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Bank Alfalah by Ahmer Nasim

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1Introduction to the Report This Internship report is anticipated at studying
and analyzing Bank Alfalah Limited (BAL) in general and particularly its
Mansehra branch office.
The most important
1purpose of the internship is to prepare and put forward a report as a partial
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fulfillment for the award of BBA degree from COMSATS
Abbottabad. 1.2 Purpose of the Report It is a common practice in all universities that during the completion
of the masters and bachelors degree they have to attain practical experience in different fields. Department
of Management Sciences, Abbottabad requires students to undergo a 6 weeks internship program. The
selection of the firm is based on the choice of the student. The department requires an internship report
based on the theoretical and practical learning of the student. The concern of
3this report is to study and analyzes the performance of
Bank Alfalah Limited (BAL) in the banking industry of Pakistan. Main purpose of this program is to make
students familiar with the practical work, as here is great difference between what they have learnt during
their bachelors and how the job is practically done. ? To give a complete survey of BAL. ? To look at BAL
authoritative, fiscal and different angles. ? To order the regions of the bank where there is some opportunity
to get better. ? To provide for some doable answers for the issues relating to BAL. ? To relate the
information picked up in useful field. 1.2.1 General Purpose ? To get acquaintance to the banking operations.
? To see the application of our professional studies especially. 1.2.2 Specific Purpose ? A partial fulfillment
as a requirement for the completion of BBA (Hons.) finance degree. ? To objectively observe the operations
of Bank Alfalah Limited (BAL) in general and specific as well. ? To make recommendations or implementation
plans on improvement of the operations of Bank Alfalah Limited (BAL) in the light of our professional studies.
1.3 Internship Program I did internship at Bank Alfalah Limited (BAL). I worked in diverse departments. Firstly
I worked on opening of account, and have learned about different types of accounts and opening of a new
account etc. Here I worked with Mr. Nawabzada Khuram. Then I was sent to Accounts Department where I
Worked under Mr. Shakeel Ahmed. After working in Accounts I worked in Credit department. The in charge of
this department is Mr. Adnan Jalal. After that I worked with Mr. Abbas in car finance department. Here I
learned that how loan is given to the customers. And many other types of convenience the bank is providing
to its clients. 1.4
1Merits of the Report The study conducted will benefit the finance
students in particular and banking students in general because the third
chapter of this report comprehensively encompasses the majority of the
aspects of banking, further includes: SWOT analysis, conclusion and
recommendations. Additionally, BAL branch Mansehra may also benefit from the
recommendations made at the end of the report. 1. 5 Scope of the Report
Banking has a very broad scope. In only six weeks of internship, it is very
complicated and hard to understand all the aspect of bank.
Just because
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1of limited time and space barriers, the span of work is
typically restricted. On the other hand
1this study of BAL will assist the management to identify their weaknesses
and threats and overcome them by using their strengths and utilizing the
opportunities. It will be source of financial data for all those who are
interested in financial statement analysis of BAL. 1. 6 Methodology of the
Report For report writing this study includes two types of data.
1.1 Primary Sources ? Firstly the Interviews and discussion with staff
members. ? Secondly Personal observations. 1. 6 .2 Secondary Sources ?
Annual reports of BAL. ? Brochures & Manuals. ? Websites. ?
Newspapers. ? Previous Internship Reports.
11.7 Scheme of the Report Division of the internship report has been done into
five chapters as: Chapter one covers purpose, merits, scope, limitations,
methodology, and scheme of the report. Chapter two based on background
and history of banking in Pakistan, background of BAL, roles, functions
and branches. Chapter three has organizational structure of BAL,
organizational charts and departments of BAL. Chapter four covers all the
financial aspects, SWOT analysis and findings based on work in chapter
three. Chapter five has recommendations for the BAL of the study based on
the analysis in the previous chapter.
CHAPTER 02 INTRODUCTION TO BANK ALFALAH LIMITED 2.1 Progression of Banking Banking is one
of the quickest developing commercial enterprises however it is a standout amongst the most delicate
organizations over the world. For the economy of a nation Banks assume imperative part and Pakistan is no
special case. For the advantages of the general masses Banks are best guardian. In our life compass, we
use the plenitude of managing an account items that were beforehand not accessible to the regular people.
Just about everybody have Visas, taken advances, and we have the protections. This banking is focused
Industry, have the right to expand gigantic administrations for our clients. Created in 1953, Pakistan Banks
Association (PBA) speaks to the Pakistan Banking Industry. Principle intentions are to organize the
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endeavors of the banking industry, with its parts, and provide for them regular vision of advancement and
improvement. The banking system of Pakistan is decently created, which have extensive variety of affiliation
running from national
5bank to business banks and to concentrated offices to cater for unique
prerequisite of
particular divisions. 2.2 Growth of Pakistans Banking Industry Pakistan is a developing nation and in the
late year the keeping money industry in Pakistan has been converted from state claimed segment to
energetic part industry. This Banking industry not just taken quality from positive interaction of budgetary and
political components likewise turns into a motor of development for economy. Development of SME's in
Pakistan is expanding at exceptionally quick pace. SME's have 90% of business in Pakistan. SME's speaks
to a noteworthy part of Pakistan's economy in term of worth aggregation, work development and neediness
diminishing exercises. Throughout July- April 22, 2006 the cash supply of the present financial year
stretched out by Rs.294.9 billion as neighboring of Rs.332.4 billion in the comparable time of the past year.
The private area the credit to expand significantly; it developed by 20.2 % (Rs.345.1 billion) throughout
July-April 22, 2006 contrasted and the development of 28% or Rs.357.4 billion. In the present monetary
year, cash flow is more noteworthy than before by 13.6% against a year 4 ago of 17%. Solid interest of
Treasury charges that are offered Rs1058 billion and gained Rs.688.8 billion. As contrasted with past years,
household also an outside banks Performance is expanded. In year 2007, 301 are Domestic banks and 105
are Foreign Banks. SBP has made Tough and strict checking and credit control measures. 2.3 Role of
Banking in the Economy In the Economy Banking principal roles are: 2.3.1 The Intermediation role:
Converting reserve funds accepted essential from families into credit (Loans) for business firms and others
keeping in mind the end goal to make speculations in most recent structures, device, supplies, and further
products. 2.3.2 Guarantor role: At the point when the clients are not able to pay they are standing behind
their clients to pay off client obligations, (for example, by issuing Latter of Credit). 2.3.3 The payments role:
The payments role is carrying out the payments for goods and services on behalf of their customers. For
example by issuing and checks clearance, giving the medium for electronic installments, wiring finances and
giving coin and money. 2.3.4 Risk Management role: The risk management role is supporting clients in
equipping them monetarily, for the danger of misfortune to property, cash and persons. 2.4 Banking in
Pakistan There are three types of banks, serving in Pakistan as: ? Government Banks. ? Private Banks. ?
Foreign Banks. 2.4.1 Government banks In the divisions of deregulation, privatization, and change in the
provincial managing an account industry and money related establishments reformed throughout the time of
1990s. The primary bank that privatize was The Muslims Commercial Bank. One great thing for the specific
period was the recruitment of the new officers through well- sorted out strategies and methods of the
Banking Council in the local keeping money industry. List of Government banks are: ? NATIONAL BANK OF
OF KHYBER (KM) 2.4.2 Private Banks The Government of Pakistan allowed little private area banks to
work, which enjoyed suspicious arrangements to support business. The private banks are: ? ALLIED BANK
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Foreign Banks Because of the strategies by Pakistani Government, various remote banks are getting
impacted and began new business in Pakistan, SOPS and as the budgetary state of the bank and Pak
government are ideal for new contestants however this has diminished the benefit of the home banks.
Foreign banks list is as follows: ? STARDARD CHARTED BANK ? CITI BANK ? HONG KONG SHANGHI
entire nation is occupied to put vigorously in the field engineering and e-business with a specific end goal to
overcome limb imperative. Each of the domesticated and also remote banks alterably systematizes shopper
financing in the nation and earned good looking benefits. 2.5 History of Bank Alfalah Limited Under the
Companies Ordinance 1984,
5Bank Alfalah Limited was joined on June 21st, 1997 as
open constrained organization. From November first, 1997 BAL Banking operations of are started. Bank
Alfalah Limited starts its life as BCCI "Pakistan Operation". Luxembourg and Grand Cayman are universal
organization. On the planet, BCCI was the seventh biggest bank. 20 billion dollars were the evaluated stakes
of BCCI. Around the globe the operations of the Bank were in 70 separate nations. The Bank of England and
International Liquidators, In July 1991, blamed BCCI for being included in tax evasion to very nearly 1.54
billion dollars. 2.6 Bank Alfalah Today Chief Managers of BAL, The quality and stand of Abu Dhabi Group, in
Pakistan helped Bank Alfalah Limited dispatch great purchaser and corporate banking operations. Bank
Alfalah Limited have worked upon a quick extension system to verify that the administrations achieve
practically to everybody , in Pakistan BAL is going towards best conceivable measured set-up arriving at
real urban focuses. The Bank is generally situated and topographically adjusted, to oblige for expanded
business needs and requests, to its current and potential demographic. It is additionally making its significant
commitment in quickening the economy of Pakistan. Just about 238 Branches of Bank Alfalah Limited is in
75 separate urban areas of Pakistan, having the enrolled business offices at B.A.Building, I.I.Chundrigar,
and Karachi. Under survey throughout the stage, Bank Alfalah made wonderful development and
improvement good to go volume, fitness, proficiency, benefit and gainfulness resulting to its expanded
contribution in business giving, exchange fund, and remote trade and currency market operations. For the
Good business Good demographic is at their heart. Typically the Bank is specific of its customers and
painstakingly checks the whole references. Fabulous wellsprings of new records are Referrals as they give
the Bank a chance to research a potential customer before building and securing a relationship. This system
serves to secure and ensure the veracity of the Bank and guarantees that the customer will impart values
vital for a long haul and stable affiliation. 2.7 Vision of BAL Vision explanation distinguishes where the
association aims to be later on or where it ought to be to best help and requests of its stakeholder. This
includes a common understanding of the nature and reason for the association and utilization this
understanding to move the association to a more noteworthy reason. The Vision of Bank Alfalah is: To be
the premier organizations operating locally and internationally that provided the complete range of financial
services to all segments under one roof. Bank Alfalah is one of the heading monetary establishments; BAL
is presently working just in Pakistan now soon it will make its system universally and Bank Alfalah every day
expanding its items for all the portions in Pakistan i.e. for Industrialists, Businessmen, and Agriculturists and
for the Government superintendents in the nation. Bank Alfalah is working for each one fragment in Pakistan,
and to make accessible its items at least expensive and most minimal accuses and of simplest methodology,
on one stage. 2.8 Mission Statement Statements of purpose are "persevering mission statements that
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recognize one business from other practically identical firms. A statement of purpose elucidates the extent of
a company's operations in item and business sector wording." statement of purpose answers the
fundamental address that goes to each strategist. An evident statement of purpose clarifies the qualities and
necessities of an association. It likewise comprehensively characterizes the future bearing of an
association. Mission statement of Bank Alfalah is: To develop and deliver the most innovative products,
manage customers experience, deliver quality service that contributes to brand strength, establishes a
competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank.
More than Mission proclamation the Management of Bank Alfalah stress on the accompanying areas: ? To
make accessible the new and more spearheading items than alternate banks to the clients. ? To obtain and
arrangement with the thoughts of the important client for the Bank ? Primary component of Bank Alfalah
Mission Statement that to convey superb and snappy administrations to the clients, who are keep incredible
quality for Bank Alfalah. ? Bank Alfalah tries to embrace those activities which give the productive result to
the clients and the stakeholder of the bank. 2.9 BAL Credit Rating Pakistan Credit Rating Agency the
heading credit org in the nation has evaluated Bank Alfalah productively. Honors taken by Bank are an AA-
(twofold A short) and an A1+ (A one or more) in the long and transient individually. This rating symbolizes
extremely lifted credit quality and low desire of credit peril. In the year 2002, TFC's are likewise giving by the
bank. These were unbelievably decently recognized in the business and were oversubscribed by 6 times.
PACRA recompensed an A+ (An in addition to) rating to these authentications. 2.10 Core objectives of BAL
Objectives could be characterized as particular comes about that an association looks to accomplish in
seeking after its key mission. It is key for authoritative triumph in light of the fact that they state heading;
support in assessment; make cooperative energy; uncover necessities; center coordination; and give a
premise to solid arranging, sorting out, and limited time, propelling, and controlling exercises. Objectives of
Bank Alfalah Limited are as follows: ? To produce most extreme financial quality for offer holders through a
steady relationship concentrates on budgetary administrations. ? BAL Invests Leveraging in the IT field. ?
Steady examination of chances for clients, prompting the consistent improvement of new items and
administrations. ? Throughout the enthusiastic commitment of private and public segment in the nation. 2.11
Branch Network of BAL Since the time when the privatization happens in 1997, Bank Alfalah Limited has
been dependable in its mission to exceed expectations in giving imaginative items and administrations to its
customers. The finished consequence of that, the 2003 year has been most ideal for bank despite shifting
business sector circumstances. BAL recorded important bring up in its business volumes coupled with the
growing of system and customer base. The Bank is completely mindful that the extension system has
immediate ramifications on the administration that it gives to its clients. In the year 2003, nine (9) business
managing an account limbs and five (5) Islamic keeping money extensions were added to the Bank Alfalah
system grow to 72 extensions in 30 urban areas on a national scale, in 2004. Quickly BAL has 238
Branches in 75 different cities. Figure 2.1: Branch Network of Bank Alfalah Limited 2.12 Organizational
Structure of BAL Figure 2.2: Organizational Structure of Bank Alfalah Limited 2.13 Different Departments
Each association is separated into unique divisions. Each division performs unique classification of
occupation and obliges staff with particular expertise to handle the careful employment. This enhances the
fitness of specialists and makes the employment of the representatives less demanding. In Main Branch of
Bank Alfalah Mansehra, divisions are ready on the base of exercises performed by method for the bank. The
ensuing are the first bureaus of the BAL Mansehra Main Branch: 2.13.1 Accounts Department Accounts
Department is known as the ethical fiber of any bank, this division indicates the presentation of a bank in a
specific region. The essential stride towards the broker customer's relationship is the opening of a client's
record. Primary Branch of Bank Alfalah Mansehra offers diverse sorts of records for different business
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fragments. Figure 2.3: Accounts Department Procedure of Opening an Account Figure 2.4: Procedure of
Opening an Account Types of Accounts a) Current Rupee Account Everybody including Individual,
organizations, affiliations, clubs, enterprises, social orders and NGOs are qualified to open current records.
This type of record is moreover appropriated as individual record and Joint Account. Noteworthy
peculiarities are as takes after: ? Rs.5, 000/ - is the Minimum beginning store. ? Rs.10, 000/ - is the
Minimum normal parity. ? Number of transactions has no impediments. ? There is no limitation on measure of
extraction of cash. ? No benefit is remunerated on layaway adjust in existing records. ? Inspection ability of
the record is boundless. ? 25, 50,100 Cheque Book are issued. b) Term Deposit This record sorts is
exceptionally prominent. The sum is kept in this account for altered time period i.e. from one month. The rate
of benefits builds according to expand in time period. The customer can't take out cash before development.
Turnover on this record is remunerated after the development, following five years if a client needs than it is
given to them. Premium is diverse with the variant of time confinements withdraw before development, past
to obtaining; he will need to give a notice to the bank 7 days. c) PLS Saving (Rupee) Accounts Savings
accounts are intended to activate funds basically from countless and living arrangement hold. In the Bank
Anybody or more persons or accomplices can open a PLS saving account. Noticeable peculiarities of PLS
record are as takes after: ? Rs.500/ - is the Minimum introductory store. ? A more modest store could be
acknowledged at the watchfulness of limb administration if normal store is required to proceed past
Rs.5,000/ - ? On the base month to month equalization premise Profit on PLS sparing records is
ascertained. ? In January and July Profit rates are proclaimed and paid semiannually. ? Benefit rate on the
PLS sparing is 2.25% for every annum. However benefit rates are liable to change in light of progress in the
return earned by the Bank on sending of trusts. ? Account Checking Facility is boundless. ? Customers are
furnished with 25, 50, leaves Cheque Book. ? Withholding Tax is deducted from the benefit and Zakat on
aggregate sum. d) Royal Profit Savings (Rupee) Accounts Royal profit is a high return rupee account
proposed to give higher rates of profit to high total assets clients and more prominent adaptability and
comfort as far as dealings. Present rates of profit are as beneath: e) Royal Patriot (Rupee Term Deposit)
Royal Patriot is a rupee term deposit scheme with competitive rate of profit. f) Foreign Currency Accounts
This Account is offered to occupant and non-inhabitant Pakistani's and in addition outsiders can open the
accounts. This account is opened in addition as current or Savings account. These accounts are opened
and kept up subject to neighborhood laws and regulations in power from auspicious way. The profit of foreign
currency on saving account is paid on half-yearly premise and on term store it is compensated on
development. No interest is paid on the current account of foreign currency. To close the account if a client
needs than the client must come back to the bank the unmoving cheque(s), alliance card, Credit Card and
ATM card(s) for end. Bank has the right to close up the account without allotting any reason by giving 14
days notice. 2.13.2 Remittances Department Remittances department is an extremely paramount division in
every bank. A standout amongst the most as often as possible utilized managing an account administrations
is the exchange of stores through the saving money channels. Exchange of stores shows the high
effectiveness and security of the bank. Local Remittances Local Remittances is the exchange of
stores inside the Country or inside the city. These are the diverse sorts of the neighborhood settlements in
BAL Mansehra Main extension: a) DD (Demand Draft) Demand Draft is drawn by one extension on an
alternate limb or on the Head Office of the same bank. Essentially a bill of trade is the Demand Draft, is a
request to pay cash, emptied by one office of a bank upon an extra office of the same bank for a cum of
cash payable request on need, for payee sake, the bank is situated free by cost at the appropriate time
course. b) TT (Telegraphic Transfer) Telegraphic Transfer is a message transmitted by means of broadcast;
fax or phone after the client fills in and signs the provision structure for exchanging trusts from one spot to
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an alternate. Exchanged sum is gets by the bank, charges obligation on the exchange. Receipt is given to
the client and the TT officer sends coded guidelines as test numbers to the drawee branch telegraphically. At
the drawee branch the code is decoded and installment made to the beneficiary at the time of presentation.
The measure of TTs issued in a day are posted in the Branch's online programming framework by the related
officers and afterward checked by the administering officers to adjust the records in which transactions
happened in the day. Later than the complete affirmation the installment is made to the client. c) MT (Mail
Transfer) At the point when the cash is not obliged immediately, via mail exchange the remittances could be
made. In this strategy for moving subsidizes, the sending bank gives honing in script via
3mail to the paying bank for the installment of unmistakable measure of
cash. As soon as MT homeward bound by the paying bank, be put together payment. Money Gram
Money gram is a global setup. It is a machine setup, from start to finish through which a customer store
cash. The customer fills a structure and set down the cash, the investor provides for him a note. The
customer give that note to the new gathering either he is in the country or outer surface the state. Banks
went by him and that is booked in the cash gram setup. Message is given to him and takes his cash. Foreign Remittances Foreign Remittances might be either inward or outer. For fear that of Inward
Remittances wherever the approved merchants buy remote trade gained in the mixture of Cheques, TTs,
MTs, DDs, Travelers and Foreign Currency Notes it streams in and if there should be an occurrence of
Outward Remittances where the sanctioned merchants offer outside trade by issuing the above given
instruments, it moves out. 2.13.3 Cash Department The Cash Counter The cash counter is
possessed by four clerks who are headed by a head clerk that pays and gets money from the clients after
deliberately checking the instruments displayed for instalment and money exhibited for saving or paying.
Additionally, advantageous is an officer in control for issuing RTCs, DDs, TTs, MTs, cash Orders and so on
and a higher Grade I official who told about the transactions and gives fundamental guidance if there should
be an occurrence of any action. Receipt and Payment of Cash For cash collection by the clientele
a cash deposit slip is filled, which involve the range office name, zone office code, assignment of record, the
date, aggregate sum that is stored in the record and the marks of the saver. The prevalent official keeps up
through himself a "Cash Deposit Stamp" that is attached on the paying in slip after the bank representative
signs that. Money or else any past instrument offered for keeping in the client's or a beneficiary's record is
acknowledged and the record credited just after the paying in slip has been marked and countersigned by the
officer. 2.13.4 Clearing Department Banks gather cheques for their customers that are drawn on different
banks. This part of meadow its clients' checks by a bank is performed for settling instalments through the
clearing houses in the State Bank of Pakistan. In territories with no SBP introduction, the clearing is further
directed by method for Bank Alfalah of Pakistan. Types of Clearing a) Inward Clearing The
procedure where instruments tired to be paid on Bank Alfalah Mansehra Main Branch, are deposited by the
holder with other banks/ branch and presented for payment. b) Outward Clearing The procedure where the
instrument drawn is payable on some other bank/ branches is deposited for collection Bank Alfalah
Mansehra Main Branch. c) Process of Clearing A
5clearing house is a place where clearing officers of all scheduled banks get
together to settle payments and
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receipt of cheques drawn on every other. Cheques likely at BAL Mansehra Main Branch are sorted and
entered in the outward registers by the officers and is sent to the BAL Manshera area office. Than in the
Supply area office a duplicate of the clearing schedule prepared sent to the reimbursement house
supervised by the State Bank of Pakistan in all the major cities of Pakistan and in the smaller ones by the
Bank Alfalah of Pakistan as an agent of the central bank. During the Clearing House every bank receives
from other banks cheques pinched in the lead it and delivers to other bank cheques drawn upon them. The
net discrepancy is matured by Dr, Cr. To their bank account with the other supervising bank. 2.13.5 Credit
Department Figure 2.5: Pecking order of Credit Department Business banks are so named on the grounds
that they have practical experience in advances to mechanical and business organizations. Banks set up
together credits of three sorts: customer 18 advances, business, home loan credits and mechanical credits.
Mechanical and Commercial credits are advances to organizations or modern firms. Types of Advances a)
Running Finance This is the most well-known sort of bank developments. When a borrower obliges fleeting
alteration, bank permits withdrawals on his financial balance abundance of the equalization with the obtaining
client encase in credit, and an on the run fund therefore happens. This conformity is normally permitted
against insurance securities to diminish danger of the bank. The acquiring customer is in a gainful toxic
substance in running account, for the reason that he need to pay administration charges alone on the offset
remarkable contrary to him. or of default the bank has the power to auction the insurance and recoup the
sum exceptional. b) Loans At the point when a client obtains a settled sum repayable either in occasional
portions or in protuberance whole at an altered future time, it is known as a "loan". BAL Mansehra Main
Branch permits loans to their customers. The bank preeminent takes ensure securities against the loan. c)
Term Finance This is exceptionally normal type of acquiring by business and mechanical concerns,
additionally it is ready available either contiguous vow or hypothecation of supplies, create or things. In
articulation fund, a borrower is permitted to have an advance of cash from the bank up to a certain farthest
point, either immediately or as and when required. The increase is simply specific on the sum really used. It
is a short term, offering toward oneself business credit. Additionally it is given proposed for one year and
restored following one year. 2.13.6 Credit Cards Department In a try to give the clients flexible keeping
money choices to satisfy their fiscal necessities, BAL presents the Alfalah HilalCard, the first Visa Electronic
5Debit Card which gives clients a boundless access to their current/ funds
account with an easy filch, at
a huge number of distribute shops and ATMs, general. The Alfalah HilalCard accompanies an assemblage of
accommodations and profits joined with the wide arrive at of Visa Network empowering it to be
acknowledged at in overabundance of 840,000 ATMs and 13 million set available to be purchased in outlets
more or less the world, making it the lion's share sufficient Debit Card accessible in Pakistan. 2.13.7 Auto
Finance & Leasing Department a) Car Finance Alfalah car proposal enables clientele to own a car at without
doubt within your means and flexible installments, with lowest amount down payment and insurance. b)
Corporate &
5Individual Car Leasing BAL in recent times introduced car leasing facility
for folks and commercial sector has set new- fangled extent for the product.
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Currently customers are provided through the choice of either to obtain the
vehicle leased or financed.
2.13.8 Home Finance Department Home finance department as propelled BAL for the span of last quarter of
2003. This item has recognized overpowering from the clients because of its most reduced imprint up and
raised quality administrations gave by bank. Home back Department on track its operation in12, September
2003. Major Purposes of Home Finance For three major purposes Bank provides the loan: ? Purchase ?
Construction ? Renovation 2.13.9 Foreign Exchange Department Mansehra Main Branch of BAL Foreign
Exchange Department deals approximately in all types of foreign banking connections such as:
Authorized Rates for Foreign Exchange Transactions State Bank reports the rate for outside trade business.
The embraced merchants are situated general consent to focus their own particular rates of trade,
commonly for spot and forward transactions for general society subject to the condition that the edge
between the purchasing and offering rate ought not to surpass 50 paisa for every US Dollar or its identical
in additional monetary forms. This circumstance does not be suitable to bury bank transactions. 2.13.10
Payment against Documents (PAD) Installment against Documents is made at retirement of L/C or
Acceptance. It is a fleeting credit around the merchant and is balanced when the installment is gained and
records are conveyed to shipper. By the lodgments are conveyed to merchant. At the lodgment date the L/C
sum is changed over at overall or busy rate. Credits (Letter of Credit) Worldwide exchange
includes various variables, for example, installment for imports in the exporter's nation; shipment of products
inside the restriction endorsed under Trade oversee meeting, alongside troubles of upholding commissioned
rights in an outside nation, and so on hence, through a perspective to beat these obstacles a framework has
been authorized keeping in mind the end goal to manage the above and other related components in order to
secure merchants and exporters of merchandise against unwanted dangers. The framework is spoken to by
'Letter of Credit' and their operation is controlled under the articles of the "Uniform Customs and Practice for
Documentary Credits" as received by the Council of the International Chamber of Commerce and authorize
with impact beginning January, 1994 inside the handout No 500. Figure 2.7: L/C Flow Chart 2.14 Bank
Alfalah Management BAL is managed by a 6-member Board of Directors headed via a Chairman. An
Executive officer is there, who manage and runs the Executive Committee. In Executive Committee at hand
are 7 members. Chairman, Board of Directors and Executive Committee members names along with their
designations are given in the annexure. CHAPTER 03 BANK ALFALAH FUNCTIONAL AREAS 3.1 Bank
Alfalah Products The Bank Alfalah has assumed its part with imaginative items and brought opportunity and
comfort to millions. We envisioned a world in which a trustworthy foundation could grow skylines and bring
new viewpoints to the client's club. Inside 10 years of its initiation, Bank Alfalah transformed that vision into
actuality with items that may be referred to for variety as well as for competitiveness and dependability.
Bank Alfalah has accomplished leverage over other keeping money foundations by offering a complete
extent of managing an account answers for its acknowledged customers. The ideas realize production of a
monetary grocery store where a huge assortment of keeping money items and administrations are
accessible to help the clients. A summing up of Bank Alfalah items and administrations is as takes after:
3.1.1 Consumer Finance Products Buyer fund is a quickly developing section of keeping money industry in
Pakistan. MasterCards, particular advances, auto money, and workstations credits for acquiring family unit
machines, and related frill and lodging financing are the important shopper fund items. As a business sector
situated bank; Bank Alfalah additionally has a solid concentrate on buyer keeping money and shopper fund.
A short clarification of items is as given underneath: a) Auto Leasing and Financing Car Finance Alfalah
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car proposal enables customers to own a car at easily affordable and flexible installments with minimum
down payment and insurance. Corporate & Individual Car Leasing BAL as of late presented
5car leasing facility for people and corporate area has set down new extent
implied for the
item. At the present clients are furnished
5with the option of either to get the vehicle rented or financed.
b) Credit Cards Credit cards are progressively getting to be lifestyle in Pakistan. Bank Alfalah (visa) Credit
Card item was dispatched throughout Dec, 2002. In a little period of time, it has attained a remarkable 23
achievement. Banks Credit Card is selective in the way that there is no minded issuance expense as it is
free until the end of time. c) Alfalah Hilal Card Bank Alfalah through its dedication to give better and
enhanced administrations than its regarded customers, has revealed an on a national scale system of
ATMs. BAL presents
5Alfalah Hilal Card the radical, new-age sort of money that gives prevalent
freedom, insurance and convenience united with the wide arrive at of Visa
framework. This card
know how to be use for everything monetary needs pretty much the world, encompassing the clock,
wherever; Visa electron cards are acknowledged by regional standards and around the world. It gives an
access to the current/Saving account with an easy swipe, beside a huge number of distribute shops or
ATMs, universal. Bank Alfalah Limited ATM system is outfitted to adventure the most breakthrough
engineering, and is equipped to get together the most elevated principles of security and proficiency. d)
Consumer Durables Bank Alfalah ceaselessly strives to enhance and add items to its shopper keeping
money administration. Bank dispatched the Micro-Financing to buyer. Began on August 04, 2003, which is
so far one more point of reference towards its dedication of helping esteemed clients. The proposal is
basically term finance fitness repayable in regularly scheduled payments, giving customers and opportunity
to have housed items. Inside this strategy, this item is encouraging the clients and bailing them out to
enhance their expectation for everyday comforts. e) Home Finance This item which was dispatched on
September 01, 2003, gives expansive mixture of Home Finance uncommonly made arrangements, proposed
especially to meet clients' require at an exceptionally focused speed. As of now, Bank Alfalah is the main
Bank in the commercial center, which gives a house account proposal for non-inhabitant Pakistani clients
situated in the UAE other than Pakistani occupants. Lodging account is open from Rs.0.500 million into the
course of Rs.7.50 million to get, revamp or manufacture a house/flat. Huge focuses are as underneath: ?
Installment time ranges from 3 to 20 years. ? Holder just contributes 30% of the estimation of property. ?
Advance can be reimbursed before development with no any punishment. ? Time of Borrower must be
between 25 to 65 years. ? Salaried staff, agents and impromptu individuals are qualified. ? Financing is also
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accessible for obtain of private area. ? Financing open to tenant & non- occupant Pakistanis. ? Least sum
will be Rs.05.500 million & most extreme of Rs.7.50 million. f)
5Alfalah Karobar Finance Alfalah Karobar Finance is a
innovative creation and product of BAL, which is launched in recent times. It is a stress-free successively
finances facility for SMEs that meets all the business wants like no other. g) Alfalah Zarie Sahulat Bank
Alfalah Ltd. (BAL) agri fund motivation has been named as "Bank Alfalah Zarie Sahulat". BAL is expansion
this administration to the customers on a vivacious markup rate. The proposal now blankets financing of a
huge number of exercises identified with reaping, yield creation advertising,, transportation, stockpiling,
pressing, agreement, working capital, send out, agri development and altered wander financing of agri non
product activities, storage room, storehouses, and so on making it extensive and comprehensive. The items
have been, thus, outlined remembering objectivity of handy pertinence in business sector situation and to
coddle the most usually requested things of agrarian financing by ranchers. h) Money Gram Bank Alfalah
limited, in collaboration with Money Gram, gives remittance cheque to Pakistan. Money Gram is individual to
individual money move service that allows consumers to receive it in few minutes. i) Online Banking Bank
Alfalah now offers the office of online banking to its clients through its nationwide arrangement of limbs.
Customers can utilize the ATMs generally the saving money counters of any extension for normal managing
an account prerequisite, independent of division wherever they maintain their records. Planned for business
customers brought together Cash Management office is additionally offered through online banking. 3.1.2
Deposit Products a) Current Rupee Account Individual, companies, partnerships, clubs, associations,
societies and NGOs are eligible to open contemporary accounts. This category of account is additional
classified as individual account and Joint Account. b) PLS Saving (Rupee) Accounts Saving accounts are
designed to mobilize savings primarily from a large number of individuals and family. Any person or more
individuals or partners can open a PLS saving account with the Bank. ? Term Deposit It is one of the well
known account classifications. The amount is stored in this financial balance for settled time period i.e. from
one month toward five years. Investment is a get-together of by the alterability of time edge. The quickness
of benefits expands as weighed by increment in time period. The customer can't withdraw cash preceding
development. The yield on this record is salaried consequent to the development. At the same time if a client
needs to withdraw before development, so he will give consciousness of to the bank 7 days preceding
getting. ? Royal Profit Savings (Rupee) Accounts Royal profit is a high yield rupee account intended to
provide higher rates of profit to high net worth customers and greater flexibility and convenience in terms of
transactions. Present charge of return are as below: Amount From 50,000 To 999,999 Proposed Rates (P.A)
1.50% From 1,000,000 To 9,999,999 1.75% From 10,000,000 To 49,999,999 2.00% From 50,000,000 To
149,999,999 2.50% From 150,000,000 & Above To be quoted by treasury Table 3.1: Royal Profit Savings
Account Proposed Rate ? Royal Patriot (Rupee Term Deposit) Noble Patriot is a rupee term set down
system with competitive rate of profit. Up to date rates of profit are like this: Tenure 1 Month 25,000-999,999
1,000,000-4,999,999 5,000 & Above 1.50 % 1.60 % 1.70% 3 Month 1.75 % 1.85 % 1.95% 6 Months 2.00
% 2.10% 2.20% 1 Year 2.25 % 2.35 % 2.45% Table 3.2: Royal Patriot Competitive Rates ? Safe Deposit
5Lockers Bank Alfalah provides secure deposit lockers conveniences to its
customers for safe custody of their plunder like documents, securities and
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ornaments etc. significant features
of lockers competence are like this. 3.1.3 LEARNING AS AN INTRENEE I did my internship in Bank Alfalah
Punjab Chowk Mansehra. It is not an incredibly big branch except merely a minute retail branch of huge
giants. First day, I reported to the manager of the branch Mr. Imdad Khan Jadoon who gave me concise
introduction concerning the management and working of the branch, he too check my understanding about
banking by taking a slight test and interview. Then he introduced me to the other employees. MANAGEMENT
OF BRANCH DESIGNATION NO OF EMPLOYEES Branch Manger 01 Operation Manager 01 Credit
Manager 01 Account Officer 01 Car Officer 01 Assistants 02 Cashier 04 IT Officer 01 Telephone Operator
01 Gun Man 03 Peons 03 Table 3.3: Management of Branch From A/c Opening Department This Branch is
having about 2000 accounts but there was only one officer, Miss. Sobia to handle this tough work. He has to
deal different people. My experience in this department was really very good. I learnt how to handle different
customers, how to fill Account Opening Form, what are the required documents that should be with you in
order to open an account, what types of account Bank Alfalah is offering to the customers, what are the
facilities that an account Holder can enjoy and what are the profit rates Bank Alfalah is giving to its
customers. I have learnt the course of action related to an Account Opening Officer has to follow in order to
open and maintain an Account. From Accounts & Finance Department There were two officers in this
department; Mr. Shakeel Ahmad and Mr. Ikram They have divided their work between them. Mr. Shakeel
handles Reporting and Mr. Ikram handles daily activity checking. I used to help Mr. Ikram in Daily Activity
checking, sorting and counting of vouchers and how to calculate the deprecations of all fixed assets. I learnt
from Mr. Shakeel the items of the Balance Sheet of Bank and saw the format of different reports. He helped
me to understand his work. He told me about the reports that he has to prepare & the purpose of those
reports. It was one of those Departments in which Customer interaction is not involve rather paper
interaction is important. In Home Finance there was one officer Mr. Jawad Maqbool I saw few customers in
this department. I learnt what the debt to equity ratio is in Home Finance, how to calculate installment, what
are the documents required to get this product, what the eligible criterion is for Home Finance Agreement,
and what is the procedure and activities of this department. What are requirement to apply for this Finance,
what is that maximum limit. From the Car Finance Department One officer in this department, whose name
was Mr. Abbas used to sit the second floor of the branch. Although the Mansehra Branch was small but still
the demand for financed cars through Bank Alfalah lead this department to prosperity. This department
handles a large number of customers daily and, without overstatement; this department is the third busiest
department after the Account Opening Department. It requires constant customer interaction and requires
high level of intelligence to screen the validity of the customers. Whereas sound marketing skills are
required to actually force the walk-in customer to select Alfalah Car Financing, still stronger skills are needed
to scan the incoming customer for validity. I learnt how to face the customers conveniently, how roper files
should be maintained, how to apply for a car, what are requirement to apply for this Product, what is that
maximum limit, what is the procedure to this department. CHAPTER 04 FINANCIAL ANALYSIS OF BANK
ALFALAH 4.1 Financial Statements 4.1.1 Balance Sheets of Bank Alfalah Limited Table 4.1 2011 2012 2013
Assets (Rupees in 000) Cash and balances with treasury banks 50,882,662 58,044,054 61,204,697
Balances with other banks 17,424,487 26,720,993 35,179,983 Lending to financial institutions 7,765,407
876,870 2,522,022 Investments 166,531,768 189,486,762 219,690,369 Advances 198,468,512
233,933,358 260,779,850 Other assets 13,290,458 13,272,536 15,198,170 Operating fixed assets
13,388,583 13,747,520 14,835,200 Deferred tax 421,825 284,601 1,204,000 Total Assets 468,173,802
536,466,694 610,614,291 Bills payable 5,403,453 8,430,910 9,543,480 Borrowings from financial
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institutions 18,168,978 21,227,834 23,115,102 Deposits and other accounts 401,247,886 457,118,723
525,525,770 Subordinated loans 7,148,693 5,874,742 9,991,000 Liabilities against assets subject to
finance lease - - - Other liabilities 10,427,754 13,587,083 10,537,195 Deferred tax liabilities - - - Total
Liabilities 442,396,764 506,219,292 578,712,547 Represented by Share capital 13,491,563 13,491,563
13,491,563 Reserves 4,100,264 5,636,549 7,274,222 Unappropriated profit 5,248,059 6,561,628
7,499,831 Surplus on revaluation of assets 2,937,152 4,557,662 3,636,128 Total Equity 25,777,038
30,247,402 31,901,744 Total Liabilities and Equity 468,173,802 536,466,694 610,614,291 4.1.2 Income
Statements of Bank Alfalah 2011 2012 2013 (Rupees in 000) Mark-up/return/interest earned 44,298,178
46,079,918 43,961,060 Mark-up/return/interest expensed 25,687,485 27,500,056 27,066,229
2Net mark-up / interest income 18,610,693
18,579,862 16,894,831 Provision against loans & advances (1,864,510) (1,848,535) (954,563) Provision
for diminution in investments value (2,459,294) (1,708,833) (94,797) Bad debts written off directly (5,696)
(1,164) (4,288)
2Net mark-up / interest income after provisions 14,281,193
15,021,330 15,841,183
2Non Mark-up / Interest Income: Fee, Commission and brokerage income
2,536,717 280,0461 Dividend income 191,708 349,061 482,567 Income from dealing in Foreign currency
1,115,417 1,309,703 1,535,808 Gain on sale of securities 140,093 1,328,000 1,588,895 Unrealized
loss/gain on investment revaluation (11,053) 1,511 8,465 Other income 1783,309 1
6,756,348 1, 862,498 Total Non mark-up/ Interest income
19,648,906 22,302,670 24,119,877 Non Mark-up / Interest Expenses: Administrative expenses 13,832,096
15,204,036 17,288,779 Other Provisions/Write Offs - (22,005) 2,100 Reversal Provision against other
assets 183,161 130,504 (162,621) Other charges 199,931 206,933 184,406
2Total non mark-up/ Interest expenses 14,215,188
15,519,468 17,312,666 Profit Before Taxation 14,215,188 15,519,468 6,807,211 Taxation -Current
3,263,249 3,141,909 2,400,321 -Prior years 45,000 160,000 (159,060) -Deferred (1,377,661) (754,828)
(110,000) Profit After Taxation 3,503,130 4,556,121 4,675,950 4.1.3 Cash Flow Statements of Bank Alfalah
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Table 4.3 2011 2012 2013
2(Rupees in 000) Cash Flow From Operating Activities: Profit before
taxation 5,433,718
6,783,202 6,807,211 Less: Dividend income (191,708) (349,061) (482,567) Adjustments: Depreciation
1,690,968 1,201,068 1,378,368 Amortization 182,816 157,454 194,731 Provision against loans and
advances 1,864,510 1,848,535 954,563
2Diminution in value of investments 2,459,294 1,
708,833 94,797 Provision against off-balance sheet obligations - (22,005) 2,100
6Provision against other assets 183,161 130,504 (162,621) Gain /loss on
investments revaluation
for trading 11,053 (1,511) (8,465)
6Bad debts written-off directly 5,696 1,164 4,288 Gain on sale of fixed
(16,291) (2,438) (24,186) Provision for gratuity 230,502 255,975 253,608 11,853,719 11,711,720
2Increase / Decrease in Operating Assets: Lendings to financial
institutions (4,394,400) 6,118,052 - Held-for-trading securities (10,151,080)
7,649,018 (3,620,450) Advances 6,813,828 (37,314,545) (27,805,343) Other assets (919,361) 77,921
(10,17,003) (919,361) (23,469,554) (32,442,796)
2Increase / Decrease in Operating Liabilities: Bills payable 881,920
3,027,457 1,112,570 Borrowings 4,441,847 2,999,686 1,897,957 Deposits and other accounts 47,232,575
55,870,837 68,481,370 Other liabilities 569,202 3,761,669 884081 53,125,544 65,659,649 72,375,978
56,328,250 53,901,815 48,945,009 Gratuity paid (230,502) (255,975) (253,608) Income tax paid
(1,822,835) (3,701,816) (3,579,103)
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2Net cash flow from operating activities 54,274,913
49,944,024 45,112,298 Net Cash Generated by Investing Activities (45,660,421) (31,305,868)
(30,171,631) Net Cash Generated by Financing Activities (418,499) (3,634,974) (3,367,676) Effect of
exchange rates change on cash & cash equivalents (419,495) 625,061 702,483
2Increase in cash and cash equivalents 7,776,498
15,628,243 13,275,474
2Cash and cash equivalents at beginning of year 62,150,999
69,927,497 85,555,740
6Cash and cash equivalents at end of the year 69,927,497
85,555,740 98,831,214 4.1.4 Statements of Changes in Equity of Bank Alfalah Total Balance
6(Rupees in 000) Balance at January 1, 2011
219,726,556 Changes in equity for 2011 Comprehensive income for the
year ended, December 31, 2011
23,083,635 Transfer from surplus on revaluation of fixed assets - net of tax
29,695 Transfer to statutory reserve
------ Balance at December 31, 2011 22,839,886 Effect of retrospective change in accounting policy with
respect to employee benefit (223,496) Balance as at January 1, 2012 restated 22,616,390
6Changes in equity for 2012 Comprehensive income for the year ended,
December 31, 2012
4,556,121 Transfer from surplus on revaluation of fixed assets - net of tax 690,169 Transfer to statutory
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reserve -
6Final cash dividend for the year ended December 31, 2012 @ 17.5%
(2,361,023) Balance at December 31, 2012
2Changes in equity for 2013 Comprehensive income for the year ended
December 31,
2013 4,675,950 Transfer from surplus on revaluation of fixed assets - net of tax 786,322 Transfer to
statutory reserve ------ Final cash dividend for the year ended December 31, 2013 @ 20% (2,698,313)
Balance at December 31, 2013 28,265,616 4.2 Financial Analysis Financial analysis is the most important
part of this report, hence due care has been taken to give true picture of the bank. Financial analysis is an
evaluation of a firms past financial performance and its prospects for the future. It consists of applying
analytical tools and other relevant data to obtain useful information. It
3helps in determining the financial conditions at any particular points in
time and effectiveness of operations of a firm during a specific period. The
various stakeholders of business are interested in the analysis of financial
statements but the focus of interest of all is not the same.
Keeping in view its importance I have addressed financial analysis by using the Bank Alfalah financial
statements, their common, index, trend and ratio analysis. 4.2
3.1 Common Size (Vertical) Analysis of Balance Sheet Common size
statements can be
3extremely helpful to highlight changes over time in the financial
performance and financial conditions of a company. In common size
(vertical) analysis of balance sheet, the
total assets is divided by
3all balance sheet items of assets side and total credit side balance is divided
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by all liability items.
3table shows a common size (vertical) analysis of the balance
sheet of Bank Alfalah for the years ended; 2011, 2012 and 2013. The common size analysis shows that
there has been slight decrease in the cash & its equivalents, continuous growth can be seen in investments
and balances with other financial institutions. The advances to customers have been remained the same.
And the fixed assets is decreased with time,
3this implies that the bank is concentrating now more on non-interest
income. The
bank is continuously declining its operating fixed assets. On the liability side, current liabilities have been
increased with time from 2011 to 2013. In comparison with total liabilities the total equity has been
increased in 2012 and then slightly decreased in 2013. The change is reflected by the change in share
capital. Vertical Analysis of Bank Alfalah Balance Sheets 2011 2012 2013 Assets Common Size (%) Cash
and balances with treasury banks 10.86 10.81 10.02 Balances with other banks 3.72 4.98 5.76 Lending to
financial institutions 1.65 0.16 0.413 Investments 35.57 35.32 35.97 Advances 42.39 43.6 42.71 Other
assets 2.8 2.47 2.488 Operating fixed assets 2.85 2.56 2.43 Deferred tax assets 0.0901 0.0717 0.197
Total Assets 100 100 100 Bills payable 1.154 1.57 1.563 Borrowings from financial institutions 3.88 3.95
3.78 Deposits and other accounts 85.7 85.2 86.06 Subordinated loans 1.52 1.09 1.636 Liabilities against
assets subject to finance lease - - - Other liabilities 2.22 2.52 1.7256 Deferred tax liabilities - - - Total
Liabilities 94.49 94.36 94.93 Represented by Share capital 2.88 2.51 2.2 Reserves 0.8757 1.05 1.19
Unappropriated profit 1.12 1.22 1.22 Surplus on revaluation of assets 0.627 0.84 0.595 Total Equity 5.5
5.63 5.22 4.2.2
3Common Size (Horizontal) Analysis of Balance Sheet& Income Statement
Horizontal analysis is also called index analysis
in which we compute the items of recent year balance sheets and income statements with one of the
previous year which we take as a base year. In this way, we check the trend of assets, liabilities, owner
equity, profit before taxation, tax, profit after tax, net income etc and their different components individually,
whether they are increasing or decreasing. Common size (horizontal) analysis of balance sheet overall
shows increasing trend while in income statement some of the components shows decreasing trend. The
total assets of Bank Alfalah have been increased to about 114% in 2012 and 130% in 2013 from 100% in
2011, which was also a major growth. Liabilities are also expanded to 114% in 2012 and 130% in 2013.
There is also a larger increase in total equity of 114% in 2012, while 130% in 2013 it has increase the same
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as the assets and the liabilities which shows that the Bank is having a very good control on its financials. In
the profit and loss statement, the mark-up / interest income shows a huge growth in 2012 up to 104% while it
has a decrease in 2013 as it reaches to 99%. In 2012, non mark-up expenses has increased to 107% and
then has a little decline to 105% in 2013. So the gross profit has fallen in 2012 to 99% and to 90% in 2013.
Similarly the net income is showing huge increase in 2012 to 130% and in 2013 it decline to 78%. Common
size (horizontal) analysis of Bank Alfalah shows that the Bank is growing its assets and operations day by
day. The decline in profit is mainly due to increase in administrative expenses which are resulted from the
rapid increase in number of its branches. Horizontal Analysis of Bank Alfalah Balance Sheet 2011 2012
1013 Assets Growth / Decline ( %) Cash and balances with treasury banks 100 114.07 120 Balances with
other banks 100 153.35 201.89 Lending to financial institutions 100 11.29 32.47 Investments 100 113.79
131.92 Advances 100 117.86 131.4 Other assets 100 99.86 114.3 Operating fixed assets 100 102.68
110.42 Deferred taxes 100 91.17 285.42 Total Assets 100 114.58 130.42 Bills payable 100 156 176.6
Borrowings from financial institutions 100 116.83 127.2 Deposits and other accounts 100 113.92 130.9
Subordinated loans 100 82.179 139.75
4Liabilities against assets subject to finance lease - - - Other liabilities
130.1 101.04 Deferred tax liabilities 100 - - Total Liabilities 100 114.42 130.81 Represented by Share
capital 100 100 100 Reserves 100 137.46 177.4 Unappropriated profit 100 125 142.9 Surplus on
revaluation of assets 100 155.17 123.79 Total Equity 100 117.34 123.76 Total Liabilities and Equity 100
114.58 130.42 Horizontal Analysis of Bank Alfalah Income Statement 2011 2012 2013 Growth / Decline (%)
Mark-up/return/interest earned 100 104.02 99.23 Mark-up/return/interest expensed 100 107.05 105.36 Net
mark-up / interest income 100 99.83 90.78 Provision against loans & advances 100 99.14 51.19 Provision
for diminution in investments value 100 69.48 3.85 Bad debts written off directly 100 20.43 75.28 Net
mark-up / interest income after provisions 100 105.18 110.92
2Non Mark-up / Interest Income: Fee, Commission and brokerage income
100 118.08 130.36 Dividend income 100 182.07 251.71 Income from dealing in Foreign currency 100
117.41 137.68 Gain on sale of securities 100 947.94 1,134.17
4Unrealized loss/gain on investment revaluation 100
----- ------ Other income 100 98.48 104.44
4Total Non mark-up/ Interest income
100 135.65 154.23
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4Non Mark-up / Interest Expenses: Administrative expenses
100 109.91 124.99 Other Provisions/Write Offs 100 ----- ------ Other charges 100 103.5 92.23
4Total non mark-up/ Interest expenses
100 109.17 154.23 Profit Before Taxation 100 124.83 125.277 Profit After Taxation 100 130.05 78.60 4.3
Financial Ratios Analysis of Bank Alfalah Financial ratios are actually the tools used to judge the
comparative performance of an organization by comparing its results with the results achieved by other firms
in same industry or with the results of its past performance. Financial ratios are classified into different
categories according to the information they provide. 4.3.1 Profitability Ratios Profitability ratios show the
4ability to generate earnings as compared to its expenses and other
relevant costs incurred during a specific period of time.
For most of these ratios,
4having a higher value relative to a
competitor's ratio or the same ratio from
4a previous period is indicative that the company is doing well. 1.
Earning Assets to Total Assets This ratio measures the proportion of the institution's income-generating
assets such as investment, securities and advances in relation to total assets. It is a key indicator of
continued earnings ability. Earning Assets to Total Assets = Earning Assets Total Assets Earning Assets to
Total Assets (2011) = Earning Assets to Total Assets (2012) = Earning Assets to Total Assets (2013) =
372,765,687 x 100 468,173,802 424,296,990 x 100 536,466,694 482,992,241 x 100 610,614,291 = = =
79.62% 79.09% 79.09% Interpretation The BAL earning assets to total assets is slightly declined in 2012
but in 2013 it has been maintained. Still the Bank Alfalah earning assets ratio is high which shows good
position, better performance and efficiency of the management.
42. Gross Profit Margin The gross profit margin ratio is used as indicator of
a business's financial health. It shows how efficiently a business is using its resources and workforce in
different processes and gives an indication of cost structure, and production efficiency of business. Gross
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Profit Margin = Gross Profit Margin (2011) = Gross Profit Margin (2012) = Gross Profit Margin (2013) =
Revenues Expenses Revenues 44,298,178 39,296,716 x 100 = 44,298,178 46,079,918 -- 38,864,460
x 100 = 46,079,918 43,961,060 -- 37,153,849 x 100 = 43,961,060 11.06% 15.65% 15% Interpretation The
gross profit margin of Bank Alfalah is low in 2011. But in the later years the company recovers itself and
maintains a steady gross profit margin ratio which is good for the Bank. The smaller Gross profit margin in
start is due to the rapid expansion policy of the Bank. 3. Cost to Income Ratio It shows a company's costs in
relation to its income. The ratio gives investors a clear view of how efficiently the firm is being run. It
indicates how cost and income changes along each other. Bad debts are not included in cost. Cost to
Income = Operating costs__ Operating Income Cost to Income (2011) = Cost to Income (2012) =
9,928,548_ x 100 = 11,751,850 11,002,961_ x 100 = 12,017,858 84% 91.5% Cost to Income (2013) =
12,747,785_ x 100 = 90% 14,122,586 Interpretation As compared to 2011, the cost to income ratio has
been increased in 2012 which shows a negative picture and inefficiency of the bank. In comparison with
income the expenses has increased more. 2013 ratio shows very slight improvement and profitability in
operations of the bank. 4. Return on Average Equity (ROE) Return on equity measures profitability by
revealing how much profit an organization generates with the money shareholders have invested.
Calculations for three years return on equity of Bank Alfalah are as follows; Return on Equity = Return on
Equity (2011) = Return on Equity (2012) = Return on Equity (2013) = Net Income_______ Shareholders
Equity 3,503,130_ x 100 = 13,491,563 4,556,121__ x 100 = 13,491,563 4,675,950_ x 100 = 13,491,563
25.96% 33.77% 34.65% Interpretation The ratio is lower in 2011 and is increasing with time in both the
preceding years. This shows that the firm is much capable of generating money internally. Due to this the
share holder's trust on the Bank will be increasing. 5. Return on Assets (ROA) Return on Assets
demonstrates how much income management has been able to produce using companys assets effectively.
For this reason, investors often use this ratio to evaluate companys management. Return on Assets = Net
Income_ Total Assets Return on Assets (2011) = 3,503,130__ x 100 = 468,173,802 0.75% Return on
Assets (2012) = Return on Assets (2013) = 4,556,121__ x 100 = 0.849% 536,466,694 4,675,950__ x 100
= 0.7657% 610,614,291 Interpretation The ROA ratio when compared with 2011 increased in 2012 and then
goes slightly down to the same level as of 2011 in 2013. This shows that the company is having a loss
control on its assets to generate returns. 4.3.2 Efficiency Ratios These ratios look at the internal workings
of the firm. They measure the efficiency with which the business manages its resources and improvements
in these ratios usually translate improved profitability of the organization. 1. Interest Income per Employee
Interest Income per Employee = Total Interest Income_ Total no of Employees Interest Income per Employee
(2011) = 5,433,718 = 7,580 716.85(In 000) Interest Income per Employee (2012) = 6,783,202 = 7,124
952.16 (In 000) Interest Income per Employee (2013) = 6,807,211 = 7,253 938.53 (In 000) Interpretation
The Bank Alfalah has increased interest income per employee in 2012 and maintains it at the same level as
of 2012 in 2013. This is because of decreasing the numbers of employees per year. But still the Bank is
earning a huge interest per employee. 2. Profit per Employee Profit per Employee = Profit after Taxation__
Total no of Employees Profit per Employee (2011) = 3,503,130 = 462.15 (In 000) 7,580 Profit per Employee
(2012) = 4,556,121 = 639.54 (In 000) 7,124 Profit per Employee (2013) = 4,675,950 = 644.7 (In 000)
7,253 Interpretation The profit per employee is increasing every year which is very good for the Bank. The
main reason behind that is the decreasing number of employee's every year and the good performance of
the existent employees. 3. Business per Branch Business per Branch = Total Business of BAL Number of
Branches Business per Branch (2011) =14,281,193 = 30,385 (In 000) 470 Business per Branch (2012)
=15,021,330 = 30,163 (In 000) 498 Business per Branch (2013) =15,841,183 = 27,597 (In 000) 574
Interpretation The business of Bank Alfalah is decreasing every year this is because of the philosophy of the
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bank. The bank wants to increase its number of branches in the country. Due to rapid growth in the number
of branches the business per branch declines. 4. Business per Employee Business per Employee = Total
Business of BAL Number of Employees Business per Employee (2011) = 14,281,193 = 1,884 (In 000)
7,580 Business per Employee (2012) = 15,021,330 = 2,108 (In 000) 7,124 Business per Employee (2013)
= 15,841,183 = 2,184 (In 000) 7,253 Interpretation The business of Bank Alfalah per employee has
increased continuously and show enormous increase in 2013. It means Bank Alfalah is using its employees
effectively and efficiently to generate maximum output / revenue of them. 5. Employee per Branch Employee
per Branch = Total no of Employees Total no of Branches Employee per Branch (2011) = 7,580 = 470 16
Employees Employee per Branch (2012) = 7,124 = 498 14 Employees Employee per Branch (2013) = 7,253
= 13 Employees 574 Interpretation The numbers of employees per branch are more in 2011, which
significantly declined in 2012, and again slightly declined in 2013. The reason for that may be opening of
new branches rapidly and get maximum out from employees in order to lower the expenses to increase their
income. 4.3.3 Liquidity Ratios Liquidity Ratios measure the liquidity of the bank or company as on a
particular day or its ability of paying short-term debts. 1.
4Current Ratio It is the ratio of current assets to current liabilities. It shows
a company s ability to cover its current liabilities with its current assets.
Current Ratio
= Current Assets_ Current Liabilities Current Ratio (2011) = Current Ratio (2012) = Current Ratio (2013) =
274,962,893 = 23,572,431 374,577,861 = 328,705,747 397,279,284 = 367,795,060 1.06 1.13 1.08
Interpretation Current ratio of Bank Alfalah shows slight changes; up down, overall the current ratio of
Bank Alfalah is good as current assets are slightly more than the current liabilities and it also meets the SBP
requirement which is 1:1. It gives picture of no liquidity problem with the Bank Alfalah. 2. Cash Ratio It is the
conservative liquidity ratio. The best indicator of companys short-run liquidity may be cash ratio. Cash
ratios of Bank Alfalah for previous three years are as follows: Cash Ratio = Cash + Marketable Securities
Current Liabilities Cash Ratio (2011) = 50,882,662 + 7,765,407_ = 424,820,317 Cash Ratio (2012) =
58,044,054 + 26,720,993_ = 486,777,467 Cash Ratio (2013) = 61,204,697 + 35,179,983_ = 558,184,352
0.138 0.174 0.172 Interpretation The cash ratio is more in 2012 and 2013 then as compared to 2011; it is
good because too low cash ratio could arise an immediate problem with paying bills and other sudden
current liabilities. The cash ratio of Bank Alfalah shows that it is using cash to its best advantages and bank
operations. 3.
3Advances to Deposit Ratio This ratio compares the advances
given by bank to customers and the deposits of customers with the bank. As the main source of income for
bank is the difference between their interests so it is an important ratio. Advances to Deposit Ratio =
Advances x 100 Deposit Advances to Deposit Ratio (2011) = 198,468,512 x 100 = 401,247,886 Advances
to Deposit Ratio (2012) = 233,933,358 x 100 = 457,118,723 Advances to Deposit Ratio (2013) =
260,779,850 x 100 = 525,525,770 49.5% 51.17% 49.62% Interpretation The advances to deposit ratio of
the Bank Alfalah has fallen to 49% in 2013, but as compared to 2011 there is a little increase. This indicates
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that Bank further need to concentrate on providing the different loans to customers in order to sustain and
increase its revenue. 4.3.4 Financial Leverage Ratios It measures the degree to which management use
debt, borrow money or equity, and issue new shares to finance ongoing operations. 1. Debt-to-Total Asset
Ratio This ratio highlights the relative importance of the debt financing to the firm by showing the percentage
of the firms assets supported by debt financing. Debt-to-Total Asset Ratio = Total Debt Total Assets
Debt-to-Total Asset Ratio (2011) = 442,396,764 x 100 468,173,802 Debt-to-Total Asset Ratio (2012) =
506,219,292 x 100 536,466,694 Debt-to-Total Asset Ratio (2013) = 578,712,547 x 100 610,614,291 = = =
94.5% 94.36% 95% Interpretation The higher the debt-to-total asset ratio; the greater the level of financial
risk, the lower this ratio; the lower the financial risk. This ratio has slightly lower in 2011 & 2012. It means in
2011 and 2012, 94% of the assets were financed by debt while in 2013 95% of the assets were financed by
debts. From the perspective of long term debt-paying ability, the lower this ratio the better is the companys
position. 2.
4Debt-to-Equity Ratio This shows the extent to which the firm is financed
for ongoing operations by borrowings and by the
4equity. The debt-to-equity ratio
also helps determining how well creditors are protected in case insolvency. Debt ratio of Bank Alfalah for
past three years is; Debt-to-Equity Ratio = Total Debt__ Total Equity Debt-to-Equity Ratio (2011) =
4Debt-to-Equity Ratio (2012) = Debt-to-Equity Ratio
(2013) = 442,396,764 = 25,777,038 506,219,292 = 30,247,402 578,712,547 = 31,901,744 17.16 16.73 18
Interpretation The ratio has been decreased in 2012 but then again slightly increased in 2013. In 2013, it
shows that creditors are providing Rs. 10 of financing for each Rs. 1 being provided by shareholders. The
lower the ratio, the higher the level of the firms financing that is being provided by shareholders and the
larger the creditor cushion (margin of protection) in the event of shrinking asset value. The Bank Alfalah still
needs to decrease this value further. 4.4 SWOT Analysis This SWOT analysis of Bank Alfalah Limited takes
into thought the internal as well as the external environment of the bank. 4.4.1 Strengths ? BAL gives its
clients a complete extent of keeping money items and administrations including corporate and institutional
managing an account, retail managing an account, buyer fund and exchange account. ? BAL has wanted to
establishment significant changes in client administrations and interior frameworks to enhance proficiency. It
additionally proposes to dispatch creative and new items. The bank is likewise expanding asset current
through consistent store fights and quickening the methodology of recuperation of extraordinary
developments. ? The Management of ALFALAH Bank Limited (BAL), keeping in mind the end goal to further
enhance the nature of administration. ? BAL has fantastic budgetary assets. ? Bank has great brand name.
? Banks have skilled human asset. ? Automated methodology and strategy. ? The administrations and Profit
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rate is aggressive in business. ? BAL has pulled vast majority of clients in Pakistan. 4.4.2 Weaknesses ?
The chief weaknesses are: ? Small Size ? Less Efficient Computer and I. T. Framework ? Uneven Presence
Of more established Staff In the higher Management Hierarchy ? Unskilled workers ? Overseas Banks still
are a slight more critical ? BAL Doesnt Possess Foreign set of associations ? No Advertising in Electronic
Media ? Bank needs in utilizing new innovation as contrasted with different banks ? Most of the workers are
congested with work. There is unpleasant offering of work and advancements are less. ? Bank is keen in
introducing new services 4.4.3 Opportunities The opportunities of BAL on which it can capitalize upon are: ?
Extension of local branch network ? Establishing foreign branch network ? Capitalization on IT ? Unfamiliar
market of MNCs ? Growth in textile sector ? Adopt E-banking 4.4.4 Threats The predominant threats Bank
Alfalah is facing at the moment are discussed in the following lines: ? Private sector banks ? Heavy reliability
on only one market section i.e. Textile. ? Network expansion by foreign banks ? Terrorist image of the
country ? Inconsistency in government policies ? Privatization of HBL & UBL ? Rising global technological
advancements ? Emerging banks ? Innovative services of other banks ? Change in economic trend ?
Modification in interBank Alfalah services. CHAPTER - 05 CONCLUSION & RECOMMENDATIONS 5.1
CONCLUSION The six weeks used at Bank Alfalah Limited, Mansehra extension were, probably a wellspring
of incredible learning for me around a great deal of things especially working in bank's climate. It is my first
encounter to work basically in some association. This reasonable preparing project did not just help me
acquire heaps of information about the transcendent capacities performed by keeping money organizations,
additionally conferred a ton of preparing as respects the set of behavioral qualities which recognize a
specific individual from whatever is left of the parcel in a the earth. ? During my internship I inferred that
presently bank Alfalah has a high piece of the overall industry and is not confronting any sort of danger. ?
Due to amazingly prepared proficient it is utilized to fabricate advancement jumps and bound. ? The real
destination of bank is to set up solid association with the clients and make them accept that bank Alfalah is
ideal for them by giving successful and productive administrations. ? It has likewise delivered a
well-assembled goodwill and confide in the business. ? At this point it is critical to compose an expression of
appreciation for the establishment, which makes it sure, that all the scholars get an experience to
commonsense life in generally overall presumed associations. ? I must underscore the way that written work
this internship report was an equitably critical encounter as really doing the internship. I genuinely attempted
my level best to concoct unique bit of composing that could serve as a vivid verification of the way that
understudies at COMSATS. 5.2 RECOMMENDATIONS Based on my six weeks stay with BAL Mansehra
main branch, I would like to give a number of suggestions for the improvement in its operations as under: ?
Gainfulness proportions demonstrates great execution of the Bank Alfalah utilizing its assets, in spite of the
fact that the benefit has been fallen persistently that may be because of its fast development arrange or
blend of items and administrations with low overall revenue. The working costs are prone to proceed the
upward pattern as the Bank arrangements to grow its system further. Bank need to keep control on its costs
side by side and ought to look for ease financing to show build in benefits. ? In spite of the fact that Bank
Alfalah has expanded its stores persistently throughout the previous years however its developments
shows huge abatement in examination with its stores and past execution. Bank continually needs to
concentrate on its developments this will help to build the imprint up income. ? As Bank Alfalah does not offer
the credit office to recently create organizations on the grounds that its the BAL strategy that it will advance
just to those individuals who are running their organizations from 3 years. Bank ought to consider this range
and attempt to give credit office to new organizations through fitting game plans to secure them. It will signify
developments of the Bank. ? The bring down the proportion, the higher the level of the company's financing
that is constantly given by shareholders and the bigger the lender pad (edge of assurance). The Bank Alfalah
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still needs to decline the quality further by bringing down the obligations. ? Administration has not had the
capacity to deliver sufficient return utilizing organization's benefits successfully. Bank Alfalah is presently
winning less with more financing in stakes as contrasted with past and it additionally indicates wasteful
utilization of organization possessions. Stakes & Liabilities Management Committee need to concentrate on
that issue. ? Bank Alfalah Limited ought to extend its limbs in Pakistan as well as outside the nation. It has
few abroad limbs yet it ought to stretch further. By opening extensions abroad, the bank can extend its
mindset; it will pick up notoriety and would have a chance to redesign its items and administrations as per
the universal guidelines. ? The method of opening a record ought to be improved. The record opening
structure ought to act naturally illustrative and incorporate interpretation in Urdu for those clients who are not
taught, since the truth can't be disregarded that numerous individuals don't have a decent understanding of
English. ? The individuals who stores a lot of cash or are old clients of the Bank with great fiscal conditions
ought to be surrender free credit lines to a certain utmost. Additionally, monetary advices ought to be given
to clients in the event that there is a change in the business sector drift before they look for it. ?
Participative administration idea ought to be embraced where for creating items as well as on administration,
thoughts from the representatives ought to be taken, build productivity and worker confidence and so forth,
to enhance them. ? The amount of Fax machines and photocopying machine in the bank are likewise short
of what they are needed. For photocopying reason one need to go upstairs. So more machines are obliged
and likewise their circumstance ought to be at the exact spot. ? BAL ought to present all the more preparing
projects for their specialists. It would help less accomplished and less instructed staff to develop and be a
significant a piece of the bank. REFERENCES ? David, R. E, (1998) (7TH Edition), Strategic Management
Concepts & Cases, New Jersy: Prentice Hall Inc. ? Wild J John & Subramayam. R.K (2000), (8TH Edition),
Financial statement analysis ,published by Mc Graw Hill New York. ? Khan. Y. M, Jain P.K (1998), (2nd
Edition), Management Accounting & Financial Analysis, Mc Graw-Hill, Inc. ?
3Van Horne, J.C, and J. M. Wachowiez (1998), (10th Edition).Fundamentals
of Financial Management. New York: Prentice Hall International,
Inc. ? Robert, F.M JR. Williams, S.F. Haka, & M.S Bettner. (1999),(11th Edition), Accounting; The Basis for
Business Decisions. Published by New York: Irwin Mc Graw-Hill. ? Suneja. H. R, (1st edition), Management
of Bank Credit, Himalaya publishing house Bombay. ? David. R. Fred, (10th edition), Strategic
H.E. Sheikh Hamdan Bin Mubarak Al Nahayan BOARD OF DIRECTORS H.E. Sheikh Hamdan Bin Mubarak
Al Nahayan Mr. Abdulla Khalil Al-Mutawa Mr. Abdulla Nasser Hawaileel Al-Mansoori Mr. Khalid Mana Saeed
Al Otaiba Mr. Ikram Ul-Majeed Sehgal Mr. Nadeem Iqbal Sheikh CHIEF EXECUTIVE OFFICER Mr.
Mohammad Saleem Akhtar EXECUTIVE COMMITTEE Mr. Mohammad Saleem Akhtar Mr. Ikram Ul-Majeed
Sehgal Mr. Parvez A. Shahid Mr. Mohammad Yousuf Mr. Tanweer A. Khan Mr. Sirajuddin Aziz Table 4.2 Table
4.4 Table 4.5 Table 4.6 Table 4.7 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 19 20 21 22 24 25 26 27 28 29
30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54
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