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8/3/2019 Project of Accounting - Bank Alfalah
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Financial AccountingProject Bank Alfalah
1/15/2011
Section: M.Com B
Submitted To: Prof. Azfar Ali
Submitted By: Hammad Malik 0053
Ahmed Anwar Shah 0056
Ammarah Tariq 0084
Anam Aslam 0089
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Table of Contents
Sr. # Topic Page #
1 Commercial Banking Scenario in Pakistan 1
2 Introduction to Bank Alfalah 3
3 Board of Directors 4
4 Chairmans Message 5
5 Branches of Bank Alfalah 6
6 Auditors Report to Shareholders 7
7 Balance Sheet 10
8 Cash flow statements 12
9 Statement of Changes in Equity 15
10 Statement of Comprehensive Income 18
11 Accounting Policies 20
12 Conclusion 24
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COMMERCIAL BANKING SCENARIO IN PAKISTAN
At the time of independence in 1947, there were 38 scheduled banks with 195
offices in Pakistan but by December 31, 1973, there were 14 scheduled Pakistani
commercial banks with 3,233 offices all over Pakistan & 74 offices in foreign
countries.
Nationalization of Banks took place on 1st January 1974 under the Nationalization
act 1974, due to certain objectives. But it had negative effects on efficiency of the
banking sector afterwards a privatization Commission was set up on January 22,
1991, the commission transferred many banks to the private sector i.e., MCB &
ABL. The government approved & permitted the establishment of 10 new private
banks in 1991; hence many new private banks have incorporated, since then,
BANK ALFALAH in one of the namely established private scheduled banks in
Pakistan.
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Bank Alfalah Limited was incorporated on June 21st, 1992 as a public limited
company under the Companies Ordinance 1984. Its banking operations
commenced from November 1st, 1997. The bank is engaged in commercial
banking and related services as defined in the Banking companies ordinance, 1962.
The Bank is currently operating through various branches in Pakistan, Bahrain,
Bangladesh & Afghanistan, with the registered office at B.A.Building,
I.I.Chundrigar,Karachi.
Since its inception, as the new identity of H.C.E.B after the privatization in 1997,
the management of the bank has implemented strategies and policies to carve a
distinct position for the bank in the market place. Strengthened with the banking of
the Abu Dhabi Group and driven by the strategic goals set out by its board of
management, the Bank has invested in revolutionary technology to have an
extensive range of products and services.
This facilitates our commitment to a culture of innovation and seeks out synergies
with clients and service providers to ensure uninterrupted services to its customers.
We perceive the requirements of our customers and match them with quality
products and service solutions. During the past five years, we have emerged as one
of the foremost financial institution in the region endeavoring to meet the needs of
tomorrow today.
BOARD OF DIRECTORS
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H.E. Sheikh Hamdan BinMubarak Al NahayanChairman
Mr. Abdulla Nasser HawalileelAl-MansooriDirector
Mr. Abdull Khalil Al MutawaDirector
Mr.Khalid Mana Saeed AlOtaibaDirector
Mr. Ikram Ul-Majeed SehgalDirector
Mr. Nadeem Iqbal SheikhDirector
Mr. Sirajuddin AzizDirector & CEO
CHAIRMANS MESSAGE
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"Our core philosophy of honesty, transparency in customer dealings,
product innovation, excellence in customer service and our commitment
to being a responsible corporate citizen pervades this website
Since the inception of Bank Alfalah, by the grace of The Almighty, we have moved rapidly in
expanding our branch network and deposit base, along with making profitable advances and
increasing the range of products and services. We have made a break-through in providing
premier services at an affordable cost to our customers.
Keeping in view our valued clients and the need for constant and effective communication of
information, we have designed this website to be as user friendly as possible.
As we pursue the path of excellence, customer satisfaction remains our priority. It is only
when we know our customers better, can we deliver a higher quality of services, thereby
adding synergy to our existing management expertise, financial strength and profitability.
This is yet another channel of communication for the delivery of quality products and services
that enhance value to our stakeholders.
H.E.Sheikh Hamdan Bin Mubarak Al Nahayan
BRANCHES OF BANK ALFALAH
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The bank is currently operating through more than 362 branches domestically and
an international presence in Afghanistan,
Bangladesh and Bahrain, with the registered
office at B.A.Building, I.I.Chundrigar, andKarachi.
Some of the main branches are located in all of
the major cities including: Bahawalnagar,
Hyderabad, Lahore, Kasur, Islamabad, Gawadar, Peshawar, Faisalabad, Quetta,
D.I.Khan, Rawalpindi, Sargodha, Sukkur, Sialkot, Multan,Dera Ghazi Khan,
Murree, Attock District, Gujranwala, Pirmahal, Mirpur Khas, Mandi Bahauddin,
Lodhran etc.
Vision
To be the premier organization operating locally & internationality that provides
the complete range of financial services to all segments under one roof.
Mission
To develop & deliver the most innovative products, manage customer experience,
deliver quality services that contributes to brand strength, establishes a competitive
advantage and enhances profitability, thus providing value to the stakeholders of
the bank.
Slogan THE CARING BANK
AUDITORS REPORT TO THE SHAREHOLDERS
We have audited the annexed balance sheet of Bank Alfalah Limited as at
December 31, 2009 and the related profit and loss account, statement of
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comprehensive income statement, cash flow statement and statement of changes in
equity together with the notes forming part thereof (here-in-after referred to as the
financial statements) for the year then ended, in which are incorporated the un
audited certified returns from the branches except for thirty eight branches whichhave been audited all the information and explanations which, to the best of our
knowledge and belief, were necessary for the purposes of our audit.
It is the responsibility of the banks management to establish and maintain a
system of internal control, and prepare and present the financial statements in
conformity with the approve accounting standards and the requirement of the
Banking Companies Ordinance,1962, and the Companies Ordinance, 1984. Our
responsibility is to express an opinion on these statements base on our audit.
We conducted our audit in accordance with the international Standards on Auditing
as applicable in Pakistan. These standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free
of any material misstatement. An audit includes examining, on a test basis,evidence supporting the amount s and disclosures in the financial statements. An
audit also includes assessing the accounting policies and significant estimates
made by management, as well as, evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable basis for our
opinion and after due verification, which in the case of loans and advances covered
more than sixty percent of the total loans and advances of the bank, we report that:
(a) In our opinion, proper books of account have been kept by the Bank as
required by the Companies Ordinance ,1984, and the returns referred to
above received from the branches have been found adequate for the purpose
of our audit;
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(b) In our opinion:
The balance sheet and profit and loss account together with the notes thereonhave been drawn up in conformity with the banking Companies Ordinance,
1962 and the Companies Ordinance, 1984, and are in agreement with the
books of account and are further in accordance with accounting policies
consistently applied, except for the changes as stated in note 3.2 to the
financial statements, with which we concur;
The expenditure incurred during the year was for the purpose of the banks
business; and
The business conducted, investments made and the expenditure incurred
during the year were in accordance with the objects of the bank and the
transactions of the bank which have come to our notice have been within the
powers of the bank.
(c) In our opinion and to the best of our information and according to the
explanations given to us the balance sheet, profit and loss account, statement
of comprehensive income, cash flow statement and statement of changes in
equity together with the notes forming part thereof conform with the
approved accounting standards as applicable in Pakistan and given the
information required by the Banking Companies Ordinance 1962 and the
Companies Ordinance 1984 in the manner so required and give a true and
fair view of the state of the banks affairs as at December 31, 2009, and its
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true balance of profit, its cash flows and changes in equity for the year then
ended; and
(d) In our opinion Zakat deducted at source under the Zakat and Ushr
Ordinance 1980 was deducted by the bank and deposited in the Central
Zakat fund established under section 7 of that ordinance.
Ferguson & Co.
Chartered Accountants
Engagement Partner: Salman Hussain
Dated: March 16, 2010
Karachi.
BANK ALFALAH LIMITED
BALANCE SHEET
AS AT DECEMBER 31, 2009
ASSETS NOTE (RUPEES IN 000)
2009Cash and balance with treasury banks 6 35056012Balance with other banks 7 22722639
Lending to financial institutions 8 14947435
Investments 9 99159957
Advances 10 188042438
Fixed Assets 11 14492194
Deferred tax assets - -
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Other assets 12 14649380
TOTAL ASSETS 389070055
LIABILITIES NOTE (RUPEES IN OOO)
Bills Payable 13 3766144
Borrowings 14 20653921
Deposits and other accounts 15 324759752
Sub-ordinate loans 16 7570181
Liabilities against assets subject to financial
lease
- -
Deferred tax liabilities 17 179851
Other liabilities 18 10006786
TOTAL LIABILITIES 366936635
NET ASSETS 22133420
REPRESENTED BY NOTE (RUPEES IN OOO)Share capital
Reserves
Inappropriate profit
19
20
13491563
3587969
2690728TOTAL 19770260
2363160Surplus on revaluation of assets net of tax
TOTAL 22133420
CONTINGENCIES AND COMMITMENTS:
The annexed notes 1 to 44 and Annexure I and II from an integral part of these financial
statements.
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BANK ALFALAH LIMITED
CASH FLOW STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2009
CASH FLOWS FROM OPERATING
ACTIVITIES
NOTE (RUPEES 000)
Profit before tax
Less: Dividend income
1016316
(248217)
768099
(+)ADJUSTMENTS:Depreciation 1467784
64999
3694546
317164
(1419)
(2849)
59817
(43521)
Amortization
Provision against loans and advances
Provision for diminution in value of
investments
Provision against off balance sheet obligations
Loss on revaluation of investments classified
as held for trading
Bad debts written off directly
Gain on sale of fixed assets
Provision for gratuity
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189352
5745873
6513972
(INCREASE)/DECREASE IN
OPERATING ASSETSLess: Lending to financial institutions (11237039)
Less: Held for trading securities (242172)
Less: Advances (5813)
Less: Other Assets (4785364)
(16270388)
INCREASE/DECREASE IN
OPERATING LIABILITES
Bills payable 314113
Borrowings 6963699
Deposits and other accounts 24026894
Other liabilities 144034
Gratuity paid (189352)
Income tax paid (1557045)
Net cash flow from operating activities 19945927
CASH FLOWS FROM INVESTING
ACTIVITIESNet investments in available for sale securities (16255052)
Net investments in held to maturity securities (7487002)
Investments in associated companies -Dividend income received 253568
Investments in fixed assets (1903456)
Proceeds from sale of fixed assets 112166
Net cash generated from investing activities (25279776)
CASH FLOW FROM FINANCING
ACTIVITIESIssuance of subordinate loans 5000000
Redemption of subordinate loans (988)
Issuance of right shares 3997500
Dividend Paid -Net cash generated from financing activities 8996512Exchange difference on translation of the net
investments in foreign branches
242506
Increase in cash and cash equivalents 3905169
Cash and cash equivalent at beginning of the
year
57583878
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CASH AND CASH EQUIVALENT AT THE
END OF THE YEAR
31 61489047
The annexed notes 1 to 44 and Annexure I and II from an integral part of these financial
statements.
BANK ALFALAH LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2009
(Rupees000)
articulars Share
Capital
Share
Premium
Statutory
Reserve
Reserve for
issue of
Bonus
Shares
Exchange
Translation
Reserve
Inappropriate
Profit
Tot
alance at Jan
2008
6500000 - 2327775 - 87058 4851840 137
3
hanges in
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ransfer from
urplus on
evaluation of
xed assets
- - - - - 24696 2469
ransfer to
atutory
eserve
- - 179407 - - (179407) -
sue of right
hares
3997500 - - - - - 399
ransfer to
eserve for
sue of bonus
hares
- - - 1499063 - (1499063) -
sue of bonus
hares for year
nded Dec
%
1499063 - - (1499063) - - -
alance at
Dec31, 2009
134915
63
- 2767442 - 820527 2690728 197
60
(a) This represents reserve created under section 21(i)(a) of the Banking
Companies Ordinance,1962
(b)As more fully explained in note 10.5.1 of these financial statements balance
of Rs. 1562.488 million (2008: Rs. 404.459 million) as at Dec 31,2009
representing additional profit arising from availing FSV benefit for
determining provision requirements is not available to the bank for the
purpose of distribution of dividend to shareholders
The annexed notes 1 to 44 and Annexure I and II from an integral part of these
financial statements.
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BANK ALFALAH LIMITEDSTATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2009
Particulars Note 2009
Interest earned
Less: Interest expensed
23
24
35561312
24654180
Net interest income 10907132
Less: Provision against loans and advances
Less: Provision for diminution in value of
investments
Less: Bad debts written off directly
10.5
9.21
10.6
3694546
317164
59817
Interest income after provision 6835605
Non mark up/ Interest income
Add: fee, commission and brokerage income
Add: Dividend income
Add: Income from dealing in foreign currencies
Add: Gain on sale of securities
Add: Unrealized Gain
Add: Other income
25
9.23
26
1913004
248217
1019732
688924
2849
1309527
12017858
Non mark up/ interest expenses
Less: Administrative expenses
Less: Provision against off balance sheet oblige
Less: other charges
27
18.2
28
10923507
(1419)
79454
PROFIT BEFORE TAXATION 1016316
Less: Taxation 119281
PROFIT AFTER TAXATION 897035
Add: Other incomes 242506
TOTAL COMPREHENSIVE INCOME FOR THE 1139541
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YEAR
The annexed notes 1 to 44 and Annexure I and II from an integral part of these
financial statements.
ACCOUNTING POLICIES OF BANK ALFALAH
Statement of Compliance
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These financial statements have been prepared in accordance with approve
accounting standards as applicable in Pakistan. Approved accounting standards
comprise of such International Financial Standards issued by the International
Accounting Standards Boards as are notified under the CompaniesOrdinance,1984, provision of and directives idled under the companies Ordinance ,
1984 Banking Companies Ordinance,1962 and the directives issued by State Bank
of Pakistan. In case the requirements differ, the provisions of and directives issued
under the companies Ordinance 1984, Banking Ordinance, 1962 and the directive
issued by SBP prevail.
Early adoption of standards
The bank did not early adopt new or amended standards in 2009.
Accounting Convention
These financial statements have been prepared under the historical cost convention
except that certain fixed assets are stated at revalued amounts, and held for trading
and available for sale investments and derivative financial instruments are
measured at fair value. The financial statements are presented in Pakistani Rupees,
which is the Banks functional and presentation currency. The amount is rounded
to nearest thousand.
Tangible Fixed Assets
Fixed assets except office premises are shown at historical cost less accumulated
depreciation and accumulated impairment losses, if any. Depreciation is charged to
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income applying the straight line. The depreciation charged for the year is
calculated after taking into account residual value, if any.
Intangible Fixed Assets
Intangible assets having a finite useful life are stated at cost less accumulated
amortization and accumulated impairment losses, if any. Such intangible assets are
amortized using the straight line method over their estimated useful lives
Capital work in progress
Capital work in progress is stated at cost less impairment losses, if any.
Current Taxation
Current tax is the expected tax payable on the taxable income for the year using tax
rates enacted at the balance sheet date and any adjustment to tax payable in respect
of previous years.
Defined Contribution Plan
The Bank operates a recognized provident fund scheme for all its permanent
employees to which equal monthly contributions are made both by the Bank and
employees at the rate of 8.33 percent of basic salary. The Bank has no further
payment obligations once the contributions have been paid.
Acceptance
Acceptance comprises undertakings by the Bank to pay bills of exchange drawn on
customers. The Bank expects most acceptances to be simultaneously settled with
the reimbursement from the customers.
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Foreign Operation
Assets and Liabilities of foreign operations are translated into rupees at the
exchange rate prevailing at the balance sheet date. The results of foreign operations
are translated at average rate of exchange for the year.
Earnings per Share
The Bank presents basic and diluted earnings per share for its shareholders. Basic
EPS is calculated by dividing the profit or loss attributable to ordinary shareholders
of the bank by the weighted average number of ordinary share outstanding during
the year
Ijarah Arrangements
Ijarah contracts entered into by the bank essentially arrangements whereby the
bank (being the owner of assets) transfer its usufruct to its customers for an agreed
period at an agreed consideration. The significant ijarah contracts entered into by
the bank are with respect to vehicles plant and machinery and equipments and are
for periods ranging from3 to 5 years.
Fee, Commission and brokerageFee, commission and brokerage income except income from guarantees are
accounted for on receipt basis. Commission on guarantees is recognized on time
period basis.
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Functional and Presentation currency
Items included in the financial statements are measured using the currency of the
primary economic environment which the bank operates.
Workers welfare Fund
The workers welfare Ordinance ,1971 has been amended vide Finance Act 2008 by
virtue of which the bank is now liable to pay WWF @2% of profit before tax as
per accounts or declared income as per income tax return, whichever is higher.
Dividend and appropriation to reserves
Dividend and appropriation to reserves, except appropriations which are required
under the law, after the balance sheet date are recognized as a liability in the
banks financial statements in the year in which these are approved.
CONCLUSION
The Bank Al-Falah has a significant progress in the banking sector, and it has
achieved this position in a very short time period, just in 3 years in Pakistan.the
Bank Al-Falah has a great share in market as well as high growth rate as compared
to all other banks, due to its best Customer dealing, Compensations to Customers
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and Employees as well and Organizational Control due to the best and powerful
Planning, Leading and Controlling sectors.
As there is no doubt that Bank Al-Falah is best in its field , but it has also someweak points like some of resources are still un-utilized and the political pressure of
references regarding the posts in the organization.
Over all the Bank Al-Falah has proved to be the best bank in the whole banking
sector, due to the fact that its weaknesses are not more than its strengths.
REFERENCES
Visit of Bank Alfalah, College Road Branch
www.bankalfalah.com
www.en.wikipedia.org
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http://www.bankalfalah.com/http://www.en.wikipedia.org/http://www.en.wikipedia.org/http://www.bankalfalah.com/