FAYSAL BANK LIMITED

PREFACE

Internship training program provide a chance to students to make them familiar with the actual business environment. It also provides an opportunity to study the theories of books in practice. This is the reason why the student of University of Central Punjab (FOC) required to complete the internship program at any reputable institution/organization. After completing internship it is required to write an internship report, covering all the aspects of that organization. This is report written on Faysal Bank Ltd, which is divided in to seven parts covering all the aspect, working and behavior of organization.

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ACKNOWLEDGMENT

By the grace of ALLAH almighty, who has enabled me to do this entailing hard work. It is a matter of pleasure and privilege for me to complete the internship and also to complete this internship report on Faysal Bank, Bedian Road Branch, Lahore Cantt. I would like to thank Prof. Azhar Ikram for giving us the opportunity for doing this internship. This work helped us to apply the theoretical concepts and learn the practical aspects of a bank. I would also like to thank Ms Nosheen Talat for her valuable guidance and help throughout this period. I would like to thank Mr. Muhammad Malik Parvaz Awan Manager of Faysal Bank Bedian Road Branch who allowed me to work with their team. I am most humbly thankful to all the employees of Faysal Bank Beadian Road Branch and especially to these personalities Mr. Rao Zahid Khalil (OM) Mr. Muhammad Shahbaz Ms. Zahida Javaid Ms. Natasha Yasmin Mr. Raja Aftab Iqbal for their continuous support and precious time with me.

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FAYSAL BANK LIMITED TABLE OF CONTENTS

1 Executive Summary 2 Introduction To FBL 2.1 History 2.2 Group Information 2.3 Board of Directors 2.4 Management Information 3 Values 3.1 Threshhold Values 3.2 Differentiator Values 4 Products 4.1 Accounts 4.2 Customer Loans 4.3 Corporate Finance & Investment 5 Services 6 Branch Inner View 7 Financial Analysis 7.1 Current performance 7.2 External Envoirment 7.2.1 Social Envoirment 7.2.2 Task Envoirment 7.3 Three Years Financial Summery 7.4 SWOT Analysis 7.5 Performance 7.5.1 Financial Objectives 7.5.2 Other Objectives 8 Major Activities 8.1 Deparments of FBL 8.1.1 Account Opening Dep 8.1.2 Cash Deparment 8.1.3 Remittance Dep 8.1.4 Clearing Dep 8.1.5 Agri Dep 9 Conclusion 10 Recommendations 11 Boblography 26 31 32 33 34 36 37 38 10 14 15 17 18 19 19 20 22 23 24 24 8 9 Page # 4 5 5 6 7

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1. Executive Summary
Pakistan after getting its independence, did not inherit a strong banking industry and since then saw a number of events in the industry, like the nationalization of banks in the 1970s. However today, the banking industry of Pakistan has been growing over the past few years, mainly because of the consistent policies implemented by the Government of Pakistan, including the privatization of banks in Pakistan. Also the State Bank of Pakistans, monetary policy has been very friendly toward the banking industry. There are a number of different banks established in Pakistan, including local incorporated commercial banks, foreign incorporated commercial banks, development financial institutions, investment banks, housing finance companies, micro finance banks and Islamic banks. Faysal Bank Limited (FBL) started its operations in 1995 as a local bank of Pakistan. On January 1, 2002, Al Faysal Investment Bank Limited, another group entity in Pakistan, merged into Faysal Bank Limited which resulted in a larger institution. The majority share holding of Faysal Bank Limited is held by Ihtmaar Bank B.S.C an investment bank listed in Bahrain, while it has one subsidiary i.e. Faysal Management Services (Pvt.) Limited (FMSL). The company is committed to its clients' best interests as well as preserving a good relationship by defining realistic objectives. Faysal Bank is continuously innovating, delivery creative and high-quality solutions which fit best its clients needs. It maintains a high ethical standards and unconditional compliance with regulations and laws. It values its integrity and actively promotes the know your customer policy amongst Faysal employees to ensure that the company is not involved in any money laundry operation. Hiring and retaining the best people while respecting diversity, encouraging self improvement, recognizing and rewarding merit are the key values of Faysal Bank.

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2. INTRODUCTION TO FAYSAL BANK

Faysal Bank is a public limited company listed with Karachi Stock Exchange. Faysal bank Limited is subsidiary of Ithmaar Bank of Bahrain.

2.1 History
Faysal Bank started operations in Pakistan in 1987, first as a branch set-up of Faysal Islamic Bank of Bahrain and then in 1995 as a locally incorporated Pakistani bank under the present name of Faysal Bank Limited. On January 1, 2002, Al Faysal Investment Bank Limited, another group entity in Pakistan, merged into Faysal Bank Limited which resulted in a larger, stronger and much more versatile institution. Faysal Bank Limited is a full service banking institution offering consumer, corporate and investment banking facilities to its customers. The Bank's widespread and growing network of branches in the four provinces of the country and Azad Kashmir, together with its corporate offices in major cities, provides efficient services in an effective manner. The strength and stability of Faysal Bank Limited is evident through the Credit Rating assigned by JCR-VIS Credit Rating Company Limited of "AA" (Double A) for long to medium term and "A-1+" (A One Plus) for short term. The majority share holding of Faysal Bank Limited is held by Ithmaar Bank B.S.C an investment bank listed in Bahrain.

2.2 Group Information

Ithmaar Bank B.S.C. is licensed by the Central Bank of Bahrain and listed on the Bahrain Stock Exchange (ITHMR). It has a paid-up capital of US$360 million, total equity of US$1.1 billion and is a full investment bank with its direct business covering the Middle East and North Africa (MENA) region, as well as South Asia, Asia-Pacific and Europe. Besides holding significant investments in the banking, financial services and real estate sectors in different markets, the main activities of the Bank include underwriting (equity and other financings), private equity (structuring, participation and portfolio management), Islamic financing, private banking, and advisory services covering project financing, investments, capital markets and mergers & acquisitions.

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Vision Excellence in all that we do. Mission Achieve leadership in providing financial services in chosen markets through innovation. Ownership Ithmaar Bank B.S.C, an investment Bank in Bahrain is the ultimate holding company of Faysal Bank. The remaining shareholders comprise of general public, NIT and other Pakistani institutions.

2.3 Board of Directors

Syed Naseem Ahmad Naveed A.Khan Graham Roderick Walker Mohammad A. R. Hussain Muhammad A Rahman Bucheerei Farooq Rahmatullah Tariq Iqbal Khan Shahid Ahmad Chairman President & CO Director Director Director Director Director Director

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2.4 Management Information
Management Team Naved A. Khan Nauman Ansari Aarij Ali Salman Ahmed Usmani Ahmed Kamran Mehreen Amin Nasir Islam Bashir A. Shaikh Syed Majid Ali President & CEO Head of Corporate & Investment Banking and Acting Head of Commercial Banking Head of Retail Banking & Acting Head of Strategic Development Head of Treasury Head of Services Head of Human Resources Head of Compliance Advisor on Special Assets and Acting Chief Risk Officer Chief Financial Officer

Senior Management Enamullah Khan Irfan A. Khan Yousuf Hussain Khaqan Khan Naved Inayet Farah Naz Ali Raza Siraj Ali Mithani Anwar Ahmed Meenai Iqbal Ahmed Zuberi Head of Equity & Capital Markets Head of Investment Banking Head of Corporate Banking (North) Head of Corporate Banking (South) Head of Cash Management & Financial Institutions Head of Consumer Finance Head of Agri Finance Head of Commercial (South) Acting Head of Islamic Banking Head of Policies & Procedures

Muhammad Abadullah Syed Kausar Nadeem Syed Nadeem Ahmed Awais Maqsood Anwer Umed Ali Samih H. Khan Seemin Shafi Zafar Bashir Arif Hasan Khan Syed Kazim Raza

Head of Centralized Operations Head of Treausry & Equity Capital Markets Back Office Head of Credit Administration Head of General Services Head of Information Technology Head of Payment Solutions & Product Development Head of Corporate Communications Head of Service Quality Head of Fraud Investigation Unit Head of Branch Distribution (South)

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3. VALUES
3.1 Threshold Values
Values at the heart of our Brand 1: Team Work We function as a team. Within function, we cooperate. Between functions, we collaborate. Together, we aim for excellence and leadership in our chosen markets. Our Team : Our Asset 2: Respect We hold our customers, Investors and regulators in high esteem. We up hold our customer rights to demand effient services. We appreciate and respect our profession and above all our bank Our Respect : Our duty 3: Integrity We are recognized by our realibity, credibility and character. We believe in ethical, honorable, time-proven principles of up rightness. We stand for and abide by honesty, truth and transparency Our Integrity : Our Identity 4: Professionalism We are proficient and efficient in all that we do. We provide banking services, knowledgeably and skillful. We up hold regulalatory obligations. Our professionalism : Our Competence

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3.2 Differentiator Values

Values that set our brand apart 5: Passion We bring zeal and enthusiasm for banking to work. We are excited to provide customers with the best or the best suited. We go the extra mile in legitimate, acceptable ways. Our Passion : Our Worth 6: Innovation We pioneer novel and more efficient ways to deliver solution. We are dedicated to a culture of improvement and modernization. We stand for originality, in thought in action and in belief. Our Innovation : Our strength 7: Responsiveness We are receptine to the need for change and improment. We are proactive and anticipate our customers needs and wants. We act quickly to modify, adjust or prepare for new realities. Our responsiveness : Our Distinguisher 8: Compassion Our concern for our colleagues, our customers, communities and our country sets us apart. To each other, we are a family. For each other, we are a meaningful source of shared humanity. Our Compassion : Our Gift

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4. PRODUCTS
4.1 Accounts
1: Faysal Savings Faysal Savings is specially designed to cater to your hard earned savings. Features

Account can be opened with an initial deposit of Rs. 10,000/. Profit is calculated on monthly minimum balance. Profit is paid on six monthly basis. Access to account through on-line banking at all Faysal Bank branches across Pakistan. Easy access through cheque book and Pocketmate Visa Debit card. Pocketmate can be used at more than a million ATMs and 29 million point of sale (POS) terminals around the world

2: Faysal Sahulat Faysal Sahulat is a transactional account specially designed for individuals and business customers who seek instant access to their funds at any Faysal Bank branch in Pakistan. Features

Account can be opened with an initial deposit of Rs. 5,000. Free access to account through online banking at all Faysal Bank branches countrywide. Unlimited transaction facilities. On maintaining a monthly average balance of Rs. 500,000 or more following additional facilities are provided , free of cost.

Cheque Book*. Pay orders* Small Locker* (subject to availability) Visa ATM/Debit Card* Statement of account*

Easy access through cheque book and Pocketmate Visa Debit card. Pocketmate can be used at more than a million ATMs and 29 million point of sale (POS) terminals around the world.

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3: Basic Banking Account As per SBP prudential communicated via BPD circular No.30, Faysal Bank has introduced the Basic Banking Account (BBA) to cater the needs of low income groups having the following features. Features

Account can be opened with Rs. 1000/. No requirement for maintaining a minimum balance Maximum of two free deposits and withdrawals through counters/clearing are allowed in a month. Unlimited transaction facility through ATMs. Free of charge statement of account for customers once a year. In case more statements are required than standard charges would be applicable. Free ATM transactions on Faysal Bank ATM machines. However charges would apply on non Faysal Bank ATM machines as per SOC.

4: Rozana Munafa Plus Account Rozana Munafa Plus is a savings account in which profit is calculated on day end balance, and is disbursed on a monthly basis. It provides customer with the option of a high value, monthly profit account. Features

Account opening and minimum balance requirement of Rs. 100,000 for individual customers and Rs. 500,000 for corporate customers. Profit is calculated on daily balance basis. Profit is disbursed on monthly basis. Access to account through online banking at all Faysal Bank branches countrywide. Easy access through cheque book and Pocketmate Visa Debit card. Pocketmate can be used at more than a million ATMs and 29 million point of sale (POS) terminals around the world.

5: Faysal Muavin Faysal Moavin is a Savings account made for genuine individual savers like you. Faysal Moavin offers the perfect combination of savings account matched with the flexibility of a current account. Features

Account can be opened with an initial deposit of Rs. 20,000/ No restriction on the number of transactions. Profit is calculated on daily balance basis. Profit is paid on monthly basis.

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Tiered profit structure providing an incentive to save more. Access to account through on-line banking at all Faysal Bank branches across the country. Easy access through cheque book and Pocketmate Visa Debit card. Pocketmate can be used at more than a million ATMs and 29 million point of sale (POS) terminals around the world.

6: Faysal Premium Faysal Premium is a savings account specially designed for high value deposits with attractive profit rates having the following features.

Features

Account can be opened with an initial deposit of Rs. 5 million Profit is calculated on daily balance basis. Profit is paid on monthly basis. Access to account through on-line banking at all Faysal Bank branches across Pakistan. Easy access through cheque book and Pocketmate Visa Debit card. Pocketmate can be used at more than a million ATMs and 29 million point of sale (POS) terminals around the world.

7: Faysal Izafa At Faysal Bank we realize that every customer's financial needs are different. As a result, the Faysal Izafa Term Deposit is designed to provide individuals and corporate customers an opportunity to grow their money securely and earn attractive profits. Features

Minimum required investment as low as Rs. 25,000/. Tenure from one year to five years. Annual, six monthly and monthly profit payment option available. Financing facility of up to 90% of the invested amount. First cheque book is provided free on investment of Rs. 300,000/ or more. Access to profit through online banking at all Faysal Bank branches and more than 3,000 ATMs countrywide.

8: Mahfoz Sarmaya Faysal Bank endeavors to build and strengthen customer relationships by providing innovative banking products and services. To provide convenience and value to customers with foreign currency related needs, Faysal Bank's Mahfooz Sarmaya foreign currency account offers attractive features:

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Features

Account can be opened in three major international currencies: US Dollars, Pound Sterling and Euro. Minimum balance for opening Mahfooz Sarmaya is 1000 units of the currency in which the account is opened. Account can be opened in any of the following types: o Savings Account o Term Deposit Account o Current Account With Mahfooz Sarmaya Account, you become eligible for Pak Rupee financing facility of up to 75 percent of the deposit in your account at very competitive financing rate. With Mahfooz Sarmaya Account, you automatically qualify for special rates for car and home financing.

9: FCY Saving Plus FCY Saving Plus is a new foreign currency savings account with attractive profit rates where customers get their profit on a monthly basis. Features

Account can be opened in US Dollars, Pound Sterling and Euro currency. Minimum balance for opening FCY Saving Plus is 500 units of the currency in which the account is opened. Profit is calculated on monthly average balance. Profit is disbursed on monthly basis. Tiered profit structure providing an incentive to save more. No FCY cash deposit charges* On maintaining the monthly average balance equivalent to USD 50k or above, the following additional facilities are provided. o Free online banking* o Priority Banking* o Borrowing in PKR upto 90% of FCY* o Preferential rates on consumer finance*

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4.2 CUSTOMER LOANS
1: Faysal Car Finance Features Vehicle Type: Lease Term: Markup Rate: Equity: 2: Faysal Housing Finance Features

Locally manufactured up to 5 Years Variable (12Mths Kibor+5% - Annually revised) Minimum 20%

Buying a new Home 1 Building a new Home 2 Buy a Land plus construction 3 Remodeling or Renovation of Existing home 4 Minimum Financing: Repayment Period: Markup Rate: Repayment: Disbursement: Rs.500,000/- or maximum 70% of the property value (50% in renovation) 1 year to 20 years Variable (12Mths Kibor+5% - Annually revised) Equal monthly installment In single tranche 1 In tranches against approved amount 2 In tranches against approved amount, first tranche will not be more than 50% of the sanctioned facility limit or 50% of land value whichever is lower 3 In pre-agreed installment against approved amount 4

3: Faysal Finance Features Maximum Financing: Repayment: Repayment Period: Markup Rate: Residency: Rs.500,000/- (up to Rs.1M in secured cases residential property) Equal monthly installment 3 Months to 60 Months Fixed (Variable in secured cases) Pakistani / NRPs

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Collateral: Liquid / Residential Property Financing Margin: 90% & 70% (for Liquid / Residential Property) Income Clubbing: Facility of clubbing of spouse income is available

4.3 CORPORATE FINANCE AND INVESTMENT

Corporate Financing Faysal Bank Limited is fully geared to meet the changing economic challenges present in Pakistan. We are ever striving to build meaningful relationships with our customers and become partners in their growth and progress by acting as financial advisors and consultants as well as financiers. Our Corporate Finance Group extends both short and long term financing facilities designed to fulfill the individual need of each corporate customer. SME Finance Small and Medium Enterprise (SME) unit of the Bank is geared towards catering to the banking requirements of small to medium businesses in a timely and therefore cost effective manner. All the branches of Faysal Bank are equipped to speedily attend incoming financing requests from SMEs. We help our customers grow from strength to strength by acting as their bankers and financial advisors. Trade Financing Faysal Bank has established a strong presence globally in Trade Financing through its network, affiliates and correspondents. The Bank has conveniently maintained relationships with major banks in the international financial market and continues to develop new ones wherever needed. Our Trade Finance services include a full range of import, export and guarantee products, thus offering tailor-made solution to fit the individual need of each customer. Treasury & Capital Market Faysal Bank's Treasury is one of the leading market makers in quoting competitive prices in all major currencies and provides dynamic corporate and institutional marketing teams with up-to-date market information. Our cutting edge is the in-time advice and execution of deals for our customers. Faysal Bank's treasury team strives to satisfy the customer's financial needs in a timely and a flawless manner. Faysal Bank has earned immaculate reputation in the field of Capital Markets, which is quite evident from our track record and market share in this area.

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Investment Banking With the ever-changing business environment in Pakistan, companies need expert partners with a keen understanding of business to help achieve profit objectives. At Faysal Bank, we offer the leaders of businesses and institutions, corporate advisory services and a wide array of tools to help them accomplish their goals. We advise and facilitate the arrangement of commercial paper, syndications, mergers, acquisitions and underwriting arrangements amongst many others. Whether the customers require financing of a project or managing of investments, we can guide them through the markets and tailor a solution to meet their specific needs. Cash Management Faysal Bank's Cash Management department has emerged as one of the leading cash management solution providers in strategic markets such as local corporate, multi-national companies, and mid-tier markets. Faysal Bank's role in these segments span the entire spectrum of services including but not limited to Strategic Receivables/Payables Management, Corporate Electronic Banking, Payroll and Fund Management Services, Dividend Processing, and Process Re-engineering. Success of Cash Management services is primarily attributable to its focus on providing streamlined and customized solution that add value to business process of its clients. Agricultural Financing Faysal Bank offer specialized products for the agricultural sector. All of our branches located in agricultural areas of Pakistan are equipped to help the local farmers improve their yield and methods of farming by offering timely and affordable modes of financing to suit their needs. To increase its outreach into agricultural regions of Pakistan, Faysal Bank has entered into strategic partnership with the specialized entities engaged in the Agro related sup-plies & services.

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FAYSAL BANK LIMITED 5. SERVICES

1: Pocket Mate Visa Debit Card Combining the wide acceptability of a credit card and the thoughtful prudence of an ATM card, Faysal Bank PocketMate is the most convenient way to carry cash. No more fear of overspending. No more searching for the nearest ATM. PocketMate Visa Debit Card provides you with the freedom of worldwide acceptability at over 27 million merchant outlets as an ATM card operative at all ATMs in Pakistan plus at over 1 Million ATMs worldwide bearing VISA logo. 2: Travelers Cheques You may purchase American Express, US Dollar and Pound Sterling Travelers Cheques at selected branches of Faysal Bank. 3: Transfer of Funds You can deposit and withdraw cash from any branch of Faysal Bank, regardless of which branch your account is in. You need only to carry your chequebook! 4: Safe Deposit Lockers At Faysal Bank, we offer our customers Safe Deposit Lockers in a pleasant and secure environment. All lockers are discretely placed within the Banks professionally guarded premises. Lockers are available in three different sizes to suit individual customer needs at reasonable rentals. Faysal Bank also offers an added insurance feature with locker. 5: Non Stop Banking All branches of Faysal Bank remain open for business from 9 a.m. to 5 p.m. from Monday to Thursday and Saturday. On Friday, the bank is open from 9 a.m. to 12.30 p.m. and then again from 3 p.m. to 5 p.m. To suit your needs, we have extended our banking hours on Saturdays. Now you can enjoy our consistent and quality service from 9 a.m. to 5 p.m.

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6. Branch Inner View

Back Room

Mr. Rao Zahid Khalil(OM) Cash counter/Room Muhammad Asif & Azmat Ali

Back Room Way

Mr. Muhammad Shahbaz (OSO)

Ms. Natasha Yasmin (RM) & Zahida Javaid

Raja Aftab Iqbal (Agri Loan Incharge) Customer Lounge

Malik Pervaiz (BM)

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FAYSAL BANK LIMITED 7. Three Years Financial Statement Analysis:

7.1 Current Performance
In last year, Faysal Bank Limited (FBL), performance was not good, as compared to the past two years. Table in the annexure one shows FBL recent performance. By looking in the table, we found that, after tax profits and Earning per share (EPS) in year 2007 decreased by 19.34% and 35.48% respectively, as compared to the 2006, while in first six months of year 2008, the profitability of FBL has been decreased by 39 % and EPS has been decreased by 53%, as compared to the first six months of 2007. In addition to profitability, most of the objectives have also not been met. Objectives Faysal Bank Limited, (2007). Annual Report. Karachi. The objectives set for year 2008 are as under: Target of opening of 24 branches in year 2008. Prudent growth & Cost efficiencies. Continued investment in technology & infrastructure. Further deepening of the culture of diligence and corporate responsibility.

7.2 External Environment: Opportunities and Threats

7.2.1 Societal Environment Following are the forces which are currently affecting Faysal Bank and the Banking Industry: a) Economic The main things affecting Faysal Bank and the banking industry are increase interest rates, and the rising inflation rate in the economy, for example, currently KIBOR which is benchmark for industry lending is at highest ever point. b) Technological Developments like introduction of oracle financial systems, symbols, and different application are increasing productivity of the Faysal Bank as well as the banking industry, but on the other its initial implementation costs are causing increased administrative cost to FBL. c) Socio cultural Socio cultural forces like values, demographic characteristics, etc. are also affecting FBL as well as the banking sector. Because of these values some professionals dont want to join banking sector, and some people dont keep their money in the banks, because of religious believes. But on the other hand such believes are also helping banks to introduce Islamic products. FBL has lost various customers because of this reason due to shift from Islamic Banking to conventional banking.

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d) Political-legal These include the forces like political conditions in country, SBP regulations, etc are also affecting FBL as well as banking sector. For example, SBP is increasing discount rates, Minimum Capital Requirement (MCR), cash reserve ratio, etc. which is causing liquidity problems for FBL as well as banking sector. Due to MCR, various mergers took placed in the banking sector, and few mergers are also expected in near future. 7.2.2 Task Environment (Industry) Many forces in the industry are causing competition, these include, technology i.e. communication system like Symbols, Sun, Oracle, etc, larger branch network, ATM locations, unique products, entry of foreign banks, etc. Task environment of FBL can be discussed through following Porter Model: a) Threat of new entrants Opening of braches by Barclays (which in international reputable bank), threat of entering of Bank of China (BOC) by acquiring SME Bank, and Industrial Development Bank of Pakistan (IDBP), while BOC is also planning to acquire 26% stakes in National Bank of Pakistan. b) Bargaining power of buyers Due to increase in interest rates, small firms are not in a position to take loan from banks, while number of corporations in Pakistan, is limited. Therefore, key customers/buyers (corporate customers) of banks have gained substantial power and now they can bargain the spread with the relationship managers due of availability of the large number of the banks. c) Threat of Substitute products or Service As such there is no significant threat of substitute products or service, but few services like investment related services are offered by various Mutual Funds, and Security Dealers, but these services are limited to big cities. While, on deposits side, National Saving Organization, is providing substitute products to the depositors of the banks through attractive packages, at very attractive rates. d) Bargaining power of suppliers Currently this is big problem for FBL as well as industry, because of liquidity crisis and Pakistans poor international financial rating, all fund suppliers are avoiding to supply credit to Pakistani industry, moreover depositors bargaining power has also been increase due to high mark up rate offered by various banks, and due to dearth of deposits with bank e) Rivalry among competing firms Banking sector is facing severe competition, due to availability of many national and international banks in the industry. Currently HBL bank, is leading with 40% market share, while MCB with highest profits and National Bank of Pakistan with largest deposits.

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7.3 LAST THERE YEARS FINANCIAL STATEMENT SUMMARY

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7.4 SWOT Analysis
Strengths Weaknesses Opportunities Threats Declining trend in banking sector, which can affect it to large extent because of its big corporate customers which are few in number. Arrival of Barclays and Bank of China in Pakistan, which can increase the competition in banking sector. Decreasing trend in Earning per share and stock prices. Moving of key employees, e.g. Corporate Relationship Managers, which means moving of corporate clients to other banks. It can capture agriculture market by offering innovative agri finance products. Impressive print and electronic media campaign highlighting FBLs role in the development of rural economy of Pakistan can give it competitive edge over its competitors. Through re-branching, FBL can capture lot of new customers. Merger with Barclays or Bank of China to become part of larger international banking network and to increase the profit. Weak branch network across the country. High employee turnover. Low number of ATMs. Attracting only upper and middle class customers. Market share is declining from new competition. Employees frustration due to excessive work burden. Based on financial strength and superior performance, Faysal Bank Limited has been assigned the highest short term rating of A1+ (A One Plus) and AA (Double A) for the long term by JCR-VIS (credit rating Company). Better technology like Symbols, implementation of Financial Oracle, HRMS. Very attractive salary packages to employees. Heavy internal financing i.e. from heavily growing deposits. Attracted big corporations like SNGPL, Attock Group of Companies, Zaver Petroleum, etc.

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7.5 Performance
7.5.1 Performance evaluation in the light of financial objectives The main financial objectives of FBL are: increase in profitability, increase in EPS, increase in share price, increased / better cash flows, and decrease in provisioning of loans and bad debts by improving risk management procedures. Following facts are found from FBLs ratio analysis, common size balance sheet analysis, and income statement analysis, (See annexure 5, 4 and 3.). Findings/Facts 1) Foremost objective of increase in profitability was not achieved, as it is evident from decreasing after tax profit and decreasing profitability ratios of year 2007 as compared to year 2006. (See annexure 6). 2) Second objective of increase in EPS was also un-attained i.e. decrease from Rs. 6.65 in 2006 to Rs.4.29 in year 2007. (See annexure 6). 3) Third objective of share price was partially achieved, i.e. increase in share price from Rs. 60 at the year end of 2006, to Rs. 67 at the end to year 2007 (Faysal Bank, 2007). 4) Increased cash flow objective was achieved by FBL, i.e. increase of 12.77% cash flows in year 2007 as compared to 2006. 5) Fifth objective was not achieved, as in the year 2007 provisioning for consumer and general advances increased from Rs. 622332 to 1871969 thousand, showing an increase of 201%. It is important to discuss current financial performance of the FBL by comparing its half yearly financials of 2008 with half yearly financials of 2007. (See annexure No. 2). By looking at the half yearly performance, one can find that current performance is very bad as compared to last year performance. For example, Profit has been decreased by 42.39%, while EPS has been decreased by 53.46%. 7.5.2 Performance Evaluation in the light of other Objectives Before evaluating performance, it is better to mention objectives (other than financial objectives) set for year 2007. Other objectives of FBL includes; geographic expansion, entering into niche market like agriculture, consumer finance, and SME finance, opening of separate Islamic Banking branches, implementation of Symbols system, cost efficiencies, introduction of new MTO program with new approach of tests, interviews, etc. (Faysal Bank, 2006). Findings/Facts 1) First objective of branch expansion was achieved as FBL opened 19 more branches in 2007. 2) This objective was partially achieved as FBL entered in consumer and SME finance, but not in agriculture finance. 3) Third objective of opening of separate Islamic branch was not achieved. 4) Objective of implementing Symbols was achieved.

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5) Objective of cost efficiencies was achieved as administrative expenses increased from 19.4% of the sale to 24.1%, which is normal because of opening of 19 new branches. (see annexure) 6) In an interview (B. Naila, personal communication, October 29, 2008) it was found that HRM department successfully introduced new methodology for MTO program. While comparison of objectives set for year 2008, with half yearly performance reveals the following facts: 1) 2) 3) 4) Up till June, only 6 new branches have been opened as compare to the target of 24. Heavy decline in profits, EPS, share prices, as shown in the table at previous page. 758% increase in the provisioning for NPLs. In an interview (Z. Abbasi, personal communication, October 14, 2008) it was found that, no single event of corporate social responsibility arranged or no other example of any form of Corporate Social Responsibility. 5) While only obvious objective achieved is continuous investment in technology, e.g. HRM department of FBL is going to implement HRMS, in order to effectively manage HR issues. After evaluating the performance of FBL, it was found that FBL performed poor as compared to the targets it set, however, it also achieved many objectives, but the main objectives were not achieved, like profitability related objectives. It is necessary to find out why FBL is not performing well, or why it is not performing according to the expectations. Reasons for Poor Performance The main reason behind low profitability is provisioning for non performing loans (NPLs). Provisioning was increasing at disastrous rate of 201% in 2006-08, and 758% in 2007-08 (as per half yearly results, i.e. till June 2008). Liberal credit policy in year 2005, whose results are being seen in year 2006, 2007, and 2008, in the form of bad debts, NPLs, and provisioning. (See annexure 7). Delay in branch expansion decision, i.e. in 2006 instead of taking in 2003/04, when other banks were also expanding branch networks, thus competitors gained edge. Change in provisioning guidelines by SBP in December 2006, which doubled its provisioning, because of very tough criteria. In an interview (A. Nasir, personal communication, October 23, 2008) it was found that , liquidity problems due to increasing interest rates, i.e. increase in KIBOR to approximately 17%, while, inter-bank rate touched highest ever level in Pakistan history i.e. 47%. High employee turnover rate i.e. 41%. Increase in overall cost of production of industries, electricity problems, which is causing low productivity, and profitability, thus discouraging expansion, which as a result is hurting banking industry, especially FBL, because its main focus is on corporate lending.

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FAYSAL BANK LIMITED 8. Major Activities Perform During Internship

8.1 DEPARTMENTS OF FBL
Following are the Departments of FBL 1) General BankingAccount Opening a. Bills And Remittances b. Deposit Department c. Cash Department 2) Credits and Advances Department 3) Agri. Department 4) Western Union & Locker Service Department 5) Housing Department 6) Auto Department 7) Card Department The Faysal Bank Bedian Road branch is not a wide branch there are only few main departments like general banking, agri laon department etc. 8.1.1 Account Opening Department Account opening is the first step in business of banking to create the relation of public with bank as a customer. Now customer becomes creditor of bank. It is most important department of bank and bank officers must take special care before opening the account. Account Of General Customers Illiterate person account Joint Account

Accounts Of Special Customer Proprietor Ship Account Partnership Accounts Limited Companys Account Agents Account Clubs, Societies /Association Accounts Trusts Local Bodies Etc.

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Account opening procedure The general procedure of all account's opening is same but the document required to open the account is different according to type of account. The branch manager is responsible to handle job of account opening but in some cases, it is assigned to other responsible officers. Information at the time of opening of account, the bank officer must assure that customer has the following characteristics: The customer must have the age of majority, it means he must be the age of 18 according to law. The customer must be of sound mind. The customer must not be insolvent and bankrupt. .

Also the bank officer must take proper information from the customer about his Means, line and place of business. Account Opening Form (AOF) The bank officer must assure that the customer fills each and every column of account opening form correctly with all necessary details. The specific information about the business or occupation of the customer is recorded in the form. It is preferred that the customer in the presence of introducer fills account opening form. Introduction of Accounts It is a most important column of AOF. Without the proper introduction, the new account cannot be opened. The bank officer consider following precaution in this respect. The introducer should come with the prospective customer to the bank, so there will be no doubt about the identity of customer. If the introducer does not come then bank officer must take extreme care about his signature verification. The staff member can become introducer if they personally known to the prospective customer.

National Identity Card The bank officer check that number of national identity card is correctly recorded in the AOF and a copy of national identity card is kept in record by the bank. Specimen Signature Card (SS Card) The bank officer takes signature of customer on AOF and specimen signature card. NADRA Verification Verification of customer ID card is also necessary from NADRA. NADRA also provide there software to FBL that they personally take verification in Bank.

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Indemnity Form If the customers signature are shaky than he will also sign the indemnity form in which he mentioned that Bank is not responsible for any obligation about his signature. KYC (Know Your Customer) Form In this form bank write all information about customer e.g. title of account, Account number, business detail etc. Visa Debit Card Application Form If customer also wants to gain facility of Debit Card or ATM card than this application form is also filled by customer. After filling this application by customer this application is forward to head office, than head office sends the ATM card. Two Photographs of customer: With form two photographs of customer is also attach with form if the customer is illiterate and use thumb impression instead of signature, if the signature are in English or Urdu than photographs are not required. Letter of Thanks A letter of thanks is sent to customer through mail to verify his address. If the address is not sending his address than bank quickly take action and can close the account. Individual Accounts Individual accounts are classified as: i. Accounts of illiterate ladies and gentlemen ii. Joint Accounts Documents required to open individual account are a. Account Opening form (AOF) b. Specimen Signature Card c. Copy of NIC Accounts of illiterate ladies and gentlemen In case of illiterate ladies and gentlemen, three photographs are required. Two is pasted on AOF and other is pasted n SS card. Instead of signature, left-hand thumb impressions are obtained on specimen signature card from gents and right hand thumb impression from ladies. At the encashment of Cheque, these customers are advised to attend bank personally and put their thumb impression on the Cheque. If the cheque is presented through clearing then it will also only pay to the customer. Joint Accounts The bank will fulfill the stop payment instruction of any cheque lodged by any member of joint account but removal of these instruction must be signed by all the member

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If any member dies then there will be no transaction in the account and balance in the account will be paid according to instruction recorded at the account opening form. The member of joint account can delegate authority to any third party to operate the account. All the members Sign such mandate but it will be cancelled if any of the member dies or insolvent.

Account of Special Customers Partnership Firm Account The documents required for these accounts are: Account Opening Form SS Card Copy of NIC of all Partners Copy of registration certificate Copy of partnership Deed

The partnership accounts are opened under the following conditions: Partnership firms can open only current account due to business concern. All partners must sign the account opening form. Account is opened with the name of Company When the changes are taking place in the firm structure or if the firm is declared as insolvent then transaction in the account will be stopped. In case of insolvency, the personal accounts of partner will also become inoperative.

Joint Stock Company Account Joint Stock companies include: Private Limited Companies The companies whose share capital is not offered to the general public instead the offer is restricted to particular class of society or within the family members called private limited. These companies are not listed in stock exchange and are not transferable. Public Limited Companies Promoters and general public contribute the share capital of these companies. These companies are listed in stock exchange and their shares are transferable and brought and soled freely in stock exchange. The document required for these accounts are: Account Opening Form SS Card Up to date Memorandum Article of Association

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Certificate of incorporation. Certificate to commence business. Resolution of board passed under company seal to open account. NIC Passport of all the directors authorized signatures. List of directors authorized signature Introduction is not required for these accounts because companies are legal entities Death, retirement or dismissal of any director does not affect operation on the account. However, death, retirement or dismissal of the directors authorized to operate upon the accounts temporarily put embargo on operations of the account. In such cases, fresh resolution authorizing another person to operate upon the account is to be called for from the company. The Cheques signed by the directors before their death retirement or dismissal will be considered as valid instrument. The operation on the account will be stopped when company terminates its career.

The specific conditions to open the account of Joint Stock Company are:

Accounts of Clubs & Societies These are non-trading/non-profit organizations and are formed for the promotion of culture, education, recreation activities and charitable purpose etc. Account opening procedure is same as mentioned before. Title of the Account Account must be opened in the name of the organization . The document required for these accounts are: Copy of Bye-laws/regulations List of members of managing/Executive committee Copy of certificate of registration (if registered) Copies of NICs of the members of executive committee

Issuance of Cheque Book The customer fills the Requisition slip for issuance of cheque books along with the AOF. The requisition slip is duly signed then bank officer enters cheque book series on it. The officers enter the series of cheque book in register in a sequence .The Bank issue 25, 50, 100 leaves cheque books.

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When cheque book issue than bank take signature on cheque book register and also on requisition form. Maintenance of Account: If amount in account is less than 10000 than 50 Rs. Per month will be deduct as a maintenance charges Inactive Account If there is no transaction in any account within 6 months then account will become inactive. Now the account will be active only by crediting some amount. Basically account is deactivating for the verification of customer. Closing of Account If the customer wants to close the account then he will fill the closing application form along with unused cheque book in the bank. The bank will pay remaining balance to account holder. Western Union Department Basically Western union department provide service for receiving of money from different countries. Through western union you can only receive money but cannot send the money to other country .The main advantage of western union is that it is not necessary that the person who is going to receiving money has account in bank .The customer directly receive the money from bank. Mostly the amounts are in the form of PKR, Dollar Euro and in Pond. Documents required for western union Western union form CNIC copy Process of western union The person who is going to transfer money he had swift code which is issued by the foreign bank from where he is going to transfer money. The person already mentions the name to whom he transfers the money. When he transfers the money in FBL then that person came with its ID card and after verification he can receive money. 8.1.2 Cash Department Cash department is the most important because it is point of contact between the bank and the customer. The FBL provides efficient and personalized services to their customer. This department creates the impression of bank commitment of professionalism in its system and procedure. So the staff of cash department is well equipped and trained not only in technical handing of cash but also in the art of customer. Functions of Cash Department It includes: Receiving cash from the customer.

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Making payment to the customers against their Cheques or other payment instruments. Handling cash withdrawal and deposit into the bank account with state bank of Pakistan and with other branches of bank. Ensuring proper storage safety and security of the cash in cash. Ensuring proper cash management and sorting out of issue able cash. Maintaining daily cash position in SYMBOL system. Transfer of Cheques from one account to another. Cash department has two counters, Cash Receipt Counter Cash Payment Counter Cash Receipt Counter If the customer wants to deposit in his account then he fills the deposits slip. In deposit slip, the customer writes his account title, account no, the amount in figures & words, particulars mention the mode of deposit either cash or cheque and sign it. The customer makes the payment to cashier along with the deposit slip. This department of bank deals in operation, relating to cash A/C. i.e. cash receipt, cash deposit, sale and purchase of prize bond. Cash Payment Counter When the customer present the cheque to withdraw the money the cashier check its date, amount in figure, signature and either it is f FBL ,RYK branch or any other branch or it is of RYK branch of other bank. If it is of FBL, RYK branch with right date then cashier enter into cash payment book and transfer to the officer. The officer feed the account number to check that demanded amount is available in his account. If amount is available then he verifies his signature from SS card already feed in computer. The officer passes the cheque and debits the customer account with the same amount and posts the stamp of transfer on it. Then cashier makes the payment to the customer and writes the detail of notes at the back of cheque to maintain daily cash position.

8.1.3 Remittance Department Remittance department plays an important role in transfer of funds from one place to another. Faysal bank provides this service to their customer, as well as general clients. Different instruments are use to remit the money. The following different instruments are used to remit the funds in FBL. Demand Draft

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Pay Order Call Deposit Receipt Demand Draft: Demand draft is used to transfer amount from one city to other city where there is no branch of FBL than demand draft is used. When there is no branch of FBL than in that city there will be another bank which provides agency services to that bank. Habib bank provides agency service to FBL e.g. in khanpur there is no branch of FBL than DD will pay to Habib bank. But now a day FBL not issue demand draft. Pay Order Pay order is issued for payment in the same city because it is issued form one branch can only be payable from the same branch.. Through pay order customer can transfer money from one branch to another branch. FBL charge no 80 Rs. Per pay order. In starting of Faysal Bank pay order is only payable in that branch from where it is issued but now a day it is pay able in any branch of FBL in Pakistan. Difference between Pay order & DD The main difference between DD and Pay order is that pay order is payable with in city and DD is payable outside the city. Pay order is payable in only that branch from where it is issued while DD is payable in any branch of FBL. Call Deposit Receipt (CDR) It is also called pay slip and it is used for security purpose. If any person makes contract with Govt. for a specific purpose e.g. for construction of roads than he makes CDR. Bank Dr the account of client and Cr the CDR if road is damage before time. But if road is not damage till contract than bank refund the money. 8.1.4 Clearing Department All the cheque and negotiable instrument, which are drawn or received from other bank, are processed and subsequently settle by the clearing department. For a bank, following are the requirements of being a member of clearing house: It must be scheduled bank i.e. it is registered It must have account with State Bank of Pakistan Sufficient balance should be in his account Normally clearing is carried out in SBP, but in the city where there is no branch of SBP than National Bank work as subsidiary of SBP. Types of Clearing: There are two types of clearing Inward Clearing

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Outward Clearing In inward clearing the Cheques of other banks comes in Faysal Bank while in outward clearing the Cheques of Faysal Bank goes to other banks. 8.1.5 Agri .Department Faysal Bank offers specialized products for the agricultural sector. Its branches located in agricultural areas of Pakistan are all equipped to help the local farmers improve their yield and methods of farming by offering timely and affordable modes of financing to suit their needs. Faysal Bank provide two types of Agri. Loan Developing loan Production loan

Developing loan Developing loan is for long term for the purpose of development of land, for example loan for tractors, treasures and machinery use in land for the purpose of development of land. Developing loan further classified into Form Loan Non- Form loan

Form loan is for forms for example tractor and machines use in fields. While Non-form loan is for dairy, poultry form, fishing, and shading and for buying animals. Production Loan Production loan is issued for the inputs of fields. For example for seeds, fertilizers and labors etc. It also has two types Form Loan Non- Form Loan Form loan is used from the inputs used in fields for example seeds, fertilizers, water expenses etc .While Non-form loan is used for the feed of animals for example Oil cakes ,green food etc Mark-up Mark-up is 18.5%, 14.5% is charged by KIBER and remaining 4% is charged by FBL. The 4% markup can be changed by FBL according to its requirements but KIBER markup remains same for all banks. Security As a security bank accept the land, gold, heavy and valuable machinery and tractor etc Down payment The down payment of tube well is 10% For Dairy and Poultry form is 20%

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For seeds, fertilizers etc is no down payment

Documents required from customer Agri. Base book In this book all detail of land is mentioned and also all detail of cultivated area. Mutation In it mentioned that land is either buy by customer or it is transfered from forefathers Jama Bandi In this document there is mentioned the area of actual land Quotation It is in that situation when loan is for tractors etc. In it customer write that from which Company he want to purchase tractor and which model etc. Feasibility Report If the customer want to open a peltry form than in it mentioned all detail of expanses. Title Deed In title deed ownership is mentioned that who is the owner of this land. Documents Charged from Bank: Credit proposal In credit proposal three things are consider by bank Recommendations from bank Processing from higher officer Approval

In recommendations from bank, the bank mentioned all details of proposal that either customer is applied first time for loan or not. Repayment Schedule Production loan is for short term and the customer pay after one year, while development loan is from 1 year to 5 year. Markup is paid after six months.

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9. CONCLUSION

The economy of the country is booming and with the investment favorable policies and their smooth implementation, the role of banks in todays economy have become an important one. The banking industry is also reaping the fruits of this economic boom by growing rapidly over the past few years. There are a number of mergers happening in the economy with foreign investments coming into the banking sector. Faysal Bank culture is built on a set of core values: Respect, Integrity, Professionalism, teamwork. The company is committed to its clients' best interests as well as preserving a good relationship by defining realistic objectives. Since the establishment of Faysal Bank, it has aimed to become the leading bank of Pakistan by that provides outstanding services to its customers. The services that Faysal Bank 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 Faysal Bank provides cater to sector of the economy. The top management of the bank is always developing strategies that cope with unexpected challenges to deliver products and services more efficiently

Lastly, to become the leading bank of Pakistan, Faysal Bank has to benchmark its services to its major competitors in the industry or the market leader in the industry and provide a continuous mean of improvement in its existing products and services, while introducing new ones to the industry. In the last section, I would like to give some recommendations and is hoped that if they are implemented will bring benefits to Faysal Bank.

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10.

RECOMENDATIONS

The bank should improve and increase its branch network in Pakistan as well as in foreign countries. Training of the staff should be carried on regular basis in the field of banking and operating computers. Bank should establish a separate marketing department in each branch. Although bank has agency relations with the foreign banks but it should open its foreign branches to compete with the competitors. Time period of the loan procedure should be reduced. Special awards should be given to hardworking employees to perform extra. New staff should hire for Agri. Department. The Bank should focus on long term debt paying ability. The management should try to create more understanding between different departments to increase their productivity. The top management should create those policies through which they can protect the Bank if the Barclays takeover it. There should decentralization decision making. The manger should recruits right person for right job. The manager should hire multi skilled workers to get economy of scale. The Bank should offer Credit Card to its customers.

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11.

Bibliography

www.google.com www.wikipedia.com www.scribd.com www.faysalbank.com Annual reports of 2008, 2007, 2006 Brushers Branch team

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