ECONOMY ROUND-UP

The last two years have witnessed a gradual and noticeable improvement in the economy. The upsurge in inward remittances, proactive policy initiatives on country debt reduction, implementation of IMF program and negligible trade gap have led to a progressive strengthening of the external account. These factors have led to a healthy buildup of reserves and improved the investment outlook of akistan. !t the domestic level from the financial industry"s perspective, the emphasis on monetary policy initiated in #$$% to reflate the economy continued resulting in surplus li&uidity in the banking sector and further lowering of interest rates. 'espite the foregoing positive catalysts to re-invigorate the economy, the real sector continues to be plagued with subdued economic activity and an increase in unemployment levels. There are multiple causative factors for the current situation as far as the real sector is concerned. The large scale-manufacturing sector suffers from excess supply as a result of heavy investments in the nineties. 'iscernable investment in recent times has been in selective areas primarily oil and gas and textile exporting units. 'omestic investment by small and medium industries seems to be hostage to investor anxiety perhaps stemming from geo-political and domestic political risk. Fiscal measures to compliment the expansionist monetary policy need to be crystalli(ed and implemented to re-spark economic growth. The development of appropriate fiscal measures, coupled with social and development spending program of )* economic revival. +manating from the operating environment and the monetary policy, the banking system continues to reflect hefty investments in Treasury bills etc well in excess of the ,-. re&uirements. In response there is a marked change in the efforts of the financial fraternity to explore new avenues to lend/ consumer financing seems to be the flavor of the day. Factors like skill, technology to originate and manage consumer loans in a cost effective manner, development of a borrowing culture in individuals and evolving cost-effective legal and collection framework and lastly 0ob creation in the economy are needed for volumetric growth in consumer financing. The impact of this on advances will however, be felt in the % and sustenance of good governance by the new government will be important for the future

longer term and in the interim low margins from the existing borrowing segments will continue to pressure banks profitability.

EMERGENCE OF BANKING
The word bank is derived from Bancus or Banque. 1istory of banking is traced to #$$$ 2.3 in )reece. riest and )oldsmiths acted as financial agents by keeping money and valuables of people in temples in strong safes. Thus, the first stage in the development of modern banking was accepting of deposits of cash from those who had surplus money with them. The )oldsmiths issued receipts for the money deposited with them, which began to pass from hand to hand in settlement of transaction as people had confidence in the integrity and solvency of goldsmiths. The receipts were drawn on a way that it entitled the holder to claim that specified amount of money from goldsmiths. These receipts were the earlier bank notes. Thus the second stage in the development of banking was the issues of bank notes. The goldsmiths discovered all the people who had deposited money did not come to withdraw their finds in cash, only a few people presented the receipts for encashment during a given period of time and they also found that most of the money deposited with them was lying idle. They also found they were being constantly re&uested for loan on good security. They thus thought it profitable to lend at least some of the money with them to needy persons. This proved profitable for them. Instead of charging interest from deposits, they began to give them interest on money deposited with them. This was the third stage in the development of banking. Through experience, banks came to know that they could keep a small proportion of total deposits for meeting demands of customers for cash and could easily lend the rest. They allowed deposits to draw over and above than the money standing to their credit. They thus allowed the overdraft facility to their deposits and this was the fourth stage in the development of banking. +very bank issued receipts and most allowed

overdraft facility and this caused too much confusion the systems. In order to earn profits, banks did not keep ade&uate reserves to meet demands of customers for cash. This failure on the part of bankers to return money caused widespread distress among people.

In order to create confidence among the people, steps were taken to regulate the banking. ! conference was held in 4uremberg in %567 where it was decided that a bank should be set up by the state, which would streamline the banking organi(ation and techni&ue. The first central bank was thus formed in )eneva in %896. The responsibility of issuing notes is now entrusted to a central bank in each country. :ith passage of time, activities of commercial bank increased. They dealt with large number of issues such as obtaining funds, advancing loans to business, farmers, households, making investment in stocks, discounting bills of exchange etc. commercial banks are now multi-service organi(ations and play a very important role in financial markets.

OVERVIEW OF THE FINANCIAL SECTOR IN PAKISTAN

The history of banking system in akistan dates back to independence of akistan in !ugust %96< when various banks transferred their 1ead =uarters and funds to areas likely to fall in India. This trend emerged due to dominant role of 1indus in pre-partitioned Indian banking system. !ccording to various books there were ;698 branches of Indian scheduled banks in the undivided sub-continent as on %st March %96< out of which only 67< branches were located in areas presently constituting akistan. 1owever the number of scheduled banks drastically declined to %95 from 67< immediately after partition. !t the time of partition there were only two banks having the honor to be first commercial bank of akistan namely 1abib 2ank -td., which was set up in %96% with its 1ead *ffice in India and the !ustralasia 2ank -td., which was established in %966 with its 1ead *ffice in akistan. 2y following the partition, an expert committee was set up and this committee recommended that the .eserve 2ank of India being the 3entral 2ank of the undivided India should continue to function as 3entral 2ank of akistan and the Indian currency notes would continue to be legal tender in akistan till ;$th ,eptember %967. ,ubse&uently it was decided to have separate 3entral 2anks and the ,tate 2ank of akistan was set up and started functioning from %st >uly %967. Thus the history of 2anking system in akistan started with the establishment of the ,tate 2ank of akistan which was inaugurated by =uaid-e-!(am Mohammad !li >inah on %st >uly, %967. 3onse&uently three banks were established which include Muslim 3ommercial 2ank -td. formed in ,eptember %967. 2ank of 2hawalpur in *ctober %967 and 4ational 2ank of akistan in %969. 1abib 2ank also transferred its 1ead *ffice from 2ombay to ?arachi due to partition in !ugust %96< and it was assisted by the ,tate 2ank to finance domestic trade of the country.

BANK ALFALAH LIMITED

2ank !lfalah -imited was incorporated in >une #%st, %99< as a public limited company under the 3ompanies *rdinance %976. Its banking operations commenced from 4ovember %st ,%99<. The bank is engaged in commercial banking and related services as defined in the 2anking companies ordinance %98#. The 2ank is currently operating through 65 branches in #% cities, with the registered office at 2.!.2uilding, I.I. 3hundrigar, ?arachi. ,ince, its inception as the new identity of 1.3.+.2 after the privati(ation in %99<, the management of the bank has implemented strategies and policies to carve a distinct position for the bank in the market place. ,trengthened with the banking of the !bu 'habi )roup and driven by the strategic goals set out by its board of management, the 2ank has invested in revolutionary technology to have an extensive range of products and services. This facilitates their commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. The bank perceived the re&uirements and of customers and matches solutions.

them with &uality products service 'uring the past five years, bank has emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow as well as today. To continually

upgrade the &uality of service to the customers, training of team members in all the integral aspects of banking, customer service and IT was specially focused. The portfolio concentrates on all aspects of conventional banking as well as the financial needs of corporate sector. 'ynamic and high value product includes 3ar Financing, 1ome Financing, .upee Travellers 3he&ues, 3redits 3ards, 'ebit 3ards, *n line 2anking, !TM and consumer 'urables. In addition to this, Islamic 2anking 'ivision is a recent initiative, which operates as separate branch. It offers ,hariah 3ompliant products through a network of five branches, which will increase to 5$ by the year #$$<. The bank is committed to combine all it s energies and resources to bring high value, security and satisfaction to its customers, employees and shareholder. The 2ank has invested in revolutionary technology to have an extensive range of products and services. This facilitates commitment to a culture of innovation and seeks out synergies with client and service providers to ensure uninterrupted services to it customers.

VISION

To be the premier organizations operating locally and internationally that provided the complete range of financial services to all segments under one roof

<

MISSION
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

BOARD OF DIRECTORS

H.E. Sheikh Hamdan Bin Mubarak Al Nahayan Chairman

Mr. Mohammad Saleem Akhtar Chie E!e"#$i%e O i"er

Mr. Abdulla Nasser Hawalileel Al-Mansoori

Mr. Abdulla halil Al Mutawa

Mr. !kram "l-Ma#eed Seh$al

Mr. halid Mana Saeed Al %taiba

Mr. Nadeem !qbal Sheikh

MANAGEMENT
3hief +xecutive *fficer +xecutive Incharge ,trategic lanning @ )lobal Marketing +xecutive Incharge 1uman .esources 'ivision +xecutive Incharge 3redit 'ivision +xecutive Incharge +stablishment @ !dministratration +xecutive Incharge 2usiness 'evelopment 'ivision ,.!.M.A 3ar FinanceA -easing +xecutive Incharge !udit @ Inspection 'ivision +xecutive Incharge 3orporate 2anking, ,M+ Financing @ 1ome -oans +xecutive Incharge 4ew roducts @ ,ervice =uality 'ivision +xecutive Incharge International @Treasury 'ivision +xecutive Incharge IT 'ivision +xecutive Incharge ,ystem @ *peration 'ivision. +xecutive Incharge 3redit Monitoring 'ivision +xecutive Incharge -egal !ffairs 'ivision. +xecutive Incharge Finance 'ivision +xecutive Incharge Islamic 2anking 'ivision +xecutive Incharge 3ards 'ivision

%$

NETWORK OF BANK ALFALAH LIMITED IN PAKISTAN

%%

The detail of 2ank !lfalah 4etwork in over akistan is as underB Sr. No. Branch KARACHI %. Main 2ranch %%%-<<<-<78 &hone Number

2.!. 2uilding, I.I 3hundrigar .oad, ?arachi $#%-#6%6$;$-9 #. ;. 6. 5. 8. <. 7. 9. %$. %%. %#. %;. %6. %5. %8. %<. 3lifton 2ranch, ?arachi ?orangi Industrial !rea 2ranch, ?arachi Muhammad !li >innah 2ranch, ?arachi ,harah-e-Faisal 2ranch, ?arachi 'efence 2ranch, ?arachi )ulshan-e-I&bal, ?arach 3loth Market 2rach, ?arachi >odiah 2a(ar 2ranch, ?arachi 4orth ?arachi 2ranch, ?arachi ?+,3 2ranch, ?arachi aper Market 2ranch, ?arachi 4orth 4apier .oad, 2ranch, ?arachi ,.I.T.+ 2ranch, ?arachi +31, 2ranch, ?arachi Timber Market 2ranch, ?arachi 2ahadurabad 2ranch, ?arachi LAHORE %7. %9. -'! la(a 2ranch, -ahore 'efence 2ranch, -ahore $6#-8;$8#$%-%$ $6#-5<#9<<#-8 $#%-57;<<7-# $#%-5$85<$%-# $#%-<<5$8#<-;$ $#%-6;%;5;8-7 $#%-5;<6;;$-5 $#%-69769;< $#%-#6$%8#%-#8 $#%-<5;#67#-76 $#%-897<8$ $#%-#6%<5%5-9 $#%-##%%;5;-7 $#%-<56$$8<-87 $#%-#57#%%6-%8 $#%-65;578%-# $#%-<<5$8;5-9 $#%-6%#75<7-7%

%#

Sr. No. #$. #%.

Branch Township 2ranch, -ahore )ulberg 2ranch, -ahore

&hone Number $6#-5%%6<##-#; $6#-57<<7$$-7 $6#-5<5<<9%-#

##. #;. #6. #5. #8. #<.

3ircular .oad 2ranch, -ahore 2adami 2agh 2ranch, -ahore !llama I&bal 2rach, -ahore ,hah !lam 2ranch, -ahore ,hadman 2ranch, -ahore Mall .oad, 2rnach, -ahore RAWALPINDI

$6#-<8;7#58-7 $6#-<<$7#9%-5 $6#-56;#98%-; $6#-<8<;6$%-8 $6#-<5;7%%8-7 $6#-<;5$$;;-;5

#7.

Main 2ranch, The Mall, .wp.

$5%-557##77 $5%-588$76-8

#9.

,atellite Town, 2ranch, .wp ISLAMABAD

$5%-66#6$7$-5

;$.

2lue !rea 2ranch, Islamabad

$5%-##<5#78 $5%-##<$%9; $5%-#$8978-<

Bran"he& in O$her Ci$ie& ;%. ;#. ;;. ;6. ;5. ;8. -ia&at .oad 2ranch, ,argodha ,arwar .oad 2ranch, ,ahiwal 3ollege .oad 2ranch, '.I ?han ,aidu ,harif .oad 2ranch, Mangora ,addar 2ranch, 1yderabad Islamia .oad 2ranch, eshawar $65%-<#6%;7-9 $9;%-<;8;%-# $98%-<%%<;$-; $9;8-<#8<65-8 $##%-<78$#$-# $9%-#7<$5%-5

%;

Sr. No. ;<. ;7. ;9. 6$. 6%. 6#. 6;. 66. 65. 68. 6<. 67. 69. 5$. 5%.

Branch 3antt 2ranch, eshawar 1ospital .oad, 4awabshah -ia&uat 2a(ar, ') ?han 3ircular .oad, )u0rat 2ank .oad 2ranch, Mardan The Mall 2ranch, :ah 3antt. 3ircular .oad 2ranch, 2ahulpur 3antt. 2ranch >helum !bdali .oad 2ranch, Multan aris .oad, 2ranch, ,ialkot -ia&uat .oad 2ranch, Faisalabad ).T .oad 2ranch, )u0ranwala Frefre .oad 2ranch, ,ukkur ,hahi .oad 2ranch, .ahim Car ?han M.! >innah .oad 2ranch, =uetta

&hone Number $9%-#7<$5%-5 $#%6-8#%#<-9 $86%-687#$%-6 $6;;-5;$#%9 $9;%-<;8;%-# $598-5;96#8-7 $8#%-7799##-5 $56%-8%$$## $8%-568<9#-8 $;6#-59%<6%-6;-66 $6%-8%<6;8-;9 $6;%-#55558-%8 $<%-#7%<;-<5 $<;%-76<<%-<;-<9 $7%-7#<58<

ISLAMIC BANKING BRANCH NETWORK %. Islamic 2anking Main 2ranch 88, Main 2oulevard, )ulberg, -ahore #. Islamic 2anking C-2lock 2ranch 9;-C, hase-;-3, '1!, -ahore 3antt ;. Islamic 2anking ?atchery 2ranch ?utchyery 2a(ar, Faisalabad 6. Islamic 2anking >innah !venue 2ranch .+'3* la(a, 7-+, 2lue !rea, Islamabad $5%-#7<9579 $6%-8$;$#%-#5 $6#-5<68%9%-95 $6#-5<%5#6%-5

%6

Sr. No. 5.

Branch Islamic 2anking Dni Tower 2ranch D4I Tower, I.I 3hundriger .oad, ?arachi

&hone Number $#%-#6<#$$%

8.

Islamic 2anking Mc-eod .oad, 2ranch lot 4o. %;, Mc-eod .oad, -ahore

$6#-<#%%86$

<.

Islamic 2anking Faisal !rcade, 2ranch ).T .oad, )u0ranwala

$6;%-55<;$%-5

7.

Islamic 2anking Murree .oad 2ranch 4ear Ministry of 'efence

%5

ORGANI'ATIONAL STRUCTURE Pre&i(en$ )CEO*

Seni+r E!e"#$i%e Vi"e Pre&i(en$

E!e"#$i%e Vi"e Pre&i(en$

Seni+r Vi"e Pre&i(en$

Vi"e Pre&i(en$

A&&i&$an$ Vi"e Pre&i(en$

O i"er& Gra(e I, II, III

%8

C-eri"a- S$a

N+n-C-eri"a- S$a

3ashier

Typist 3lerks @ !ssistants

)uards

Messengers

%<

GOALS . OB/ECTIVES

)oals and ob0ectives are factors through which the company"s devotion and commitment to the 0ob can be seen. If the goals are realistic and achievable, than surely that organi(ation is doing it"s 0ob. 2ank !lfalah also has certain goals and ob0ectives which it is trying to achieve, through it"s various strategies and operations. The goals and ob0ectives are mentioned belowB %. To create a sound base, and through efficient systems achieve modern banking through out akistan. #. 2y the end of every accounting year there is an increase in deposits. !s the deposit rate of during #$$# was approx 5# Million and the same has been increased in #$$; by << Million. ;. To create unit banking network in all the branches of 2ank !lfalah, the end of the year. This means that all the operations of the bank, i.e. deposits to advances, imports, exports, -A3 *pening, foreign currency and many more aspects under one roof, so that the customer can be facilitate in one visit. 6. Islamic 2anking is one of the goals of 2ank !lfalah though it has been initiated in the last fiscal year and it is very acceptable for general public. 1owever, there is lot of work to do for successful implementation of the Islamic 2anking lan. In this regard the 2ank is opening specific Islamic 2anking 2ranch under the supervision of its Islamic 2anking 'ivision.

%7

STRATEGIES

2ank !lfalah has formulated certain sets of strategies to enable it to achieve its goals and ob0ectives. These strategies are mentioned belowB %. In order to achieve it"s goals of creating a sound base and presence of efficient

modern banking system, 2ank !lfalah has started operation of !utomated Teller Machines in all the ma0or areas like ?arachi, -ahore, Islamabad and other cities of akistan. #. 2ank !lfalah is committed to building long-lasting relationships through an

assertion to service excellence and providing innovative products to meet the changing needs of our valued customers. !lthough still in its infancy, compared to the exalted banking standards, 2ank !lfalah, backed by a strong !bu 'habi )roup and inspired by the vision of its 2oard and Management, has built up a strong customer base. The 2ank provides a full range of banking services to corporate clients, while applying leading technologies. Today the 2ank is well-positioned to provide appropriate banking services to customers. ;. The main focus is building relationships and being known by the way they do

business. Management recogni(es that a banking relationship re&uires compatibility, communication, and cooperation and that each customer deserves nothing less than full attention and available resources to meet their financial ob0ectives. 6. 3ore value and corporate culture is based on the belief that superior personali(ed

service is the most important product. 2ank is in the process of getting to know customers by name and understand their business and personal financial needs. This one-

%9

on-one, personali(ed service &uality has served as 2ank !lfalahEs uni&ue signature since inception and continues to separate it from other financial institutions. 5. The 2ank !lfalah team comprises of some of the most highly skilled and

professional financial experts in banking industry. Managers, lenders and trust advisors offer the uni&ue perspective of knowing and understanding in the local economy. The Management focuses its attention on making informed and feasible economic decisions, bringing better returns and more profitability for investors and customers. 8. ?eeping in view the unrest among the Islamic 3ommunity on the Interest 2earing

2anking the !lfalah is in the process of target marketing and gives its full attention to this segment of a large population over the world. <. To ac&uire the reputation and status of bank which operates on international

standard, !lfalah 2ank was to get the credit rating of akistan 3redit .ating !gency, which gave it the !!- and !%F in the long term and short term respectively.

#$

ACCOUNTING POLICIES

2ank !lfalah is a scheduled commercial bank and is principally engaged in the business of bak as defined in the 2anking 3ompanies *rdinance, %98#.

Ba&i& + Pre&en$a$i+n In accordance with the directive of the Federal )overnment regarding the shifting of the 2anking system to Islamic modes, the ,tate 2ank of akistan has issued various circulars from time to time. *n permissible form of trade related mode of financing comprises of purchase of goods by the banks from their customers and resale to them at appropriate mark-up in price on deferred payments basis. The purchase and slaes arising under these arrangements are not reflected in these accounts as such but are restricted to the amount of facilities actually utili(ed and the appropriate portion of mark-up thereon.

A""+#n$in0 C+n%er&i+n These accounts have been prepared using the historical cost convention in conformity wit the accepted practice of banking institution in akistan.

Fi!e( A&&e$& O1ne(2 Fixed assets are stated at cost less accumulated depreciation. 'epreciation

is computed over the estimated useful lives of the related assets at varying rates and methods depending on the nature of the assets.

The cost of the assets is depreciated on the diminishing balance method, except for vehicles, carpets and renovation costs of leased premises, which are depreciated on a

#%

straight-line basis. 'epreciation is charged for the full month on purchaseAac&uisition of assets while no depreciation is charged in the month of disposal of an assets. Maintenance and normal repairs are charged to income as and when incurred. Ma0or renewal and improvements are capitali(ed. )ains and losses on disposal of fixed assets are taken to the profit and loss account. Lea&e(2 !ssets held under finance lease are accounted or by recording the assets

and the related liabilities at the amounts determined on the basis of lower of fair value of the assets and present value of minimum lease payments. Finance charge is allocated to accounting periods in a manner so as to provide a constant periodic rate of charge on the outstanding liability. 'epreciation is charged on leased assets on the basis similar to that of owned assets. In%e&$men$ Investments are stated at cost, net off provisions made for diminution in value. rofits and losses on sale of investment are dealt with through the profit and loss account in the year in which they arise. A(%an"e& !dvances are stated net off provisions for bad and doubtful debts. ,pecific and general provisions for bad and doubtful debts are determined by the management kepping in view the re&uirements of the akistan. F+rei0n C#rren"ie& !ssets and liabilities in foreign currencies have been translated into ak .upees at the rates of exchange approximating those ruling at the 2alance ,heet date except those covered by forward exchange contracts which are converted at contracted rates. +xchange gains and losses are included in income currently. Ta!a$i+n rovision for tax is based on applicable rates of tax after taking into account tax credit available, if any. rudential .egulations issued by the ,tate 2ank of

##

The 2ank accounts for deferred tax, if any, taking into account ma0or timing differences, using the liability method. 1owever, deferred tax is not provided it can be established with reasonable probability that the timing differences will not reverse in the foreseeable future.

Re%en#e Re"+0ni$i+n Income is recogni(ed on accrual basis.

#;

PRODUCTS
COMPREHENSIVE AND DIVERSIFIED PRODUCT PORTFOLIO :ith the mission to provide all-encompassing banking services to the customers, 2ank !lfalah has a uni&uely defined menu of financial products. 3urrently it is one of the most comprehensive portfolios of personali(ed financial solutions that are customtailored to serve the re&uirements not only of conventional customers but also fulfill the needs of the corporate sectorB 3ar Financing .upee Travellers 3he&ues *nline 2anking 3redit 3ards !TMs 1ome Financing Islamic 2anking 3orporate and ,tructured Financing

Car Finan"in0 3ar Financing is one of the ma0or renowned product of 2ank !lfalah and can be utili(ed in terms of Financing of Dsed Gehicles, -oan against 3ar, 2alance Transfer Facility, .efinancing Facility Honly for !lfalah 3ustomersI and it is characteri(ed in terms ofB -owest Mark up -ower Insurance =uick rocessing -ower 'own ayment #6

H+me Finan"in0 Ma0or features of 2ank !lfalh 1ome Financing are -owest Mark-up, =uick rocessing, Multiple .epayment *ptions and Free Galuation. It has been bifurcated in terms of J1ome 2uyer, 1ome 3onstruct, 1ome Improver, 1ome 2alance Transfer FacilityK. Financing -imit Tenure B B upto .s. %$,$$$,$$$Aupto #$Cears ;$L 2orrower A <$L 2ank

+&uity articipation B

R#3ee Tra%e-er& Che4#e& .upee Travelers 3he&ues are as good as cash and are accepted at the ma0or shops, travel agents, hotels business establishments and all over the country and abroad. This service is being offered to facilitate instant fund availability to travelers and business people who used to carry a large sum of money with them.

Cre(i$& Car(& 2ank !lfalah Gisa 3ard is everywhere and globally acce pted and welcomed at locations displaying the GI,! logo. It is accepted at nearly ;$ million merchants and 7<$,$$$ !TMs in more than %5$ countries around the globe and over %$,$$$ establishments in akistan. !lfalah GI,! pays for shopping, travel, entertainment, meals and much more.

De5i$ Car(& #5

2ank !lfalah -imited presents !lfalah 1ilal3ard, the first Gisa +lectron International 'ebit 3ard which gives an unlimited access to current A savings account with a simple swipe, at millions of retail shops and !TMs, worldwide. The !lfalah 1ilal 3ard comes with a host of conveniences and benefits combined with the wide reach of Gisa 4etwork enabling it to be accepted at more than 76$,$$$ !TMs and %; million retail outlets around the world, making it the most acceptable 'ebit 3ard available in akistan.

On Line Ban6in0 To provide enhanced and value added products to customer bank is constantly striving for additional facilities. 2ank provide fully automated on-line telephone banking facilities to its customers enabling them to carry out banking transactions like balance in&uiries, statement re&uests, product information and exchange rate.

A#$+ma$e( Te--er Ma"hine )ATM* The bank offers #6 hours self service banking facilities to it customers on country wide basis through deployment of !utomated Teller Machine. This system allows the banking facilities such as cash withdrawls, cash deposits, funds transfer, balance in&uiries, account statements. +lectronic cash dispensing facilities are available in ma0or cities of akistan. !ll !TMs are linked through a state-of-the-art ,atellite 2ased 3ommunication ,ystem which offers #6 hours real time service. I&-ami" Ban6in0 ! separate division is a recently initiated, which operates as separate branch. It offers ,hariah 3ompliant products through a network of five branches, which will #8

increase to 5$ by the year #$$<. Islamic 2anking has launched following products with the perception that these are in accordance with the ,haria rinciples. a. b. c. !lfalah Masharaka 1omes Murabaha Finance !flalah 3ar I0arah

C+r3+ra$e an( S$r#"$#re( Finan"in0 The portfolio concentrates on all aspects of conventional banking as well as the financial needs of corporate sector including dynamic and high value product. -oaning against securities -etter of 3redit -etter of )uarantee 'emand Finance 3ash Finance

#<

BOSTON CONSULTING GROUP )BCG* MATRI7 FOR THE SBU8S

MARKET SHARE

GROWTH RATE

HIGH

HIGH

LOW Islamic Banking ATM Debi Car!

Car Financing Home Financing Online Banking

LOW

De"osi s In#es men s Cre!i Car!s

R$"ee Tra#elers C%e&$es

#7

ENVIRONMENTAL ANALYSIS
!ny environment which interacts with the functions and operations of a company, should be properly studied and evaluated so that the environment only benefits the company rather than affecting it negatively. -ike other institutions, 2ank !lfalah also has an environmental effect on its functions. 2asically two types of environment effect the bank operations, policies and strategies.

Mi"r+ En%ir+nmen$ Microenvironment is in fact the internal environment, which ahs an effect on the functions of the bank. Micro environment of 2ank of !lflah consiss ofB

%. #. ;.

'eposits !dvances 3ompetitors

9:

De3+&i$& 'epositors are the main source of profit generation for

the bank. !lflah offers depositors number of incentive by virtue of which they too care make same money. !lflah relies on depositors @ workers to increase their volume every year. This is evident from the fact that the growth rate increased 67.6$L during #$$#-$;, as this growth rate is satisfactory it is a must that this environment of deposit growth should not decline.

#9

;:

A(%an"e& !dvances are basically what !lflah give to people asking for money. If there shall

be more people depositing money. There will be more asking for advances as well. 2anks tend to make profit by giving advances at a rate higher than what they owe to the depositors. The difference is the banks profit. If the environment is healthy then more @ more people will be asking for advances for business and other options. It is also evident from the fact that during the year #$$#-$; the advances growth rate is <%.%#L.

<:

C+m3e$i$+r& 3ompetitors should always be studied with great care, because competitors, can

greatly influence an organi(ation position. 2ank !lfalah has a lot of competitors because in a short span of 5 year it has achieved what not many banks had achieved. This leads to competitions. ,imilarly 2ank !lfalah should keep a tag on the competitors move or any other new technology it is introducing, because to sustain in the micro environment, a competitor has to be viewed with a lot of care.

Ma"r+ En%ir+nmen$ +very organi(ation is sub0ect to general trends prevailing in the environment. For the success of the organi(ation these trends are of significant importance and must be thoroughly studies. 2ank !lfalah faces the following factors in connection with its macro environmentB %. #. ;. 6. 5. 'emographic ,ector +conomic ,ector Technological ,ector ,ocial ,ector olitical ,ector

;$

HUMAN RESOURCE MANAGEMENT

H#man Re&+#r"e P-annin0 !t 2ank !lfalah -imited, 1uman .esource lanning involves a decision making in three areas of combined activitesB Ste'-! The bank identifies its organi(ational needs and then ac&uires a right king of human resource accordingly. Ste'-!! 2ank motivates them to achieve excellent performance by giving them different sorts of targets according to their 0ob re&uirements. Ste'-!!! It also creates an interactive link between the employee goals and the organi(ational goals. /+5 De&"ri3$i+n It is descriptive in nature and constitutes a record of existing and additional 0ob facts. The order of 0ob description is as followsB >ob identification >ob summary 'uties performed ,upervision given and received

Re"r#i$men$ an( Se-e"$i+n 2ank !lfalah -imited recruits three kinds of employeesB %. #. ;. Top -evel Management Trainee *fficers 3ontractual 2asis +mployees ;%

Trainin0 an( De%e-+3men$ In 2ank !lfalah -td. the process of Training and 'evelopment consists of various other activities likeB a. (rainin$) i. The appraisal form of an employee indicates the areas in which the employee should be trained and developed. It also elaborates the abilities of an employee. ii. Management and *rgani(ation 'evelopment 'ivision of each region timely reviews the employees and recommends them for training during the operations it they note any discrepancy between the desired and actual performance. This review is performed after every &uarter. iii. Dpon the re&uest of )M H*perationI, indicates which sort of training is needed in a particular region regarding the *peration ,upport and ,ervice b. *e+elo'ment) i. ii. Management Skill Training, Special Training for oreign Transferred !mployees,

Per +rman"e A33rai&a-2 It is a structured discussion between employee and supervisor. It provides an opportunity for the supervisor to recogni(e an employee"s achievement, offer suggestions for improvement when needed, discuss 0ob responsibilities, define ob0ectives, counsel for career advancement, and 0ustify a pay ad0ustment. .egarding the performance appraisal, bank adopts both type of approaches.

;#

a.

(raditional A''roach) The traditional approach is primarily concerned with the overall organi(ation and its past performance. In 2ank !lfalah, overall performance is reviews at branch level. +ach branch is liable to show its performance in a positive direction according to set goals.

b.

*e+elo'ment A''roach) This approach viewed the employees as individuals and has been forward looking through the use of goal setting. !ll the employees in the each of the branches are given a performa. +very employee working in the bank is assigned targets, usually their target are in the form of amount. The performances of all the branches are reviewed in the end of 'ecember. Till yet 2ank !lfalah, has no computeri(ed system to assess the performance of employees

Per +rman"e A33rai&a- Pr+"e&&2 The performance appraisal process in the 2ank !lfalah -td. consists of four interrelated stepsB i. +stablish a common understanding between the manager HevaluatorI and employee HevaluateI regarding work expectations, mainly the work to be accomplished and how those work are to be evaluated. ii. +stablish ongoing assessment of performance and the progress against work expectation. iii. Formal documentation of performance through the completion of a performance and development appraisal form appropriate to the 0ob family.

;;

iv.

The formal performance and development appraisal discussion, based on the completed appraisal form and ending in the construction of a development plan.

Re1ar( Mana0emen$ .eward Management elaborates how people are rewarded in accordance with their value to an organi(ation. It is concerned with both financial and non-financial rewards. ! reward system of an organi(ation consist of integrated policies, processes and practices for rewarding its employees in accordance with contribution, skill and competence and their market worth. In 2ank !lfalah the elements of reward management system are consists of Basic &ay, the fixed salary or wage which constitutes the rates for the 0ob. This rate is varied in a skill based or competence based system according to the individual"s skill or competence. The rates are fixed by managerial 0udgement of what is re&uired to recruit and retain the employee. In 2ank !lfalah there is no any concept of individual performance related pay except to the 2usiness 'evelopment *fficer. 2usiness 'evelopment *fficers are those who are hired at contractual basis. They are assigned different targets. If they exceed to the targets they can en0oy the individual performance related pay otherwise they are fied. There is no concept of bonuses, commission or over time related pay. The official timing of bank is $9.$$ !M to $8.$$ M but almost all of the employees have to work till near $7.$$ M. 1owever, for this additional work they are not getting any additional bonuses A over time.

;6

SWOT

ANALYSIS

STRENGTHS ,ince, inception of 2ank !lfalah, it has moved rapidly in expanding branch network and deposit base, along with making profitable advances and increasing the range of products and services bank have made a break-through in providing premier services at an affordable cost to our customers. 2ank !lfalah has been awarded an !!- Hdouble ! minusI and an !%F H! one plusI in the long and short term respectively by the !3.!. These rating denote very high credit &uality and very low expectation of credit risk.

The main source of a financial institution is public savings in this regard public confidence plays a vital role. ,o, the confidence of customers are the main strength of 2ank !lfalah. In order to maintain an effective communication of information regarding the need of valued clients bank has designed its website to be as user-friendly as possible. This facilitates to pursue the path of excellence and customer satisfaction through delivering higher &uality of services, thereby adding synergy to our existing management expertise, financial strength and profitability. 1ence, it"s a channel of communication for the delivery of &uality products and services that enhance value to our stakeholders. WEAKNESSES !s per 2ank policy, advertising and publicity is not extensively emphasi(ed. Through advertisement customers could be kept abreast with the products and services. The main focus of 2ank is ma0or cities of akistan. It is direly needed to extend its network and people should be educated about the functioning of bank. ,ince, 2ank !lfalah has strong set up in D!+ and Middle +ast, therefore, specifically those areas of

;5

akistan should be targeted where large number of people are working abroad. 1ence, bank could avail an excellent deposit rate by using its annual budget specified for network extension.

OPPORTUNITIES The life cycle of an organi(ation is comprised of threats as well as opportunities. If we say, today the rates of challenges are too high but simultaneously the rate of opportunities is also high. It is mandatory to try to make progress with consistency as well as to adapt changes with the needs of time, in order to cope up with both conditions. In the prevailing scenario, 2ank !lfalah could penetrate further and could capture various corporate customers in addition to the retail customers by expanding their network. In addition to the excellent routine banking, it has earned a good name by offering special products like car financing, home financing and credit card. ,o, the penetration of these products could enhance the market share. In the rapidly growing industry of akistan, launching of another ,2D, Alwarid Mobile will be an excellent addition towards the credibility as well as enhancement of 2ank !lfalah"s market share. 2ank !lfalah has launched another division known as !slamic Bankin$. This new aspect will also attract a large number of people, who don"t want to deal with interest bearing banking. 1ence, it"s a new opportunity where competitors are limited.

THREATS :hile doing business, threats are part of the game. +specially, in this era, most of the financial institutions are working as rivate -imited 3ompany and facing or have a fear of threat from their competitor as well as new entrants.

;8

In order to maintain as well as to enhance the market share, banks always try to introduce new schemes A packages. 1ence, the environment is very much innovative and adaptive to the needs of customers. Though 2ank !lfalah has a strong footing and maintain a good number of loyal customer, still bank has threats in various sectorsB a. In -ar .inancin$ M32 @ D2- are threats however, the expected car financing of !24 !mbro could also be a threat for 2ank !lfalah. b. threats. c. In credit cards, 2ank !lfalah captured the market share of 3iti 2ank and ,tandard 3hartered 2ank. Till yet the bank has no prominent threat. 2ut, the launch of !skari 2ank Master 3ard and Dnion 2ank 3ard might be threat after some time. In Home .inancin$ Dnion 2ank or to some extent 42 are

;<

MANAGERIAL PRACTICES A00re&&i%e Ban6in0 2ank alfalah expanding their network of Islamic 2anking. 2ank !l 2araka has been serving the Islamic banking sector since %$ years and they have only 5 braches in akistan. *n the other hand bank !lfalah has established #$ branches in a year. M+$i%a$i+n 2ank !lfalah motivating their employees by giving them comprehensive benefits and professional environment within the organi(ation, which enhances the performance of the employees. 2ank motivates their employees by giving ; bonuses in a year. BENEFITS M+ni$+r= Bene i$& Monitory benefits are given to the employees on the basis of their performance like salary rise, cash pri(e. Gra(e Pr+m+$i+n 2ank also provides benefit to their employees in the form of grade promotion. )rade promotion motivates the employee to do their work efficiently and effectively. A5r+a( P+&$in0 2ank benefit their employees by sending them on overseas posting where they can enhance their professional skills and get handsome financial benefits in terms of salary or fridge benefits.

C+n$r+--in0 2ank has proper setup of controlling the day to day transactions and operational affairs. 2ank controls the operations through a proper check and balance system and properly monitor the daily work.

;7

In$erna- C+n$r+- Uni$ 2ank has an Internal 3ontrol Dnit that monitors the daily transactions within the organi(ation and keeps informing the management about the rules and policies violation. Internal control unit has a proper check and balance on operations and other bank departments.

In$erna- A#(i$ Internal audit is a tool to have a proper check on daily working in a bank. Internal auditor has to point out the discrepancies found during audit. Internal auditors hand over the audit report to the audit chief and he hand over that to the management. Management overlook all the discrepancies and try to reduce the violation and also took the necessary actions. Internal audit conducted in a bank twice a year. E!$erna- A#(i$ +xternal auditors are the representatives of state bank of akistan. ,tate bank assigned them to audit the banks the find out the lapses or discrepancies according to the rules and regulations of state bank of akistan. ,tate bank imposed penalty on bank if they found any discrepancies related to banking practices or procedures. +xternal auditor hand over the audit report to state bank of akistan and ,2 handover the report to the management along with the debit advice in form of penalty and management overlook the discrepancies and take necessary actions. +xternal audit conducted once in a year. 2ank !l Falah has a 3hartered !ccountant 3ompany on his panel who prepare and overview the financial reports of the bank Taseer 1adi @ 3o. is a chartered firm which is on the panel of 2ank !lfalah.

;9

> CUSTOMERS PROBLEMS It seems that the priority is given to the corporate customers in 2ank !l Falah as the individuals from middle class have to remind the management of certain branch to do the needful for them. 3ustomer is the king and customer always right. 2ank is earning profit from the customers. 2ank should have a proper relationship with corporate as well as individual customers. It is recommended that the management should stress on having satisfactory relationship with individual customers because they can also provide the revenue in term of profit.

EMPLOYEES PROBLEMS 9 In&# i"ien$ Em3-+=ee& To compete in the banking industry 2ank !l Falah should have enough employees to facilitate the customers, and divide the workload of the existing employees by hiring new people, because the bank cannot use the alternative to reduce the number of customers and loosing the market share. ; W+r6in0 H+#r& 2ank !l Falah although providing the customer service in better way but there is a lot of work to do in a routine banking to the employees due to which they work for long time. Management should gave relaxation to the employees by hiring new professionals and reduce the working hours.

6$