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FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING
INTRODUCTION
Chapter I
1.0. INTRODUCTION
Definitions, Role, Objective, Impact, Limitations, Scope
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INTRODUCTION
1.1. INTRODUCTION
Trade Finance is one of the core departments of any bank. In modern banking it is well known as a main source of generating income for the bank. Trade Finance Department has two main sections, first is Imports and the second is Exports.
Trade Finance is not just important for the banks it is equal or more important for the country as well. There are multiple products and different of nature made by different countries which every country cannot make, due to its geographical location, resources availability, excess population, etc. Keeping this condition in mind, every country Imports its need or luxury for their people. The country who purchases is called the Importing country and the one who sells is called the Exporting country. The tool with which import and export are determined is called Balance of Payment and any excess or shortage among Imports and Exports are known as Trade Deficit or Trade Surplus. Trade Deficit is recognized when import exceeds export and Trade Surplus commences when export exceeds imports. It is important to note here, that with respect to Pakistan, Imports would have more importance rather than Exports, because Pakistan is an Import based country and a lot depending upon Imports to overcome shortage in the country.
1
Recently Trade deficit for Pakistan was calculated to be US$ 12.1 billion, for the period
of ten months ending April 2011, Exports over US$ 20 billion whereas Imports over US$ 32 billion (following links to be referred of Wednesday, May 11, 2011 and Friday, May 20, 2011). Islamic Banking has been emerging in this new era and it has grown very quickly in past
1 http://www.brecorder.com/pakistan/business-a-economy/13978-trade-deficit-narrows194pc.html http://www.brecorder.com/pakistan/business-a-economy/14865-exports-of-rs1722691million-recorded-in-10-months.html
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INTRODUCTION
few years, before the inception of Islamic Banking which is only 30 years old, trade business was followed by Conventional Banking only, which is more than 300 years old. After the proper inauguration of Islamic Banking, terminologies and products came into existence when they started making different transactions with different customers, different products like, Murabahah, Musharkah, Musawamah, Salam, Istisna and Mudarbah, etc. Topic here covers the main product of LC which contains these contracts of transaction and generation of profits and their performance analysis for the Trade Finance Department.
1.2. DEFINITIONS
1.2.1. ISLAMIC BANKING
Definition: Islamic banking (or participant banking) is banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. Sharia prohibits the payment or acceptance of specific interest or fees (known as Riba or usury) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also Haraam (forbidden). While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to apply these principles to private or semi-private
commercial institutions within the Muslim community. 1.2.2. TRADE FINANCE

Definition: Trade finance relates to International Trade when a seller who is actually an exporter requires a purchaser of the products, which he manufactures, to pay back against the goods which the purchaser who is called an importer has purchased. The process in which these two buyer or seller/ importer and exporter gets involved is called Trade finance. There are certain risks in international trade, therefore banks get involve and provide a transparent assistance to the importer as well as exporter.
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INTRODUCTION
1.2.3. IMPORT
Definition: Imports is the word used for the person or company who brings in the product or services whatsoever is offered from outside/outsource of its boundaries. Buyer of such goods and services is known to be the Importer.
1.2.4. EXPORT
Definition: Exports is the word used for the person or company who sell out the products and services whatsoever is offered to another company/country whatsoever but out of the premises. Seller of such goods and services is known to be the Exporter.
1.2.5. LETTERS OF CREDIT

Definition: A standard, commercial Letters of Credit (LC) is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking. The letters of credit can also be payment for a transaction, meaning that redeeming the letters of credit pays an exporter. Letters of credit are used primarily in international
trade transactions of significant value, for deals between a supplier in one country and a
customer in another. In such cases, the International Chamber of Commerce Uniform
Customs and Practice for Documentary Credits applies (UCP 600 being the latest
version). They are also used in the land development process to ensure that approved public facilities (streets, sidewalks, storm water ponds, etc.) will be built. The parties to a letters of credit are usually a beneficiary who is to receive the money, the issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary is a client. Almost all letters of credit are irrevocable, i.e., cannot be amended or canceled without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any. In executing a transaction, letters of credit incorporate functions common to giros and Traveler's cheques. Typically, the documents a beneficiary has to present in order to receive payment include a commercial invoice, bill of lading, and documents proving the shipment were insured against loss or damage in transit.
1.3. ROLE IN THE ECONOMY OF PAKISTAN

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INTRODUCTION
1.3.1. TRADE FINANCE IN PAKISTAN

Pakistan has the 27th largest economy in the world. Pakistan has textile industry, chemical, food processing and mainly agricultural. Among different industries Pakistans banking industry has flourished a lot in recent years, but economy of Pakistan has always lacked in Trade Deficit.
1.3.2. TRADE DEFICIT

Pakistans Trade with China was around US Dollar 8.67 Billion, it was an increase of almost 28p over the previous year. Their imports increased where as Exports stood at the same place. Pakistans Feb Trade deficit was 895 Million Dollars, which shows that deficit got better, but the deficit is still a problem for a country to grow.
1.4. IMPACTS
1.4.1. ADVANTAGES
Two countries (or other kinds of parties, such as individuals or firms) can both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods. Even if one country is more efficient in the production of all goods ( absolute
advantage), it can still gain by trading with a less-efficient country, as long as they have
different relative efficiencies. For example, if, using machinery, a worker in one country can produce both shoes and shirts at 2 per hour, and a worker in a country with less machinery can produce either 2 shoes or 4 shirts in an hour, each country can gain from trade because their internal tradeoffs between shoes and shirts are different. The less-efficient country has a comparative advantage in shirts, so it finds it more efficient to produce shirts and trade them to the more-efficient country for shoes. Without trade, its cost per shoe was 2 shirts; by trading, its cost per shoe can reduce to as low as 1 shirt depending on how much trade occurs (since the more-efficient country has a 1:1 trade-off). The more-efficient country has a comparative advantage in shoes, so it can gain in efficiency by moving some workers from shirt-production to shoe-production and trading
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INTRODUCTION
some shoes for shirts. Without trade, its cost to make a shirt was 1 shoe; by trading, its cost per shirt can go as low as 1/2 shoe depending on how much trade occurs. The net benefits to each country are called the gains from trade.
1.4.2. DISADVANTAGES
When countries open their international borders to member nations in the same free trade zone, they also open themselves up to the possibility of fierce competition which may come from other nations in the same free trade zone. All countries within the zone would be competing with one another for the same consumers. Because of the increased competition, some countries may appear to have gained some degree of competitive advantage against others. One way of attaining such advantage could be related to advanced technology. For instance, the North American Free Trade Zone includes United States, Canada and Mexico. Because of the technological superiority of the United States over a country like Mexico, unemployment levels in Mexico might be higher than that of the United States because of fewer employment opportunities in Mexico compared to those in the United States. Companies in free trade zones are always in competition with one another. This competition can also lead to another issue: restructuring. Unless companies that are at a competitive disadvantage restructure their operations, they may not be in a position to catch up with their competitors. Restructuring is an expensive endeavor; it may involve the corporate management team, ownership, or the operational aspects of the firm. Free trade regions may also impact some regions more than others in terms of the level of economic development. Some areas of the region may attract a greater level of economic development than others, resulting in the economic underdevelopment of some areas within the free trade zone. Underdevelopment could also impact the country's gross domestic product and depress the country's total exports as a result.
1.5. OBJECTIVES
The research will analyze the financial performance of Trade Finance Department.
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INTRODUCTION
Research will try to find out the key role player in financial aspects of Trade Finance Products. To find the impact of volume of Letters of Credit issued by Trade Finance Department for the bank, focusing the profitability. Also to analyze the impact of huge amount of Letters of Credit issued by Trade Finance Department on behalf of the bank. Comparing the performance of the Trade Finance Department in terms of revenue generation with other departments.
1.6. SCOPE OF THE STUDY

The purpose of this project and analysis is to prove that Trade Finance Department is one of the core departments of any organization and Letters of Credit is their core product, which helps to generate huge amount of revenue/profits.
1.7. LIMITATIONS
Trade Finance is a very huge and vast topic; it has various sections which can cover many things. So in order to identify benefits and outcomes of one thing from trade finance, my research is restricted to the Letters of Credit. Whereas LCs also covers different areas of both import and export, to limit the topic, my research is focused towards the number of LCs, amount of LCs and revenue generated through functions of LCs. Above all, time factor is the biggest limitation for any researcher to conduct a research on any topic and prove the subject being worked on, which is the first thing for this research as well. Since researches are conducted on detailed information and analyzed from different aspects and angles, in order to prove the testing subject, researcher had to limit the research to one subject, in order to focus the authenticity. Research conducted on the subject has certain limitations itself because the department
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INTRODUCTION
covers many areas of business, and practically it is not possible to cover all areas of businesses performed by the department. Research is confined to number of Letters of Credit issued by the bank. Research is restrained not just to number Letters of Credit but to the amount of Credits issued by the bank. Over all the research is bound to the revenue generated through increase in volume and amount of Letters of Credits by Trade Finance Department for both Import and Exports. Due to unavailability of financial data all the ratios and figures are not covered but all the efforts were made to cover maximum of data. The research has covered the main head of revenue generation by trade finance department from Letters of Credit. Research is reserved to revenue generating through Letters of Credits and Service Charges as per the schedule of bank charges of BankIslami Pakistan Limited, only Researcher analyzed the ratios and data for only three (3) given years for the subject bank.
Financial Analysis was also restricted to limited fundamentals.

Researcher did not cover all the heads of balance sheet. Researcher did not discuss the non performing/low performing side of Trade Finance Department.
Researcher has not analyzed the branches performing separately.
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INTRODUCTION
Limited statistical procedure has been applied to prove the subject thesis.
Respondents were restricted to thirty five (35) in number.
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LITERATURE REVIEW
Chapter II
2.0. LITERATURE REVIEW

History, Products, Trade Finance, Financial Performance, Enhancement, Hypothesis
NAUSHEEN ABDUL RAZZAQ 1008767
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LITERATURE REVIEW
LITERATURE REVIEW 2.1. INTRODUCTION

Pakistan is an Import based country depending mostly on imports whereas very low volumes of Export. So, the research will cover more about generating revenues through Imports in Trade Finance Department of Banks. However with respect to selection of product in Imports & Exports in Pakistan, Murabahah is one of the commonly used products in Trade Finance in Islamic Banks.
2.1.1. MODERN HISTORY

Modern history of Islamic Banking is not as old as Commercial (Conventional) Banking is (has been), if we explore Islamic Banking i.e. more than 30 years old only whereas compared with Commercial (Conventional) Banking which more than 300 year old. From the history of 30 years of Islamic Banking all over the world, last ten years have given the major impact in the progression, development and in upbringing purified Islamic Products and Services. Islamic Banking is now becoming very popular among different walks of life and is being appreciated throughout not just Islamic Countries but other Countries as well, because of its purity, transparency and justified products and services offered throughout for all the schools of thoughts. Islamic Banking is flourishing very fast and now becoming a necessity for every organization as well as individuals, because of its purity as per Shariah Compliant Standards stating sharing of profit as well as losses in basic contracts and agreements offered, which is not (was never) offered by conventional banks.
2.2. ISLAMIC BANK BUSINESSES

Since Islamic Products have now sufficient variety to give enough competition in the market to commercial banks, they are growing faster, and their market share is now increasing every year viably. Islamic Banks works in different sectors where these products are used as per contract and requirement, if required there can be two or more
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contracts at the same time which can cover two or more products. There are certain contracts or agreements which can be dealt with any of two products which fulfills the requirement, which means sometimes its the customer choice to select any of the products being offered. Among the businesses Islamic Banks works in the field of Islamic Equity Funds, Islamic Derivatives, Islamic Bonds, Trading, Microfinance, etc. Briefly Islamic Banks covers every department of businesses, like, Operations, Risk Policy and Analytics, Administration and General Services, Information System Technology (I.T.), Compliance, Product Development, Credit Administration, Consumer and Retail Banking, Treasury and Financial Institutions, Internal Audit, Trade Finance, Human Resource, Risk Management, Finance, Corporate Finance and the most important Shariah Board (which includes members of Product Development as well). Among all the departments one of the main source for banks income is Trade Finance Department, which caters most of the business and profits for the bank. In recent researches it has been observed throughout the world that there are banks which completely depends/based upon Trade Finance Business or their most of the business profits are earned by Trade Finance Department, which shows higher side of interest to work in and analyze the causes and symptoms to discuss.
In order to restrict our research at a point where we can conclude some results we have focused our research on Financial Performance Analysis of Trade Finance Products in Islamic Banking, which means we will be discussing the Islamic Banking products used in Trade Finance, their financial performance, reasons for their increase or major share in banking sector and to add precision to it we will cover it through available figures, data of one bank i.e. BankIslami Pakistan Limited, Increase in their profitability, volumes of trade business, etc.
2.2.1. ISLAMIC PRODUCTS

Islamic Banking now covers most (almost all) of the products to offer end consumers and customers. Among the products offered by Islamic Banks, few of them offered are: Bai' al 'inah (sale and buy-back agreement), Bai' bithaman ajil (deferred payment sale), Bai' muajjal (credit sale), Hibah (gift), Ijarah thumma al bai' (hire purchase), IjarahNAUSHEEN ABDUL RAZZAQ 1008767
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wal-iqtina, Musharakah (joint venture), Qard hassan/ Qardul hassan (good loan/benevolent loan), Wadiah (safekeeping), etc. Some commonly known transactions offered by Islamic Banks are: Musharakah, Mudarabah, Murabahah, Musawamah, Bai Salam, Ijarah, Sukuk (Islamic bonds), Takaful (Islamic insurance), Wakalah (power of attorney), etc.
2.3. INCEPTION OF TRADE FINANCE DEPARTMENT

In early stone ages, concept of banking was to keep the money safe, secure and deliver it upon request with some charges of keeping it safe. After the modifications, additions and when banks started working as a business organization, providing multiple facilities to account holders, concepts of securities came, as a collateral for the business transactions to share the risk of bringing the product or to send the product. When these transactions were performed, there was no proper check and balance for the transaction executed, hassle to handle number of customers were increasing as the customers were increasing and to charge every customer for services was also becoming a problem, as many of transactions were going uncharged. To facilitate such problem of handling customers transactions and to charge them properly for the sharing of risk, formation of trade department came into existence, with the specification of working for Imports and Exports only. As the banking sector flourished, different departments also came to existence, whereas Trade Department became a common name as Trade Finance Department, later became Centralized Trade Finance Department in many banks. With improvements and changes in department many things were being replaced with the arrival of new technology and few were carried to next stage. Now the department has a proper check and balance system, to monitor every customer individually, facilitate and charge for the business transaction, performed through selected bank.
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2.4. IMPACT/IMPORTANCE OF TRADE FINANCE ON REVENUE

In recent years there has been a major role of Income through Trade Finance in Total Revenue of the bank. Trade Finance is now commonly known as the backbone for any bank, for new banks in order to generate revenue or get early into profits or to increase their profitability, they should be focusing on establishing strong Trade Finance Business Cycle, and to work on that they have to build their Corporate Sector to get maximum business out of it and the working staff should be enough experienced to handle daily basis transactions.
2.4.1. REVENUE GENERATION THROUGH TRADE FINANCE

In order to know about the income of the bank, it is required to highlight some other revenue generating factors as well, which includes: International Remittances/Inward Remittances/ Inland Remittances (Selling FDD, FTT, Duplicates, Cancellation, Foreign Traveler Cheques, Purchasing FDD, Home Remittances, Pay Orders, Demand Drafts, etc), ATMs, Debit Cards, Internet Banking, IVR, Consumer Financing (Car Ijarah, House Financing, SMEs, Safe Deposit Lockers), Postage and Communication, SWIFT Charges, Facsimile and Trade Services, etc. There are various modes through which a bank generates its revenue, most of them are highlighted above, but in trade finance, income is generated through LC opening charges, LC amendment charges, Acceptance of Bills under Usance LC, Inland Trade Charges and Miscellaneous Charges (Airway bill, Contract registration, Amendment in contract, Acceptance for Import, Clearing of Goods, Credit Reports, Imports bill unpaid, Reimbursement charges, LC Cancellation and Discrepancy fee, etc).
2.5. FINANCIAL PERFORMANCE OF TRADE FINANCE

Importance of Trade Finance business can be obtained with results available of Letters of Credits processed by BankIslami Pakistan Limited for the year ended 2009 & 2010. Letters of Credits opened, Processed and Retired during the year 2009 were around 205 in volume whereas Letters of Credits opened, Processed and Retired during the 2010 were around 415 in volume.
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2.6. REVENUE SHARE COMPARISON

As provided above, there are various departments who participate in the profitability of the banks. Some of them have major participation, some are moderate and some have very low share of participation. With respect to Trade Finance Department, it is assumed naturally that Trade Finance would have major share in the profitability of the bank, as called backbone of a bank. Irrespective of assumption it is observed and found in many banks that their profitability, quickly getting into profitability, reason is Trade Finance, but in few banks Treasury is also found to be a department, which has a lot of influence in the profitability, in some cases more than Trade Finance, but in most of the banks, Trade Finance is the leading department which pulls the institutions into profitability.
2.7. ENHANCEMENT IN PROFITABILITY

To enhance the profitability of the bank, it is required to establish an effective Trade Finance Department, and to generate maximum revenue out of it, employees working in the organization must bring in more corporate clients / trading customer / Importer / Exporter, with an increase or support of these customers a bank or Trade Finance can generate maximum revenues out of it, as much as the transaction volume would increase, revenues would automatically be increased irrespective amount. With the enhancement in profitability overall department performance improves as well as banks performance improves, on the note that volume of the business is important for the bank to establish, to keep running the business.
2.8. POLITICAL IMPACTS

There has been a definite interference of politics in the running business of the banks. It has been in both positive and negative, in a sense that when any individual customer or an organization doesnt meet the policy criteria of banks or regulation as per laws defined by banks then such customers uses political influence to get their sharing of risk or confirmation for authenticity of their transaction executed/to be executed. Whereas on the side of a bank, when a bank doesnt meet the criteria of central bank,
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regulations of central bank, then on individual or group request, bank uses political influence to get the extension for the completion or to meet the requirement. In terms of positive impact, whenever there is a change in Government, Personnel or Amendments in laws, policies of the running Government changes, with this change of policies, banks are benefited for their lacking or they are being relieved from the reservation they were in.
2.9. HYPOTHESIS
Hypothesis No. 1
HA: Increase in volume of Letters of Credit has a positive impact on the profitability of Trade Finance Department. HO: Increase in volume of Letters of Credit does not have a positive impact on the profitability of Trade Finance Department
Increase in volume of Letters of Credit
Has Relationship With
Impact on Profitability of Trade Finance Department
Hypothesis No. 2
HA: Letters of Credit does generate revenue for the Trade Finance Department. HO: Letters of Credit does not generate revenue for the Trade Finance Department.
Has Letters of Credit Relationship With Profitability of Trade Finance Department
Hypothesis No. 3
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HA: Satisfactory volume of LCs does help to generate revenue for Trade Finance Department. HO: Satisfactory volume of LCs does not help to generate revenue for Trade Finance Department.
Has Volume of Letters of Credit Relationship With Revenue Generation of Trade Finance Department
Hypothesis No. 4
HA: High volume of LCs does enhance profitability of Trade Finance Department. HO: High volume of LCs does not enhance profitability of Trade Finance Department.
Has High volume of Letters of Credit Enhancement in Profitability of Trade Finance Department
Relationship With
Hypothesis No. 5
HA: Huge amount of LCs does increase the credibility of Trade Finance Department. HO: Huge amount of LCs does not increase the credibility of Trade Finance Department.
Volume of Letters of Credit
Profitability of Trade Finance Department
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COMPANY PROFILE
Chapter III
3.0. COMPANY PROFILE

About, Vision, Mission, BOD, Management, Products, History
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COMPANY PROFILE
3.1. ABOUT COMPANY (INTRODUCTION)

BankIslami Pakistan Limited as a Scheduled Islamic Commercial Bank started its operations in April 2006 with its first branch in SITE, Karachi. By the end of 2006, the Bank had 10 branches, nine in Karachi and one in Quetta. The Bank further concentrated in building a nationwide network and by the end of year 2007, its branch network grew to 36 branches in 23 cities. In 2008, the Bank opened 66 new branches nationwide which expanded its network to 102 branches in 49 cites. This gives BankIslami the distinction of having the fastest expanding network in Pakistan as well as offering the widest network by any Islamic Bank in Pakistan. The idea of BankIslami was conceptualized by Jahangir Siddiqui & Company Limited and DCD Group in late 2003. Mr. Hasan A. Bilgrami was appointed as Adviser to the sponsors on March 16, 2004 to formalize the idea. He presented the concept paper of BankIslami to sponsors on March 24, 2004. Dubai Bank joined the Sponsors and became one of the founding shareholders of BankIslami by investing 18.75% in the total Capital. BankIslami Pakistan Limited was the first Bank to receive the Islamic Banking license under the Islamic Banking policy of 2003 on March 31, 2005. The Bank envisioned to focus primarily on Wealth Management as the core area of business in addition to Shariah compliant Retail Banking products, Proprietary and Third party products, and Integrated financial planning services. BankIslami Pakistan Limited made a public offering of Rs. 400 Million, at par, from 6th to 8th March. This was the first primary issue by a Bank in over a decade in Pakistan. The Initial public offering (IPO) of BankIslami received overwhelming response from the general public as the applications received were 9 times higher than offered, fetching nearly Rs. 3.5 Billion, against the demand of Rs. 400 Million.
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3.2. VISION: THE VISION OF BANKISLAMI PAKISTAN LIMITED IS TO BE RECOGNIZED AS THE LEADING AUTHENTIC ISLAMIC BANK.
3.3. MISSION: THE MISSION OF BANKISLAMI PAKISTAN LIMITED IS TO CREATE VALUE FOR OUR STAKEHOLDERS BY OFFERING AUTHENTIC, SHARIAH COMPLIANT AND TECHNOLOGICALLY ADVANCED PRODUCTS AND SERVICES. WE DIFFERENTIATE OURSELVES THROUGH: AUTHENTICITY INNOVATION UNDERSTANDING OUR CLIENTS NEEDS COMMITMENT TO EXCELLENCE AND FAST, EFFICIENT AND SEAMLESS DELIVERY OF SOLUTIONS. AS A GROWING HUMAN CAPITAL TO AND INSTITUTION, THE FOUNDATION FOR OUR PERFORMANCE LIES ON OUR BANKISLAMI REMAINS OF COMMITTED BECOMING AN EMPLOYER
CHOICE, ATTRACTING, NURTURING AND DEVELOPING TALENT IN A TRANSPARENT AND PERFORMANCE DRIVEN CULTURE.
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3.4. BOARD OF DIRECTORS:

Chief Justice (R) Mahboob Ahmed (Chairman) Mr. Hicham Hammoud Mr. Ahmed Goolam Mahomed Randeree Mr. Ali Raza Siddiqui Mr. Hasan A. Bilgrami (CEO) Mr. Shabir Ahmed Randeree and Mr. Mohamed Al Amiri.
3.5. MANAGEMENT PROFILE:

o o o o o o o o o o o o o o o o
Mr. Ahmed Mustafa Mr. Arsalan Vohra Mr. Arshad Wahab Zuberi Mr. Asad Alim Mr. Farooq Anwar Mr. Hasan A. Bilgrami Mr. Khawaja Ehrar ul Hassan Mr. Muhammad Faisal Shaikh Mr. Muhammad Furqan Mr. Muhammad Imran Mr. Muhammad Shoaib Khan Mr. Rehan Shuja Zaidi Mr. Shamshad Ahmed Ms. Sheba Matin Khan Mr. Syed Akhtar Ausaf Mr. Syed Mujtaba H. Kazmi
Head, Branch Operations Head, Risk Policy & Analytics Head, Admin & General Services Head, Information Systems Head, Operations Chief Executive Officer Head, Compliance Head, Product Development Head, Credit Administration Head, Consumer & Retail Banking Head, Treasury & Financial Institutions Head, Internal Audit Head, Trade Finance Head, Human Resources Head, Risk Management Head, Corporate Finance
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COMPANY PROFILE
Mr. Syed Shah Sajid Hussain
Head, Finance
3.6. PRODUCTS:
3.6.1. Consumer Banking MUSKUN Home Financing Islami Auto Ijarah-New Vehicle Islami Auto Ijarah-Used/Imported Vehicle 3.6.4. Investment Banking Advisory Private Placement Sukuk Arrangment Syndication 3.6.2. Retail Banking Islami Current Account Islami Foreign Currency Account Islami Bachat Account Islami Dollar Bachat Account Islami Mahana Munafa Account Islami Amadni Certificate Rates & Weightages Underwriting Trusteeship Structured Finance Listing on Capital Markets Project Financing Mergers & Acquisitions
3.6.3. Corporate Banking Account Services Trade Services Working Capital Finance Project Finance Musharakah Financing Mudarabah Financing
3.6.5. Value Added Services Online Banking Inter Bank Fund Transfer Internet Banking ATM/Debit Card Biometric ATM 24/7 Phone Banking eStatement Self Service Phone Banking Lockers
3.7. HISTORY:
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COMPANY PROFILE
3.7.1. BankIslami The Idea:

The epochal idea of BankIslami was conceptualized by Jahangir Siddiqui & Company Limited and DCD Group in late 2003. Mr. Hasan A. Bilgrami was appointed as Adviser to the sponsors on March 16, 2004 to formalize the idea. He presented the concept paper of BankIslami to sponsors on March 24, 2004. A detailed business plan was then prepared and a formal application was submitted to the State Bank of Pakistan on May 26, 2004. On September 26, 2005, Dubai Bank joined the Sponsors and became one of the founding shareholders of BankIslami by investing 18.75% in the total Capital.
3.7.2. Accreditation by State Bank of Pakistan:

The State Bank of Pakistan issued a No Objection Certificate in no time on August 19, 2004 and BankIslami Pakistan Limited, the second full-fledge Islamic Commercial Bank in Pakistan, was incorporated on October 18, 2004 in Pakistan. BankIslami Pakistan Limited was the first Bank to receive the Islamic Banking license under the Islamic Banking policy of 2003 on March 31, 2005. The Bank envisioned to focus primarily on Wealth Management as the core area of business in addition to Shariah compliant Retail Banking products, Proprietary and Third party products, and Integrated financial planning services.
3.7.3. Initial Public Offering of BankIslami:

BankIslami Pakistan Limited made a public offering of Rs. 400 Million, at par, from 6th to 8th March. This was the first primary issue by a Bank in over a decade in Pakistan. The Initial public offering (IPO) of BankIslami received overwhelming response from the general public as the applications received were 9 times higher than offered, fetching nearly Rs. 3.5 Billion, against the demand of Rs. 400 Million.
3.7.4. Inauguration and Network Expansion:

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COMPANY PROFILE
The State Bank of Pakistan declared BankIslami Pakistan Limited as a Scheduled Bank with effect from March 17, 2006. BankIslami started its Banking operations on 7th April 2006 with its first branch in SITE, Karachi. By the end of 2006, the Bank had 10 branches, nine in Karachi and one in Quetta. The Bank further concentrated in building a nationwide network and by the end of year 2007, its branch network grew to 36 branches in 23 cities. In 2008, the Bank opened 66 new branches nationwide which expanded its network to 102 branches in 49 cites. This gives BankIslami the distinction of having the fastest expanding network in Pakistan as well as offering the widest network by any Islamic Bank in Pakistan.
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COMPANY PROFILE
Chapter III
3.0. COMPANY PROFILE

Ratios Analysis for the Year Ended December 2010, 2009, 2008
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COMPANY PROFILE
3.8. RATIOS ANALYSIS:

3.8.1. For The Year Ended December 2010
FO R THE YEAR ENDED 2010 RATIO ANALYSIS Bank Islam i Pak istan Lim ite d Ris k /Solve ncy Ratios a. De bt to Equity Ratio = T otal Debt T otal Equity = 40,182,515 4,764,163 = Re sults % 843.43
b. De bt to Asse ts
T otal Debt T otal Assets
40,182,515 44,946,678
89.4
c. Equity Multiplie r (EM)
T otal Assets Share Capital
44,946,678 5,279,679
851.31
d. Book Value Pe r Share
T otal Equity No. of Shares Outstanding
4,764,163 6,951,625
68.53
e . Basic Earning Powe r
EBIT T otal Assets
41,833 44,946,678
0.09
f. Earnings Pe r Share
Net Inc om e No. of Shares Outstanding
(556,130) 6,951,625
(8)
g. Ne t Spre ad to Gross Re turn
Net Spread Gross Return from Financ ing
h. Ne t Profit Be fore Tax to Total Incom e
Net Profit Before T ax T otal Inc om e
41,833 1,963,204
2.13
i. Ne t Profit Afte r Tax to Total Incom e
Net Profit After T ax T otal Inc om e
41,159 1,963,204
2.1
j. Expe nse to Incom e
Expense Inc om e
1,920,590 1,963,204
97.83
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k . Financing to De posit Ratio (A DR) =
Advanc es Deposits
16,670,125 38,109,790
43.74
l. C apital Ade quacy R atio (CAR) =
* T ier 1 Capital + T ier 2 Capital ** = Ris k W eighted Assets
4,516,407 23,155,542
19.5
Profitability Ratios
m . R e turn on A ve rage Ass e ts
Net Inc om e T otal Ass ets
(554,985) 45,035,703
(1)
n. R e turn on A ve rage Equity
Net Inc om e Equity
(554,985) 4,766,386
(12)
o. O pe rating Expe nse to In com e = (Net
Income)
T otal Expens e Inc om e
1,918,661 554,985
345.71
Liqu idity Ratios
p. Total D e posit to Total A sse t Ratio =
T otal Deposit T otal Ass ets
38,109,790 45,035,703
84.62
q. C ash to De posit R atio (CDR)
Cash Deposits
3,035,148 38,109,790
7.96
r. C urre nt Ratio
Current Ass ets Current Liabilities
3,604,770 1,507,977
239.05
s. C urre nt Ass e t Ratio
Current Ass ets T otal Ass ets
3,604,770 45,035,703
t. C ash to Total Asse t Ratio
Cash T otal Ass ets
3,035,148 45,035,703
6.74
u. Ne t W ork ing Capital
Current Ass ets Current Liabilities ----------------- = 2,096,793 =
Page 24
COMPANY PROFILE
2010
Page 25
COMPANY PROFILE

FO R THE Y EA R ENDED 2009 R A TI O A NA LY SI S Bank Islam i Pak istan Lim ite d R is k /Solve n cy R atios a. D e bt to Equ ity R atio = T otal Debt T otal Equity = 29,546,478 4,740,293 = Re su lts % 623.3
b. D e bt to A s se ts
29,546,478 34,286,771
86.17
c. Equ ity Mu ltiplie r (EM)
T otal Assets S hare Capital
34,286,771 4,740,293
723.3
d. Book V alu e Pe r S h are
T otal Equity N o. of Shares O utstanding
4,740,293 634,336
747.28
e . Basic Earn in g Powe r
EBIT T otal Assets
562,909 34,286,771
1.64
f. Earnin gs Pe r S h are
N et Inc om e N o. of Shares O utstanding
(577,246) 634,336
(91)
g. Ne t Spre ad to Gross R e turn
N et S pread = G ross Return from F inanc ing
h . Ne t Profit Be fore Tax to Total = In com e
N et Profit Before T ax T otal Inc om e
(562,909) 1,203,211
(47)
i. Ne t Profit A fte r Tax to Total In com e
N et P rofit After T ax T otal Inc om e
(478,939) 1,203,211
(40)
j. Expe n se to In com e
Expens e Inc om e
1,766,120 1,203,211
146.78
Page 26
COMPANY PROFILE
k . Financing to Deposit Ratio (ADR)=
Advanc es Deposits
13,282,152 27,987,378
47.46
l.
Capital Adequacy Ratio (CAR)
* Tier 1 Capital + T ier 2 Capital ** = Risk Weighted Assets
4,451,262 21,825,938
20.39
m . Return on Ave rage Assets
Net Inc ome Total Assets
(577,246) 34,286,771
(2)
n. Return on Ave rage Equity
Net Inc ome Equity
(577,246) 4,740,293
(12)
o. Ope rating Expense to Incom e (Net =
Income)
T otal Expense Inc ome
1,766,120 (577,246)
(306)
Liquidity Ratios
p. Total De posit to Total Asset Ratio=
Total Deposit Total Assets
27,987,378 34,286,771
81.63
q. Cash to Deposit Ratio (CDR)
Cash Deposits
4,217,515 27,987,378
15.07
r. Current Ratio
Current Assets Current Liabilities
6,277,065 1,073,492
584.73
s. Current Asset Ratio
Current Assets Total Assets
6,277,065 34,286,771
18.31
t.
Cash to Total Asse t Ratio
Cash Total Assets
4,217,515 34,286,771
12.3
u. Ne t W ork ing Capital

Current Assets Current Liabilities = ----------------- =
5,203,573
Page 27
COMPANY PROFILE
2009
Page 28
COMPANY PROFILE
FO R THE YEAR ENDED 2008 RATIO ANALYSIS Bank Islam i Pak istan Lim ite d Risk /Solve ncy Ratios a. De bt to Equity Ratio = T otal Debt T otal Equity = 13,896,779 5,191,821 = Re sults % 267.67
b. De bt to Asse ts
13,896,779 19,088,600
72.8
c. Equity Multiplie r (EM)
T otal Assets Share Capital
19,088,600 5,279,679
361.55
d. Book Value Pe r Share
T otal Equity No. of Shares Outstanding
5,191,821 819,225
633.75
e . Basic Earning Powe r
EBIT T otal Assets
(229,152) 19,088,600
(1)
f.
Earnings Pe r Share
Net Inc ome No. of Shares Outstanding
(98,307) 819,225
(12)
g. Ne t Spre ad to Gross Re turn
Net Spread Gross Return from Financ ing
h. Ne t Profit Be fore Tax to Total Incom e
Net Profit Before T ax T otal Inc om e
(229,152) 804,743
(28)
i.
Ne t Profit Afte r Tax to Total Incom e
Net Profit After T ax T otal Inc om e
(52,930) 804,743
(7)
j.
Expe nse to Incom e
Expense Inc om e
4,033,895 804,743
501.27
Page 29
COMPANY PROFILE
k . Finan cing to D e posit R atio (AD R) =
Advanc es Deposits
6,257,531 12,477,955
50.15
l. Capital Ade quacy Ratio (C AR) =
* T ier 1 Capital + T ier 2 Capital ** = Risk W eighted Ass ets
4,989,225 12,526,012
39.83
m . Re turn on Ave rage As se ts
Net Inc om e T otal Assets
(983,007) 13,896,779
(7)
n. Re turn on Ave rage Equity
Net Inc om e Equity
(983,007) 5,191,821
(19)
o. O pe rating Expe nse to I ncom e = (Net
In co me)
T otal Expense Inc om e
1,033,895 (98,307)
(1,052)
Liquidity R atios
p. Total D e posit to Total A sse t Ratio =
T otal Deposit T otal Assets
12,477,955 13,896,779
89.79
q. Cash to De posit Ratio (C DR)
Cash Deposits
2,175,413 12,477,955
17.43
r. Curre nt Ratio
Current Assets Current Liabilities
4,382,903 1,065,178
411.47
s. Curre nt Asse t Ratio
Current Assets T otal Assets
4,382,903 13,896,779
31.54
t. Cash to Total A sse t Ratio
Cash T otal Assets
2,175,413 13,896,779
15.65
u. Ne t W ork ing C apital
Current Assets Current Liabilities ----------------- = =
3,317,725
Page 30
COMPANY PROFILE
Page 31
METHODOLOGY
2008
Page 32
METHODOLOGY
Chapter IV
4.0. METHODOLOGY
Problem Definition/Statement, Research Methodology Design/Sample
Page 33
METHODOLOGY
4.1. PROBLEM DEFINITION

What are the reasons for increase in Income by Trade Finance Department and its impact on total profitability of bank.
4.2. PROBLEM STATEMENT

Banks provide financial services to all customers, belonging to every industry. The trade finance department plays a vital role in the Import & Export of a country. It also generate huge amount of income which become the largest share of total income of any branch or bank. What are the impacts on profitability of bank because of revenue generated through Trade Finance Department. What possibly could be the reason of increase in income and profitability of Trade Finance Department in a bank.
4.3. RESEARCH METHODOLOGY

Research will collect data through primary and secondary sources. Research will take help from printed material. Research will develop questionnaire and get it fill out by Trade Finance users and working officers.
4.3.1. RESEARCH DESIGN 4.3.1.1. Purpose of Study: The study is Descriptive in nature 4.3.1.2. Type of Investigation: The investigation will be Casual 4.3.1.3. Research Interference : Researchers interference will be Moderate
Page 34
METHODOLOGY
4.3.1.4. The Study Setting: The type of study is Non Contrived Study The researcher will perform Filed Experiment to identify cause
and affect relationship
4.3.1.5. Unit of Analysis: The unit of analysis for this study will be Islamic Banks 4.3.1.6. Time Horizon: The time period will be Cross Sectional
4.4 RESEARCH SAMPLE DESIGN

4.4.1. Sample Frame:
Islamic Banks.
4.4.2. Sampling Unit:

Trade Finance Department
4.4.3. Research Interference: Researchers interference will be Moderate 4.4.4. Sampling Method: Proportionate 4.4.5. Sampling Size:
Islamic Banks
Total
Non Trade Office Trade Finance Department 20 15
Page 35
METHODOLOGY
4.4.6. Sampling Plan:

To prove our hypothesis, we will analyze the financial analysis of Trade Finance
Selected
20
15
Performance of Islamic Banks and conduct interview or fill out questionnaire from Trade Finance and other staff of Banks.
4.4.7. Select a Sample:

We will select the employees working in Trade Finance/Banks and for questionnaire.
Page 36
DATA ANALYSIS
Chapter V
5.0. DATA ANALYSIS

Questionnaire Summary
Page 36
DATA ANALYSIS
5.1. QUESTIONNAIRE SUMMARY

Percentage Analysis of Questionnaire Financial Analysis of Trade Finance Products in Islamic Banking
How long have you been associated with banking sector. 25 Years 1 3% 20 Years 3 9% 15 Years 3 9% 10 Years 28 80%
II
How long have you been serving in the current organization. 25 Years 0 0% 20 Years 0 0% 15 Years 0 0% 10 Years 35 100%
III Have you ever been associated with Trade Finance Department and/or its your first experience. Yes 15 43% No 20 57%
IV In your opinion does Trade Finance Department has the potential to increase the profitability of bank.
S trongly Agree
35 100% V
Agree 0 0%
Neither Agree Nor Disagree
0 0%
Disagree 0 0%
S trongly Disagree
0 0%
Do you agree that Trade Finance Department is one of the core department of a bank.
S trongly Agree
34 97%
Agree 1 3%
0 0%
Disagree 0 0%
S trongly Disagree
0 0%
VI In your view is Trade Finance Department important for the profitability of banks.
S trongly Agree
35 100%
Agree 0 0%
0 0%
Disagree 0 0%
S trongly Disagree
0 0%
VII Do you prefer working in Trade Finance Department. Yes 24 69% No 11 31%
Page 37
DATA ANALYSIS
VIII Does your department has potential growth and profitability as Trade Finance Department has.
S trongly Agree
28 80%
Agre e 7 20%
0 0%
Disagre e 0 0%
S trongly Disagree
0 0%
IX Do you have complete/full knowledge of Trade Finance Products. Ye s 11 31% X No 24 69%
Do you agree/think that its products are fully Shariah Compliant.

S trongly Agree
25 71%
Agre e 10 29%
0 0%
Disagre e 0 0%
S trongly Disagree
0 0%
XI Do you agree that LC is the important product of Trade Finance.

S trongly Agree
34 97%
Agre e 1 3%
0 0%
Disagre e 0 0%
S trongly Disagree
0 0%
XII Does Letter of Credit generate revenue for the Trade Finance Department.
S trongly Agree
33 94%
Agre e 2 6%
0 0%
Disagre e 0 0%
S trongly Disagree
0 0%
XIII Do you think volume volume of LCs is satisfactory for your bank to generate sufficient revenue.
S trongly Agree
16 46%
Agre e 19 54%
0 0%
Disagre e 0 0%
S trongly Disagree
0 0%
XIV Does your bank has the capacity to manage high volume of LCs
S trongly Agree
25 71%
Agre e 10 29%
0 0%
Disagre e 0 0%
S trongly Disagree
0 0%
XV Does your bank approve huge amount of LCs Ye s 20 57%

No 15 43%
Page 38
DATA ANALYSIS
Chapter V
5.0. DATA ANALYSIS

Individual Response Analysis
Page 39
DATA ANALYSIS
5.2. INDIVIDUAL RESPONSE ANALYSIS

I How long have you been associated with banking sector.
25 Years 1 3%
20 Years 3 9%
15 Years 3 9%
10 Years 28 80%
Page 40
DATA ANALYSIS
II
How long have you been serving in the current organization.
25 Years 35 100%
20 Years 0 0%
15 Years 0 0%
10 Years 0 0%
Page 41
DATA ANALYSIS
III
Have you ever been associated with Trade Finance Department and/or its your first experience.
15 43%
20 57%
Page 42
DATA ANALYSIS
IV In your opinion does Trade Finance Department have the potential to increase the profitability of bank.
Strongly Agree
35 100%
Agree 0 0%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 43
DATA ANALYSIS
Do you agree that Trade Finance Department is one of the core department of a bank.
Strongly Agree
34 97%
Agree 1 3%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 44
DATA ANALYSIS
VI
In your view is Trade Finance Department important for the profitability of banks.
Strongly Agree
35 100%
Agree 0 0%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 45
DATA ANALYSIS
VII
Do you prefer working in Trade Finance Department.

Yes
24 69%
No 11 31%
Page 46
DATA ANALYSIS
VIII Does your department has potential growth and profitability as Trade Finance Department has.
Strongly Agree
28 80%
Agree 7 20%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 47
DATA ANALYSIS
IX
Do you have complete/full knowledge of Trade Finance Products.

Yes
11 31%
No 24 69%
Page 48
DATA ANALYSIS
Do you agree/think that its products are fully Shariah Compliant.

Strongly Agree
25 71%
Agree 10 29%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 49
DATA ANALYSIS
XI
Do you agree that LC is the important product of Trade Finance.

Strongly Agree
34 97%
Agree 1 3%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 50
DATA ANALYSIS
XII
Does Letters of Credit generate revenue for the Trade Finance Department.
Strongly Agree
33 94%
Agree 2 6%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 51
DATA ANALYSIS
XIII Do you think volume of LCs is satisfactory for your bank to generate sufficient revenue.
Strongly Agree
16 46%
Agree 19 54%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 52
DATA ANALYSIS
XIV
Does your bank has the capacity to manage high volume of LCs
Strongly Agree
25 71%
Agree 10 29%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 53
DATA ANALYSIS
XV
Does your bank approve huge amount of LCs

Strongly Agree
20 57%
Agree 15 43%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 54
STATISTICAL ANALYSIS
Chapter VI
6.0. STATISTICAL ANALYSIS

Main Questions Analysis
Page 56
6.1. MAIN QUESTIONS ANALYSIS
Page 57
XII
Does Letters of Credit generate revenue for the Trade Finance Department.
Strongly Agree
33 94%
Agree 2 6%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 58
XIII Do you think volume of LCs is satisfactory for your bank to generate sufficient revenue.
Strongly Agree
16 46%
Agree 19 54%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
XIV
Does your bank has the capacity to manage high volume of LCs
Page 59
Strongly Agree
25 71%
Agree 10 29%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
XV
Does your bank approve huge amount of LCs
Page 60
Strongly Agree
20 57%
Agree 15 43%
0 0%
Disagree 0 0%
Strongly Disagree
0 0%
Page 61
Chapter VI
6.0. STATISTICAL ANALYSIS

Statistical Tool Application by Statistician
6.2. STATISTICAL TOOL APPLICATION by STATISTICIAN

Page 62
H1: Letters of Credit does generate revenue for the Trade Finance Department. Ho: Letters of Credit does not generate revenue for the Trade Finance Department.
Z Test of Hypothesis for the Mean Data Null Hypothesis = Level of Significance Population Standard Deviation Sample Size Sample Mean Intermediate Calculations Standard Error of the Mean Z Test Statistic Lower-Tail Test Lower Critical Value p-Value Do not reject the null hypothesis -1.644853627 0 0.038877096 -49.90084687 3 0.05 0.23 35 1.06
Has Letters of Credit Relationship With
Revenue Generation of Trade Finance Department
Results: Alternate Hypothesis Accepted

HA: Ho: Accept Reject
H1: Satisfactory volume of LCs does help to generate revenue for Trade Finance Department.
Page 63
Ho: Satisfactory volume of LCs does not help to generate revenue for Trade Finance Department.
Z Test of Hypothesis for the Mean Data Null Hypothesis = Level of Significance Population Standard Deviation Sample Size Sample Mean Intermediate Calculations Standard Error of the Mean Z Test Statistic Lower-Tail Test Lower Critical Value p-Value Do not reject the null hypothesis -1.644853627 3.63163E-67 0.084515425 -17.27495297 3 0.05 0.5 35 1.54
Has Volume of Letters of Credit Relationship With

Results: Alternate Hypothesis Accepted HA: Ho: Accept Reject
Income Generation of Trade Finance Department
H1: High volume of LCs does enhance profitability of Trade Finance Department. Ho: High Volume of LCs does not enhance profitability of Trade Finance Department.
Page 64
High volume of Letters of Credit

H1: Huge amount of LCs does increase the credibility of Trade Finance Department. Ho: Huge amount of LCs does not increase the credibility of Trade Finance Department.
Enhancement in Profitability of Trade Finance Department Page 65
Has Huge Amount of Letters of Credit Relationship With Profitability of Trade Finance Department
Page 66
6.0. HYPOTHESIS TESTING
6.3. HYPOTHESIS TESTING
Page 67
Hypothesis No. 1
HA: Increase in volume of Letters of Credit has a positive impact on the profitability of Trade Finance Department. HO: Increase in volume of Letters of Credit does not have a positive impact on the profitability of Trade Finance Department
Increase in volume of Letters of Credit
Impact on Profitability of Trade Finance Department

Hypothesis No. 2
HA: Letters of Credit does generate revenue for the Trade Finance Department. HO: Letters of Credit does not generate revenue for the Trade Finance Department.
Has Letters of Credit Relationship With Revenue Generation of Trade Finance Department

Page 68
Hypothesis No. 3
HA: Satisfactory volume of LCs does help to generate revenue for Trade Finance Department. HO: Satisfactory volume of LCs does not help to generate revenue for Trade Finance Department.
Has Volume of Letters of Credit Relationship With Income Generation of Trade Finance Department
Hypothesis No. 4
HA: High volume of LCs does enhance profitability of Trade Finance Department. HO: High volume of LCs does not enhance profitability of Trade Finance Department.
High volume of Letters of Credit
Enhancement in Profitability of Trade Finance Department
Hypothesis No. 5
HA: Huge amount of LCs does increase the credibility of Trade Finance Department. HO: Huge amount of LCs does not increase the credibility of Trade Finance Department.
Page 69
Has Huge Amount of Letters of Credit Relationship With Profitability of Trade Finance Department
Page 70
RECOMMENDATION
Chapter VII
CONCLUSION
Chapter Wise Summary
Page 72
RECOMMENDATION
Chapter I
INTRODUCTION
In the first chapter of the research a brief introduction is given at first place, definitions of key terminologies used in the field of Islamic Banking, Trade Finance, Imports, Exports and Letters of Credit. Role in the economy of Pakistan, its impacts, scope of study, objectives with limitations on research.
Chapter II
LITERATURE REVIEW
Chapter two covers the literature review side of the project, which highlights some information on Pakistan, a brief modern history of Islamic Banking, businesses conducted by Islamic Banks and their products derived through Shariah Compliance. Apart modern history inception of Trade Finance Department was also discussed, impact of trade finance department and revenue generated through the department with some political impact on the running business and its profitability. Hypothesis to be tested is also covered in this chapter.
Chapter III
COMPANY PROFILE
This chapter solely covers the organization, on the research is conducted, about the company or introduction to the company, vision statement of the company along with the mission statement that the company originally has for its ongoing concern, its management profile, board of directors details, products offered by the organization for its customers and consumers, history or inception of organization and some factual financial figures posted by the organization in past three years, at the last of chapter.
Page 73
RECOMMENDATION
Chapter IV
METHODOLOGY
This chapter has the core portion of research, methods and formulation of topic how the research is being conducted and will be identified through its problem definition, problem statement, purely research methodology and its design and research sample design.
Chapter V
DATA ANALYSIS
Data analysis chapter covers the questionnaire that was filled by the respondents, data analysis tools have been applied in order to prove the subject of the research through respondent's reply on hypothesis testing verified by the questionnaire, graphical representation of all questions individually and summary of analysis.
Chapter VI
STATISTICAL TOOLS
Statistical tools analysis and techniques applied through responses gathered from the respondents of the questionnaire. A detailed graphical representation and results, through responses on hypothesis, dependent questionnaire on main questions only. Hypothesis testing with its results and detailed graphical representations.
Page 74
RECOMMENDATION
Chapter VIII
RECOMMENDATIONS
Under Current Situation
Following results and observation are recommended for the given subject thesis. Page 75
RECOMMENDATION
It is observed that Islamic System is old and authentic but Islamic Banks are not as old as Islamic System and history is, Islamic Banks should be increased in number, in order to capture market Islamic Industry despite low in numbers is flourishing and growing viably every year. Islamic Banks should work on the core theme of Islam that is to aware people with the principles of Islamic Banking and Islamic System. Islamic Banks have the potential to capture the market of banking sector and convert conventional banking to Islamic banking for which they have to spread the message of Islam and Islamic Banking. It is observed that Islamic Banks have more documentation than Commercial Banks, which customers may not like always, it is preferably recommended that Islamic Banks should work on their documentation requirement and try to reduce it at least equal to commercial banking documentation in order to compete in the market. Islamic Banks must introduce technological advancement in their products and product derivatives. Islamic Banks must maintain their market worth, distinction, authenticity and standards with high ratings. Islamic Banks must enter into new markets and explore new areas of businesses to come up with new products which are completely Shariah Compliant. They should arrange seminars and training sessions on Islamic Economic System and try to revolutionize the misguided system. Marketing system should be enhanced and must become a regular activity so that people do not forget the religion they belong to and the best system they are going to promote ever is Islamic Banking System.
Page 76
RECOMMENDATION
Islamic Banks must follow their core business techniques and keep up the requirements of central bank to the point where central bank start making different policies for Islamic Banks. Like central bank constituted a separate department to deal with Islamic Banks in future. More Islamic Banks should be opened and those who are already working, they should expand their businesses and make more people aware of Islamic and Shariah Compliant Banking for life time. In order to differentiate Islamic Banking and Islamic Banks, Islamic Organizations have to come up with new dynamics in banking to overtake commercial banking and make their way in every field.
Page 77
REFERENCES
Chapter IX
REFERENCES
Core, Related, Reference
REFERENCES (Bibliography)
Page 74
REFERENCES
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APPENDIX
APPENDIX
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APPENDIX
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APPENDIX
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ANNEXURE
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FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

commercial institutions within the Muslim community. 1.2.2. TRADE FINANCE

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

1.2.5. LETTERS OF CREDIT

1.3. ROLE IN THE ECONOMY OF PAKISTAN

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

1.3.1. TRADE FINANCE IN PAKISTAN

1.3.2. TRADE DEFICIT

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

1.6. SCOPE OF THE STUDY

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

Financial Analysis was also restricted to limited fundamentals.

Researcher has not analyzed the branches performing separately.

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

2.0. LITERATURE REVIEW

NAUSHEEN ABDUL RAZZAQ 1008767

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

LITERATURE REVIEW 2.1. INTRODUCTION

2.1.1. MODERN HISTORY

2.2. ISLAMIC BANK BUSINESSES

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

2.2.1. ISLAMIC PRODUCTS

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

2.3. INCEPTION OF TRADE FINANCE DEPARTMENT

NAUSHEEN ABDUL RAZZAQ 1008767

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

2.4. IMPACT/IMPORTANCE OF TRADE FINANCE ON REVENUE

2.4.1. REVENUE GENERATION THROUGH TRADE FINANCE

2.5. FINANCIAL PERFORMANCE OF TRADE FINANCE

NAUSHEEN ABDUL RAZZAQ 1008767

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

2.6. REVENUE SHARE COMPARISON

2.7. ENHANCEMENT IN PROFITABILITY

2.8. POLITICAL IMPACTS

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

Increase in volume of Letters of Credit

Has Relationship With

Impact on Profitability of Trade Finance Department

Has Letters of Credit Relationship With Profitability of Trade Finance Department

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

Volume of Letters of Credit

Has Relationship With

Profitability of Trade Finance Department

NAUSHEEN ABDUL RAZZAQ 1008767

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

3.0. COMPANY PROFILE

NAUSHEEN ABDUL RAZZAQ 1008767

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

3.1. ABOUT COMPANY (INTRODUCTION)

NAUSHEEN ABDUL RAZZAQ 1008767

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

NAUSHEEN ABDUL RAZZAQ 1008767

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

3.4. BOARD OF DIRECTORS:

3.5. MANAGEMENT PROFILE:

NAUSHEEN ABDUL RAZZAQ 1008767

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING

Mr. Syed Shah Sajid Hussain

FINANCIAL PERFORMANCE ANALYSIS OF TRADE FINANCE PRODUCTS IN ISLAMIC BANKING