CHAPTER – 01

INTRODUCTION

1.1 Introduction 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 purpose of the

internship is to prepare and put forward a report as a partial 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 this 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.

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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 Merits 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 of limited time and space barriers, the span of

work is typically restricted. On the other hand this 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.

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1.6.1 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.

1.7 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

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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 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

bank to business banks and to concentrated offices to cater for unique prerequisite of particular

divisions.

2.2 Growth of Pakistan’s 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

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

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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:

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NATIONAL BANK OF PAKISTAN (NBP)

FIRST WOMEN BANK LIMITED (FWB)

THE BANK OF PUNJAB (BOP)

THE BANK 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

PICIC COMMERIAL BANK LIMITED

UNION BANK LIMITED

ASKARI COMMERIAL BANK LIMITED

MUSLIM COMMERIAL BANK LIMITED

UNITED BANK LIMITED

BANK AL-FALAH LIMITED

BANK AL HABIB LIMITED

PRIME COMMERIAL BANK LIMITED

MY BANK LIMITED

SAUDI PAK BANK COMMERIAL LIMITED

SAUDI PAK BANK COMMERIAL LIMITED

FAYSAL BANK LIMITED etc.

2.4.3 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 BANKING CORPORATION (HSBC)

ABN AMRO BANK

DUBAI ISLAMIC BANK

NIB BANK etc.

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The 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, Bank 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

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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 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.

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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.

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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

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2.12 Organizational Structure of BAL

Figure 2.2: Organizational Structure of Bank Alfalah Limited

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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 fragments.

Figure 2.3: Accounts Department

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Procedure of Opening an Account

Figure 2.4: Procedure of Opening an Account

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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.

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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.

2.13.2.1 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:

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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 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 mail

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.

2.13.2.2 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.

2.13.2.3 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

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Outward Remittances where the sanctioned merchants offer outside trade by issuing the above

given instruments, it moves out.

2.13.3 Cash Department

2.13.3.1 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.

2.13.3.2 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.

2.13.4.1 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.

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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 clearing house is a place where clearing officers of all scheduled banks get together to settle

payments and 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

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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 International Debit 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

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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 & Individual Car Leasing

BAL in recent times introduced car leasing facility for folks and commercial sector has set new-

fangled extent for the product. 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

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Mansehra Main Branch of BAL Foreign Exchange Department deals approximately in all types

of foreign banking connections such as:

2.13.9.1 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 it’s 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.

2.13.10.1 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.

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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 member’s names along with their

designations are given in the annexure.

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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.

MasterCard’s, 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 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 car leasing facility for people and corporate area has set down new

extent implied for the item. At the present clients are furnished with 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 Alfalah 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.

24

Time of Borrower must be between 25 to 65 years.

Salaried staff, agents and impromptu individuals are qualified.

Financing is also 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) Alfalah 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.

25

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:

Table 3.1: Royal Profit Savings Account Proposed Rate

26

Amount Proposed Rates (P.A)

From 50,000 To 999,999 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

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:

Table 3.2: Royal Patriot Competitive Rates

Safe Deposit Lockers

Bank Alfalah provides secure deposit lockers conveniences to its customers for safe custody of

their plunder like documents, securities and 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.

27

Tenure 25,000-999,999 1,000,000-4,999,999 5,000 & Above

1 Month  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%

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

28

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

29

FINANCIAL ANALYSIS OF BANK ALFALAH

4.1 Financial Statements

4.1.1 Balance Sheets of Bank Alfalah Limited

2011 2012 2013Assets (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 166,531,768 189,486,762 219,690,369Advances 198,468,512 233,933,358 260,779,850Other 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 1,204,000Total Assets 468,173,802 536,466,694 610,614,291

Bills payable 5,403,453 8,430,910 9,543,480

Borrowings from financial institutions 18,168,978 21,227,834 23,115,102Deposits and other accounts 401,247,886 457,118,723 525,525,770Subordinated 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 7,274,222Unappropriated profit 5,248,059 6,561,628 7,499,831Surplus 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 468,173,802 536,466,694 610,614,2914.1.2 Income Statements of Bank Alfalah

30

Table 4.1

Table 4.2

2011 2012 2013(Rupees in 000’)

Mark-up/return/interest earned 44,298,178 46,079,918 43,961,060Mark-up/return/interest expensed 25,687,485 27,500,056 27,066,229Net 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)

Net mark-up / interest income after provisions 14,281,193 15,021,330 15,841,183

Non Mark-up / Interest Income:

Fee, Commission and brokerage income 2,148,239 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 1,756,348 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

Total 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

31

Table 4.3

2011 2012 2013(Rupees in 000’)

Cash Flow From Operating Activities:Profit before taxation 5,433,718 6,783,202 6,807,211Less: Dividend income (191,708) (349,061) (482,567)Adjustments:Depreciation 1,690,968 1,201,068 1,378,368Amortization 182,816 157,454 194,731Provision against loans and advances 1,864,510 1,848,535 954,563Diminution in value of investments 2,459,294 1,708,833 94,797Provision against off-balance sheet obligations - (22,005) 2,100Provision against other assets 183,161 130,504 (162,621)Gain/loss on investments revaluation for trading 11,053 (1,511) (8,465)Bad debts written-off directly 5,696 1,164 4,288Gain on sale of fixed assets (16,291) (2,438) (24,186)Provision for gratuity 230,502 255,975 253,608

11,853,719 11,711,720 9,011,827Increase / 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)Increase / Decrease in Operating Liabilities:Bills payable 881,920 3,027,457 1,112,570Borrowings 4,441,847 2,999,686 1,897,957Deposits and other accounts 47,232,575 55,870,837 68,481,370Other liabilities 569,202 3,761,669 884081

53,125,544 65,659,649 72,375,97856,328,250 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)Net cash flow from operating activities 54,274,913 49,944,024 45,112,298Net 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

Increase in cash and cash equivalents 7,776,498 15,628,243 13,275,474Cash and cash equivalents at beginning of year 62,150,999 69,927,497 85,555,740Cash 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

32

Table 4.4

Total Balance(Rupees in 000’)

Balance at January 1, 2011 19,726,556

Changes in equity for 2011

Comprehensive income for the year ended, December 31, 2011 3,083,635

Transfer from surplus on revaluation of fixed assets - net of tax 29,695

Transfer to statutory reserve ------

Balance at December 31, 2011 22,839,886Effect of retrospective change in accounting policy with respect to

employee benefit (223,496)

Balance as at January 1, 2012 restated 22,616,390

Changes 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 reserve -

Final cash dividend for the year ended December 31, 2012 @ 17.5% (2,361,023)

Balance at December 31, 2012 25,501,657

Changes in equity for 2013Comprehensive 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

33

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 firm’s past financial performance

and its prospects for the future. It consists of applying analytical tools and other relevant data to

obtain useful information. It helps 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.

4.2.1 Common Size (Vertical) Analysis of Balance Sheet

Common size statements can be extremely 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 all balance sheet items of assets side and total credit

side balance is divided by all liability items. The table 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, this 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

34

Table 4.5

2011 2012 2013Assets Common Size (%)Cash and balances with treasury banks 10.86 10.81 10.02Balances with other banks 3.72 4.98 5.76Lending to financial institutions 1.65 0.16 0.413Investments 35.57 35.32 35.97Advances 42.39 43.6 42.71Other assets 2.8 2.47 2.488Operating fixed assets 2.85 2.56 2.43Deferred tax assets 0.0901 0.0717 0.197Total Assets 100 100 100

Bills payable 1.154 1.57 1.563Borrowings from financial institutions 3.88 3.95 3.78Deposits and other accounts 85.7 85.2 86.06Subordinated loans 1.52 1.09 1.636Liabilities against assets subject to finance lease - - -Other liabilities 2.22 2.52 1.7256Deferred tax liabilities - - -Total Liabilities 94.49 94.36 94.93

Represented by

Share capital 2.88 2.51 2.2Reserves 0.8757 1.05 1.19Unappropriated profit 1.12 1.22 1.22Surplus on revaluation of assets 0.627 0.84 0.595Total Equity 5.5 5.63 5.22

4.2.2 Common Size (Horizontal) Analysis of Balance Sheet & Income Statement

35

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 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

36

Table 4.6

2011 2012 1013Assets Growth / Decline (%)Cash and balances with treasury banks 100 114.07 120Balances with other banks 100 153.35 201.89Lending to financial institutions 100 11.29 32.47Investments 100 113.79 131.92Advances 100 117.86 131.4Other assets 100 99.86 114.3Operating fixed assets 100 102.68 110.42Deferred taxes 100 91.17 285.42Total Assets 100 114.58 130.42

Bills payable 100 156 176.6Borrowings from financial institutions 100 116.83 127.2Deposits and other accounts 100 113.92 130.9Subordinated loans 100 82.179 139.75Liabilities against assets subject to finance lease - - -Other liabilities 100 130.1 101.04Deferred tax liabilities 100 - -Total Liabilities 100 114.42 130.81

Represented by

Share capital 100 100 100Reserves 100 137.46 177.4Unappropriated profit 100 125 142.9Surplus on revaluation of assets 100 155.17 123.79Total Equity 100 117.34 123.76

Total Liabilities and Equity 100 114.58 130.42

Horizontal Analysis of Bank Alfalah Income Statement

37

Table 4.7

2011 2012 2013

Growth / Decline (%)Mark-up/return/interest earned 100 104.02 99.23Mark-up/return/interest expensed 100 107.05 105.36Net 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

Non 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

Unrealized loss/gain on investment revaluation 100 ----- ------

Other income 100 98.48 104.44

Total Non mark-up/ Interest income 100 135.65 154.23

Non Mark-up / Interest Expenses:

Administrative expenses 100 109.91 124.99

Other Provisions/Write Offs 100 ----- ------

Other charges 100 103.5 92.23

Total 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

38

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 business's ability to generate earnings as compared to its expenses

and other relevant costs incurred during a specific period of time. For most of these ratios,

having a higher value relative to a competitor's ratio or the same ratio from a 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) = 372,765,687 x 100 = 79.62%468,173,802

Earning Assets to Total Assets (2012) = 424,296,990 x 100 = 79.09%536,466,694

Earning Assets to Total Assets (2013) = 482,992,241 x 100 = 79.09%610,614,291

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.

2. Gross Profit Margin

39

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 Profit Margin = Revenues – ExpensesRevenues

Gross Profit Margin (2011) = 44,298,178 – 39,296,716 x 100 = 11.06%44,298,178

Gross Profit Margin (2012) = 46,079,918 -- 38,864,460 x 100 = 15.65%46,079,918

Gross Profit Margin (2013) = 43,961,060 -- 37,153,849 x 100 = 15%43,961,060

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) = 9,928,548_ x 100 = 84%11,751,850

Cost to Income (2012) = 11,002,961_ x 100 = 91.5%12,017,858

Cost to Income (2013) = 12,747,785_ x 100 = 90%14,122,586

Interpretation

40

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 = Net Income_______Shareholders Equity

Return on Equity (2011) = 3,503,130_ x 100 = 25.96%13,491,563

Return on Equity (2012) = 4,556,121__ x 100 = 33.77%13,491,563

Return on Equity (2013) = 4,675,950_ x 100 = 34.65%13,491,563

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

company’s assets effectively. For this reason, investors often use this ratio to evaluate company’s

management.

Return on Assets = Net Income_Total Assets

Return on Assets (2011) = 3,503,130__ x 100 = 0.75%468,173,802

Return on Assets (2012) = 4,556,121__ x 100 = 0.849%536,466,694

41

Return on Assets (2013) = 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 = 716.85(In 000’) 7,580

Interest Income per Employee (2012) = 6,783,202 = 952.16 (In 000’) 7,124

Interest Income per Employee (2013) = 6,807,211 = 938.53 (In 000’) 7,253

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

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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 BALNumber 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

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 BALNumber 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

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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 EmployeesTotal no of Branches

Employee per Branch (2011) = 7,580 = 16 Employees 470

Employee per Branch (2012) = 7,124 = 14 Employees 498

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. Current 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) = 274,962,893 = 1.06

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23,572,431

Current Ratio (2012) = 374,577,861 = 1.13328,705,747

Current Ratio (2013) = 397,279,284 = 1.08367,795,060

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 company’s short-run liquidity may be

cash ratio. Cash ratios of Bank Alfalah for previous three years are as follows:

Cash Ratio = Cash + Marketable SecuritiesCurrent Liabilities

Cash Ratio (2011) = 50,882,662 + 7,765,407_ = 0.138424,820,317

Cash Ratio (2012) = 58,044,054 + 26,720,993_ = 0.174486,777,467

Cash Ratio (2013) = 61,204,697 + 35,179,983_ = 0.172558,184,352

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. Advances to Deposit Ratio

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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 = 49.5%401,247,886

Advances to Deposit Ratio (2012) = 233,933,358 x 100 = 51.17%457,118,723

Advances to Deposit Ratio (2013) = 260,779,850 x 100 = 49.62%525,525,770

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 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 firm’s assets supported by debt financing.

Debt-to-Total Asset Ratio = Total DebtTotal Assets

Debt-to-Total Asset Ratio (2011) = 442,396,764 x 100 = 94.5%468,173,802

Debt-to-Total Asset Ratio (2012) = 506,219,292 x 100 = 94.36%536,466,694

Debt-to-Total Asset Ratio (2013) = 578,712,547 x 100 = 95%610,614,291

Interpretation

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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

company’s position.

2. Debt-to-Equity Ratio

This shows the extent to which the firm is financed for ongoing operations by borrowings and by

the shareholder’s equity. 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) = 442,396,764 = 17.1625,777,038

Debt-to-Equity Ratio (2012) = 506,219,292 = 16.7330,247,402

Debt-to-Equity Ratio (2013) = 578,712,547 = 1831,901,744

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 firm’s 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

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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 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 Doesn’t 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:

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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

49

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:

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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 year’s 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 it’s 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 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

51

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

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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.

Van 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),(11 th 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 Management”, Pearson education.

ANNEXURE

53

BOARD OF DIRECTORS & MANAGEMENT

CHAIRMAN

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

54