Lahore School of Economics

Master of Business Administration

BANKING
Final Project

Submitted by: Group 6

Uzair Ejaz
Sahifa Pervaiz
Awais Farrukh
Muhammad Amin Asghar
Muhammad Hamza Ansar

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Table of Contents
HISTORY.................................................................................................................... 3
SPONSORS................................................................................................................ 4
Randeree Family...................................................................................................... 4
Dubai Bank PJSC...................................................................................................... 4
Jahangir Siddiqui & Co. Ltd...................................................................................... 4
BOARD OF DIRECTORS........................................................................................... 5
SHARIAH SUPERVISORY BOARD............................................................................5
MISSION, VISION & VALUES....................................................................................... 6
PRODUCTS & SERVICES.......................................................................................... 7
CONSUMER PRODUCTS........................................................................................... 7
RETAIL BANKING...................................................................................................... 7
BANKISLAMI TAKAFUL.............................................................................................. 8
CORPORATE BANKING............................................................................................. 9
INVESTMENT BANKING.......................................................................................... 12
HOME REMITTANCE............................................................................................... 12
VALUE ADDED SERVICES....................................................................................... 12
FINANCIAL SUMMARY........................................................................................... 13
VERTICAL ANALYSIS.............................................................................................. 16
FINANCIAL RATIOS................................................................................................ 17
HORIZONTAL ANALYSIS........................................................................................ 24
SWOT ANALYSIS.................................................................................................... 25
RECOMMENDATIONS & SUGGESTIONS...............................................................26
APPENDIX................................................................................................................. 27

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HISTORY
The idea of BankIslami was conceptualized by Jahangir Siddiqui & Company Limited and
Randeree family in late 2003. Mr. Hasan A. Bilgrami was appointed as Adviser to the sponsors to
formalize the idea. He presented the concept paper of BankIslami to sponsors on March 2004. A
detailed business plan was then prepared and a formal application was submitted to the State
Bank of Pakistan on May 2004. On September 2005, Dubai Bank joined the Sponsors and
became one of the founding shareholders of BankIslami by investing 18.75% in the total Capital.
The State Bank of Pakistan issued a No Objection Certificate in no time on August 2004 and
BankIslami Pakistan Limited, the second full-fledge Islamic Commercial Bank in Pakistan, was
incorporated on October 2004 in Pakistan.
BankIslami Pakistan Limited was the first Bank to receive the Islamic Banking license under the
Islamic Banking policy of 2003 on March 31, 2005. The Bank envisioned to focus primarily on
Wealth Management as the core area of business in addition to Shariah compliant Retail Banking
products, Proprietary and Third party products, and Integrated financial planning services.
BankIslami Pakistan Limited made a public offering of Rs. 400 Million, at par, from 6th to 8th
March 2006. This was the first primary issue by a Bank in over a decade in Pakistan. The Initial
public offering (IPO) of BankIslami received overwhelming response from the general public as
the applications received were 9 times higher than offered, fetching nearly Rs. 3.5 Billion,
against the demand of Rs. 400 Million.
The State Bank of Pakistan declared BankIslami Pakistan Limited as a Scheduled Bank with
effect from March 17, 2006. BankIslami started its Banking operations on 7th April 2006 with its
first branch in SITE, Karachi. By the end of 2006, the Bank had 10 branches, nine in Karachi and
one in Quetta. The Bank further concentrated in building a nationwide network and by the end of
year 2007; its branch network grew to 36 branches in 23 cities. In 2008, the Bank opened 66 new
branches nationwide which expanded its network to 102 branches in 49 cites. By the end of
2014, the Bank has achieved the target of 213 branches in 80 cities nationwide; this gives
BankIslami the distinction of having the fastest expanding network in Pakistan as well as

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offering the widest network by any Islamic Bank in Pakistan.

SPONSORS
BankIslami is a joint venture among three financially sound and progressive shareholders,
namely, Randeree family, Dubai Bank and Jahangir Siddiqui & Co. Ltd. (See Share holding
pattern fig.1 - appendix)
Randeree Family
Mr. Ahmed Goolam Mahomed Randeree & Mr. Shabbir Ahmed Randeree are the sponsors of
BankIslami in their personal capacity.
The history of the modern Randeree family can be traced back to Jersey (The Channel Islands) in
1975. After three decades of trading, today the family concern has its Family Investment office
based out of the DIFC (Dubai International Finance Centre) with its operations extending to
London, New York and Dubai.
Dubai Bank PJSC
Dubai Bank PJSC is an Islamic bank based in Dubai, U.A.E. It commenced operations in
September 2002 as a conventional Bank. However, on January 1, 2007, it converted into
Shariah compliant financial institution with a focus on the UAEs Islamic banking sector.
Jahangir Siddiqui & Co. Ltd
Jahangir Siddiqui & Co. Ltd. ("JSCL") is the holding company for one of the largest and most
diversified financial services groups in Pakistan, involved in investment Banking, broker-dealer
operations, proprietary trading, insurance, Banking and asset management. The Company was
established in 1991 and was the first Pakistani financial services company to boast a Wall Street
pedigree due to its previous joint venture with Bear Stearns and Co. It is also the only securities
company to be a primary dealer for Government securities in Pakistan and is one of the largest
bond trading firms in Pakistan. JSCL is a listed company on the Karachi Stock Exchange.
JSCL subsidiaries include JS Global Capital Ltd, JS Bank., and JS-Investment Ltd. JSCL also
has holdings in the sugar, sugar derivatives, specialty textile, specialty steels and insurance
sectors through significant minority holding in leading companies in these sectors. These
strategic investments and associated companies include, EFU General Insurance, EFU Life

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Assurance, Allianz EFU Heath Insurance, Azgard Nine and Al Abbas Sugar Mills amongst
others.

BOARD OF DIRECTORS
The Board of Directors of BankIslami comprises of eminent representatives. These include Mr.
Ali Hussain, Mr. AbdulHakim Binherz, Mr. Ali Raza Siddiqui, Mr. Ali Al Shamali, Mr. Fawad
Anwar, Mr. Kamal Afsar, Mr. Hasan A. Bilgrami and Mr. Shabir Ahmed Randeree.
Following are the members of banks Board of Directors:

Mr. Ali Hussain (Chairman)

Mr. Ali Raza Siddiqui
Mr. Ali Al Shamali
Mr. Fawad Anwar
Mr. Kamal Afsar
Mr. Hasan A. Bilgarami (CEO)
Mr. Shabir Ahmed Randeree

SHARIAH SUPERVISORY BOARD

BankIslami conforms to Shariah compliance standards as approved by its Shariah Supervisory
Board. The profiles of members of its Shariah Supervisory Board are as follows:

Mufti Irshad Ahmad Aijaz

Mufti Muhammad Hussain
Mufti Javed Ahmad

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MISSION, VISION & VALUES

VISION
The Vision of BankIslami is to be recognized as the leading Authentic Islamic Bank.

MISSION
The Mission of BankIslami is to create value for our stakeholders by offering Authentic, Shariah
Compliant and technologically advanced product and services. We differentiate ourselves
through:

Authenticity

Innovation

Understanding our client's needs

Commitment to excellence, and

Fast, efficient and seamless delivery of solution. As a growing institution, the foundation
for our performance lies on our human capital and BankIslami remains committed to
becoming an employer of choice, attracting, nurturing and developing talent in a
transparent and performance driven culture.

CORE VALUES
BankIslami is strongly committed towards its core values of:

Product authenticity

Customer focus

Meritocracy
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Integrity

Team work

Humility

Innovation

PRODUCTS & SERVICES

CONSUMER PRODUCTS
1) MUSKUN HOME FINANCING
The MUSKUN Home financing facility is based on the principle of Diminishing Musharakah
and Ijarah. The Diminishing Musharakah transaction is based on Shirkat-ul-Milk where you and
the Bank participate in ownership of a property. The share of the bank is then leased to you on
the basis of Ijarah and is divided into a number of units. It is then agreed that you will buy the
units of the bank periodically, thereby increasing your own share till all the units of the Bank are
purchased by you which will make you the sole owner of the property. Till that time, you pay the
Bank rent for its units leased to you. The rent keeps on decreasing as your ownership in the
property increases and that of the Bank decreases.
2) ISLAMI AUTO IJARAH
BankIslami's Auto Ijarah facility is based on the concept of Ijarah. It is a Shariah compliant
alternative to Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The
Bank requires you to pay a monthly rent for the use of the Vehicle. In this while, the ownership
of the vehicle remains with the Bank, only the rights of use is transferred to you. At the end of
the Ijarah Agreement, you will be given a choice whether to return the vehicle to the Bank and
receive back the security deposit paid by you at the beginning or to purchase it at a price as low
as the security deposit.
RETAIL BANKING
1) ISLAMI CURRENT ACCOUNT
With our Islami Current Account, you can have complete peace of mind that your funds are safe
and utilized in Halal avenues only. Islami Current Account is ideal for customers who have
frequent transaction needs and require unlimited access to their account to meet their personal or
business expenses. Also, you have access to our entire online network of 201 Branches in 80
Cities for convenience of instant and secure intercity transactions. So enjoy full control over your
funds in a Shariah compliant manner.
2) ISLAMI BACHAT ACCOUNT

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Islami Bachat account is a bundle of benefits. It helps you keep up with your tradition of savings
with the convenience and safety of a professional and understanding bank. Also, you earn highly
attractive profits on your savings with the flexibility of making as many transactions on your
account as you want.
Islami Bachat Account is ideal for customers who need to draw money for monthly expenses but
would also like to earn on your hard earned savings. Corporate Employers can also avail this
account to provide convenience, flexibility and halal profits to their employees by opening their
salary accounts with us.
3) ISLAMI MAHANA MUNAFA ACCOUNT
Long term investments yield high returns but delayed profit payment. With our Islami Mahana
Munafa Account you don't compromise on any. Now you can enjoy the freedom of halal monthly
gains for a prosperous present while building your wealth for a secure future. Also, Islami
Mahana Munafa Account will provide you with security, convenience and flexibility of
investment tenure to suit your needs.
4) ISLAMI FOREIGN CURRENCY ACCOUNT
BankIslami Islami Foreign Currency account is ideal for businesses and individuals who would
like to diversify their investment in different currencies to ensure security against currency
fluctuations or want to keep foreign currency account to meet their business needs. Also, you can
have easy access to foreign currency with no hassles of foreign exchange conversion when you
have to travel abroad or remit funds abroad to meet education, leisure or business needs.
5) ISLAMI AMADNI CERTIFICATE
It can earn Halal profit on your investment. With Islami Amadni Certificate, your hard earned
investment work harder to yield high expected profits so you can build your wealth for a
prosperous future. You get the best of both worlds in a safe, secure and flexible package to
perfectly meet your needs.
If you are a salaried individual, a businessperson or a corporate entity with some long term
investment funds to spare, our Islami Amadni certificate is an ideal solution for you. With our
Islami Amadni Certificate, the higher your investment the higher will be your return and that too
in a Shariah compliant manner. Also, you have the flexibility to choose amongst various
investment tenures to suit your personal or business needs.
BANKISLAMI TAKAFUL
Whether you are planning for your childs education, your daughters wedding or your own
retirement, BankIslami provides you golden opportunity to invest, in BankIslami Takaful Plan in
collaboration with Pak-Qatar Family Takaful Limited.
Now you can protect your familys future with BankIslami Takaful plan that is compliant to your
beliefs and principles.
To meet your specific requirements, BankIslami Takaful presents following Takaful plans:

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1. BankIslami Takaful - Asaan Saving Plan

2. BankIslami Takaful - Saving Plan
3. BankIslami Takaful - Single Contribution Plan

CORPORATE BANKING
1) MUDARBAH FINANCE
Mudarabah is a kind of partnership where one partner gives money to another for investing in a
commercial enterprise. The investment comes from the first partner who is called 'Rabb-ul-Maal'
while the management of the business is an exclusive responsibility of the other, who is called
'Mudarib'. The profits generated are shared according to a mutually agreed pre-determined ratio,
whereas, loss is borne by Rabb-ul-Maal unless the loss is due to negligence of Mudarib.
The scope of Mudarabah is broad. Mudarabah can be applied to fulfill project financing needs as
well as working capital financing needs of Corporate Clients. Since Mudarabah transactions are
based on pure profit and loss sharing arrangement, therefore, the risks associated with such
transactions are greater as compared to other financing modes. Due to this reason, Mudarabah
transactions are executed subject to satisfactory review of feasibility of the proposed
transaction/project.
2) MUSHARKA FINANCE
In Musharakah, a joint enterprise is formed for conducting some business in which all partners
share the profit according to a mutually agreed pre-determined ratio, whereas, the loss is shared
in the ratio of capital investment. From Shariah perspective, Musharakah is one of the preferred
modes of financing
The scope of Musharakah is broad. Musharakah can be applied to fulfill project financing needs
as well as working capital financing needs of Corporate Clients. Since Musharakah transactions
are based on pure profit and loss sharing arrangement, therefore, the risks associated with such
transactions are greater as compared to other financing modes. Due to this reason, Musharakah
transactions are executed subject to satisfactory review of feasibility of the proposed
transaction/project.
3) WORKING CAPITAL FINANCE
At BankIsami, we understand that your business needs constant access to low cost and flexible
financing, in order to meet day-to-day funding needs. Team of experienced Relationship
Managers with wide sector experience offers effective cash flow management by way of
financing arrangements suitably structured to ones needs and risk profile.

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Cash is the lifeline of any business. To fulfill your working-capital financing requirements,
BankIslami offers a wide range of products as follows:
Murabahah Financing: Murabahah is a type of sale in which the seller discloses the cost of
goods and profit to the buyer. Through this short-term financing mode, BankIslami can finance
the 'asset-purchase requirement' of the Corporate Customers.
The Customer, intending to utilize the Murabahah facility, identifies the commodities ('assets') it
needs to purchase through Murabahah facility. BankIslami purchases the assets from Supplier
and then sells the same to the Corporate Customer against an agreed price (including disclosed
profit portion) on deferred payment basis.
Istisna Financing: Istisna is a contract of sale of specified items to be manufactured/
constructed, with an obligation on the part of the manufacturer/seller to deliver them to the buyer
upon completion.
Istisna can be used for made-to-order commodities where the buyer (BankIslami) would order a
specific good with some specifications to be manufactured by the Corporate Client in a particular
period of time and deliver to BankIslami after completion.
Salam Financing: Salam is a sale, whereby, the seller undertakes to supply some specific
commodity to the buyer at a future date in exchange for an advanced price fully paid on the spot.
As a matter of principle, the sale of a commodity which is not in the possession of the seller is
unlawful. Thus, the practice of Salam is legalized as an exception and is allowed under certain
terms and conditions.
Salam is allowed for commodities only which are homogeneous and fungible in nature i.e. every
unit of the commodity should be identical and substitutable in nature e.g. sugar, rice, wheat etc.
Therefore, Salam is an ideal mode for financing for agricultural concerns. Salam financing can
also fulfill all working capital requirements of manufacturers/traders dealing in homogeneous
commodities.
4) PROJECT FINANCE
BankIslami offers medium and long-term financing facilities for infrastructure, BMR and
industrial projects in all sectors directly or on syndication basis. more
Ijarah: Ijarah is a contract, whereby, BankIslami will lease out an asset to the Corporate Client
and receive periodical rentals from the Client for the use of that asset. The asset will remain in
the ownership of the Bank throughout the term of Ijarah. At the end of the Ijarah term, the asset
can be purchased by the Client at an agreed price.
Ijarah is mainly used for long and medium term fixed asset financing for infrastructurei and
industrial projects.
Diminishing Musharakah: The product of Diminishing Musharakah is offered on the basis of
'Shirkat-ul-Milk'. Shirkat-ul-Milk means partnership of persons in an undivided property. Process
of Diminishing Musharakah financing involves BankIslami taking share in the ownership of a
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specific asset along with the Corporate Client and then gradual purchase of the Client of
BankIslami's ownership share in the asset throughout the term of Diminishing Musharakah. At
the end of the Diminishing Musharakah term, Client becomes the sole owner of the asset.
Diminishing Musharakah is mainly used for long and medium term fixed asset financing for
infrastructure and industrial projects. Diminishing Musharakah is also an ideal mode for Real
Estate Financing.

5) TRADE SERVICES
BankIslami offers a wide range of export and import services designed to assist you in building
on your strengths, so that your company can seize new business opportunities around the world.
These include:
Bank Guarantee
Services for Exporters
Export Bills for Collection
L/C Advising & Confirmation services
Islamic Export Refinance facility
Financing against Export Sight and Usance Bills (Shariah-compliant alternative
for Bill Discounting)
o Pre-Shipment and Post-Shipment financing on Islamic modes of financing
o
o
o
o
o
o

Services for Importers

o Letter of Credit
o Import Financing (by way of Murabaha/Ijarah)
6) ACCOUNT SERVICES
BankIslami offers all basic banking services to suit your routine business needs.
o
o
o
o
o
o
o

Current Accounts with zero account maintenance fees

Choice of currency-PKR, EURO, USD, GBP & JPY
Transfer of funds with lowest transaction fees
Access to quick and timely foreign exchange services
Access to the entire online branch network 102 Branches in 49 Cities
Unlimited within city and intercity online transactions
Free Deposit and Withdrawal over the counter services at all BankIslami branches

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INVESTMENT BANKING
BankIslami Pakistan Limited takes deep pride in providing Investment Banking to its
valued customers, as its core business, revolving around the concept of Wealth
Management.
Following are the products and services:
Advisory Trusteeship
o Fund Raising
o Corporate Restructuring
o Mergers & Acquisitions
o Infrastructure Development
o Project Financing
Structuring
o Securitizations
o Distressed Assets Sales
o Structured Finance
o Initial Public Offerings
Underwriting
o SUKUKs'
o Equity
o Musharakah Certificates
Trusteeship
o Trusteeship for SUKUKs etc
o Fiduciary Roles in Mutual Funds
Specialized Roles
o Private Equity
o Special Projects
o Ijarah and Musharkah Syndication
HOME REMITTANCE
BankIslami introduces MoneyGram money transfer services. Now you can receive your
money from your loved ones abroad at any BankIslami branch nationwide.
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VALUE ADDED SERVICES

o
o
o
o
o
o
o
o
o
o

SMS Alert Plus

Online Banking
Inter Bank Fund Transfer
Internet Banking
Visa/Debit Card
Biometric ATM
24/7 Phone Banking
eStatement
Self Service Phone Banking
Lockers

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FINANCIAL SUMMARY

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VERTICAL ANALYSIS

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FINANCIAL RATIOS
1. SPREAD RATIO
Profit earned / Profit expense (In Millions) x 100

2015= 8,008/ 4,456 = 1.80 times

2014= 7,812/ 4,459 = 1.75 times
2013=6,289/ 3,790= 1.66 times
Significance:
The Higher this ratio is, the better it would be as this is the core operation.
Spread is the gap between interest rate a bank charges on loans and rate pays on deposits. The amount of
total interest earned divided by the total interest paid to depositors as mentioned in the income statement.

2. NET PROFIT MARGIN RATIO

Total profit Income Total profit Expense / Total Assets x 100

2015= 8,008 4,456 / 106,454 * 100 = 3.34%

2014= 7,812 4,459 / 101,984 * 100 = 3.29%
2013= 6,289 3,790 / 86,856 * 100= 2.88%
Significance:
This ratio actually tells you that how much net profit margin is earned on Total assets.
This ratio indicates the earning capacity through core banking business by utilizing all assets. Banks
normally borrow from savers and lend to investors. It is the ratio between the difference of interest
income and interest expense to total assets.

3. COST OF FUNDS
Profit or Interest Expense / Deposits + Borrowings x 100

2015= 4,456 /75,597+ 1,711 * 100

2014= 4,459/ 73,126+ 561 * 100
2013= 3,790/ 62,548+ 2,538 * 100

= 5.76%
= 6.05%
= 5.82%

Significance:

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This ratio actually tells you that how much you paid on the borrowed funds and deposits. It is actually the
cost of acquiring funds.

4. RETURN ON ASSETS (ROA)

Net profit after Tax / Total Assets * 100

2015= 284 / 106,454 * 100 = 0.27%

2014= 314 / 101,984 * 100 = 0.33%
2013= 185 / 86,856 * 100= 0.23%
Significance:
We actually see total business of bank, this ratio tells that how efficiency bank is using its Assets.
This ratio expresses the capacity of earning profit by a bank on its total assets employed in the business. It
is calculated as percentage of net profit after tax to total assets.

5. RETURN ON EQUITY (ROE)

Net profit after Tax / Owners Equity * 100

2015= 284 / 6,294* 100 = 4.51%

2014= 314 / 6,220 * 100 = 5.35%
2013= 185 / 5,515 * 100= 3.38%
Significance:
This ratio tells that how much sponsors, shareholders are earning.
This ratio expresses the return on shareholders equity. ROE is a direct measure of returns to the
shareholders. It is calculated as a percentage of the net profit after tax to total Shareholders equity. It is
also useful for whole financial sector.

6. OTHER INCOME TO TOTAL INCOME RATIO

OTHER INCOME / TOTAL INCOME * 100

2015= 608 / 4,164* 100 = 14.60%

2014= 632 / 3,985 * 100 = 15.86%
2013= 454 / 2,953 * 100= 15.36%
Significance:
How much income is from core banking services is the part of total income.

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Ratio on incomes earned other than profit earned e.g. capital gains, commission, and fee to total assets
etc. This ratio expresses how much income is earned out of total income other than profit (mark-up)
through other functions of the bank.

7. PROFIT EARNED RATIO

Profit (Interest) expensed / Profit (Interest) earned

2015= 4,456/ 8,008 = 0.56 times

2014= 4,459/ 7,812 = 0.57 times
2013=3,790/ 6,289 = 0.60 times
Significance:
This ratio expresses the payment of interest mainly to depositors. The lower the ratio, the less the
company is burdened by debt expenses.

8. ASSET PERFORMANCE
Pre-provisions operating profit / Total Assets * 100

2015= 476 / 106,454 * 100

2014= 510 / 101,984 * 100
2013= 435/ 86,856 * 100

= .45%
= .50%
= .50%

Significance:
This ratio shows that how much assets contributed towards earning operating profit.

9. EQUITY PERFORMANCE
Pre-provisions operating profit / Equity * 100

2015= 476 / 6,294 * 100

2014= 510 / 6,220 * 100
2013= 435/ 5,515 * 100

= 7.56 %
= 8.20%
= 7.89%

Significance:
This ratio shows that how much equity contributed or performed towards earning operating profit. It also
shows the percentage profit of the equity value.

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10.
NON-INTEREST EXPENSES TO TOTAL INCOME (COST TO
INCOME)
Non interest expenses / Total income * 100

2015= 3,688 / 4,164 * 100

= 88.57%
2014= 3,475 / 3,985 * 100 = 87.20%
2013= 2,518/ 2,953 * 100
= 85.27%
Significance:
The ratio expresses the percentage of non-interest expenses to total income which reflects efficiency of
management in applying the banks resources.
The Cost to Income ratio increased by 2.3% on back of full impact of branch expansion of 60
branches in 2013 and 12 branches in 2014.

11.

TAXES TO PRE-TAX PROFIT

Taxes / Pre-Tax Profit * 100

2015= 156 / 440 * 100

= 35.45%
2014= 156 / 470 * 100
= 33.19%
2013= 123/ 308 * 100 = 39.94%
Significance:
This ratio expresses that how much portion of profit is paid out as taxes.

12.

EQUITY TO TOTAL ASSETS

Equity / Total Assets * 100

2015= 6,295 / 106,454 * 100

2014= 6,220 / 101,984 * 100
2013= 5,515/ 86,856 * 100

= 5.91%
= 6.10%
= 6.35%

Significance:

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This ratio expresses that how much share of the shareholder is in the assets. This ratio used to help
determine how much shareholders would receive in the event of a company-wide liquidation.

13.

ADJUSTED EQUITY TO TOTAL ASSETS

Adjusted Equity / Total Assets * 100

2015= 6,295 + 763 / 106,454 * 100

= 6.63%
2014= 6,220 + 647/ 101,984 * 100 = 6.73%
2013= 5,515 + 727/ 86,856 * 100 = 7.91%
Significance:
This ratio expresses that how share of the shareholder is in the assets. This ratio used to help determi ne
how much shareholders would receive in the event of a company-wide liquidation according to current
surplus or reduced market value.

14.

REVALUATION SURPLUS / ADJUSTED EQUITY

Revaluation Surplus / Adjusted Equity * 100

2015= 763 / 6,295 * 100

2014= 647/ 6,220 * 100
2013= 727/ 5,515 * 100

= 12.12%
= 10.40%
= 13.18%

Significance:
This ratio expresses that how much shareholders gained on the revaluation of assets.

15.

TOTAL DEPOSIT AND OTHER ACCOUNTS TO TOTAL ASSETS

Total deposits and other accounts / Total Assets * 100

2015= 93,368 / 106,454 * 100 = 87.71%

2014= 90,331/ 101,984 * 100 = 88.57%
2013= 75,226/ 86,856 * 100 = 86.61%
Significance:

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The ratio shows what percentage of total assets comprises total deposits and other accounts.

16.

TOTAL LIABILITIES TO TOTAL ASSETS

Total liabilities / total assets * 100

2015= 99,397 / 106,454 * 100 = 93.37%

2014= 95,117/ 101,984 * 100 = 93.27%
2013= 80,613/ 86,856 * 100 = 92.81%
Significance:
The ratio shows the proportion of banks assets, which are financed through debt.

17.

GROSS ADVANCES TO DEPOSITS

Gross advances / deposits * 100

2015= 42,406 / 93,368 * 100

2014= 41,698/ 90,331 * 100
2013= 38,932/ 75,226 * 100

= 45.42%
= 46.16%
= 51.75%

Significance:
The ratio expresses the percentage of gross advances to deposits and expresses the utilization of deposits
in the core business of a bank, i.e., intermediation.

18.

GROSS ADVANCES TO BORROWING AND DEPOSITS

Gross advances / borrowings + deposits * 100

2015= 42,406 / 93,368 + 1,711 * 100

2014= 41,698/ 90,331 + 561 * 100
2013= 38,932/ 75,226 + 2,538 * 100

= 44.60%
= 45.88%
= 50.06%

Significance:
The ratio expresses the percentage of gross advances to deposits and borrowings. This ratio shows activity
of a banking business as it reflects that advances are being made more/less than deposits.
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19.

CASA TO TOTAL DEPOSIT

CASA / Total Deposits * 100

2015= 55,736 / 93,368 * 100

2014= 55,244/ 90,331 * 100
2013= 40,618/ 75,226 * 100

= 59.69%
= 61.16%
= 53.99%

Significance:
A higher CASA ratio means higher portion of the deposits of the bank has come from current and savings
deposit, which is generally a cheaper source of fund.

Significance:
A higher CASA ratio means higher portion of the deposits of the bank has come from current and savings
deposit, which is generally a cheaper source of fund.

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HORIZONTAL ANALYSIS

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SWOT ANALYSIS

Strengths

Second largest branch network among Islamic Banks in Pakistan

Competitive advantage of doing less marketing than conventional banking

Advantage of religious position in a Pakistan

Fulfilled the Paid-up capital requirements of SBP

It works on the ethical and moral values of Islam

Diversified portfolio of Islamic Banking products and services

Pioneer in introducing Islamic Banking in Paksitan

Weaknesses

BankIslami rarely promote its products on electronic media

Lack of Islamic banking products awareness among the general public
Declining investments
Unable to realize full potential of its franchises and infra-structure

Opportunities

Due to increased deposits Bank has the opportunity to expand its network in remote areas.

Due to increasing trend in profits, BOP has opportunity to introduce new schemes to capture more
market share. Also banks investment opportunities are also increased.
Having recently acquired KASB Bank and moving towards fulfilling SBP Paid-up capital
requirements, bank has the opportunity to increase the deposit base and profitability by expanding
their products and services to the peoples.

Threats

Economic instability
Political instability

Increasing Competition in Islamic Banking Sector

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RECOMMENDATIONS & SUGGESTIONS

BankIslami should invest more for creating more revenue streams since Investments have decreased in

the period
Bank should work on the collection of due amounts from other financial institutions

Bank should work on a good marketing concept, advertising strategy, promotional activities
Bank should improve its Performance Appraisal System and hiring must be done on merit

Recently acquired KASB Bank, BankIslami need to train existing workforce and hire new resource.

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APPENDIX

(Figure-1)

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