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.

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

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 Pakistans Banking Industry
Pakistan is a developing nation and in the late year the keeping money industry in Pakistan has
been converted from state claimed segment to energetic part industry. This Banking industry not
just taken quality from positive interaction of budgetary and political components likewise turns
into a motor of development for economy. Development of SME's in Pakistan is expanding at
exceptionally quick pace. SME's have 90% of business in Pakistan. SME's speaks to a
noteworthy part of Pakistan's economy in term of worth aggregation, work development and
neediness diminishing exercises.
Throughout July- April 22, 2006 the cash supply of the present financial year stretched out by
Rs.294.9 billion as neighboring of Rs.332.4 billion in the comparable time of the past year. The
private area the credit to expand significantly; it developed by 20.2 % (Rs.345.1 billion)
throughout July-April 22, 2006 contrasted and the development of 28% or Rs.357.4 billion. In
the present monetary year, cash flow is more noteworthy than before by 13.6% against a year
ago of 17%. Solid interest of Treasury charges that are offered Rs1058 billion and gained
Rs.688.8 billion. As contrasted with past years, household also an outside banks Performance is

expanded. In year 2007, 301 are Domestic banks and 105 are Foreign Banks. SBP has made
Tough and strict checking and credit control measures.
2.3 Role of Banking in the Economy
In the Economy Banking principal roles are:
2.3.1 The Intermediation role:
Converting reserve funds accepted essential from families into credit (Loans) for business firms
and others keeping in mind the end goal to make speculations in most recent structures, device,
supplies, and further products.
2.3.2 Guarantor role:
At the point when the clients are not able to pay they are standing behind their clients to pay off
client obligations, (for example, by issuing Latter of Credit).
2.3.3 The payments role:
The payments role is carrying out the payments for goods and services on behalf of their
customers. For example by issuing and checks clearance, giving the medium for electronic
installments, wiring finances and giving coin and money.
2.3.4 Risk Management role:
The risk management role is supporting clients in equipping them monetarily, for the danger of
misfortune to property, cash and persons.
2.4 Banking in Pakistan
There are three types of banks, serving in Pakistan as:

Government Banks.
Private Banks.
Foreign Banks.

2.4.1 Government banks

In the divisions of deregulation, privatization, and change in the provincial managing an account
industry and money related establishments reformed throughout the time of 1990s. The primary
bank that privatize was The Muslims Commercial Bank. One great thing for the specific period
was the recruitment of the new officers through well- sorted out strategies and methods of the
Banking Council in the local keeping money industry. List of Government banks are:
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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.

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
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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
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.
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.
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2.9 BAL Credit Rating

Pakistan Credit Rating Agency the heading credit org in the nation has evaluated Bank Alfalah
productively. Honors taken by Bank are an AA- (twofold A short) and an A1+ (A one or more) in
the long and transient individually. This rating symbolizes extremely lifted credit quality and low
desire of credit peril. In the year 2002, TFC's are likewise giving by the bank. These were
unbelievably decently recognized in the business and were oversubscribed by 6 times. PACRA
recompensed an A+ (An in addition to) rating to these authentications.

2.10 Core objectives of BAL

Objectives could be characterized as particular comes about that an association looks to
accomplish in seeking after its key mission. It is key for authoritative triumph in light of the fact
that they state heading; support in assessment; make cooperative energy; uncover necessities;
center coordination; and give a premise to solid arranging, sorting out, and limited time,
propelling, and controlling exercises.
Objectives of Bank Alfalah Limited are as follows:

To produce most extreme financial quality for offer holders through a steady relationship
concentrates on budgetary administrations.

BAL Invests Leveraging in the IT field.

Steady examination of chances for clients, prompting the consistent improvement of new
items and administrations.

Throughout the enthusiastic commitment of private and public segment in the nation.

2.11 Branch Network of BAL

Since the time when the privatization happens in 1997, Bank Alfalah Limited has been
dependable in its mission to exceed expectations in giving imaginative items and administrations
to its customers. The finished consequence of that, the 2003 year has been most ideal for bank
despite shifting business sector circumstances. BAL recorded important bring up in its business
volumes coupled with the growing of system and customer base.
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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

13

14

Figure 2.4: Procedure of Opening an Account

Types of Accounts
a) Current Rupee Account
Everybody including Individual, organizations, affiliations, clubs, enterprises, social orders and
NGOs are qualified to open current records. This type of record is moreover appropriated as
individual record and Joint Account. Noteworthy peculiarities are as takes after:

b)

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.
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:
a) DD (Demand Draft)
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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

17

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
19

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
20

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 newfangled 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 its identical in additional
monetary forms. This circumstance does not be suitable to bury bank transactions.
2.13.10 Payment against Documents (PAD)
Installment against Documents is made at retirement of L/C or Acceptance. It is a fleeting credit
around the merchant and is balanced when the installment is gained and records are conveyed to
shipper. By the lodgments are conveyed to merchant. At the lodgment date the L/C sum is
changed over at overall or busy rate.
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 members 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. MasterCards,
particular advances, auto money, and workstations credits for acquiring family unit machines,
and related frill and lodging financing are the important shopper fund items. As a business sector
situated bank; Bank Alfalah additionally has a solid concentrate on buyer keeping money and
shopper fund.
A short clarification of items is as given underneath:
a) Auto Leasing and Financing
Car Finance
Alfalah 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
24

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.
Time of Borrower must be between 25 to 65 years.
Salaried staff, agents and impromptu individuals are qualified.
25

f)

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.
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.

3.1.2 Deposit Products

a) Current Rupee Account

26

Individual, companies, partnerships, clubs, associations, societies and NGOs are eligible to open
contemporary accounts. This category of account is additional classified as individual account
and Joint Account.
b) PLS Saving (Rupee) Accounts
Saving accounts are designed to mobilize savings primarily from a large number of individuals
and family. Any person or more individuals or partners can open a PLS saving account with the
Bank.

Term Deposit

It is one of the well known account classifications. The amount is stored in this financial balance
for settled time period i.e. from one month toward five years. Investment is a get-together of by
the alterability of time edge. The quickness of benefits expands as weighed by increment in time
period. The customer can't withdraw cash preceding development. The yield on this record is
salaried consequent to the development. At the same time if a client needs to withdraw before
development, so he will give consciousness of to the bank 7 days preceding getting.

Royal Profit Savings (Rupee) Accounts

Royal profit is a high yield rupee account intended to provide higher rates of profit to high net
worth customers and greater flexibility and convenience in terms of transactions. Present charge
of return are as below:
Amount
From 50,000 To 999,999
From 1,000,000 To 9,999,999
From 10,000,000 To 49,999,999
From 50,000,000 To 149,999,999
From 150,000,000 & Above

Proposed Rates (P.A)

1.50%
1.75%
2.00%
2.50%
To be quoted by treasury

Table 3.1: Royal Profit Savings Account Proposed Rate

Royal Patriot (Rupee Term Deposit)

27

Noble Patriot is a rupee term set down system with competitive rate of profit. Up to date rates of
profit are like this:

Tenure
1 Month
3 Month
6 Months
1 Year

25,000-999,999
1.50 %
1.75 %
2.00 %
2.25 %

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

1.60 %
1.70%
1.85 %
1.95%
2.10%
2.20%
2.35 %
2.45%

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.

MANAGEMENT OF BRANCH
28

NO OF EMPLOYEES
01
01
01
01
01
02
04
01
01
03
03

DESIGNATION
Branch Manger
Operation Manager
Credit Manager
Account Officer
Car Officer
Assistants
Cashier
IT Officer
Telephone Operator
Gun Man
Peons

Table 3.3: Management of Branch

From A/c Opening Department

This Branch is having about 2000 accounts but there was only one officer, Miss. Sobia to handle
this tough work. He has to deal different people. My experience in this department was really
very good. I learnt how to handle different customers, how to fill Account Opening Form, what
are the required documents that should be with you in order to open an account, what types of
account Bank Alfalah is offering to the customers, what are the facilities that an account Holder
can enjoy and what are the profit rates Bank Alfalah is giving to its customers.
I have learnt the course of action related to an Account Opening Officer has to follow in order to
open and maintain an Account.

From Accounts & Finance Department

There were two officers in this department; Mr. Shakeel Ahmad and Mr. Ikram They have
divided their work between them. Mr. Shakeel handles Reporting and Mr. Ikram handles daily
activity checking.

29

I used to help Mr. Ikram in Daily Activity checking, sorting and counting of vouchers and how to
calculate the deprecations of all fixed assets. I learnt from Mr. Shakeel the items of the Balance
Sheet of Bank and saw the format of different reports. He helped me to understand his work. He
told me about the reports that he has to prepare & the purpose of those reports. It was one of
those Departments in which Customer interaction is not involve rather paper interaction is
important.
In Home Finance there was one officer Mr. Jawad Maqbool I saw few customers in this
department. I learnt what the debt to equity ratio is in Home Finance, how to calculate
installment, what are the documents required to get this product, what the eligible criterion is for
Home Finance Agreement, and what is the procedure and activities of this department. What are
requirement to apply for this Finance, what is that maximum limit.
From the Car Finance Department
One officer in this department, whose name was Mr. Abbas used to sit the second floor of the
branch. Although the Mansehra Branch was small but still the demand for financed cars through
Bank Alfalah lead this department to prosperity. This department handles a large number of
customers daily and, without overstatement; this department is the third busiest department
after the Account Opening Department. It requires constant customer interaction and requires
high level of intelligence to screen the validity of the customers. Whereas sound marketing skills
are required to actually force the walk-in customer to select Alfalah Car Financing, still stronger
skills are needed to scan the incoming customer for validity. I learnt how to face the customers
conveniently, how roper files should be maintained, how to apply for a car, what are requirement
to apply for this Product, what is that maximum limit, what is the procedure to this department.

CHAPTER 04
FINANCIAL ANALYSIS OF BANK ALFALAH
4.1 Financial Statements
4.1.1 Balance Sheets of Bank Alfalah Limited
30

Table 4.1

2011

2012

Assets

2013

(Rupees in 000)
61,204,697

Cash and balances with treasury banks

50,882,662

58,044,054

Balances with other banks

17,424,487

26,720,993

Lending to financial institutions

7,765,407

876,870

Investments

166,531,768

189,486,762

219,690,369

Advances

198,468,512

233,933,358

Other assets

13,290,458

13,272,536

260,779,850
15,198,170

Operating fixed assets

13,388,583

13,747,520

14,835,200

Deferred tax

421,825

284,601

1,204,000

Total Assets

468,173,802

536,466,694

610,614,291

Bills payable

5,403,453

8,430,910

9,543,480

Borrowings from financial institutions

18,168,978

21,227,834

23,115,102

Deposits and other accounts

401,247,886

457,118,723
5,874,742

525,525,770
9,991,000

Subordinated loans

7,148,693

Liabilities against assets subject to finance lease

Other liabilities

2,522,022

13,587,083

10,427,754

Deferred tax liabilities

35,179,983

10,537,195
-

442,396,764

506,219,292

578,712,547

Share capital

13,491,563

13,491,563

13,491,563

Reserves

4,100,264

5,636,549

7,274,222

Unappropriated profit

5,248,059

Surplus on revaluation of assets

2,937,152

6,561,628
4,557,662

7,499,831
3,636,128

Total Equity

25,777,038

30,247,402

31,901,744

468,173,802

536,466,694

610,614,291

Total Liabilities
Represented by

Total Liabilities and Equity

4.1.2 Income Statements of Bank Alfalah

Table 4.2
2011

2012

2013

(Rupees in 000)
44,298,178

Mark-up/return/interest earned
31

46,079,918

43,961,060

Mark-up/return/interest expensed

25,687,485

27,500,056

27,066,229

Net 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)

(5,696)

(1,164)

(4,288)

14,281,193

15,021,330

15,841,183

2,148,239

2,536,717

280,0461

191,708

349,061

482,567

1,309,703
1,328,000

1,535,808

Gain on sale of securities

1,115,417
140,093

Unrealized loss/gain on investment revaluation

(11,053)

1,511

8,465

Other income

1783,309

1,756,348

1,862,498

19,648,906

22,302,670

24,119,877

13,832,096

15,204,036

17,288,779

(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

3,263,249

3,141,909

2,400,321

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

Bad debts written off directly

Net mark-up / interest income after provisions
Non Mark-up / Interest Income:
Fee, Commission and brokerage income
Dividend income
Income from dealing in Foreign currency

Total Non mark-up/ Interest income

1,588,895

Non Mark-up / Interest Expenses:

Administrative expenses
Other Provisions/Write Offs

Taxation
-Current
-Prior years

Table 4.3

4.1.3 Cash Flow Statements of Bank Alfalah

Cash Flow From Operating Activities:

Profit before taxation
32

2011

2012
(Rupees in 000)

2013

5,433,718

6,783,202

6,807,211

Less: Dividend income

Adjustments:
Depreciation
Amortization
Provision against loans and advances
Diminution in value of investments
Provision against off-balance sheet obligations
Provision against other assets
Gain/loss on investments revaluation for trading
Bad debts written-off directly
Gain on sale of fixed assets
Provision for gratuity
Increase / Decrease in Operating Assets:
Lendings to financial institutions
Held-for-trading securities
Advances
Other assets
Increase / Decrease in Operating Liabilities:
Bills payable
Borrowings
Deposits and other accounts
Other liabilities
Gratuity paid
Income tax paid
Net cash flow from operating activities
Net Cash Generated by Investing Activities
Net Cash Generated by Financing Activities
Effect of exchange rates change on cash & cash
equivalents
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of the year

(191,708)

(349,061)

(482,567)

1,690,968
182,816
1,864,510
2,459,294
183,161
11,053
5,696
(16,291)
230,502
11,853,719

1,201,068
157,454
1,848,535
1,708,833
(22,005)
130,504
(1,511)
1,164
(2,438)
255,975
11,711,720

1,378,368
194,731
954,563
94,797
2,100
(162,621)
(8,465)
4,288
(24,186)
253,608
9,011,827

(4,394,400)
(10,151,080
6,813,828
)
(919,361)
(919,361)

6,118,052
7,649,018
(37,314,545
77,921
)
(23,469,554

(3,620,450)
(27,805,343
(10,17,003)
)
(32,442,796

881,920
4,441,847
47,232,575
569,202
53,125,544
56,328,250
(230,502)
(1,822,835)
54,274,913
(45,660,421
(418,499)
)

)
3,027,457
2,999,686
55,870,837
3,761,669
65,659,649
53,901,815
(255,975)
(3,701,816)
49,944,024
(31,305,868
(3,634,974)
)

)
1,112,570
1,897,957
68,481,370
884081
72,375,978
48,945,009
(253,608)
(3,579,103)
45,112,298
(30,171,631
(3,367,676)
)

(419,495)
7,776,498
62,150,999

625,061
15,628,243
69,927,497

702,483
13,275,474
85,555,740

69,927,497

85,555,740

98,831,214

4.1.4 Statements of Changes in Equity of Bank Alfalah

Table 4.4
Total Balance
(Rupees in 000)
19,726,556

Balance at January 1, 2011

Changes in equity for 2011
33

Comprehensive income for the year ended, December 31, 2011

Transfer from surplus on revaluation of fixed assets - net of tax
Transfer to statutory reserve
Balance at December 31, 2011
Effect of retrospective change in accounting policy with respect to
employee benefit

3,083,635
29,695
-----22,839,886
(223,496)

Balance as at January 1, 2012 restated

Changes in equity for 2012
Comprehensive income for the year ended, December 31, 2012
Transfer from surplus on revaluation of fixed assets - net of tax
Transfer to statutory reserve
Final cash dividend for the year ended December 31, 2012 @ 17.5%
Balance at December 31, 2012

22,616,390
4,556,121
690,169
(2,361,023)
25,501,657

Changes in equity for 2013

Comprehensive income for the year ended December 31, 2013
Transfer from surplus on revaluation of fixed assets - net of tax
Transfer to statutory reserve
Final cash dividend for the year ended December 31, 2013 @ 20%

4,675,950
786,322
-----(2,698,313)

Balance at December 31, 2013

28,265,616

4.2 Financial Analysis

Financial analysis is the most important part of this report, hence due care has been taken to give
true picture of the bank. Financial analysis is an evaluation of a firms past financial performance
and its prospects for the future. It consists of applying analytical tools and other relevant data to
34

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

Table 4.5
2011

Assets

2012

2013

Common Size (%)

Cash and balances with treasury banks

10.86
35

10.81

10.02

Balances with other banks

3.72

4.98

5.76

Lending to financial institutions

1.65

0.16

0.413

Investments

35.57

35.32

35.97

Advances

42.39

43.6

42.71

2.8

2.47

2.488

2.85

2.56

2.43

0.0901

0.0717

0.197

Total Assets

100

100

100

Bills payable

1.154

1.57

1.563

Borrowings from financial institutions

3.88

3.95

3.78

Deposits and other accounts

85.7

85.2

86.06

Subordinated loans

1.52

1.09

1.636

2.22

2.52

1.7256

94.49

94.36

94.93

2.88

2.51

2.2

0.8757

1.05

1.19

1.12

1.22

1.22

0.627

0.84

0.595

5.5

5.63

5.22

Other assets
Operating fixed assets
Deferred tax assets

Liabilities against assets subject to finance lease

Other liabilities
Deferred tax liabilities
Total Liabilities
Represented by
Share capital
Reserves
Unappropriated profit
Surplus on revaluation of assets
Total Equity

4.2.2 Common Size (Horizontal) Analysis of Balance Sheet & Income Statement
Horizontal analysis is also called index analysis in which we compute the items of recent year
balance sheets and income statements with one of the previous year which we take as a base
year. In this way, we check the trend of assets, liabilities, owner equity, profit before taxation,
36

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

Table 4.6
2011

Assets

2012

1013

Growth / Decline (%)

Cash and balances with treasury banks

100
37

114.07

120

Balances with other banks

100

153.35

201.89

Lending to financial institutions

100

11.29

32.47

Investments

100

113.79

131.92

Advances

100

117.86

131.4

Other assets

100

99.86

114.3

Operating fixed assets

100

102.68

110.42

Deferred taxes

100

91.17

285.42

Total Assets

100

114.58

130.42

Bills payable

100

156

176.6

Borrowings from financial institutions

100

116.83

127.2

Deposits and other accounts

100

113.92

130.9

Subordinated loans

100

82.179

139.75

Other liabilities

100

130.1

101.04

Deferred tax liabilities

100

Total Liabilities

100

114.42

130.81

Share capital

100

100

100

Reserves

100

137.46

177.4

Unappropriated profit

100

125

142.9

Surplus on revaluation of assets

100

155.17

123.79

Total Equity

100

117.34

123.76

Total Liabilities and Equity

100

114.58

130.42

Liabilities against assets subject to finance lease

Represented by

Horizontal Analysis of Bank Alfalah Income Statement

2011

Table 4.7
2012
Growth / Decline (%)

38

2013

Mark-up/return/interest earned

100

104.02

99.23

Mark-up/return/interest expensed

100

107.05

Net mark-up / interest income

100

99.83

105.36
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

Fee, Commission and brokerage income

100

118.08

130.36

Dividend income

100

182.07

251.71

Income from dealing in Foreign currency

100

137.68

Gain on sale of securities

100

117.41
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

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

Non Mark-up / Interest Income:

Non Mark-up / Interest Expenses:

4.3 Financial Ratios Analysis of Bank Alfalah

Financial ratios are actually the tools used to judge the comparative performance of an
organization by comparing its results with the results achieved by other firms in same industry or
39

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
468,173,802

Earning Assets to Total Assets (2012) =

424,296,990 x 100
536,466,694

Earning Assets to Total Assets (2013) =

482,992,241 x 100
610,614,291

79.62%

79.09%

79.09%

Interpretation
The BAL earning assets to total assets is slightly declined in 2012 but in 2013 it has been
maintained. Still the Bank Alfalah earning assets ratio is high which shows good position, better
performance and efficiency of the management.

2. Gross Profit Margin

40

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 Expenses
Revenues

Gross Profit Margin (2011) =

44,298,178 39,296,716 x 100

44,298,178

Gross Profit Margin (2012) =

46,079,918 -- 38,864,460 x 100

46,079,918

Gross Profit Margin (2013) =

43,961,060 -- 37,153,849 x 100

43,961,060

11.06%

15.65%

15%

Interpretation
The gross profit margin of Bank Alfalah is low in 2011. But in the later years the company
recovers itself and maintains a steady gross profit margin ratio which is good for the Bank. The
smaller Gross profit margin in start is due to the rapid expansion policy of the Bank.
3. Cost to Income Ratio
It shows a company's costs in relation to its income. The ratio gives investors a clear view of
how efficiently the firm is being run. It indicates how cost and income changes along each other.
Bad debts are not included in cost.
Cost to Income =

Operating costs__
Operating Income

Cost to Income (2011) =

9,928,548_ x 100
11,751,850

Cost to Income (2012) =

11,002,961_ x 100
12,017,858

Cost to Income (2013) =

12,747,785_ x 100
14,122,586

84%

Interpretation

41

91.5%

90%

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 =
13,491,563

25.96%

Return on Equity (2012) =

4,556,121__ x 100 =
13,491,563

33.77%

Return on Equity (2013) =

4,675,950_ x 100 =
13,491,563

34.65%

Interpretation
The ratio is lower in 2011 and is increasing with time in both the preceding years. This shows
that the firm is much capable of generating money internally. Due to this the share holder's trust
on the Bank will be increasing.
5. Return on Assets (ROA)
Return on Assets demonstrates how much income management has been able to produce using
companys assets effectively. For this reason, investors often use this ratio to evaluate companys
management.
Return on Assets =

Net Income_
Total Assets

Return on Assets (2011) =

3,503,130__ x 100 =
468,173,802

Return on Assets (2012) =

4,556,121__ x 100 = 0.849%

536,466,694
42

0.75%

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 =
7,580

716.85(In 000)

Interest Income per Employee (2012) =

6,783,202 =
7,124

952.16 (In 000)

Interest Income per Employee (2013) =

6,807,211 =
7,253

938.53 (In 000)

Interpretation
The Bank Alfalah has increased interest income per employee in 2012 and maintains it at the
same level as of 2012 in 2013. This is because of decreasing the numbers of employees per year.
But still the Bank is earning a huge interest per employee.
2. Profit per Employee
Profit per Employee =
Profit per Employee (2011) =

Profit after Taxation__

Total no of Employees
3,503,130
7,580

43

462.15 (In 000)

Profit per Employee (2012) =

4,556,121
7,124

Profit per Employee (2013) =

4,675,950
7,253

639.54 (In 000)

644.7 (In 000)

Interpretation
The profit per employee is increasing every year which is very good for the Bank. The main
reason behind that is the decreasing number of employee's every year and the good performance
of the existent employees.
3. Business per Branch
Business per Branch =

Total Business of BAL

Number of Branches

Business per Branch (2011) =14,281,193 = 30,385 (In 000)

470
Business per Branch (2012) =15,021,330 = 30,163 (In 000)
498
Business per Branch (2013) =15,841,183 = 27,597 (In 000)
574
Interpretation
The business of Bank Alfalah is decreasing every year this is because of the philosophy of the
bank. The bank wants to increase its number of branches in the country. Due to rapid growth in
the number of branches the business per branch declines.
4. Business per Employee
Business per Employee =

Total Business of BAL

Number of Employees

Business per Employee (2011) =

14,281,193 = 1,884 (In 000)

7,580

Business per Employee (2012) =

15,021,330 = 2,108 (In 000)

7,124
44

Business per Employee (2013) =

15,841,183 = 2,184 (In 000)

7,253

Interpretation
The business of Bank Alfalah per employee has increased continuously and show enormous
increase in 2013. It means Bank Alfalah is using its employees effectively and efficiently to
generate maximum output / revenue of them.
5. Employee per Branch
Employee per Branch =

Total no of Employees
Total no of Branches

Employee per Branch (2011) =

7,580 =
470

16 Employees

Employee per Branch (2012) =

7,124 =
498

14 Employees

Employee per Branch (2013) =

7,253 =
574

13 Employees

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 companys ability to cover its
current liabilities with its current assets.
Current Ratio =

Current Assets_
Current Liabilities

Current Ratio (2011) =

274,962,893 =

1.06
45

23,572,431
Current Ratio (2012) =

374,577,861 =
328,705,747

1.13

Current Ratio (2013) =

397,279,284 =
367,795,060

1.08

Interpretation
Current ratio of Bank Alfalah shows slight changes; up down, overall the current ratio of Bank
Alfalah is good as current assets are slightly more than the current liabilities and it also meets the
SBP requirement which is 1:1. It gives picture of no liquidity problem with the Bank Alfalah.
2. Cash Ratio
It is the conservative liquidity ratio. The best indicator of companys short-run liquidity may be
cash ratio. Cash ratios of Bank Alfalah for previous three years are as follows:
Cash Ratio = Cash + Marketable Securities
Current Liabilities
Cash Ratio (2011) = 50,882,662 + 7,765,407_ =
424,820,317

0.138

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

486,777,467

0.174

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

558,184,352

0.172

Interpretation
The cash ratio is more in 2012 and 2013 then as compared to 2011; it is good because too low
cash ratio could arise an immediate problem with paying bills and other sudden current
liabilities. The cash ratio of Bank Alfalah shows that it is using cash to its best advantages and
bank operations.

3. Advances to Deposit Ratio

46

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
401,247,886
Advances to Deposit Ratio (2012)

Advances to Deposit Ratio (2013)

233,933,358
457,118,723
260,779,850
525,525,770

100

49.5%

100

51.17%

100

49.62%

Interpretation
The advances to deposit ratio of the Bank Alfalah has fallen to 49% in 2013, but as compared to
2011 there is a little increase. This indicates that Bank further need to concentrate on providing
the different loans to customers in order to sustain and increase its revenue.
4.3.4 Financial Leverage Ratios
It measures the degree to which management use debt, borrow money or equity, and issue new
shares to finance ongoing operations.
1. Debt-to-Total Asset Ratio
This ratio highlights the relative importance of the debt financing to the firm by showing the
percentage of the firms assets supported by debt financing.
Debt-to-Total Asset Ratio = Total Debt
Total Assets
Debt-to-Total Asset Ratio (2011) =

442,396,764 x 100
468,173,802

Debt-to-Total Asset Ratio (2012) =

506,219,292 x 100
536,466,694

Debt-to-Total Asset Ratio (2013) =

578,712,547 x 100
610,614,291

Interpretation
47

94.5%

94.36%

95%

The higher the debt-to-total asset ratio; the greater the level of financial risk, the lower this ratio;
the lower the financial risk. This ratio has slightly lower in 2011 & 2012. It means in 2011 and
2012, 94% of the assets were financed by debt while in 2013 95% of the assets were financed by
debts. From the perspective of long term debt-paying ability, the lower this ratio the better is the
companys position.
2. Debt-to-Equity Ratio
This shows the extent to which the firm is financed for ongoing operations by borrowings and by
the shareholders 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
25,777,038

Debt-to-Equity Ratio (2012) =

506,219,292
30,247,402

Debt-to-Equity Ratio (2013) =

578,712,547
31,901,744

17.16

16.73

18

Interpretation
The ratio has been decreased in 2012 but then again slightly increased in 2013. In 2013, it shows
that creditors are providing Rs. 10 of financing for each Rs. 1 being provided by shareholders.
The lower the ratio, the higher the level of the firms financing that is being provided by
shareholders and the larger the creditor cushion (margin of protection) in the event of shrinking
asset value. The Bank Alfalah still needs to decrease this value further.

4.4 SWOT Analysis

This SWOT analysis of Bank Alfalah Limited takes into thought the internal as well as the
external environment of the bank.
4.4.1 Strengths

48

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 Doesnt Possess Foreign set of associations
No Advertising in Electronic Media
Bank needs in utilizing new innovation as contrasted with different banks
Most of the workers are congested with work. There is unpleasant offering of work and
advancements are less.

Bank is keen in introducing new services

4.4.3 Opportunities
The opportunities of BAL on which it can capitalize upon are:

Extension of local branch network

Establishing foreign branch network
Capitalization on IT
Unfamiliar market of MNCs
Growth in textile sector
49

Adopt E-banking

4.4.4 Threats
The predominant threats Bank Alfalah is facing at the moment are discussed in the following
lines:

Private sector banks

Heavy reliability on only one market section i.e. Textile.
Network expansion by foreign banks
Terrorist image of the country
Inconsistency in government policies
Privatization of HBL & UBL
Rising global technological advancements
Emerging banks
Innovative services of other banks
Change in economic trend
Modification in interBank Alfalah services.

CHAPTER - 05
CONCLUSION & RECOMMENDATIONS
5.1 CONCLUSION
The six weeks used at Bank Alfalah Limited, Mansehra extension were, probably a wellspring of
incredible learning for me around a great deal of things especially working in bank's climate. It is
my first encounter to work basically in some association. This reasonable preparing project did
not just help me acquire heaps of information about the transcendent capacities performed by
keeping money organizations, additionally conferred a ton of preparing as respects the set of

50

behavioral qualities which recognize a specific individual from whatever is left of the parcel in a
the earth.

During my internship I inferred that presently bank Alfalah has a high piece of the overall

industry and is not confronting any sort of danger.

Due to amazingly prepared proficient it is utilized to fabricate advancement jumps and

bound.
The real destination of bank is to set up solid association with the clients and make them
accept that bank Alfalah is ideal for them by giving successful and productive

administrations.
It has likewise delivered a well-assembled goodwill and confide in the business.
At this point it is critical to compose an expression of appreciation for the establishment,
which makes it sure, that all the scholars get an experience to commonsense life in

generally overall presumed associations.

I must underscore the way that written work this internship report was an equitably
critical encounter as really doing the internship. I genuinely attempted my level best to
concoct unique bit of composing that could serve as a vivid verification of the way that
understudies at COMSATS.

5.2 RECOMMENDATIONS
Based on my six weeks stay with BAL Mansehra main branch, I would like to give a number of
suggestions for the improvement in its operations as under:

Gainfulness proportions demonstrates great execution of the Bank Alfalah utilizing its
assets, in spite of the fact that the benefit has been fallen persistently that may be because
of its fast development arrange or blend of items and administrations with low overall
revenue. The working costs are prone to proceed the upward pattern as the Bank
arrangements to grow its system further. Bank need to keep control on its costs side by

side and ought to look for ease financing to show build in benefits.
In spite of the fact that Bank Alfalah has expanded its stores persistently throughout the
previous years however its developments shows huge abatement in examination with its
51

stores and past execution. Bank continually needs to concentrate on its developments this

will help to build the imprint up income.

As Bank Alfalah does not offer the credit office to recently create organizations on the
grounds that its the BAL strategy that it will advance just to those individuals who are
running their organizations from 3 years. Bank ought to consider this range and attempt
to give credit office to new organizations through fitting game plans to secure them. It

will signify developments of the Bank.

The bring down the proportion, the higher the level of the company's financing that is
constantly given by shareholders and the bigger the lender pad (edge of assurance). The

Bank Alfalah still needs to decline the quality further by bringing down the obligations.
Administration has not had the capacity to deliver sufficient return utilizing organization's
benefits successfully. Bank Alfalah is presently winning less with more financing in
stakes as contrasted with past and it additionally indicates wasteful utilization of
organization possessions. Stakes & Liabilities Management Committee need to

concentrate on that issue.

Bank Alfalah Limited ought to extend its limbs in Pakistan as well as outside the nation.
It has few abroad limbs yet it ought to stretch further. By opening extensions abroad, the
bank can extend its mindset; it will pick up notoriety and would have a chance to
redesign its items and administrations as per the universal guidelines.

The method of opening a record ought to be improved. The record opening structure
ought to act naturally illustrative and incorporate interpretation in Urdu for those clients
who are not taught, since the truth can't be disregarded that numerous individuals don't

have a decent understanding of English.

The individuals who stores a lot of cash or are old clients of the Bank with great fiscal
conditions ought to be surrender free credit lines to a certain utmost. Additionally,
monetary advices ought to be given to clients in the event that there is a change in the

business sector drift before they look for it.

Participative administration idea ought to be embraced where for creating items as well
as on administration, thoughts from the representatives ought to be taken, build
productivity and worker confidence and so forth, to enhance them.

52

The amount of Fax machines and photocopying machine in the bank are likewise short of
what they are needed. For photocopying reason one need to go upstairs. So more

machines are obliged and likewise their circumstance ought to be at the exact spot.
BAL ought to present all the more preparing projects for their specialists. It would help
less accomplished and less instructed staff to develop and be a significant a piece of the
bank.

REFERENCES

David, R. E, (1998) (7TH Edition), Strategic Management Concepts & Cases, New
Jersy: Prentice Hall Inc.

Wild J John & Subramayam. R.K (2000), (8 TH 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), (10 th Edition).Fundamentals of Financial

Management. New York: Prentice Hall International, Inc.

Robert, F.M JR. Williams, S.F. Haka, & M.S Bettner. (1999),(11th Edition), Accounting;
The Basis for Business Decisions. Published by New York: Irwin Mc Graw-Hill.
53

Suneja. H. R, (1st edition), Management of Bank Credit, Himalaya publishing house

Bombay.

David. R. Fred, (10th edition), Strategic Management, Pearson education.

ANNEXURE
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
54

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

55