase DIBPLs
Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or
not, can purchase a Demand Draft from a bank branch.

3.5.2.2 MAIL TRANSFERS:

Money is safely and quickly moved by using DIBPL Mail Transfer service. And DIBPL also
offered the most competitive rates in the market.
3.5.2.3 PAY ORDER:
DIBPL provides another reason to transfer money using its facilities. Pay orders are a secure and
easy way to move money from one place to another. And as usual, charges for this service are
extremely competitive.
3.5.2.4 TRAVELER'S CHEQUES:
Negotiability: Pak Rupees Travelers Cheques are a negotiable instrument.
Validity: There is no restriction on the period of validity.
Availability: At 36 branches of DIBPL all over the country.
Encashment: At all branches of DIBPL.
Limitation: No limit on purchase.
Safety: DIBPL Travelers Cheques are the safest way to carry money.
3.5.2.5 LETTER OF CREDIT:
DIBPL is committed to offering its business customers the widest range of options in the area of
money transfer. In a commercial enterprise Letter of Credit service is just what customers are
looking for. With competitive rates, security, and ease of transaction, DIBPL Letters of Credit are
the best way to do business transactions.
TRADE FINANCES & OTHER BUSINESS LOANS
3.5.3 CORPORATE FINANCE:

3.5.3.1 Working Capital and Short Term Loans:

DIBPL specializes in providing Project Finance Export Refinance to exporters Pre-shipment
and Post-shipment financing to exporters Running finance Cash Finance Small Finance
Discounting & Bills Purchased Export Bills Purchased / Pre-shipment.
3.5.3.2 Medium term loans and Capital Expenditure Financing:
DIBPL provides financing for its clients capital expenditure and other long-term investment
needs. By sharing the risk associated with such long-term investments, DIBPL expedites clients
attempt to upgrade and expand their operation thereby making possible the fulfillment of our
clients vision. This type of long term financing proves the banks belief in its client's
capabilities, and its commitment to the country.
3.5.3.3 Loan Structuring and Syndication:
Dubai Islamic Bank Pakistan Ltd. leadership in loan syndicating stems from ability to forge
strong relationships not only with borrowers but also with bank investors. Because syndicate
partners understand the asset criteria, DIBPL help borrowers meet substantial financing needs by
enabling them to reach the banks most interested in lending to their particular industry,
geographic location and structure through syndicated debt offerings. Syndication capabilities are
complemented by capital strength and by industry teams, who bring specialized knowledge to the
structure of a transaction.
3.5.3.4 Cash Management Services:
With DIBPL Cash Management Services (in process of being set up), the customers sales
collection will be channeled through networking of DIBPL branched spread across the country.
This will enable the customer to manage their companys total financial position right from
desktop computer. They will also be able to take advantage of outstanding range of payment,
ejection, liquidity and investment services. In fact, DIBPL is committed to provide everything,
which takes to manage cash flow more accurately.
3.5.4 SHORT TERM INVESTMENTS:
DIBPL now offers excellent rates of profit on all its short term investment accounts. Whether the
funds are invested for 3 months or 1 year, DIBPLs rates of profit are extremely attractive, along
with the security and service only DIBPL can provide.
3.5.5 EQUITY INVESTMENTS:
DIBPL has accelerated its activities in the stock market to improve its economic base and restore
investor confidence. The bank is now regarded as the most active and dominant player in the
development of the stock market. DIBPL is involved in the following:
Investment into the capital market
Introduction of capital market accounts (under process)

 DIBPLs involvement in capital markets is expected to increase its earnings, which would result
in better returns offered to account holders.

4. ORGANIZATIONAL STRUCTURE
4.1 STRUCTURE OF THE DUBAI ISLAMIC BANK PAKISTAN LTD.
In Dubai Islamic Bank, the head is called Chairman of the Bank. And after Chairman there is
Six Broad of Directors. Dubai Islamic Bank has Eleven Groups which control the working of the
Divisions, Wing, Department, Section and Regional of the Dubai Islamic Bank. In DIBPL,
Department is called Wings.
4.2 ORGANIZATION HIERARCHY OF DIB F-10MARKAZ BRANCH

I worked in Dubai Islamic Bank Pakistan Limited as an internee for two months. During
internship, I rotated in different departments where I learned about these departments. The
branch manager monitors the whole branch to develop efficiency and effectiveness. The different
department's details are listed below.
There are seven departments are operating in F-10 Markaz Branch. In deposits section, various
kinds of deposits are made in routine and reported to head office. The deposit section is very
efficient and active. In remittances section deals with external and internal remittances to
facilitate the customers. Remittances are transferred through pay order, bank draft and telegram
transfer. In clearance department, cheques are cleared through clearing house by using the
facility of NIFT.
In advances department, bank makes different kind of advances and offer attractive Islamic
compliance products to attract customers. In other departments, HR department functions the
recruitment, performance appraisal, training and other relevant jobs. In cash department, the
collection and payment of cash is made.
(NOTE: Organogram is attached in annexes.)
4.3 VARIOUS DEPARTMENTS DETAILS
DIBPL have a different department so I am going to explain the performance of every
department.
4.3.1 CASH DEPARTMENT
Cash department performs the following functions
4.3.1.1 Receipt
The money, which either comes or goes out from the bank, its record should be kept. Cash
department performs this function. The deposits of all customers of the bank are controlled by

means of ledger accounts. Every customer has its own ledger account and has separate ledger
cards.
4.3.1.2 Payments
It is a bankers primary contract to repay money received for this customers account usually by
honoring his cheque.
4.3.1.3 Types of Cheques
Some specific types of cheque are being entertained in the clearing department of
DIBPL.

LOCAL CHEQUE
By local cheque we mean collection of cheque from the banks which are the members of the
clearinghouse and which are located within the city.
OUT STATION CHEQUE
By out station cheque we mean collection of cheque from the banks which are situated outside
the city. It means that presenting bank and the bank on which the cheque is drawn are not
situated in the same city.
4.3.2 CLEARANCE DEPARTMENT
A clearing house is an association of commercial banks set up in given locality for the purpose of
interchange and settlement of credit claims. The function of clearinghouse is performed by the
central bank of a country by tradition or by law. In Pakistan, the clearing system is operated by
the SBP. If SBP has no office at a place, then NBP, as a representative of SBP act as a
clearinghouse.
The easy, safe and most efficient way is to offset the reciprocal claims against the other and
receive only the net amount owned by them. This facility of net inter bank payment is provided
by the clearinghouse.
The representatives of the local commercial banks meet at a fixed time on all the business days
of the week. The meeting is held in the office of the bank that officially performs the duties of
clearinghouse. The representatives of the commercial banks deliver the cheques payable at other
local banks and receive the cheques drawn on their bank. The cheques are then sorted according
to the bank on which they are drawn. A summary sheet is prepared which shows the names of the
banks, the total number of cheques delivered and received by them. Totals are also made of all
the cheques presented by or to each bank. The difference between the total represents the amount
to be paid by a particular bank and the amount to be received by it. Each bank then receives the
net amount due to it or pays the net amount owed by it.
2.2.1 In-word clearing Books:

The bank uses inward clearing register for the purpose of recording all the details of the cheques
that the other banks have issued on the bank.
2.2.2 Out-Word Clearing Books:
The bank uses outward clearing register for the purpose of recording all the details of the
cheques that the bank has delivered to other banks.

4.3.3 ADVANCES DEPARTMENT

DIBPL give loans to the borrowers for different purposes. These loans are given for various
sectors for different periods. Small Finance, Cash Finance, Personal Loans, Demand Finance,
Running Finance, Corporate Finance, Export Import Financing, House Building Finance.

4.3.4 REMITTANCE DEPARTMENT

Another important department in the bank is remittances. People send their money to the other
persons and organizations through various way i.e. Bank draft, Telegraphic Transfer, Mail
Transfer, Coupons, Govt. Draft and Western Union Money Transfer etc. It works both inward
and outward.
DIBPL offers the following forms of remittances.
Demand Draft
Telegraphic Transfer
Pay Order
Mail Transfer
Safe custody of specimen signature book
Preparation of periodical statements
Any other work/ duty assigned by manager
4.3.5 DEPOSITS DEPARTMENT
Customers keep their savings in PLS Saving Accounts and businessmen save their money in
bank Current Accounts. DIBPL gives profit on saving accounts and special saving accounts.

4.3.6 FOREIGN EXCHANGE DEPARTMENT:

This department mainly deals with the foreign business. The main functions of this department
are:
a)

L/C dealing.

b)

Foreign currency accounts dealing.

c)

Foreign Remittance dealing.

DIBPL is committed to offering its business customers the widest range of options in the area of
money transfer. If you are a commercial enterprise then our Letter of Credit service is just what
you are looking for. With competitive rates, security, and ease of transaction, DIBPL Letters of
Credit are the best way to do your business transactions
This department deals with the foreign currency accounts which mainly include dollar account,
euro account etc.

4.3.7 PRIVILEGE BANKING DEPARTMENT

4.3.7.1 Online Banking
This department is functioning only in online branches in the bank. This is a fast track banking
system in modern banking. DIBPL is also trying to enhance this facility for their customers.
4.3.7.2 Utility Services
Keeping in view the difficulties faced by general public DIBPL has taken the initiative to provide
service for collection/receipt of utility bills on behalf of WAPDA, Sui Gas and PTCL from 9.00
am to 5.00 pm all the branches throughout the countries are observing this practice to ease the
long queues lined-up at the counters of banks.

4.3.8 COMPLIANCE DEPARTMENT

Role of branch compliance department is to reconcile the prescribed frequencies, investigate
long pending reconciliation item, and ensure correct treatment every half year and clearing
system service branch-in major cities. Internal control is the integration of the activities, plans,
attitudes, policies and efforts of the people of the bank working together to provide reasonable
assurance that the organization will achieve its objectives and mission.
4.3.9 HUMAN RESOURCES MANAGEMENT DEPARTMENT
Human Resources Management Department works for the betterment of the employees.
Enhances skills, training management, service benefits, wages, medical facilities, staff loans are
basic functions of this department.

4.3.10 INFORMATION TECHNOLOGY DEPARTMENT

Banks data collection and information system run by Regional Data Collection Center. This
department manages staff training programs regarding computer.
4.3.11 ISLAMIC BANKING
The year 2005 marked the first year of Islamic banking operations. During the year under review,
in addition to active participation in various Sukuk transactions, DIBPL has extended its Islamic
Banking Operations Network.
5. STRUCTURE OF FINANCE & ACCOUNTS DEPARTMENT

Accounts department is a backend department at Dubai Islamic Bank,-10 Markaz; Islamabad

performs the following Accounting Operation:
Reports
It generates reports like Statement of Account Activity (a report on the activity of all
accounts), Statement of Affairs (a report on the assets and liabilities), Statement of Foreign
Exchange (a report on the foreign exchange currencies at the bank) and Statement of Profit and
Loss (a report on the income and expenditures of DIBPL, F-10 Markaz Branch, and Islamabad).
These reports can be generated at daily, weekly, monthly, quarterly or yearly basis as required by
the bank.

Income and Expense

The department also needs to calculate the revenues and expenses, control expenditure and
forecast profits every month.

Budget
Formulation of yearly budgets & targets in consultation with the branch manager is also done by
the accounts department.

Activity Checking
Daily activity checking and monitoring is done by the accounts department of the whole bank.
Storage of Records

Accounts Department also has the duty to store vouchers and system generated reports.
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.

5.3 The role of financial managers in establishing relationship

This is a senior role and the Relationship Manager will manage a portfolio of complex borrowing
corporate clients as well as being the primary point of contact for the banks relationships with the
Hedge Fund Sector. The role will report to the Head of Corporate Banking.
The ideal candidate will maximize opportunities to strengthen and leverage existing relationships
as well as continue to maintain and ensure high levels of customer satisfaction and retention all
the while generating new recommendations. The successful candidate will be experienced in
developing growth plans and expanding the divisions borrowing and non-borrowing
relationships within the hedge fund sector.
Strong working knowledge of commercial banking products, loan agreements, security and other
credit requirements, particularly with respect to the mutual and hedge fund sectors is preferred.
Essential qualifications include at least 10 years banking experience with at least 5 years in a
direct commercial customer contact role: in depth experience in structuring financing
transactions with the mutual and hedge fund sectors; experience in structuring financing
transactions with the property sector will be considered an asset. Financial manager in
establishing relationship always gives priority of his organization these benefits:
Maximization of profit.
Earning per share maximization.
Increase of sale
Welfare
Reduce in cost
Maximization of shareholders wealth.

5.4 Use of Electronic data in Decision-making

In todays contemporary business, critical and timely decision making is a must and important
too. Todays bank use sophisticated softwares that not only help in operations but also improves
decision making by providing different reports, which can produced at different periods of time,
that can help employees at every level of the banks administration.
5.4.1 Technical Methods that Affect the Industry

The banking industry of Pakistan is at the forefront of modernizing its daily operations by
introducing the latest technologies in its operations. Some of the technical methods that are used
and affect the banking industry are as follows:
Advanced technological products and services

Automation of operational tasks

Decision making tools

5.4.2 Advanced technological products and services
Automatic Teller Machines (ATM) and ATM cards have been the biggest innovations that have
simply changed the way people today are now making their personal transaction. With ATM
cards, people can take out money from their accounts at any time, from any bank that they want
to, at their convenience.
ATM cardholders can take money out of their accounts, from any 1 link network ATM, the
largest ATM network of the country. Other ATM networks include Mnet and Cirrus. Today all
banks are members of 1 link, while most of them are members of Mnet and Cirus.
Internet Banking is another major technological product introduced by different banks of
Pakistan. With the help of internet banking, customers with the convenience of their own
personal computers can transfer money from their accounts, view their balances and a lot more.
5.4.3 Automation of operational tasks
Technical advancements have also impacted the daily operations of banks inPakistan. Online
transfer of money between branches has increased the efficiency of exchange of money between
different account holders of the same bank.
Simple tasks such as balance inquiry and bank statements have become as easy as a click of a
button with highly sophisticated information systems.
All banks today have their own information systems that they can use in almost all departments
like clearing, account opening, car leasing and remittances.
5.4.4 Innovation
Innovation is a must in modern times, as it will help banks to compete in todays highly
technologically advanced industry. Some of the innovations that the banking industry is looking
forward are:

More advanced means of connectivity between branches through better and advanced
software and hardware to maintain connections with banks in remote areas and during natural
calamities in Pakistan. These might include better connection through WiFi or WiMax, both new
technologies.

More advanced information systems in banks that are more secured than before to
eliminate any chances of fraud and which are even more user friendly to help employees to use
them not only to make critical decisions but also satisfy customer need in a more timely manner.

Advancements in online transfer from inter branch to an even more helpful inter bank
transfers.

Automation of simple operations task that will not only improve efficiency but also
reduce costs like stationery and
courier services, like automation of check books etc.

5.5 SOURCES OF FUNDS

2005
2007
2,233,671

2006

2008 2009
Bills Payable
Borrowings
Deposits & other accounts

12,723,830
129,714,891

(Data Source: DIB

Financial Statements

The analysis of the balance sheet of the bank shows that current liabilities increases over the
period of time, the increase in liabilities and increase in loan shows that company wants to have
more cash in hand rather than lending it to others and losing the return on that investment. As for
as the fixed liabilities of company are concern they are showing increasing trend and same is
case with the current and long term liabilities but the increasing trend in assets is lower than the
increasing trend in liabilities which in not a good position for the bank as shown in the table
borrowing are more increase in 2009.

5.6 GENERATION OF FUNDS

2005
2007
20,947,333
5,099,195
875,113

2006

2008 2009
Mark-up income
Non-mark-up income
Other income
(Data Source: DIB Financial Statements)

In generation of funds of DIB, the most important source is mark-up income. There are three
earning revenues. Banks earning are mark-up income, non-mark-up income and other income. In
2005, the mark-up income is 20947333 which show a good strength of DIBPL. With the passage
of time the revenue of DIBPL is increasing with good figures and market share. The revenue
generated by the DIBPL is invested in the market to maximize its market share and to increase its
profitability index. In last five years the trends in generation of funds are positive and
remarkable.
5.6 ALLOCATION AND MOBILIZATION OF FUNDS
Allocation and mobilization of funds refers to the composition of funds in different sectors. How
many funds are used in acquiring assets, to pay the short term and long term obligations, for
investment purposes, to expand the business volume, to acquiring latest machinery and updated
technology, to pay the dividend etc. The finance department of DIBPL allocates the funds in
different sectors according to the policies of the management. Allocation of funds provides a
track how funds shape inflow and outflow in DIBPL.

2005

19,708,518
3,183,957
35,503,196
83,931,400
4,280,504
-

2006

Cash&balanceswithtreasurybanks
Balanceswithotherbanks
Lendingtofinancialinstitutions
Investments
Advances
Fixedassets
Deferredtaxassets
Otherassets

2007

2008

2009

3,226,959

154,834,534248,313,793275,685,541
328,895,152348,990,764

In balance sheet of bank the most important item is earning assets. There are four earning assets.
Bank has strong earning assets like advances investments and lending to financial institutions has
major percentage in of assets of bank. In liability and equity analysis the borrowing from
financial institutions and deposits have major portion and reserve and share capital has major
portion in equity. Out of the three earning assets (lending to financial institutions, advances and
investments) only advances have recorded a growth while Lendings to financial institutions and
Investments fell respectively.

Analysis of balance sheet shows increase or decrease in each item as a percentage of assets
means that assets are chosen as key figure. As we have seen in the table the interest expense is
increasing with the turnover so the bank is more utilizing on advances. As for as the fixed
liabilities of company are concern they are showing increasing trend and same is case with the
current and long term liabilities.

6.0 FINANCIAL ANALYSIS

6.1 FIVE YEAR BALANCE SHEET
2005

ASSETS
19,708,518
3,183,957
35,503,196
83,931,400
4,280,504
-

2006

2007
(Rupees in 000)

2008

2009

Cash&balanceswithtreasurybanks
Balanceswithotherbanks
Lendingtofinancialinstitutions
Investments
Advances
Fixedassets
Deferredtaxassets
Otherassets

3,226,959

154,834,534248,313,793275,685,541328,895,152
348,990,764

LIABILITIES
2,233,671
12,723,830
129,714,891
1,899,480
-

Bills Payable
Borrowings
Deposits & other accounts
Sub- Ordinated loans
Lia against asset subj to finance lease
Deferred tax liabilities
Other liabilities

275,834
2,275,344

149,655,669

8
331,946,025NETASSETS
5,261,484
12,241,945
16,219,844
17,044,739

PRESENTED BY
2,500,000
1,008,772
860,300
6,387,372
4,369,072

240,849,667

Share capital
Reserve

263,443,596
7,464,126

312,675,30

Un appropriated profit
Surplus on revaluation of assets-net of Tax
12241945
16,219,844

7,464,126

12,241,945

17,044,739

6.2 FIVE YEAR PROFIT AND LOSS STATEMENT

2005

2006

2007

2009
(Rupees in 000)

2008

20,947,
333
6,559,3
98
14,387,
935
1,515,3
54
185,707
14,297

33,633,7
35
10,321,7
68
23,311,9
67

43,788,6
28

13,634,9
12
30153,
2,446,73 716
9
(245,88
1)
-

3,075,72
3

32,807
1,748,1
65
12,639,
770
5,099,1
95
1,273,8
63
1,008,9
88
875,113
8,257,1
59
20,896,
929
8,878,8
01
32,243

23,069
(709,461
2,223,92 )
7
21,088,0
5,28
40
4
2,37154
4,926,60 6
4
27,782,1
1,718,47 70
8
1,205,63 6,144,62
8
8
2,891,75
5
1,333,84
1,573,9 0
05
1,169,51
9,424,62 5
5
30,512,6
65
(4,464)
11,195,1
33
198,298

8,284_
8,919,3
28
11,977,6
01
11,977,6
01
4,950,0
00
847,958

627,618
12,162,8
92
39,945,0
62

63,206
11,456,6 13,443,4
37
41
19,056,0
28
(17,283)

208,327
19,056,0 13,634,
28
485
26,310,5
7,154,00 77
2
(15,729) (1,098,7
5,782,2 09)
26,310,5
29
77
6,195,3 291,291

50,569,4
81
16,940,0
11
33,629,4
70

60,940,798
23,884,768
37,058,030
10,590,565

373,249
4,723,08
4,000
4
____-___
10,970,814
(40,248) 26,087,216
7,925,370
39,899
2,878,932
4,722,73 3,969,057
5
395,427
28,906,7
35
1,707
1,245,369
6,781,68 16,415,862
3
42,503,078
3,263,24
6
18,171,198
1,042,82
747,521
7
583,361
2,341,69 19,502,080
0
23,000,998
23,000,998
(31,964) 11,762,650
147,363
(4,220,240)
13,544,8
45
7,542,40815,458
42,451,5 ,590
80
45,344,188
14,205,9
11
130,456
60,933,234
168,027
17.48
17,141
14,391,
079
28,060,5
01
28,060,5
01
8,311,50
0
391,497

Mark-up / return / interest

earned
Mark-up / return / interest
expensed
Net mark-up / return / interest
income
Provision against nonperforming advances
Provision for / (reversal of)
diminution in the value of
Investments
Provision against off balance
sheet obligations
Bad debts written off directly
Net mark-up /interest income
after provisions
i)
Non mark-up /
interest income
Fee, commission and
brokerage income
Dividend income
Income from dealing in
foreign currencies
Gain on sale of securities-net

Unrealized gain/(loss) on revaluation of investments

Classified as held for trading
Otherincome
Totalnonmarkup/interestincome
ii)

Non mark-up / interest expense

Administrative expenses
Other provisions / write offs
Other charges
Total non-markup / interest expenses
Extra ordinary / unusual items
iii)
Profit before taxation
Taxation - Current
- Prior years
- Deferred
iv)

Profit after taxation

Unappropriated profit brought forward

Transferred from surplus on revaluation of
fixed assets on account of incremental depreciation

Profit available for appropriation

Basic and diluted earning per share-after tax
(Data Source: DIB Financial Statements)
6.3 RATIO ANALYSIS
Ratios provide the means of showing the relationship, which exists between, figures of the
Balance Sheets and Income Statements. The analysis is undertaken to assess important
characteristics of business like liquidity, solvency and profitability. A study of these aspects
enables drawing conclusions as to financial requirements and capabilities of business units.
Ratios may be classified in a number of ways to suit any particular purpose. Different kinds of
ratios are selected for different types of situations. Some of the ratios calculated for DIBPL are
given below.
6.3.1 LIQUIDITY RATIO
Comparison gives an indication of the short-term debt paying ability of an entity. Since a bank is
also a business firm so to maintain adequate liquidity is also crucial to carry out business activity.
6.3.1.1 Current Ratio
It is used to measure the ability of an enterprise to meet its current liabilities out of current assets.
Current Ratio = Current Assets / Current Liabilities
2005

(Rupees in000)
2006
2007

2008

2009

Current Assets

340,134

7,550,223

19,425,608

29,526,710

33,228,530

Current liabilities

119,340

4,903,849

16,952,908

26,983,946

29,328,629

2.85

1.54

1.15

1.09

1.13

Current Ratio

CURRENT RATIO
INTERPRETATION
The current ratio of DIBPL, for the year 2009, is 1.13 times of current liabilities. It is good to
meet the short-term obligations, when compared with the current ratio 2008, which is 1.09 times

of current liabilities. The company should maintain minimum limit of current ratio for Bank
i.e.1.
6.3.1.2 Net Working Capital
Working capital compares current assets to current liabilities, and serves as the liquid reserve
available to satisfy contingencies and uncertainties. A high working capital balance is mandated
if the entity is unable to borrow on short notice. The ratio indicates the short-term liquidity of a
business and in determining if a firm can pay its current liabilities when due.
Net Working Capital = Current Assets Current Liabilities
(Rupees in 000)
2005
2006
2007

2008

2009

Current Assets

340,134

7,550,223

19,425,608

29,526,710

33,228,530

Current liabilities

119,340

4,903,849

16,952,908

26,983,946

29,328,629

Net Working
Capital

220,794

2,646,374

2,472,700

2,542,764

3,899,901

NET WORKING CAPITAL

INTERPRETATION
Net working capital of 2009 increases from year 2008. This is safety cushion to creditors. The
volume of net working capital is showing positive trends.
6.3.2 DEBT RATIOS / SOLVENCY RATIONS
Solvency is a companys ability to meet its long-term obligations as they become due. An
analysis of solvency concentrates on the long-term financial and operating structure of the
business.
6.3.2.1 Debt to Asset / Debt Ratio
Provides information about the company's ability to absorb asset reductions arising from losses
without endangering the interest of creditors.
Debt Ratio = Total Liabilities / Total Assets
2005

(Rupees in 000)
2006
2007

2008

2009

Total Assets

497,393

8,434,280

Total liabilities

119,340

4,903,849

Debt Ratio

0.2399

0.5814

21,308,247

32050073

35,368,894

16,952,908

26,983,946

29,328,629

0.7956

0.8419

0.8292

DEBT RATIO

INTERPRETATION
Creditors prefer low debt ratio, debt ratio shows that how much asset the company has to honor
their obligations. This ratio is increased from 0.8419 to 0.8292. This is a good for the company
because the company has 1 asset to pay 0.8292 debts.
6.3.2.2 Debt to Equity Ratio
Indicates how well creditors are protected in case of the company's insolvency. The debt to
equity is a significant measure of solvency since a high degree of debt in a capital structure may
make it difficult for the company to meet interest chargers and principal payments at maturity.
Debt to Equity Ratio = Total Debt / Total Stockholders Equity
(Rupees in 000)
2006
2007

2005

2008

2009

Total Debt

119,340

4,903,849

16,952,908

26,983,946

29,328,629

Total Equity

418,185

3,917,480

5,126,230

6,017,780

6,776,030

0.285

1.252

3.307

4.484

4.328

Debt to Equity
Ratio

DEBT TO EQUITY RATIO

INTERPRETATION
Debt to equity ratio is the relationship borrowed funds and owners capital and equity multiplier
is the relationship between total assets and total equity. But it is good that the ratio is decreasing
in 2009 than 2008. The overall leverage position is showing better trend as compare to previous
years.
6.3.3 PROFITABILITY RATIOS

This ratio shows that what percentage of net profit to the total income is.
6.3.3.1 Net Profit Margin
This ratio measures the firms profitability of sales/ interest earned after taking account of all
expenses and income taxes. This ratio can be calculated as:
Net Profit Margin = Net Profit / Revenue *100
(Rupees in 000)
2006
2007

2005
Net Profit

619,537

1,270,944

Revenue

2,094,733

3,363,373

29.57%

37.79%

Net Profit
Margin

1,702,234

2008

2009

1,903,377

1,545,859

4,378,862

5,056,948

6,094,079

38.87%

37.64%

25.37%

NET PROFIT MARGIN

INTERPRETATION
From the calculation it is very much clear that the performance of DIBPL is very good still to 2007. And
the trend is upward. It tells us a firms net income per rupee of revenue. As the trend is upward it
shows the high profits in revenue per rupee in case of DIBPL. It is because of high advances the DIBPL
has given to the people but in 2008 the ratio trend is downward which not good for DIBPL.

6.3.3.2 Return on Equity

Measures the income earned on the shareholder's investment in the business.
Return on Equity = Net Income / Average Total Equity
(Rupees in 000)
2005
Net Profit
(After Tax Profit)

2006

619,537

1,270,944

Total Equity

2,489,976

3,615,847

Return on
Equity

24.88%

35.15%

2007
1,702,234

2008

2009

1,903,377

1,545,859

5,304,464

6,927,063

8,136,700

32.09%

27.48%

18.99%

RETURN ON EQUITY

INTERPRETATION
It is decreasing every year with different rate. This condition is not good for DIBPL because
every investor want to earn high income on his investment.
6.3.3.3 Return on Total Assets
Measures the company's ability to utilize its assets to create profits.
Return of Total Assets = Net Income / Average Total Assets *100
(Rupees in 000)
2005
Net Profit
(After Tax Profit)
Total Assets

2006

619,537

1,270,944

55,323,146

57,771,911

1.12%

2.20%

Return on Total
Assets

2007
1,702,234

2008

2009

1,903,377

1,545,859

63,513,271

76,219,359

81,775,832

2.68%

2.50%

1.89%

RETURN ON TOTAL ASSETS

INTERPRETATION
The results show that the Return on Asset are decreased which show that the
DIBPL Assets are not properly utilize in 2009 or may be there are no proper
environment for Banking sector because in 2008 Pakistan face the economic
crisis.
6.3.4 BANK SPECIAL RATIO
6.3.4.1 Investment to Asset Ratio
Investment to Total Assets = Investment / Total Assets
(Rupees in 000)

2005
Investment
Total Assets
Investment to
Total Assets

2006

2007

2008

2009

113,930

832,925

2,974,087

3,019,266

2,822,723

497,393

8,434,280

21,308,247

32,050,073

35,368,894

0.14

0.09

0.08

0.22

0.10

INVESTMENT TO ASSET RATIO

INTERPRETATION
This ratio indicates that out of total asset how much bank utilize its asset for
further investing. This ratio in decrease in 2009, which is not useful for the
bank to enhance its revenues.
6.3.4.2 Advances to Deposit Ratio
Advances to Deposit Ratio = Total Advances / Total Deposit
2005

(Rupees in 000)
2006
2007

2008

2009

Total Advances

3,195,575

3,273,957

11,347,979

18,073,501

20,589,613

Total Deposit

4,655,717

4,322,621

16,114,461

25,458,910

27,980,906

Advances to
Deposit Ratio

68.64%

75.74%

70.42%

70.99%

73.58%

ADVANCES TO DEPOSIT RATIO

INTERPRETATION
Loans or advances are the major assets of a bank while deposits are major
liabilities of a bank. Higher ratio shows the better solvency of bank.
6.3.4.3 Cash to Deposit Ratio
Cash to Deposit Ratio = Cash / Deposit
(Rupees in 000)
2006
2007

2005
Cash
Total Deposit
Cash to Deposit
Ratio

2008

2009

944,465

719,833

1,992,425

2,691,572

2,932,264

4,655,717

4,322,621

16,114,461

25,458,910

25,980,906

20.29%

16.65%

12.36%

10.57%

11.29%

CASH TO DEPOSIT RATIO

INTERPRETATION
This ratio shows that how much cash you have to pay the liabilities (deposits). As this ratio
show that company has fewer amounts of cash than deposits. It also indicates that bank is
investing so the bank is enhancing its business. But at the same time it could be risk for
bank for liquidation.

6.3.4.4 Equity to Assets

Equity to Assets = Equity / Total Assets

2005

(Rupees in 000)
2006
2007

2008

2009

Equity
Total Assets
Equity to Total
Assets

418,185

3,917,480

5,126,230

6,017,780

8,136,700

497,393

8,434,280

21,308,247

32,050,073

35,368,894

47.50%

46.45%

24.06%

18.78%

19.16%

EQUITY TO ASSETS

INTERPRETATION
This ratio shows the position of equity in total assets of business. This ratio is in increasing
trend. But the bank should increase its equity by increasing the wealth of shareholders.

6.3.4.5 Equity to Deposits

Equity to Deposit = Equity / Deposits
(Rupees in 000)
2006
2007

2005
Equity

2008

2009

248,997

3,917,480

5,126,230

6,017,780

8,136,700

Total Deposits

655,717

8,322,621

16,114,461

25,458,910

25,980,906

Equity to Total
Deposits

37.97%

47.07%

31.81%

23.64%

31.32%

EQUITY TO DEPOSITS
INTERPRETATION

This ratio shows that how much equity part is there in total structure. The capital advocacy
requirement is 28%. The bank was not fulfilling the requirement in 2005 & 2006 but now
bank has 31.32%, which is good.

6.3.4.6 Earning Per Share

Earning Per Share = Net Income / No of Ordinary Shares
(Rupees in 000)
2005
2006

2004
Net Profit
(After Tax Profit)
No of Ordinary
Shares
Earning Per
Share (EPS)

2007

2008

619,537

1,270,944

1,702,234

1,903,377

1,545,859

49,241,062

59,089,274

70,907,129

81,543,198

89,697,510

12.58

21.51

24

23.34

17.23

EARNING PER SHARE

INTERPRETATION
As their earnings per common share is good year by year it mean that results of the ratio
indicate that firm has paid a handsome return on investment showing the profit generations.
Because the companys net income is increasing gradually. As shown above the bank basic
earning per share is increasing due to increase in net income. This shows how mush profit
each share has earned in any particular year. It is most important ratio for peoples who
decide about investing their money. Although it decreased in 2009 but the overall
performance is good.

6.3.3.3 Return on Total Investment

Measures the income earned on the shareholder's investment in the business.
Return on Investment = Net Income / Total Investment

2005

(Rupees in 000)
2006
2007

2008

2009

Net Profit
(After Tax Profit)

619,537

1,270,944

Total Investment

2,489,976

3,615,847

24.88%

35.15%

Return on
Investment

1,702,234

1,903,377

1,545,859

5,304,464

6,927,063

8,136,700

32.09%

27.48%

18.99%

RETURN ON INVESTMENT

INTERPRETATION
It is decreasing every year with different rate. This condition is not good for DIBPL because
every investor want to earn high income on his investment.

6.3.3.3 Return on Fixed Assets

Measures the company's ability to utilize its fixed assets to create profits.
Return on Fixed Assets = Net Income / Average Fixed Assets *100

2005
Net Profit
(After Tax Profit)
Total Fixed
Assets
Return on Fixed
Assets

(Rupees in 000)
2006
2007

619,537

1,270,944

55,323,146

57,771,911

1.12%

2.20%

2008

1,702,234

2009

1,903,377

1,545,859

63,513,271

76,219,359

81,775,832

2.68%

2.50%

1.89%

RETURN ON FIXED ASSETS

INTERPRETATION
The results show that the Return on Asset are decreased which show that the DIBPL Assets are
not properly utilize in 2009 or may be there are no proper environment for Banking sector
because in 2008 Pakistan face the economic crisis its assets to create profits.

6.4 VERTICAL ANALYSIS

In vertical analysis a significant item of a financial statement is used as a base value, and all
other items of the financial statement are compared to it. In balance sheet, total assets are
assigned 100%. Each asset account is expressed as a percentage of total assets. Total liabilities
and stockholders equity is also assigned 100%. Each liability and equity account is then net
income is given the value of 100% and all other amounts are evaluated in comparison to net
sales. The resulting figures are then given a common size statement.

Dubai Islamic Bank Pakistan Ltd.

Balance Sheet
Vertical Analysis (Rs 000)
For the year ended Dec 31, 200
2005

2006

2007

2008

2009

Cash & balances with

treasury banks
Balances with other
banks
Investments-net
Lending to financial
institutions
Advances- net
Operating Fixed assets
Deferred Tax Assets
Other assets-net

17.08
9.00
26.99
1.90
39.92
3.45
1.66
-

12.32
5.56
27.17
2.82
46.43
4.10
1.60

12.38
6.40
22.03
3.62
49.77
1.52
4.27

12.45
4.92
27.70
2.82
44.65
3.40
4.07

13.03
4.69
20.89
2.09
50.50
2.96
0.39
5.45

Total Assets

100

100

100

100

100

ASSETS

LIABILITIES

1.42
2.19
91.84
0.003
0.006
4.55

0.35
1.72
92.06
0.003
0.89
4.96

1.92
2.12
90.2
.002
0.43
5.80

1.09
1.68
91.65
0.005
0.78
4.79

1.45
5.65
87.36
.003
0.00
5.54

100

100

100

100

100

10.65
23.38
19.81
53.8
4
46.16

7.95
18.20
22.48
48.63
51.37

8.65
16.94
39.14
64.7
3
35.27

7.00
13.56
38.98
59.55
40.46

8.75
19.46
51.19
79.40
20.60

100

100

100

100

100

Bills Payable
Borrowings
Deposits & other
accounts
Liabilities against asset
subject to finance lease
Deferred tax liabilitiesnet
Other liabilities

Total liabilities
NET ASSETS
PRESENTED BY
profit

Share capital
Reserve
Unappropriated
Surplus on revaluation of assets

Total Liabilities and

Equity

Dubai Islamic Bank Pakistan Ltd.

Profit & Loss Account
Vertical Analysis (Rs 000)
For the year ended Dec 31, 200

Mark-up / return /
interest earned
Mark-up / return /
interest expensed

Net mark-up /
return / interest
income
Provision against nonperforming advances
Provision for diminution in
the value of Investment
Provisionagainstoffbalance
sheetobligations
Bad debts written off

2005

2006

2007

2008

2009

100
31.31

100
30.69

100
31.63

100
33.50

100
39.19

66.50

60.81

9.34
(0.08)
0.08
9.34

6.98
0.61
0.006
7.96

68.69 69.31 68.37

7.23
0.89
0.068
0.16
8.348

7.27
(0.73)
0.07
6.97

6.97
(1.61)
0.01
5.37

directly

Net mark-up
/interest income
after provisions
Non mark-up interest
income
Fee, commission
and brokerage income
Dividend income
Income from
dealing in foreign
currencies
Gain on sale of
securities-net
Unrealized gain/
(loss) on revaluation of
investments
Classified as held
for trading
Other income
Total non-markup /
interest income

60.34 62.34 63.00

Profit before
Taxation
years

Taxation Current
- Prior
- Deferred

Profit After
Taxation

52.85

24.34
6.08
4.81
-

14.65
5.11
3.58
2.58

13.93
6.56
3.02
2.65

13.41
6.45
2.06
4.67

13.21
3.16
6.64
1.04

4.17
39.40

4.68
30.60

(0.01)
1.42
27.57

(0.06)
0.29
26.78

0.21
0.23
26.54

83.95

70.64

28.09
0.33
0.03
28.46

26.21
0.41
0.85
31.73

55.49

38.91

99.74 92.94 90.58

Non mark-up / interest
expense
Administrative
expenses
Otherprovisions/
writeoffs
Othercharges
Totalnonmarkup/interest
expenses

57.16

42.38
0.15
0.04
42.57

33.29
0.59
0.19
34.06

30.48
(0.04)
0.47
30.92

57.17 58.88 59.66

23.63
4.04
(0.07)

21.21
(3.27)
0.87

19.72
1.20
0.14

16.44
0.77
0.64

19.03
(6.92)

27.60

18.87

21.06

17.85

12.11

37.64

26.68

29.43 40.01 38.60

Unappropriated
profitbroughtforward
Transferredfrom
surplusonrevaluationof
fixedassetsonaccountof
incrementaldepreciation

Profit
availablefor
appropriation

28.13
0.22

27.24
0.13

44.24
-

57.78 67.38 82.84

63.42
0.08

74.40
0.21

101.1
4

101.29

In balance sheet of bank the most important item is earning assets. There are four earning assets.
Bank has strong earning assets like advances investments and lending to financial institutions has
major percentage in of assets of bank. In liability and equity analysis the borrowing from
financial institutions and deposits have major portion and reserve and share capital has major
portion in equity. Out of the three earning assets (lending to financial institutions, advances and
investments) only advances have recorded a growth while Lendings to financial institutions and
Investments fell respectively.
Vertical analysis of profit and loss shows increase or decrease in each item as a percentage of
sales means that sales are chosen as key figure. As we have seen in the table the interest expense
is increasing with the turnover so the bank is more utilizing on expenses. Net Interest income
was 10% higher this year to Rs 37.058 billion owing to volume growth. The interest earned in
the 12 months of 2008 is 21% higher than that of 2008 but it was matched by more than
proportionate increase in the interest expenses, which rose by 41%. So in vertical analysis the net
interest income is decreased in 2009 as compare to 2008.
DIBPL directors give some of reasons in increasing in interest expenses.

Firstly, the banks have been imposed a minimum of 5% deposit rate on all the savings
schemes. This had previously been left at the banks' discretion as to how much they have to pay.
A few of the banks have also been penalized by the SBP for acting like cartel in deposits.

Secondly, there has been other attractive scheme from the National Savings, which offered
better rates and drained the liquidity from banking sector.

Furthermore, the economy was going through high inflation, so the people were not too
optimistic about saving in banks as the money was losing its value very fast.
Administrative expenses shows decreasing trend also the profit after tax is in decreasing position
during last two years, that position in not good for the company. Only profit available for
appropriation is increasing as compare to previous years, which is 101.29% in 2009.

6.5 HORIZONTAL ANALYSIS

In horizontal analysis different periods data is compared and in one year item is selected and
item is compared with the same category of item of next period. In this analysis the year should

be consecutive for the analysis and then percentage difference is taken to see the performance
over the period of time. This analysis is used to evaluate the trend in the accounts over the year.

Dubai Islamic Bank Pakistan Ltd.

Balance Sheet
Horizontal Analysis (Rs 000)
For the year ended Dec 31, 200
ASSETS

Cash & balances with treasury banks

Balances with other banks
Lending to financial institutions
Investments-net
Advances- net
Operating Fixed assets
Other assets-net
Total Assets

LIABILITIES
Bills Payable
Borrowings
Deposits & other accounts
Liabilities against asset subject to finance lease

Deferred tax liabilities-net

Other liabilities

Total liabilities
NET ASSETS PRESENTED BY
Share capital
Reserve
Unappropriated profit
Surplus on revaluation of assets

Total Liabilities and Equity

Dubai Islamic Bank Pakistan Ltd.

Profit & Loss Account
Horizontal Analysis (Rs 000)
For the year ended Dec 31, 200

Mark-up / return / interest earned

Mark-up / return / interest expensed

Net mark-up / return / interest income

Provision against non-performing advances
Provision for diminution in the value of Investment
Provisionagainstoffbalancesheetobligations
Bad debts written off directly

Net mark-up /interest income after provisions

Non mark-up interest income
Fee, commission and brokerage income
Dividend income
Income from dealing in foreign currencies
Gain on sale of securities-net
Unrealized gain/(loss) on revaluation of investments
Classified as held for trading
Other income
Total non-markup / interest income

Non mark-up / interest expense

Administrativeexpenses
Otherprovisions/writeoffs
Othercharges
Totalnonmarkup/interestexpenses

Profit before Taxation

Taxation Current
- Prior years
- Deferred

Profit After Taxation

Unappropriatedprofitb/ftransferred
Transfromsurplusonrevaluationoffixedassetsonaccountofincrementaldepreciation

Profitavailableforappropriation
The horizontal analysis of the balance sheet of the bank shows that current assets increases over
the period of time, the increase in cash and decrease in loan shows that company wants to have
more cash in hand rather than lending it to others and losing the return on that investment. as for
as the fixed assets of company are concern they are showing increasing trend and same is case
with the current and long term liabilities but the increasing trend in assets is lower than the
increasing trend in liabilities which in not a good position for the bank .as shown in the table
borrowing are more increase in 2009.
The horizontal analysis of Profit & Loss account of years 2007-2009 shows a continuous
decrease in mark up, non mark up and also there is a rapid and huge decrease in the profits in
2008. The administrative expenses have been decrease in 2008 but again it will increase in 2009.
The income after tax is decrease, which was 19% lower than the income earned in 2008. The
bank profits before tax are increasing trend, which is 18% higher than the previous year of 2008.
The management of the bank gives many reasons of the radical change in profitability. First of
all, adverse economic conditions domestically, the law and order, power shortages, record high
inflation, liquidity in the banking system, steep rise in interest rates, increase in government
borrowing from the central bank, rising import bill and resulting growth in fiscal deficit.
The interest expense is also increase in 2008-2009. The management give different reasons that
the banks have been imposed a minimum of 5% deposit rate on all the savings schemes. This had
previously been left at the banks' discretion as to how much they have to pay. A few of the banks
have also been penalized by the SBP for acting like association in deposits. Secondly, there has
been other attractive scheme from the Savings, which offered better rates and drained the

liquidity from banking sector. Furthermore, the economy was going through high inflation, so
people were not too optimistic about saving in banks as the money was losing is value very fast.
The provisions against non-performing loans were 124% higher as compared to 2007. The
advances recorded an increase because the bank was lending though very prudently due to
increasing NPLs (Non-performing loans). Along with the increase in Advances, the composition
has also changed a bit. A shift from long-term to short-term loans is observed.
7.0 ORGANIZATIONAL ANALYSIS WITH REFERENCE TO THE COMPETITORS IN
TERMS OF TOTAL ASSETS, TOTAL LIABILITIES AND TOTAL REVENUE
DIBPL is one of the leading Islamic Banks with Islamic compliant products. It has earned a good
market share in a very short span of time due to its efficient and effective management and
proactive market approach. There are a lot of its competitors in market trying to dominate its
market strength and share. Here DIBPL is compared with NBP and BAF in terms of its
total assets, total liabilities and total revenue etc.
Total Assets
Revenue

Banks
NBP
BAF
DIBPL

2009
40,354
262693423964
19,503
21,937
17,781

2008
32,58
5
17,85
8
12,56
5

Total Liabilities

Total

Rupees in Millions
2009

2009

19,393
15,365 15323
10,362

2008
14,68
7
12,32
4
8,542

2009
25,368
2536542,503
21,854 43,971
15,368

(Source: Annual reports of various banks)

As per the table, the total assets of NBP are 40354 million in 2009 which are maximum in
volume as compared to BAL and DIBPL. In 2009, the total assets of DIBPL are 17781 which
show a positive trend as compare to 2008. Similarly the trends of all banks from 2008 to 2009
are positive and show a good change in terms of quantity.
The volume of liabilities of NBP is higher as compared to other banks due to its extensive
branching and networking. The volume of all the banks shows positive trends from 2008 to
2009. This is because of new projects, increase in short term and long term liabilities.
The volume of NBP is high as compared to other banks like BAL and DIBPL in terms of
quantity due to its extensive products networking and the other reason is that because it plays the
functions as an agent of the government. DIBPLs volume of revenue is comparatively lower as
compared lower then its competitors. Because DIBPL has recently established in 2005 thats the
reason its volume of revenue is lower.
8.0 FUTURE PROSPECTS OF DIBPL
DIBPL remains committed to the interest of all stake holders including its employees, owners,
regulators and Pakistani nation. DIBPL has defined strategy on where and how want to proceed

2008
20,58
7
18,57
4
12,65
4

in the years to come. With the implementation of the new Core Banking Package, DIBPL will
completely automate its functions which in turn will appreciably enhance work efficiency.
DIBPL will continue to diversify customer segments thereby increasing product offering. DIBPL
committed towards the employees empowerment / development will continue DIBPL believe
that a motivated and well trained work force is necessary to ensure sustenance and growth. On
the business side its main focus would be to reduce non-performing loans and increase deposits.
DIBPL remain committed to its Vision, Mission & core values and its strategy for the future
includes recovery efforts and revival of non-performing loans, deposit mobilization,
consolidation of loans, expense management and tapping into untapped markets by increasing
our network both domestically and internationally. Customer service will remain its main focus
of Operations management.
Finally DIBPL extend its appreciation to the banks staff for their commitment, dedication and
hard work in achieving these excellent results. DIBPL would like to express its sincere reverence
to the Board members whose valuable guidance has always enlightened in decision making.
Finally DIBPL would like to express its appreciation to stakeholders, regulators and its valued
customers for their support and continued confidence in DIBPL.
(Source DIBPL annual report 2009)
9.0 WEAKNESSES OF THE ORGANIZATION WITH MAIN FOCUS ON FINANCIAL
MANAGEMENT
Customer Satisfaction: In DIBPL customer dealing is well, but during rush hour the customer
has to wait for a long time for their turn. Its quite hard for a new customer or potential customer
to get the required information.
Poor record management and filing system: During my internship I observed that filing
system of branch is not good. When certain record is needed the staff has to struggle to find it out
and a lot of time is wasted.
Unequal distribution of work: Work is not equally distributed. On one hand some employee
have to work all day without relaxing while some others have nothing to do at all. This not only
creates confusion among employees but also hurting and disturbing for overall setup of the bank.
And above all it results in dissatisfaction among customers as well.
Difference between theory and practice: A vast difference exists between theory and practice
and DIBPL has written procedure but practical work done by employees is a bit different from
written procedures.
Bank duty to maintain secrecy: They dont care about maintaining secrecy, especially during
the rush hours. They speak loudly about the account position and while getting clearance of
cheque the person can easily get the whole information from the ledge. The deposit clerk must be
careful while passing any cheque. In this regard another shortfall is in giving the information
about the balance on telephone.
Excessive paper work: It is notified that due to the lengthy procedure of paper work the bank
employee are over burdened. They are unable to give proper attention to the clients and face

difficulties in getting their job done. One reason for lengthy procedure and excessive paper work
in the bank is the lack of computerized technology.
More accounts fewer deposits: Efficient banking is one, which does not emphasize on number
of accounts but on greater amount of deposits. DIBPL is more interested in increasing its number
of account irrespective to its deposit.
Delegation of authority: Manager has very limited authority; he has to take the approval from
his management authority i-e. In case of advance he has to take the approval of general and
regional manager. The other problem is created, when the manager is not present in his office,
the customer having to wait for hours. This discourages both customer and officers because they
have to suffer a lot.
Lack of specialized training: DIBPL does not provide adequate facility of specialized training
to their staff. Training is generalized rather than specialized. As the worker finishes his training,
he is inducted into a specific field without having great deal of knowledge about the field.
.

10.0 CONCLUSION
DIBPL is an effectively operating and profit making organization and carrying out its activities
under a specified system of procedure. The main regulatory body is State Bank of Pakistan,
which provides policy guidelines and ensures that the money market operates on sound
professional basis. While the head office specifies the whole procedure of function and
operations. This procedure has been modernized with the passage of time with a view to
streamline the approach and underlying procedure for effective overhauling of its own
capabilities so as to bring them at par with international practices.
There are people who are motivated towards their work but on the whole, it seems like
employees do not work on time and enjoys wasting their time, which is a big hurdle in its way to
progress. Also working at the bank, I also found out that all the departments are not linked
together. Employees usually hide their work from other employees as its match going on and
whoever does the best would be awarded. That should not be the case. All the departments
should work as team not as individuals, so that the whole branch would get benefit out of it. So
there is a lack of teamwork, also due to this weakness of the branch, its customers are not
satisfied. I talked to many clients of the bank but most of them were not satisfied with the
services provided specially in the departments namely Account department, Cash department and
Bill collection section. So I would suggest to the employees to work whole- heartedly and show
keen interest in their work.

11.0 RECOMMENDATIONS AND SUGGESTIONS

Here I am giving some suggestions, which in my view can add some input for efficiency and
better performance of DIBPL as an organization in general and F-10 Markaz Branch in Particular
The recommendations are as follows:
In my opinion the process of a transaction should be short in order in save time for both
customers and the bank.
Staff strength should be enhanced and professional qualified persons should be recruited.
It is recommended that proper training be provided to the staff members that will ultimately
increase the performance of Bank over all.
It is suggested that promotion be given to the staff in due time and on the basis of performance to
provide job satisfaction.
The bank should spend more on renovation of the branches to improve environment and
atmosphere to attract the customers.
Sitting arrangement, air conditioning and new furniture should be facilitated
The Bank should introduce the computers software to cope the heavy load of work and better
control.
Extra counters should be established in order to facilitate during the rush days the difficulties
faced by the bank staff as well as the customers.
All Branches of the Bank must be online.
All the departments should be established separately.
Bank can increase its profit ratio by reducing extra expenditures and to enhance the volume of
advanced especially retail loans.
I done internship, I recommend that security level in the bank should be enhanced especially
where I got internship and operation of Mobile phones must not be allowed inside the Bank.
Bank should take step to establish separate counters for the old age employees and pensioners.
The Bank should locate new market for its operational activities in the country as well as abroad.
The Bank should increase profit rate on deposits and saving schemes especially for pensioners
and old age citizens.
For improvement of internal control and system the compliance wing and surprise inspection
system should work more effectively.
To avoid complaints and leaving the bank job number of staff should be enhanced and their
salaries should be leveled to the private/multinational banks.
Double shift system should be introduced to improve attitude and behavior of the employees.
Payment of salaries should be made separately to accommodate the valued customers and
depositors.
For collection of utility bills i.e. Electricity bills, Telephone bills, Water and Gas bills separate
cash receipt counter must be established.