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Read! In the Name of your Lord How created, created man from a clot .Read for your Lord is the most Generous. Who has taught the use of the pen. Taught man what he knew not. (AL QURAN)

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Good Saying of Some Great Peoples:

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ACKNOWLEDGEMENT

All gratitude and thanks to almighty ALLAH the gracious, the most merciful and beneficent who gave me courage to undertake and complete this task. I am very much obliged to my ever caring and loving parents whose prayers have enabled to reach this stage. I am grateful to almighty ALLAH who made me able to complete the work presented in this report. It is due to HIS unending mercy that this work moved towards success. I am highly indebted to my course instructor Mr. Farrukh for providing me an opportunity to learn about the Banking system of Bank Al-Falah" which is vital ingredient of MBA program. I am very great full to my teacher Mr. Azeem and Mr Idrees for providing me guideline for the completion of this report. I feel great pride and pleasure on the accomplishment of this report.

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TABLE AND CONTENTS

1. BANK ALFALAH BACKGROUND.08 2. MISSION STATEMENT 10 3. VISION STATEMENT..1 1 4. OBJECTIVE 12 5. COMPANY INFORMATION ..13 5.1 PERFORMANCE ..13 5.2 ISLAMIC BANKING BRANCHES.14 5.3 ISLAMIC MODES OF FINANCING.14 6 INTRODUCTION TO BANK ALFALAH ISLAMIC PRODUCT15 6.1 MUSHARAKAH .15 6.2 MUDARABAH .. 15 6.3 MURHABAH.15 6.4 IJARAH.16 6.5 SALAM.16 6.6 ISTISNA16 7 FUNCTION OF BANK ALFALAH.. 17 8 ISLAMIC BANKING GROUP..17 9 PERSONAL BANKING 18 ALLAMA IQBAL OPEN UNIVERSITY 5 | Page

10 ACCOUNT OPENING DEPARTMENT. 18 10.1PERSONAL ACCOUNT.. 18 10.2 CURRENT ACCOUNT. 18 10.3 MUSHARAKAH SAVING DEPOSIT. 18 10.4 MUSHARAKAH TERM DEPOSIT. 18 10.5 ACCOUNT HOLDER OF BANK. 19 10.6 REMITTANCE. 20 10.7 MONEY GRAM. 20 10.8 LOCKER. 20 10.9 IMPORTANT FEATURE OF LOCKER. 20 11 COMPANY MANAGEMENT SYSTEM. 21. 12 COMPANY HIERARCHY 22 13 BRANCH LEVEL HIERARCHY 23 14 DEPATRMENTS . 24 15 HOME MUSHARKAH DEPARTMENT 25 15.1 FEATURES.. 25 15.2 RECTRICTED CUSTOMER 26 16 CAR IJRAH . 26 16.1 BENEFITS AND FEARUTES.. 26 16.2 DIFFERENCE B/W CAR IJRAH AND CAR LEASING 27 17 CREDIT ADMINISTRATION 27 18 REMITTANCE AND CLEARING DEPARTMET27 ALLAMA IQBAL OPEN UNIVERSITY 6 | Page

18.1 MEANING OF REMITTANCES 27 18.2 PARTIES INVOLVES IN REMITTANCE 27 18.3 REMITTER 27 18.4 REMITTCE ISSUING BANK 18.5 PAYING BANK 28 18.6 INSTRUMENT USED IN REMITTANCE 28 18.7 DEMAND DRAFT 28 18.8 PAY ORDER .28 18.9 TELEGRAPH TRANSFER .28. 18.10 CANCELLATION OF PO, DD, CDR ..28 19 ACCOUNT DEPARTMENT .29 19.1 ACCOUNT DEPARTMENT ACTIVITIES. 20 FORIGEN TRADE DEPARTMENT.30 20.1 IMPORT ..31 20.1.1 REVOCABLE L/C ..31 20.1.2 IRREVOCABLE L/C .31 20.1.3 DOCUMENTS FR IMPORT 31 20.1.4 DOCUMENTS REQUIRED FOR IMPORTER..31 20.2 EXPORT ..31 20.2.1 DOCUMENTS REQUIRED FOR EXPORTERS 31 20.2.2 DOCUMENTS TO BE ATTACHED FOR EXPORTERS 31 21 CASH DEPARTMENT .. 32 21.1 CASH RECEIPET 32 21.2 CHEQUE ENCASHMENT PROCEDURE 32

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22 FINANCE

34

FIVE YEARS FINANCIAL SUMMARY.. 23 RATIO ANALYSIS ..41 23.1 LIQUAIDITY RATIO42 23.2 LEVERAGE RATIO..42 23.3 PROFITABILITY RATIO ..43 23.4 ACTIVITY RATIO .44 23.5 MARKET RATTIO.45 24 HORIZONTAL ANALYSIS OF BALANCE SHEET 47 25 VERTICAL ANALYSIS OF BALANCE SHEET48 26 FINANCILA HIGHLIGHTS 49 27 GRAPHICAL REPRESENTAION OF RATIO ANALYSIS..50 28 GRAPHICALL REPRESENTAION OF FINANCIAL .55 29 GRAPHICAL REPRESENTATION OF FOREIGN EXCHANGE BUSINESS.. 30 SWOT ANALYSIS .60

STRENGTHS 60 30.1 HEALTHY ENVIRONMENT FOR WORKERS60 30.2 BANKS GOOD WILL..60 30.3 LOYAL STAFF .60 ALLAMA IQBAL OPEN UNIVERSITY 8 | Page

30.4 CUSTOMER SERVICES 61 30.5 UNDERSTAND AND SUPPORT CLIENT NEED61 30.6 TRAINING AND DEVELOPMENT 61 30.7 LEADER IN CUSTOMER BANKING 61 30.8 FASTEST GROWING BANK 61 30.9 SOCIAL WELFARE 61 30.10 AGGRESSIVE PROMOTIONS 61 WEAKNESSES 62 30.11 IMITED EXCELENT GRADE. 62 30.12 I.T SYSTEM 30.13 WORK LOAD. 62

62

OPPORTUNITIES 63 30.14 OVERSEAS OPERATIONS. 30.15 EXPLORATIION OF NEW AREAS 63

63

THREATS.. 64 30.16 EGULATORY FRAME WORK .. UNIVERSITY 9 | Page

64

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30.17 FOREIGN BANKS. 64 30.18 INDUSTRY SLUMP.. 64 30.19 UNSTABLE POLITICAL GOVERNMENT . 64 30.20 INTERNATIONAL CHECKS 64 30.21 COMPETITORS. . 64 31 PESTS ANALYSIS 65 31.1 POLITICAL ENVIRONMENT 64 31.2 ECNOMICAL ENVIRONMENT. 64 31.3 SOCIAL ENVIRONMENT. 65 31.4 TECHNOLOGICAL ENVIRONMENT.. 66 32 CONCLUSION 67 33 RECOMMENDATION 68 34 REFERENCES 71

1. EXECUTIVE SUMMARY
The banking structure in Pakistan comprises of the following types, State Bank of Pakistan, Commercial Bank of Pakistan; Exchange Banks, Saving banks, Cooperative banks, specialized credit institutions. The state bank of Pakistan is the Central bank of the country and was established on July 01, 1948. The network of bank branches now covers a very large segment of national economy. The ALLAMA IQBAL OPEN UNIVERSITY 10 | P a g e

State Bank of Pakistan issues the shares of these periodically. Bank employees and other common peoples can also purchase these shares and earn profit. To open an account the customer has to meet the general banking manager with an introducer. The procedure begins with the punching of account opening form to the customer file i.e. customers master file. Before closing any account, bank send letter to the account hold for informing him that his account is going to be closed. There is need an approval form higher authority to close any account. Current deposits are those which are payable to bank whenever demanded by the customer. Bank does not pay any profit on current deposits. The following are the financial products/services of PLS Account, Saving Account, Term deposit and Foreign currency accounts. In remittance department like any other BANK AL-FALAH also have instruments for transferring of money, Telegraphic Transfer, Mail Transfer. In cash department both deposits and withdrawals go side by side. This department works under the CD In charge and deals with cash deposits and payments. This department maintains the following sheets, books, and ledger of account cash received voucher sheet. Cash paid voucher sheet, Paying-in-slip, Cheque Book, Cash balance book. The clearing in Karachi at BANK AL-FALAH or other banks is being done through NIFT (National Institute of Facilitation Technology). Bank provides this facility to the people who need advance money to meet their requirement. Party dealing with other banks financial condition of borrower business and as a first step credit proposal is being made. BANK AL-FALAH provides advances, which are two types. Secured Advances, Unsecured Advances. BANK AL-FALAH usually classified advances in to following types Commercial Advances, Corporate/SMEs Advances, Agricultural Advances. Commercial Advances are of following types Demand Finance, Cash Finance, Export Refinance Part I (Pre Shipment) & others. Banks Agriculture division deals with the agriculture advances. Bank provides the Agriculture Advances in order to enhance and support the agriculture sector of the country. Farm Credit & Non Farm Credit.

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In foreign exchange, BANK AL-FALAH is dealing Foreign Currency Accounts, Foreign Remittances, and Foreign Bills for Collection, Imports & Exports Foreign currency accounts & the foreign currency department deals with the following types of accounts, Current account, Saving bank account, Term deposit. Foreign accounts are convertible on floating rate available to the bank. Letter Of Credit facility is being provided by BANK AL-FALAH in foreign exchange.

2. Bank Alfalah Limited- Background:

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Bank Alfalah Limited (BAL) is a private bank in Pakistan owned by the Abu Dhabi Group. Bank Alfalah Limited was incorporated on June 21st, 1992 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1st, 1997. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance, 1962. Bank Alfalah Limited is registered at both Karachi and Lahore Stock Exchange with a ticker name of BAFL. The Bank is currently operating through 310 branches in 96 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Bank of Credit & Commerce International (BCCI) was a Pakistan based bank established by Mr. Agha Hassan Abdi from UBL in association with U.A.E and Europe. BCCI has its branches in 74 different countries of the world. It had its three branches in Pakistan. 1991, The BCCI was banned, when it was accused by the European countries that the bank was involved in some illegal operations with gulf countries. The major reason behind European accusation was that BCCI was of Islamic mode. Therefore the bank was closed due to international pressure. Since its inception, as the new identity of H.C.E.B (Habib Credit and Exchange Bank Limited) after the privatization in 1997, the management of the bank started implementing strategies and policies to carve a distinct position for the bank in the market place. This was further strengthened with a partnership with the Abu Dhabi Group which owns 70% of Bank Alfalah Limited shares. This allowed the bank to invest more in revolutionary technology to increase its range of products and services, perceiving the requirements of their customers and matching them with quality products and service solutions.

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3. Bank Alfalah Limited Islamic Banking

Mission Statement

To practice Islamic banking in its desired spirit that unfolds its true economic potential resulting in prosperity to our customers and commercial rewards to our sponsors and our employees.

Vision Statement

To be the premier organization operating locally & internationality that provides the complete range of financial services to all segments under one roof. We focus on our customers as an active component in growth process. We continue to offer services that expand their access to excellent and affordable technologies.

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4. OBJECTIVES:
Bank Alfalah believes in the phrase customer comes first. BAL IBDs objective is to

please their customers by fulfilling the financial needs as best as possible. They believe in placing the client at the center of business and all of the products and services. Service excellence is one of the objectives of Bank Alfalah. Alfalah strives continually on the development of new areas of activities to distinguish itself in the market place along with traditional banking activities of resource mobilization and credit disbursement. Alfalahs objective is the complete automation and computerization of all of its banking activities. Alfalah Training and Development program of its employees is aimed at developing skills of its employees. It makes positive contribution to the service culture of the banking system as a whole. They are committed to put all their energies, resources and time to bring higher value and satisfaction to their customers, employees and shareholders. The introduction and development of innovative financial instrument will another major objective of Bank Alfalah Ltd (Islamic Banking).

5. Company Information:
Islamic Banking Group has been founded in 2003 in Pakistan. Great journeys begin with but a single step and mighty oaks are born out of humble seedlings. Bank Alfalah Limited Islamic Banking Group (BAL-IBG) presently a division of Bank Alfalah Limited is gearing up to ALLAMA IQBAL OPEN UNIVERSITY 15 | P a g e

become a separate, full-fledged Islamic Banking entity. BAL-IBG offers to its customers a broad range of Islamic products under personal, consumer and corporate banking modes. The array of Islamic instruments at the disposal of BAL-IBG is equipped to provide efficient and satisfying solutions to our customers needs. Our Islamic products are Shariah-compliant carrying the seal of approval of the Centre of Islamic Economics, an institution vested with powers to attest authenticity and legitimacy of Islamic banking products in Pakistan.

5.1 Credit Rating:

PACRA, a premier rating agency of the country, has rated the bank AA (double A), Entity Rating for long term and A1+ (A one plus) for the short term. These ratings denote a very low expectation of credit risk, strong capacity for timely payment of financial commitments in the long term and by highest capacity for timely repayment in the short term, respectively. The ratings of first and second and third unsecured listed and subordinated TFC issues of PKR 650 million, PKR 1,250 million and Rs.1,325 million have been maintained at AA- (Double A minus).

5.2 Performance:
Bank Alfalah Limiteds Islamic Banking Group (BAL-IBG) started operations in 2003 and at its yearend reflected a modest capital base of Rs 100 million and deposits totalling Rs 113.7m. By following yearend, BAL-IBGs equity had risen more than 4 times to Rs 569m and the balance sheet footing had swelled to Rs 7,799 million. Deposit size had grown from less than Rs 114m to over Rs 7,229 million. The pace of frenetic, triple digit growth was continued over the next twelve months as equity more than doubled to Rs 1,278 million from Rs 569m. Assets also recorded a more than 100% growth, climbing to Rs 15,634 million from Rs 7,799 million. Deposits alone failed to double rising to Rs 12,476m from Rs 6,548 million yet managing a healthy 90% increase.

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5.3 Islamic Banking Branches:

The branches network spread all major cities of Pakistan. Bank Alfalah Limited Future plan is to expand its network by opening more branches in 2010. The Bank is fully aware that the branch network has direct implications on the services that it provides to its customers. We offer services through a network of 160 branches and 60 state of the art ATM machines. Conventional Branches Islamic Banking Branches Overseas Branches ATM Machines

6. ISLAMIC MODES OF FINANCING ADOPTEDBY BANK ALFALAH LIMITED

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Following Islamic ways of financing adopting by Bank Alfalah Limited under the supervision of Shariah board: Musharakah Mudarabah Diminishing Musharakah Murabaha Ijarah (Leasing)

7. INTRODUCTION TO ALFALAH ISLAMIC PRODUCTS 7.1 Musharakah

Musharakah is one of the two ideal modes of Islamic financing. The other one is Mudarabah. Musharakah is a contractual relationship formed through mutual consent of the parties for sharing of profits and losses in a joint venture. Assets in the venture are jointly owned in proportion to each partners contribution. The profits are shared in a pre-agreed ratio. Losses, however, are incurred in proportion to each partners investment. Islamic Bank representing share of its depositors invests funds in the joint venture alongside other investor(s).

7.2 Mudarabah
Like Musharakah, Mudarabah is also a form of partnership. Whereas all partners in Musharakah contribute capital, under Mudarabah partnership is formed between provider of capital and provider of expertise or human resource. Proportions for sharing profit are decided upfront. Losses are incurred solely by the partner contributing capital.

7.3 Murabaha
Murabaha is a non-participatory mode of Islamic financing where the bank sells the asset required by its client to the client on cost-plus basis. The asset is first purchased by the bank and the bank ALLAMA IQBAL OPEN UNIVERSITY 18 | P a g e

incurs the risk of any loss or damage to the asset as long as the asset remains under its ownership. Upon sale of the asset, the Islamic bank is obligated to inform the client of the exact cost incurred in the purchase of the asset and the margin of profit incorporated in the sale price. Payment by the client of the sale price may be deferred in which case it would become Muajjal. The selling price once agreed cannot be changed even when the client fails to pay on the agreed date.

7.4 Ijarah
Under this facility a client may take on rent, property, vehicle or any other real asset belonging to the bank. The bank transfers the right of use of the asset to the client, while retaining the ownership of the asset. The client pays periodic rent to the bank for the use of the asset. Basis for rentals can be fixed as well as floating. Any change is rental may be made through mutual consent.

7.5 Salam
Salam is a contract of advanced payment against deferred delivery of goods. Goods paid for in advance by the buyer are delivered by the seller after an interval of time. The Seller receives in advance fully paid price of the goods at the time of contract undertaking to deliver the goods specified by the buyer at a future date.

7.6 Istisna
Manufacture of a specific product against precise specifications by a manufacturer for delivery to buyer. It is necessary that the price of the product and product specifications are fully agreed upon by the manufacturer and the buyer, and that the material required for manufacture is arranged by the manufacturer.

8. FUNCTIONS OF BANK ALFALAH

8.1. ISLAMIC BANKING GROUP
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8.1.1.Personal Banking:
ACCOUNT OPENING DEPARTMENT

8.1.2.Personal Accounts:
Bank Alfalah Islamic Banking Division (BAL-IBG) offers Current, Savings and Term Deposit facilities to its customers seeking personal banking relationships with the following features:

8.1.3. Current Account

Current account is one where money is constantly being drawn out and put in since the money withdraw able at any time by the customer, therefore ,the bank do not pay profit on current account.
Deduction of Zakat is also not applicable on current account. Current account holders receive a Cheque book and regular statements containing details of money paid in and paid out.

8.2 Musharakah Savings Deposits

The aim of this account is to encourage and mobilize saving of the people. Saving account is generally opened by the person or small income and for salary purpose. The bank invests the money of saving account and the profit or loss is shared between bank and the account holder. Deduction of Zakat is applicable.

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8.3 Musharakah Term Deposit

These deposits are kept with the bank for a specified period of time. The bank invests the money of saving account and the profit or loss is shared between bank and the account holder. Deduction of Zakat is applicable on this account.

8.4 Account Holders Of Bank

The bank open the account of its customers which includes An individual A firm Company Corporation or association

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8.5 Remittance
Transfer of funds from person to person and from place to place constitutes concept of remittance. A remittance is an important service provided by bank to customers. It is a source of income for banks.

8.6 Money Gram

Bank Alfalah Limited, in collaboration with Money Gram, offers remittance service to Pakistan. Money Gram is person to person money transfer service that allows consumers to receive money in just a few minutes.

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8.7 Locker.
Bank Alfalah provides safe deposit locker facility to its customers for safe keeping of their valuables like documents, securities and jewellery etc.

8.7.1. Important Features Of Lockers Facility Are As Follows

Various sizes to choose from small, medium & large. Annual locker rent ranges from Rs.1,000/- to Rs.3,500/-.

Locker rent is waived for customers maintaining a minimum deposit of Rs.2 million in current account or above Rs.25,000/- in a current account or Rs.50,000/- in a savings account.

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9. Companay Management System

Company Hierarchy

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10. Branch Level Hierarchy

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CHIEF CHIEF MANAGER MANAGER

MANAGER MANAGER OPERANION OPERANION

MANAGER MANAGER INTERNATION INTERNATION AL BANKING AL BANKING

MANAGER MANAGER CREDIT CREDIT

INTERNAL INTERNAL AUDIT AUDIT

MARKRTING MARKRTING DEPAARTMEN DEPAARTMEN T T

ACCOUNTING ACCOUNTING MANAGER MANAGER

INPUT INPUT DEPARTMENT DEPARTMENT

LEASING LEASING DEPARTMENT DEPARTMENT

CASH CASH DEPARTMENT DEPARTMENT

EXPORT EXPORT DEPARTMENT DEPARTMENT

LEASING LEASING DEPARTMENT DEPARTMENT

ACCOUNT ACCOUNT OPENING OPENING

FOREIGN FOREIGN EXPPORT EXPPORT

HOME HOME FINANCE FINANCE

REMITTNCE REMITTNCE

CAR CAR FINANCING FINANCING

CLEARING CLEARING

CREDIT CARD CREDIT CARD

11. Departments:
Bank Alfalah Limited McLeod Road Branch has the following departments: Home Musharkah Department ALLAMA IQBAL OPEN UNIVERSITY 26 | P a g e

 Car Ijarah Department Credit Administration Department (CAD) Remittances and Clearing Department Trade Finance Cash & Deposits Accounts Department

11.1

Home Musharkah Department

Homes enter into joint ownership agreement with the bank for purchase

Alfalah

/construction/renovation/replacement of outstanding house. Bank will provide a certain amount of financing maximum up to 70% of value of property and sign Musharakah agreement. ALLAMA IQBAL OPEN UNIVERSITY 27 | P a g e

11.1.1 Features
Great value Lowest rates Protecting your mortgage Trustworthy and simple Affordability Flexibility

11.1.2 Restricted Customers

Bank Alfalah Limited hesitates to offer this facility to Layers, Politicians, actors and Media persons.

11.2 ALFALAH CAR IJARAH

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A Shariah compliant car-leasing scheme with added features such as: No upfront registration charges No upfront insurance premium No rentals before delivery of car Quickest processing. No hidden charges. Minimum down payment. Complete repayment at any point of time. Balance transfer facility {BTF} for existing as well as new clients from other Banks. Tenure period ranging from 1 to 5 years. Financing of all brand new locally assembled vehicles and used cars. Financing limit ranging between Rs. 200,000/- to Rs. 2000,000/- for brand new cars. The facility applies to all locally-assembled new cars up to Rs 4 million.

11.2.1 Difference Between Car Ijarah And Car Leasing

The only difference between Alfalah Car Ijarah and Car Leasing is the interest factor. Car Ijarah is a complete Islamic Product and is interest free while conventional car leasing is actually an interest based loan.

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11.2.2 Features:
Quickest processing No hidden charges Minimum down payment other Banks Tenure period ranging from 3 to 5 years. Financing of all brand new locally assembled vehicles and used cars.

11.3 CREDIT ADMINISTRATION DEPARTMENT

Work of CAD starts after credit department forward the CLP to related authority or Head Office. Function of the CAD is to compile all the documentation regarding corporate finance. It includes Credit Administration & Monitoring. There are three things which are done by CAD: 1. Checking the Credit Risk 2. Disbursement the Loan after approval 3. Monitoring the Loan

11.4 Remittances 11.4.1 Meanings of Remittances

Remittance is transfer of funds from one place to another or from one person to another. A Remittance is an important service provided by banks to customers as well as non-customers. Since it is not a free service it is a source of income for the bank.

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11.4.2 Parties Involve In Remittances

There are four parties involved in remittance: Remitter Remittee Issuing Bank Paying Bank

11.4.3 Remitter
One who initiates, or requests for a remittance. The remitter comes to the issuing or originating branch, asks for a remittance to be made, and deposits the money to be remitted. The bank charges him a commission for this service. He may or may not be the branchs customer.

11.4.4 Remittee
A Remittee is also called the beneficiary, or the payee. The person in whose name the remittance is made. A remittee is also the one who receive the payment.

11.4.5 Issuing Bank

The bank that sends or affects the remittance, through demand drafts, telegraphic transfers, or Mail Transfers.

11.4.6 Paying Bank

Paying Bank also knows as the drawee branch. The branch on which the instrument is drawn. It has to make the payment (usually located in a different city country).

11.4.7 Instruments Used In Remittances

1. 2. 3. 4. Demand Draft (DD) Pay Order (PO) Pay Slip Call Deposit Receipt (CDR) ALLAMA IQBAL OPEN UNIVERSITY 31 | P a g e

5.

Cancellation of PO, DD & CDR

11.5 Demand Draft

Demand Draft is a negotiable instrument, which is drawn by one branch to another branch of the same bank. In case of agency arrangement Demand Draft can also be issued by one branch of the bank payable to other branch of the other bank e.g. DD issued by the BAL payable by UBL.

11.6 Pay Order

Pay order is a negotiable instrument made by the bank, on account of a customer, to pay on order the specified amount to the directed person (payee).

11.7 Telegraph Transfer

It is just a shape of Demand Draft. The difference is that it is not drawn on the specified branch. It can be drawn on any branch of the same bank. The paying bank has to verify the signatures and after verification payment is made.

11.8 Cancellation of PO, DD and CDR

After issuance of Pay Order, Demand Draft or Call Deposit Receipt by BAL-IBD Mcleod Road Branch, Lahore, if any one of these has to be cancelled by the customer, it is returned in the bank. Then, after deducting the cancellation charges of Rs.100 for PO and Rs. 200 for DD, the remaining (net) amount is paid to the customer.

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12. ACCOUNTS DEPARTMENT

12.1 Accounts Department

In any Bank the accounts department plays a major role. In Bank Alfalah Limited- Islamic Banking, the burden of the accounts department is largely reduced because of computerization. The use of the computer system increases the efficiency and pace of the banks work. Following activities are carried out in the accounts department: Budgeting o o Preparation of monthly budget review Preparation of monthly performance review

Reports o o o o o Preparation of daily reporting Preparation of weekly reporting Preparation of monthly reporting Preparation of quarterly reporting Preparation of semi annually reporting

Funds management Activity checking Reconciliation Fixed Assets, Record, Depreciation, Maintenance, Insurance & Approvals ALLAMA IQBAL OPEN UNIVERSITY 33 | P a g e

12.2 Account Department Also Performs Following Activities.

Expense Management o o o Payment of all petty cash Payment of all capital expenditures Payment of inter branch expense

Taxation o o Deduction of withholding tax and deposit into SBP Filing of tax returns

Pay Role Monthly closing Monitory & Monthly Closing Statement Preparation Leave Record & General Administration. 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)

The bank does not make payment of a cheque bearing a six month or older date. If an account is not operated in six months, it is called dormant account. In our branch at Mcleod Road, Lahore, Account Manager is responsible for the filling of diesel in Generator. It is the responsibility of Operational Manager in other branches. ALLAMA IQBAL OPEN UNIVERSITY 34 | P a g e

13. FOREIGN TRADE DEPARTMENT

Trade Department deals within exports and imports. Mr. Saad Hayat and Mr. Iqbal Hussain at McLeod Road Branch supervise it. The bank acts as exporter as well as importer bank for different parties who are in the business of export and import.

13.1 Import
All goods and services brought into a country that were purchased from organization located in other countries.

13.1.1 Imports Feature

L/C is opened by the importer. There are two types of L/C

Revocable L/C (Any party can revoke it without telling to any party at any time, It is not
used in Pakistan)

Irrevocable L/C (No one can revoke it)

Documents For Import

Performa invoice signed by importer Category passbook copy attested by any bank L/C opening application filled in by the customer Import registration Annexure B ALLAMA IQBAL OPEN UNIVERSITY 35 | P a g e

Verification of signature by S.S. Card L/C issued on basis of L/C application form. Insurance if covered by buyer. Insurance cover note. Insurance policy. Promissory note L/C commission L/C Margin

13.1.3 Requirement For The Importer

These requirement / document must be fulfilled from importer before doing the import: NTN Sale Registration Certificate

13.2 Export
All goods and services sent from one country to another country.

13.2.1Export Feature Document Required For Exporter

1. National tax number 2. Registration of Exporter 3. Sales tax registration

Documents To Be Attached For Exporters

Commercial Invoice ALLAMA IQBAL OPEN UNIVERSITY 36 | P a g e

 Bill of lading Packing list o Total quantity o Net weight / carton o Gross weight / carton o Total net weight / carton o Total gross weight Bill of exchange (original or draft) E-form: Initial document on which total export proceeding is based. In this form, all the conditions are given, which are necessary for exports. Letter of credit: It is written agreement between importer and exporter. Beneficiary certificate. Insurance Certificate of Origin (Form A)

14. CASH DEPARTMENT

Cash department of Bank Alfalah Limited works under the Manager Operations Mr. Saqib Nawaz. Chief Cashier is Mr. Haji Muhammad and four cashiers are Mr. Azher-Ul-Haq, Mr. Usman Tariq Bhatti, Mr. Waheed-ur-Rehman and Mr. Salman Ahmad. They all report to C.D Incharge Mr. ALLAMA IQBAL OPEN UNIVERSITY 37 | P a g e

Zubair Aslam and who ultimately reports to Manager Operations. Though they didnt allow me to go in this department but I gather some data and knowledge from them. This department is given the complete responsibility of cash, as result of transaction in touch local and foreign currencies. It is also responsible for the book keeping of these transactions and the safe custody of cash. The officers in this department are called teller and there were 5 tellers at the counter. This department involves in two activates:a) Cash receipts b) Cash payments

14.1 Cash Receipts

In cash department depositors use deposit slip for depositing the amount into their accounts. The officer checks if the deposit slip is properly filled up containing Title of account. Account number Date Amount in words and figures. Detail on both counter file and cash receipt voucher should be the same. Cash is received by cash receiving officer, twice counted and matched with the deposit slip. The cash details are written on the back of the deposit slip and are also entered in cash receiving register. Cash received stamp is affixed on the face of the deposit slip along with the signature of the cash receiving officer.

Deposit slip and cash receiving register is given to the officer in the cash department. The officer cash department both on cash receipt and cash receiving register makes again proper scrutiny. Officer cash department signs both the deposit slip and register. Deposit slip is credited and posted ALLAMA IQBAL OPEN UNIVERSITY 38 | P a g e

in the concerned accounted in the system. Counter folio is given the deposition as receipt. One consolidated cash debit voucher is posted in the system to balance the cash.

14.2 Cheque Encashment Procedure

Cheque Encashment are made in four steps, these are:a. Receiving Of Cheques b. Verification Of Signature c. Computer Terminal Process d. Payment Of Cash

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15.FINANCIALS

16 .FIVE YEARS FINANCIAL SUMMARY

2005 OPERATIONAL RESULTS Total Income UNIVERSITY 40 | P a g e 14,515 24,416 31,822 36,292 40,743 ALLAMA IQBAL OPEN 2006 2007 2008 2009

Operating Expenses Profit before Income Tax and Provision Profit before Income Tax Profit after Taxation BALANCE SHEET Shareholders' Equity Total Assets Advances - net of provision Investments- net of provision Deposits and other accounts OTHERS Imports Exports RATIOS Capital Adequacy Profit before Tax ratio (PBT/Gross mark up income) Gross spread ratio (Net mark up income/gross mark up Expense Income / income) ratio Return on Average Equity (ROE) Return on Average Assets (ROA) Advances/Deposits Ratio Cash Dividends Stock Dividend Book value per share excluding revaluation of Assetsvalue per share including revaluation of Book AssetsEarnings per share Basic No.of Employees(other than outsourced)

4,344 2,966 2,563 1,702

5,918 3,264 2,566 1,763

8,289 6,906 4,536 3,130

10,623 3,831 1,795 1,301

11,002 4,711 1,016 897

6,738 10,573 13,767 248,314 275,686 328,895 118,864 149,999 171,199 57,416 56,502 88,492 222,345 239,509 273,174

14,609 348,991 192,671 75,973 300,733

19,770 389,070 188,042 99,160 324,760

116,210 119,937 184,305 71,847 70,844 79,090 8.66 20.93 41.17 3.34 30.65 0.84 53.46 12
-

190,289 93,406 8.03 5.78 34.51 3.42 9.17 0.38 64.07 15% 23% 18.27 21.32 1.63 7,584

197,304 100,493 12.46 2.86 30.67 3.70 5.22 0.24 57.90

-

9.48 12.11 28.12 4.13 20.37 0.67 62.63

-

9.85 17.59 35.54 3.84 25.72 1.04 62.67

-

33.33 21.15 24.48 2.91 6,543

30.00 21.18 24.95 3.92 7,371

12.5% 14.65 16.41 0.71 7,462

22.46 24.88 3.92 5,218

17.

BALANCE SHEET

AS AT DECEMBER 31, 2009

2005 UNIVERSITY 41 | P a g e 2006 2007 2008 2009

ALLAMA IQBAL OPEN

ASSETS Cash and Balances with Treasury Banks Balances with other Banks Landings to Financial Institutions Investments Advances Fixed Assets Deferred Tax Assets Other Assets 24,798,070 9,713,369 27,050,493 57,416,255 118,864,010 6,620,067 3,851,529 248,313,793 LIABILITIES Bills payable Borrowings Deposits And other Accounts Sub-Ordinated Loans Liabilities against Assets Subject to Finance Lease Deferred Tax Liabilities Other Liabilities 3,733,124 5,844,389 222,345,067 3,223,355 484,066 5,219,666 240,849,667 NET ASSETS REPRESENTED BY Share Capital Reserves Unappropriated profit 3,000,000 1,851,218 1,886,845 5,000,000 2,749,533 2,823,072 6,500,000 2,414,833 4,851,840 7,995,000 3,166,056 3,447,467 13,491,563 3,587,969 2,690,728 7,464,126 3,091,135 8,394,130 239,509,391 3,222,106 1,921,338 7,305,496 263,443,596 12,241,945 4,138,243 21,230,697 3,452,031 13,690,222 3,766,144 20,653,921 324,759,752 7,570,181 179,851 10,006,786 366,936,635 22,133,420 27,859,360 12,731,952 12,456,653 56,502,210 149,999,325 10,502,990 5,633,,051 275,685,541 29,436,378 18,380,738 3,452,059 88,491,564 32,687,335 21,531,043 3,315,500 75,973,238 35,056,012 22,722,639 14,947,435 99,159,957 188,042,438 14,492,194 14,649,380 389,070,055

171,198,992 192,671,169 11,922,324 6,013,097 13,773,293 8,989,186

328,895,152 348,990,764

273,173,841 300,732,858 3,220,858 1,379,809 9,531,860 2,571,169 208,465 11,291,280

312,675,308 331,946,025 16,219,844 17,044,739

ALLAMA IQBAL OPEN UNIVERSITY 42 | P a g e

6,738,063

10,572,605

13,766,673

14,608,523

19,770,260

Surplus on Revaluation of Assets net of tax

726,063 7,464,126

1,669,340 12,241,945

2,453,171 16,219,844

2,436,216 17,044,739

2,363,160 22,133,420

18. Profit And Loss Account Of Five Years

Mark-Up / Return / Interest Earned Mark-Up / Return / Interest Expensed Net Mark-Up / Interest Income Provision Against Non Performing Loans And Advances Provision For Diminution In Value Of Investments Bad Debts Written Off Directly Net Mark -Up / Interest Income After Provision 4,639,009 5,259,357 6,786,197 7,172,032 6,835,605 2005 12,246,811 7,204,992 5,041,819 -402,298 -512 -402,810 2006 21,191,470 15,232,886 5,958,584 -697,690 -1,537 -699,227 2007 25,783,871 16,620,963 9,162,908 2,370,867 5,844 2,376,197 2008 2009 31,046,583 35,561,312 20,331,194 24,654,180 10,715,389 10,907,132 2,035,997 1,479,062 28,298 3,543,357 3,694,546 317,164 59,817 4,071,527

Non-mark- Up / Interest Income

Fee, Commission And Brokerage Income Dividend Income Income From Dealing In Foreign Currencies Gain On Sale Of Securities Unrealized (Loss) / Gain On Revaluation Of Investments Classified As Held Of Trading Other Income Total Non-Mark -Up / Interest Income 23,163 504,967 2,268,533 6,907,542 -27,599 842,099 3,224,639 8,483,996 -21,530 1,031,372 6,038,466 12,824,663 -181,571 1,247,669 5,245,427 12,417,459 2,849 1,309,527 5,182,253 12,017,858 1,158,747 52,014 290,091 239,551 1,804,998 37,393 386,997 180,751 2,429,599 64,722 474,510 2,059,793 2,539,321 300,943 914,845 424,220 1,913,004 248,217 1,019,732 688,924

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Non Mark-Up / Interest Expenses Administrative Expenses Other Provision / Write Off Other Charges Total Non Mark-Up / Interest Expanses Extra Ordinary / Unusual Items Profit Before Taxation Taxation Current Perior Years Deferred Profit After Taxation Unappropriated Profit Brought Forward Transferred From Surplus On Revaluation Of Fixed Assets Profit Available For Appropriation 4,313,023 10,125 21,104 4,344,252 2,563,290 2,563,290 592,635 1,037 267,524 861,196 1,702,O94 860,300 24,870 2,587,264 5,874,745 43,306 5,918,051 2,565,945 2,565,945 476,226 -100,874 427,902 803,254 1,762,691 1,886,845 26,074 3,675,610 8,272,587 6,959 9,565 8,289,111 4,535,552 4,535,552 1,726,810 -321,487 1,405,323 3,130,229 2,823,072 24,585 5,977,886 10,471,399 28,582 122,758 10,622,739 1,794,720 1,794,720 1,730,051 -221,797 -1,014,835 493,419 1,301,301 4,851,840 24,586 6,177,727 10,923,507 -1,419 79,454 11,001,542 1,016,316 1,016,316 1,066,301 -767,346 -179,674 119,281 897,035 3,447,467 24,696 4,369,198

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19. RATIO ANALYSIS ABBRIVATION USED IN CALCULATIONS

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Net Mark Up Income Gross Mark Up Income Gross Spread Ratio Total Shareholder Equity Return On Equity Total Assets Return On Assets Net Sale Total Assets Total Assets Turnover Ratio Net Sale Fixed Assets Fixed Assets Turnover Ratio Total Outstanding Shares Earning Per Share Total Shareholder Equity Total Outstanding Shares Book Value

NMI GMI GSR TSE ROE TA ROA NS TA TATR NS FA FATR TOS EPS TSE TOS BV

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20. Ratio Analysis

PROFITABILITY RATIO ALLAMA IQBAL OPEN UNIVERSITY 47 | P a g e

MARKET RATIO ACTIVITY RATIO LEAVERAGE RATIO

20.1 PROFITIABILITY RATIO

Profitability ratios are the measure of the performance of the company

NET PROFIT AFTER TAX = 2005 EAT IE NPAT 1,702,O94 12,246,811 13.89 2006

EAT/IE 2007 3,130,229 25,783,871 12.14 2008 1,301,301 31,046,583 4.29 2009 897,035 35,561,312 2.52

1,762,691 21,191,470 8.32

GROSS SPREAD RATIO = 2005 NMI GMI GSR 5,041,819 12,246,811 41.26

NMI/GMI 2006 5,958,584 21,191,470 28.12 2007 9,162,908 25,783,871 35.53 2008 10,715,389 31,046,583 34.51 2009 10,907,132 35,561,312 30.77

RETURN ON EQUITY =
UNIVERSITY

EAT/TSE
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2005 EAT TSE ROE 1,702,O94 6,738,063 25.36

2006 1,762,691 10,572,605 16.67

2007 3,130,229 13,766,673 22.73

2008 1,301,301

2009 897,035

14,608,523 19,770,260 8.91 4.54

RETURN ON ASSETS =
2005 EAT TA ROA 1,702,O94 248,313,793 .68 2006

EAT/TA
2007 3,130,229 328,895,152 .95 2008 1,301,301 2009 897,035

1,762,691 275,685,541 .64

348,990,764 389,070,055 .37 .23

LOAN / DEPOSIT RATIO =

2005 LOAN DEPOSIT L/D RATIO 2006

L/D
2007 2008 2009

118,864,010 149,999,325 171,198,992 192,671,169 188,042,438 222,345,067 239,509,391 273,173,841 300,732,858 324,759,752 53.45 62.63 62.67 64.16 57.90

Interpretation
Profitability ratios have revealed that the bank performance has inconsistent behavior and in 2009 it was at the worst position it ever had. The performance is badly affected in the last few years. And it is result of the extreme wave of the terrorism and changed political scenario.

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20.2 ACTIVITY RATIO

Activity ratios tell about efficiency of the bank. . These ratios are also called asset utilization ratios. It tells us that how efficiently assets are utilized.

TOTAL ASSET TURNOVER RATIO=

2005 NS TA TATR 12,246,811 248,313,793 4.93 2006 21,191,470 275,685,541 7.68 2007

NS/TA
2008 31,046,583 2009 35,561,312

25,783,871 328,895,152 7.83

348,990,764 389,070,055 8.89 9.14

FIXED ASSETS TURNOVER RATIO =

2005 NS FA FATR 12,246,811 6,620,067 184.99 2006 21,191,470 10,502,990 201.76 2007

NS/FA
2008 31,046,583 13,773,293 225.41 2009 35,561,312 14,492,194 245.48

25,783,871 11,922,324 216.36

Interpretation

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Activity ratios point out the worst efficiency of the bank. Our banks all the activity ratios are very low, which reveals that the bank is not utilizing its assets efficiently. The company has to improve or increase its sales, so that it can improve its asset utilization. And bank improves the way of working and its turn over of fixed asset was consistently increases. And also the deposits turn over as well.

20.3 MARKER RATIO:

Market measures tell the performance of the company in the market.

EARNING PER SHARE RATIO =

2005 EAT TOS EPS 1,702,O94 3,000,000 56.73 2006 1,762,691 5,000,000 35.35 2007

EAT/TOS
2008 1,301,301 2009 897,035

3,130,229 6,500,000 48.25

7,995,000 13,491,563 16.37 6.65

BOOK VALUE =
2005 TSE TOS BV 6,738,063 3,000,000 224.6

TSE/TOS
2006 10,572,605 5,000,000 211.55 2007 13,766,673 6,500,000 211.79 2008 2009

14,608,523 19,770,260 7,995,000 13,491,563 182.72 146.54

REVALUATION PER SHARE RATIO =

SOR/TOS

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2005 SOR TOS RPS 726,063 3,000,000 24.20

2006 1,669,340 5,000,000 33.48

2007 2,453,171 6,500,000 37.74

2008 2,436,216 7,995,000 33.57

2009 2,363,160 13,491,563 17.52

Interpretation
If we see the DPS we can say that company is not announcing dividends consistently. Earning per share has increased from 2005 to 2007 but in 2008 and in 2009 it is quite low. Market performance of the bank is not quite promising. Book value is showing a continuous trend of declining. Bank has to work over its portfolio and has to diversify it. RPS had increased in spite of 2005 it was better in 2006, 2007 and even in 2008 the condition was stable but in 2009 it really effected by the instability of conditions.

20.5 LEVERAGE RATIO

Leverage ratios tell us about the capital structure of the company

DEBT TO EQUITY =
2005 TD TSE DE 5,844,389 6,738,063 86.73 2006

TD/TSE
2007 21,230,697 13,766,673 154.21 2008 2009

8,394,130 10,572,605 79.49

13,690,222 20,653,921 14,608,523 19,770,260 93.71 104.46

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DEBT TO TOTAL ASSET =

TD/TA

2005 TD TA DTA 5,844,389 248,313,793 2.35

2006 8,394,130 275,685,541 3.04

2007 21,230,697 328,895,152 6.55

2008 13,690,222

2009 20,653,921

348,990,764 389,070,055 3.92 5.31

Interpretation
The ratio of the bank is an average is varying throughout the last four years. It reveals that banks operating income is times more than its debt obligations. It is very evident from the leverage ratios that bank is using extensive leverage for its operations.

21. HORIZONTAL ANALYSIS OF FIVE YEARS BALANCE SHEET

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2005 ASSETS Cash and Balances with Treasury Banks Balances with other Banks Landings to Financial Institutions Investments Advances Fixed Assets Deferred Tax Assets Other Assets TOTAL ASSETS LIABILITIES Bills payable Borrowings Deposits And other Accounts Sub-Ordinated Loans Liabilities against Assets Subject to Finance Lease Deferred Tax Liabilities Other Liabilities TOTAL LIABILITIES NET ASSETS REPRESENTED BY Share Capital Reserves Unappropriated profit Surplus of revaluation of assets TOTAL LIABILITY & SHARE CAPITAL
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% -

2006
112.34% 131.07% 4.61% 98.40% 126.19% 158.65% 146.26% 111.02% 82.81% 143.62% 107.72% 99% 396.90% 139.96% 109.38% 164.00% 166.60% 148.53% 149.61% 157% 229.92% 164.01

2007
118.70% 189.23% 1.27% 154.13% 144.03% 180% 156.12% 132.45% 110.80% 363.26% 122.86% 99% 285.00% 182.61% 129.82% 217.30% 216.66% 130.44% 257.14% 204.31% 337.87% 217.30%

2008
131.81% 222.17% 1.22% 132.32% 162% 208% 233.39% 140.54% 92.47% 234.24% 135.25% 797.60% 43.06% 216.32% 137.82% 228.35% 266.50% 171.03% 182.71% 216.80% 335.54% 228.35%

2009
141.36% 233.93% 5.53% 172.70% 158% 218.91% 380.35% 156.68% 100.88% 353.39% 146.06% 234.00%

37.15% 191.56% 152.35% 296.53% 449.72% 193.80% 142.60% 293.41% 325.47% 296.53%

22.VERTICAL ANALYSIS OF FIVE YEAR BALANCE SHEEET

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ASSETS Cash and Balances with Treasury Banks Balances with other Banks Landings to Financial Institutions Investments Advances Fixed Assets Deferred Tax Assets Other Assets TOTAL ASSETS LIABILITIES Bills payable Borrowings Deposits And other Accounts Sub-Ordinated Loans Liabilities against Assets Subject to Finance Lease Deferred Tax Liabilities Other Liabilities TOTAL LIABILITIES NET ASSETS REPRESENTED BY Share Capital Reserves Unappropriated profit TOTAL SHAREHOLDER EQUITY Surplus on Revaluation of Assets net of tax TOTAL LIBALITY & SHARE CAPITAL

2005 9.98% 3.91% 10.89% 23.13% 47.86% 2.67% 1.55% 100% 1.50% 2.35% 89.54% 1.30% 0.19% 2.10% 96.99% 3.01% 1.21% 0.75% 0.76% 2.71% 0.29%

2006 10.10% 4.62% 4.52% 20.50% 54.41% 3.81% 2.04% 100% 1.12% 3.04% 86.88% 1.17% 0.70% 2.65% 95.56% 4.44% 1.81% 0.99% 1.02% 3.84% 0.61%

2007 8.95% 5.58% 10.59% 26.91% 52.05% 3.62% 1.83% 100% 1.26% 6.46% 83.06% 0.98% 0.42% 2.90% 95.07% 4.93% 1.98% 0.73% 1.47% 4.19% 0.75%

2008 9.37% 6.18% 0.95% 21.77% 55.91% 3.95% 2.83% 100% 0.99% 3.92% 86.17% 0.74% 0.06% 3.24% 95.12% 4.88% 2.29% 0.90% 0.98% 4.19% 0.70%

2009 11.09% 5.84% 3.84% 25.48% 48.33% 3.72% 3.76% 100% 0.97% 5.31% 83.57% 1.95% 0.05% 2.57% 94.31% 5.68% 3.46% 0.92% 0.69% 5.08% 0.61%

100%

100%

100%

100%

100%

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ALLAMA IQBAL OPEN UNIVERSITY 56 | P a g e

23. FINANCIAL HIGHLIGHTS

ALLAMA IQBAL OPEN UNIVERSITY 57 | P a g e

23.1 Graphical Representation of Ratio Analysis

2005

Capital Adequacy Ratio

Profit before Tax ratio Gross spread ratio Net Mark up income/gross mark up income Income/Expense ratio

Return on Av erage Equity (ROE) Return on Av erage Assets (ROA) Adv ances/Deposits Ratio

ALLAMA IQBAL OPEN UNIVERSITY 58 | P a g e

2006

Capital Adequacy Ratio

Profit before Tax ratio Gross spread ratio Net Mark up income/gross mark up income Income/Expense ratio

Return on Av erage Equity (ROE) Return on Av erage Assets (ROA) Adv ances/Deposits Ratio

2007

Capital Adequacy Ratio

Profit before Tax ratio Gross spread ratio Net Mark up income/gross mark up income Income/Expense ratio

Return on Av erage Equity (ROE) Return on Av erage Assets (ROA) Adv ances/Deposits Ratio

ALLAMA IQBAL OPEN UNIVERSITY 59 | P a g e

2008

Capital Adequacy Ratio Profit before Tax ratio Gross spread ratio Net Mark up income/gross mark up income Income/Expense ratio Return on Av erage Equity (ROE) Return on Av erage Assets (ROA) Adv ances/Deposits Ratio

2009
C pita Adequa y a l c P rofit before T x ra a tio (P T G sma up B / ros rk inc ome) G ss ros prea ra (Net d tio m rkup inc a ome/g s ros m rkup inc a ome) Inc ome / E xpens ra e tio R eturn on Avera e E g quity (R ) OE R eturn on Avera e As ets g s (R OA) Adva es epos R tio nc /D its a

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23.2 Graphical Representation of Financials

45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2005 2006 2007 2008 2009 Profit after Taxation Total Income Operating Expenses Profit before Income Tax and Provision Profit before Income Tax

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23.3 GRAPHICAL REPRESENTATION OF BALANCE SHEET

400000 350000 300000 250000 200000 150000 100000 50000 0 2005 2006 2007 2008 2009 BALANCE SHEET Shareholders' Equity Total Assets Advances - net of provision Investments- net of provision Deposits and other accounts

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23.4 Graphical Representation of Foreign Exchange Business

200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2005 2006 2007 2008 2009 Imports Exports

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350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2005

Im ports Exports

2006

2007

2008

2009

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70 60 50 40 30 Return on Average Equity (ROE) 20 10 0 2005 2006 2007 2008 2009 Return on Average Assets (ROA) Advances/Deposits Ratio Capital Adequacy Profit before Tax ratio (PBT/Gross mark up income) Gross spread ratio (Net mark up income/gross mark up income) Income / Expense ratio

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24. SWOT ANALYSIS

24.1 STRENGTHS 24.1.1Environment Is Healthy For Workers
Bank Alfalah Limited Working environment is healthy and sound for workers. Branches are well furnished with all latest facilities. Cooperation and stress free environment are the strength of Bank Alfalah Limited.

24.1.2Banks Goodwill
Bank Alfalah Limited is a big brand and has a strong goodwill both among corporate and consumer sector.

24.1.3Loyal Staff
One the major strength of Bank Alfalah Limited is its human capital. Bank Alfalah Limited has committed and a loyal staff who works for the betterment of and improvement bank without making consideration on time. They sit late hours without any over time.

24.1.4 ustomer Services

Bank Alfalah Limited is providing excellent customer services. Highly trained team of Customer Services Managers and CROs are committed to long lasting relationships by satisfying customers in all aspects.

24.1.5 Understand And Support Client Needs

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The Bank's primary commitment is to understand and support clients' business objectives and financial needs. At Bank Alfalah Limited all is ensured through constant restraining regimes.

24.1.6 raining And Development

To meet the market scenarios and to be the market leader Bank Alfalah Limited dedicate towards employees training. All officers are trained in training and developments centre which providing competitive advantage to bank.

24.1.7Leader In Consumer Banking

Bank Alfalah Limited always been a leader in developing a wider spectrum of innovative financial products based on consumer needs and is known to be the most aggressive player in the arena of consumer banking.

24.1.8Fastest Growing Bank

Bank Alfalah Limited is the fastest growing bank regarding expansion of branches network and financial position.

24.1.9Social Welfare
Bank Alfalah Limited also committed to societal welfare. Bank has an association with SOS Childrens Village and participates in fund raising for SOS and provides sponsorships for different programs.

24.1.10 Aggressive Promotion

Bank Alfalah Limited sponsoring major events like Bank Alfalah Limited sponsor golf tournament and squash tournament. Through aggressive marketing they are capturing huge market. ALLAMA IQBAL OPEN UNIVERSITY 67 | P a g e

24.2 WEAKNESSES
24.2.1 Limited Excellent Grades
Bank Alfalah Limited gives grades to their employees according to their performance. Each branch can only give seven excellent grades which results in increment of their income. Now if they have 10 employees in excellent grade, they put just seven in excellent grade which results in low morale level of employees. 24.2.2

I.

T System
Bank Alfalah Limited I.T system is not as good as should be. There is a need of improvement and up-gradation. System always stuck and slow.

24.2.3Work load
There excess work load on employees of Bank Alfalah Limited. The sit late hours and there is no over time for that which may cause employees disappointment and increase the ratio of employees to left the organization.

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24.3 OPPORTUNITIES
24.3.1 Overseas Operations
Bank Alfalah Limited has the opportunities to expand its network in foreign countries. Currently Bank Alfalah Limited working in Bangladesh and Afghanistan. In future India, Srilanka, Central Asia can be the markets for the Bank Alfalah Limited. 24.3.2

xploration of New Areas

Bank has the opportunities to enter new ways of banking through SMS- banking, E-mail statements which can give new trends to banking and can ease the customer.

24.4 THREATS
24.4.1 Regulatory Frame Work
SBP regulation policies and rules changes time to time which can be threat for bank. Like minimum capital ratio, maintenance of branches network according to SBP policies. 24.4.2

oreign Banks

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Foreign banks entering in market with strong financial backup. Like Dubai Islamic Bank, Emirates Global International Bank, Bahrain Islamic Bank.

24.4.3Industry Slump
In Pakistan economy size not increasing and there is no establishment of new industry which is not a healthy sign for banking sector.

24.4.5

nstable Political Governments

In Pakistan there is no political stability. Governments changes rapidly and within the changes in governments policy and laws also changes which creates hurdles for business and industry.

24.4.6International Checks
International monitoring and checks increases due to the fear of terrorism, money laundering, and usage of funds for terrorism.

24.4.7Competitors
Emerging banks may become a threat to Bank Alfalah Limited, as they are targeting small segments of society very effectively. The service quality of foreign banks is way above the level of local banks.

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25. PEST ANALYSIS

25.1 Political Environment
1. Government encourage a sound financial industry 2. Inconsistent Government Policies because of instability in the country 3. Electricity problem created by bad Policies increase expense of Bank 4. Govt. is privatizing government owned banks that will increase competition. 5. More and more new banks are being given license by the Govt. that will increase competition.

25.2 Economic Environment

1. There has been economic instability in the country 2. Because of world crisis, Pakistan also hit a bit badly. 3. People dont have the money to buy necessities so how could they buy other products from Bank Alfalah Limited-IBD. 4. As far as the rate of profit is concerned it is declining than it was in the past so people are reluctant to deposit their money in banks. 5. Since the export sanctions are updated, the trade financing departments of branch have become much busy. ALLAMA IQBAL OPEN UNIVERSITY 71 | P a g e

25.3 Social Environment

1. Pakistan is facing much problem as people buying power is much low 2. We are not saving economy, but consumption oriented economy. We just save 14% of our National Income 3. Most people are risk averse investors so they prefer to keep their money with banks rather than investing somewhere else. 4. Trust in banking sector is much in Pakistan. So Bank Alfalah Limited dont have much problem in finding it.

25.4Technological Environment
1. The overall technological environment for this industry is favorable. 2. Bank Smart is the software which they are using. 3. New Software for banking operations has evolved. 4. Technological advancements constantly bring new machines, which have the ability to produce more. 5. It makes the process of the faster than before. 6. Online banking is the key in Bank Alfalah Limited now.

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26. CONCLUSION
The economy of the country is not in good way but with the investment favorable policies and their smooth implementation, the role of banks in todays economy have become an important one. It has been five years since the establishment of Bank Alfalah Limited, and since its establishment it has aimed to become the leading Islamic bank of Pakistan by that provides outstanding services to its customers. The bank has seen phenomenal growth in the past few years by opening more branches in the country, increasing the deposit base, while also increasing the assets and profits of the bank. The services that Bank Alfalah Limited Islamic Banking provides have a great market penetration not only because of their features but also the profit and markup rates that they charge. Also the products that Bank Alfalah Limited provides cater to sector of the economy. After the birds eye view of all the ratios, I am going to conclude that the future of Bank Alfalah Limited is very bright and will grow more rapidly. Bank Alfalah Limited can meet all the short and long term financial obligations very easily because the short term solvency of Bank Alfalah Limited ALLAMA IQBAL OPEN UNIVERSITY 73 | P a g e

is very strong as well as long term solvency. Bank Alfalah Limited is the best and will remain best in its field. In the last section, I would like to give some recommendations and is hoped that if they are implemented will bring benefits to Bank Alfalah Limited.

27. RECOMMENDATIONS
Bank Alfalah Limited is at its peak at the moment, so I dont have much recommendation for them but still we always find room for improvement. There are some recommendations according to my mind.

27.1 Placements of Employees

There are some departments in the bank that do not have enough employees, while some have more than needed. All this creates inefficiencies and so the operations manager should look at the department of the branch and see where inefficiencies lie, in consultation of with the heads of the departments and hire individuals where there are less employees or rotate employees from other departments.

27.2 Technological Advancements

Bank Alfalah Limited should develop a modern connectivity architecture to effectively maintain an online connection of the branch with other branches and also the ATM link, which may include ALLAMA IQBAL OPEN UNIVERSITY 74 | P a g e

using modern technologies like fiber cables, routers etc. Also backup links should also be developed.

27.3 Workshops and Counseling

Work shop programs should be conducted in every city, rather than just two centers, for all Bank Alfalah Limited employees. These workshops should relate to all aspects of banking and may also be conducted with other banks as a joint program also as parts of the human resource training, counseling programs should be started for junior executives or new entrants into the bank, introducing them to their prospects in this industry.

27.4 Incentives
Incentive schemes should be developed for the employees that can help motivate them, which might include: Scholarship programs for all employees. Introducing employee awards at branch and regional levels. Increments should come more early.

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28. REFERENCES
28.1 Bank Alfalah Limited-IBG - McLeod Road, Lahore. This is the major source of this report. During my internship period I was rotated in the following departments from where I gathered information about the department working for the completion of my internship report. Account Opening Customer Services Corporate Banking Consumer Banking ALLAMA IQBAL OPEN UNIVERSITY 76 | P a g e

Foreign Trade Cash Department Accounts Department

All I learnt from them, I put it in this report and all the data which I required, they give it to me.

28.2 Web Resources

Bank Alfalah Limited (www.bankalfalah.com) The Daily Times Newspaper (www.dailytimes.com.pk) Wikipedia (www.wikipedia.com) State Bank of Pakistan (www.sbp.org.pk)

28.3 Reports

Annual Report Bank Alfalah Limited 2005 Annual Report Bank Alfalah Limited 2006 Annual Report Bank Alfalah Limited 2007 ALLAMA IQBAL OPEN 77 | P a g e

UNIVERSITY

Annual Report Bank Alfalah Limited 2008 Annual Report Bank Alfalah Limited 2009 Banking Statistics of Pakistan 2008

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