INTERNSHIP REPORT ON FAYSAL BANK LIMITED

Muhammad Waqar Ahmad

Submitted In Partial Fulfillment of the Requirement for the Degree Of

Master of Business Administration.

At

Department Of Management Sciences

National University of Modern Languages

Islamabad Campus

December 2010

i
 National University of Modern Languages

Faculty of Information Technology and Management Sciences

It is hereby certified that the report has been thoroughly and carefully read and

recommended to the faculty of Management Sciences for acceptance of “Internship

Report on Faysal Bank Limited” by Roll No 10676, Muhammad Waqar Ahmad,

Session (JAN 2009 to DEC 2010) Morning, in partial fulfillment of the requirements

for the degree of Master in Business Administration at National University of Modern

Languages Islamabad.

Dated: ______________________________

Supervisor: ______________________________

Observers: ______________________________

Head of Department: ______________________________

ii
 Dedication

I dedicate this effort and work to Almighty ALLAH, the holy prophet Muhammad

(P.B.U.H), the great educationist of mankind my parents who always been there with

me through thick and thin, praying for me all the time and believing in me.

iii
 Acknowledgement

“_And if all the trees in the earth were pens and the sea with more seas to help it,

(were ink) the words of ALLAH could not be exhausted. Lo! ALLAH is very wise

“.

(AL_QURAN).

In the name of Allah, Who is most beneficent and merciful? I am though his boundless

and infinite mercy that I have been able to complete my report. I invoke peace for

Hazarat Muhammad (peace be upon him) the last prophet of Allah, who is forever a

Torch of guidance for a whole world.

I wish to acknowledge my beloved parents who pray for me in every step of my life and

faced many difficulties in my upbringing. I also thanks to my teachers who help me in

developing my report, and special thanks to all others who have guided me in the

completion of my report.

Finally, I am very pleased with Allah, Who always lived with me and helped me in

every stage of laying down this report.

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 Executive Summary

Being student of MBA-Finance, I opted FAYSAL BANK, a locally incorporated

commercial bank, prepare Internship Report on its banking business, products,

processes, policies, controls, compliance, and worked in General Banking /Operations,

Corporate Banking Group, SME Group, Trade Operations Department and Credit

Administration Department. During my 6-Week stay in d-ground Branch Faisalabad, I

observed processes in all departments, read their manuals & policies, performed

assignments on test basis and viewed all critically in perspective of my subjects in

MBA. The report also contains observation and critical analysis made on different

departments, its functioning, policies & documents and recommendation.

Faysal Bank Limited (Faysal Bank) is a Pakistan based banking institution. The bank is

principally engaged in providing consumer, corporate and investment banking services

to its customers. The bank offers a wide range of consumer banking products and

services, which include deposit accounts, car loans, home loans and other consumer

loans. Corporate banking division of the bank provides finance to corporate customers,

small and medium sized businesses, agricultures and traders. It also provides treasury

and capital market services and cash management services to its customers.

Global Markets Directs Faysal Bank Limited - Financial Analysis Review is an in-

depth business, financial analysis of Faysal Bank Limited. The report provides a

comprehensive insight into the company, including business structure and operations,

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executive biographies and key competitors. The hallmark of the report is the detailed

financial ratios of the company.

Provides key company information for business intelligence needs. The report contains

critical company information ' business structure and operations, the company history,

major products and services, key competitors, key employees and executive

biographies, different locations and important subsidiaries. The report provides detailed

financial ratios for the past three years. Financial ratios include profitability, margins

and returns, liquidity and leverage, financial position and efficiency ratios.

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TABLE OF CONTENTS

vii
 Contents Page no
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Chapter No 1: Introduction 1
1.0 Definition of bank 2
1.1 Evaluation of banking 2
1.2 Introduction about banking sector 3
1.3 Types of bank 4
1.4 Modern banking 6
1.5 Islamic banking 7
1.6 Islamic financing 7
1.7 Three form of financing 8

Chapter No 2: Introduction Of Faysal Bank 10

2.0 History of faysal bank 11
2.1 Introduction of faysal bank 11
2.2 Group information 12
2.3 Capital and ownership 12
- Vision statement 13
- Mission statement 13
2.4 Opening doors to limitless possibilities 14
2.5 Our values 14

Chapter No 3 : Business Structure And Strategy 16

3.0 Board of directors 17
3.1 Organ Gram of Faysal Bank Limited 18
3.2 Product and services 19
Chapter No 4 : Customer Services Department 21
4.0 Requirements for Opening And Closing of Account 22

4.1 Procedure of opening an account 1 22

4.2 Closing of account 24

4.3 Required procedure for opening an account 25

 Chapter No 1

Introduction

1.0 Definition of Bank

2
 (1) “Banks do business of money. Rather banks do business of lending and

borrowing loans.”

(2) “Banks are guardian distributor of cash money”.

(3) “Banker or a bank or a person or company carrying on the business

receiving moneys and collecting drafts for customers subject to the obligation of

honoring cheques drawn upon them from time to time by the customer to the

extent of the amount available on their current accounts”.

1.1 Evaluation of Banking

It has not so far been decided as to how the word ‘bank’ originated. Some authors opine

that this word is derived from the word ‘bancues’ or ‘banque’ which mean a bench. The

explanation of this origin is attributed to the fact that the Jews in Lombardy transacted

the business of money exchange on benches in the market place and hewn the business

failed; the ‘banco’ was destroyed by the people incidentally. the word ‘bankrupt’ is said

to have been evolved from this practice the opponents oh this opinion argue that if it

was so, then how is it that the Italians money changer were never called ‘Banchierei’ in

the middle ages?

Other authorities hold the opinion that the word ‘bank’ in derived from the German

word ‘back’ which means ‘joint stock fund’ latter on when the Germans occupied

major part of Italy the word ‘back’ was Italianized into ‘bank’.

It is therefore not possible to decide as to which of the opinions is correct, for no record

is available to ascertain the validity of any of the opinions.

3
1.2 Introduction about Banking Sector

Banking is the business of providing financial services to consumers and businesses.

The basic services a bank provides are checking accounts, which can be used like

money to make payments and purchase goods and services; savings accounts and time

deposits that can be used to save money for future use; loans that consumers and

businesses can use to purchase goods and services; and basic cash management services

such as check cashing and foreign currency exchange. Four types of banks specialize in

offering these basic banking services: commercial banks, savings and loan associations,

Savings banks and credit unions.

“Establishment authorized by a government to accept deposits, pay interest, clear

checks, make loans, act as an intermediary in financial transactions and provide

other financial services to its customer”.

“A broader definition of a bank is any financial institution that receives, collects,

transfers, pays, exchanges, lends, invests, or safeguards money for its customers”.

This broader definition includes many other financial institutions that are not usually

thought of as banks but which nevertheless provide one or more of these broadly

defined banking services. These institutions include finance companies, investment

companies, investment banks, insurance companies, pension funds, security brokers

and dealers, mortgage companies, and real estate investment trusts.

4
1.3 Types of Banks

Primarily all banks gather temporarily idle money for the purpose of lending to other

and investment gain in the form of return, profits and dividends etc. however, due to the

verity of resources of money and the diversity in lending and investment operations,

banks have been place in various categories, such as

 Commercial Bank

 Savings Bank

 Merchant Banks

 Mortgage Banks

 Consumer Bank

 Investment Bank

 Central Bank

a) Commercial Bank

The commercial banks received deposits from the public, which are repayable on

demand upon written orders of the depositors. As their most distinctive feature the

commercial banks maintain the checking accounts for the constitutions.

Te commercial banks are also distinguished for providing short-term finance to trade,

commerce and industry to enable these sectors to expand their productive activities

b) Merchant Banks

5
Merchant banks are those, which have been mainly financing the domestic and

international trade. During the late 18th and early 19th centuries the trade between

countries was financed by bill of exchange by well-reputed merchant’s houses for

which they would charges a commission for their services

c) Savings Banks

The basic purpose of these banks is to inculcate the habit of saving in the people the

savings banks deposits are not repayable upon only the written order of depositor but

the depositor of his agent has to appear personally at the saving banks to make

withdrawal and for this purpose he must present a pass book a certificate of deposit or

some similar documents to prove his right to receive his payments. Post office savings

banks and savings accounts at national saving organizations are well known national

saving banks in Pakistan.

d) Mortgage Banks

These banks mainly deal in loans for acquisition or construction of real estate against

the securities of mortgage.

e) Consumer Banks

These banks providing finance for purchasing consumption goods for the use of

Brewers

f) Investment Banks

6
These banks assists business houses and governmental bodies to raise money through

the sale of stocks and bond for usually long term purposes these banks perform the

usual functions of raising deposits of idle money from the public and finance the

business houses other bodies.

g) Central Banks

Central banks occupy the unique position in banking structure of a country because

they have been interested with the responsibility of controlling the money supply,

interest rate, and financial market of a country for the purpose of economic

development.

1.4 Modern Banking

Banking in its modern form and structure stared in Britain when many of the Lombardy

merchants came to England in the fourteenth century and settled in the parts of the city

of the London now called Lombard Street.

The king Edward –III established the Office of Royal Exchanger for changing foreign

money at a profit for the benefit of the Crown.

In 1854, the joint Stock Companies Act opened an era of corporations; and the Limited

Liability Act, 1855, restricted the liability of the shareholder of the limited company.

1.5 Islamic Banking

7
Islamic banks appeared on the world scene as active players over two decades ago. But

"many of the principles upon which Islamic banking is based have been commonly

accepted all over the world, for centuries rather than decades".

Roughly, 20% of the world's population is Islamic. While some in the Western world

think this population is only in the Middle East, the religion is truly global from the

Middle East, to Afghanistan, to the US, to Indonesia, and every where in between.

Attention to Islamic finance obviously accelerated since 9-11, but it is worthy to note

that an Islamic finance meeting was actually scheduled for 9-12 in the WTC and that

the Islamic Finance movement was already growing very rapidly. According to

estimates in the Wall Street Journal Islamic finance is roughly a $150 billion dollar

market.

a) Sharia

An Islamic Economy is an economy that is regulated by a set of rules based on outlines

set by the Islamic “Sharia”

Sharia is the set of guidelines mentioned in the Quraan.

1.6 Islamic Financing

Is a concept that emerged in scientific manners in the second half of the past century?

With the expanding role that the banking system and money handling, many Muslim

communities were faced with a problem over the concept of INTEREST.

In Islamic Sharia, there is a straightforward and definite rule that has to be obeyed, i.e.

NO “RIBA”.

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a) Riba

By Definition, Riba is an Arabic word that literally means “extra”

In regards to Islamic Sharia, Riba means the lending of money for a specific time where

upon the lender receives his money with an EXTRA amount agreed upon. It was what

most people in finance call interest.

b) Banks with No Interest

A bank that neither charges nor pays an interest is an intriguing concept. Especially if

we consider the existing (and dominate), global banking system (that is interwoven

with all the daily aspects of our life) is based on interest.

1.7 Three forms of financing

• Modarba (Participation Financing)

• Morabaha (Financing Resale of Goods)

• Ijara (Lease financing)

i. Modarba

Modarba (Participation Financing) falls under three categories

• Demand Deposits

• Mutual Investment Deposits

• Special Investment Deposits

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ii. Morabaha

Another form of a relationship between a customer and an Islamic bank is that of buyer

and seller. This contract is known as ‘Morabaha’ (Financing Resale of Goods).

The bank buys goods or products from its owner directly on the request of the customer

and then resells it to the customer, at a selling price higher than the purchase price. The

customer then pays any consideration to the goods he purchased on an installment

basis, as per an agreed repayment schedule.

iii. Ijara

The third method, or ‘Ijara’ (leasing), requires an Islamic bank to purchase equipment

and lease them to the customer for a specific period. At the end, in most cases, the Bank

will transfer the title to the customer either by executing a sale agreement for a normal

value or by way of donations.

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 Chapter No 2

Introduction of Faysal Bank Limited

11
2.0 History of Faysal Bank

Faysal Bank started operations in Pakistan in 1987, first as a branch set-up of Faysal

Islamic Bank of Bahrain and then in 1995 as a locally incorporated Pakistani bank

under the present name of Faysal Bank Limited. On January 1, 2002, Al Faysal

Investment Bank Limited, another group entity in Pakistan, merged into Faysal Bank

Limited, which resulted in a larger, stronger and much more versatile institution. In

fact, it has the highest share capital amongst private banks in Pakistan and is amongst

the largest in terms of equity.

2.1 Introduction of Faysal Bank

Faysal Bank Limited is a full service banking institution offering consumer, corporate

and investment banking facilities to its customers. The Bank’s widespread and growing

network of branches in the four provinces of the country and Axed Kashmir, together

with its corporate offices in major cities, provides efficient services in an effective

manner.

The strength and stability of Faysal Bank Limited is evident through the Credit Rating

assigned by JCR-VIS Credit Rating Company Limited of “AA” (Double A) for long to

Medium term and “A-1+” (A One Plus) for short term. Ithmaar Bank B.S.C an

investment bank listed in Bahrain holds the majority share holding of Faysal Bank

Limited.

12
2.2 Group Information

Ithmaar Bank B.S.C. is licensed by the Central Bank of Bahrain and listed on the

Bahrain Stock Exchange (ITHMR). It has a paid-up capital of US$360 million, total

equity of US$1.1 billion and is a full investment bank with its direct business covering

the Middle East and North Africa (MENA) region, as well as South Asia, Asia-Pacific

and Europe. Besides holding significant investments in the banking, financial services

and real estate sectors in different markets, the main activities of the Bank include

underwriting (equity and other financings), private equity (structuring, participation and

portfolio management), Islamic financing, private banking, and advisory services

covering project financing, investments, capital markets and mergers & acquisitions.

2.3 Capital and Ownership

Ithmaar Bank B.S.C, an investment Bank in Bahrain is the ultimate holding company of

Faysal Bank. The remaining shareholders comprise of public, NIT and other Pakistani

institutions.

13
 Vision statement

To be the bank of first choice with the highest ethical principles as our guiding

force.

Mission Statement
14
 To excel in providing innovative, value based banking solutions to meet changing

needs of customers and to strengthen the image of trust and reliability.

2.6 Opening Doors to Limitless Possibilities

The bank open door to limitless possibilities for their stakeholders by providing

banking solutions that deliver results through meticulous planning, focus on specific

objectives, setting priorities right, and putting in place strategies and processes that help

yield better growth with higher return.

2.7 Our Values

a) Integrity

15
The bank will hold fast to the highest standards of ethical conduct to meet their

commitments to their customers, employees and shareholders. Above all, bank will

hold true to their persona commitment and conviction to the truth.

Our Integrity: Our Identity

b) Corporate Governance

The bank goal is to respond a rapidly changing business environment in a timely

manner to improve corporate citizenship and transparency by reinforcing their ethical

standards and building a relationship of trust with customers and stakeholders.

c) Corporate Social Responsibility

The bank believes that the highest standards of engagement must not be only with their

stakeholders, employees or customers but also within the community in which bank

work and live. The bank abides by the laws of Pakistan in which they do business, bank

strives to be a good corporate citizen and take full responsibility of all their actions.

d) Teamwork

As a team, the bank plays to win from the smallest unit to the enterprise as a whole.

The bank achieve far more as a team than as individuals.

Our Team: Our Assets

e) Respect

16
The bank appreciate their diversity and believe that respect for their employees,

customers, stakeholders, and all those with whom the bank interact are an essential

element of all positive and productive business relationships. The bank treat everyone

as he wish to be treated with dignity and respect.

Our Respect: Our Values

17
 Chapter No 3

Business Structure and Strategy

3.0 Board of Directors

Syed Naseem Ahmad Chairman

Naved A. Khan President & Chief Executive Officer
Graham Roderick Walker Director
Mohamed A.R. Hussain Director
Mohammad A. Rahman Bucheerei Director
Farooq Rahmatullah Director
Tariq Iqbal Khan Director
Shahid Ahmad Director

18
 • Organizational chat

Chairman

Secretary
of the
Board

Director Director
CEOB
(Govt. (Govt.
Director Director Director (Member)
Nominated) Nominated)
CHIEF MANAGER /
BRANCH MANAGER

3.1 Organ am Gram of Faysal Bank Limited

Manger
Manger
Operation Credit manager
Credits
s

Accounts
Departme Imports Leasing
nt Departme Departme
nt nt
Cash
Departme
nt Exports Home finance
Departmen Department
t
Account opening
Department Car
finance
Foreign Exchange Departmen
Department t
Debit Card
Departmen
t Credit card
Department
19

Marketing
Clearing Internal Audit
Departmen
Department Department
t
3.2 Products and Services

The bank is progressive and striving to offer innovative products, easy accessibility,

quality service & convenience to our customers. The bank offer customized financing

solutions with flexible criteria and convenient loan tenures. Customer can avail car,

home and personal loans through our various branches. The bank also offers a host of

Corporate & Investment Banking Services to our clients, which include financial and

corporate advisory services, along with a wide array of tools to help them achieve their

goals.

a) Deposit Accounts Consumer Loans

20
Faysal Savings Account Car Finance

Rozana Munafa plus Account House Finance

Basic Banking Account Faysal Finance

Faysal Moavin

Faysal Premium

Faysal Izafa

Mahfooz Sarmaya

FCY Saving Plus

b) Corporate & Investment Banking Services

Corporate Financing Pocket Mate Visa Debit Card

SME Finance Travelers Cheques

Trade Financing Transfer of Funds

Treasury & Capital Markets Safe Deposit Lockers

Investment Banking Non-stop Banking

Cash Management

21
Chapter No 4
22
 Customer Services Department

4.0 Requirements for Opening and Closing of Account

a) Terms and Conditions

Account opening requires things:

• National ID card of the customer and introducer

• Introducer

• Visiting card or employment certificate.

23
b) Customer

Customer is the person who comes with the purpose of opening the account

c) Introducer

Introducer is a person having the account in same branch and gives guarantee about the

customer. If the introducer is not proper than state bank charges RS 5000/- per head

from that employee of the bank who has opened the account of the customer on the

request of the introducer.

4.1 Procedure of opening an account

First of all, the customer is required to fill an application form. Then customer attaches

the photocopy of his identity card and fills the signatory cards. Now customer fills the

pay-in slip and deposits money on the counter. Bank allotted an account number within

one day after confirming from the head office, which is at Mall road Lahore. Now

customer fills the pay-in slip and deposits money on the counter.

Following things are needed for opening of account

• Account opening form

• Specimen Signature card

• Next of kin

• Letter of thanks

• Issuances of cheque book

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a) Account Opening Form

Account opening form consist of

• Category of account

• Currency

• Title of account

• Account number

• Customer information

• Initial deposit

• Authorized person in case of customer death

b) Specimen Signature Card

The signature card included the name and specimen signature of the customer.

c) Next of Kin

In the next of kin, the customer authorized the bank to pay the proceedings of his/her

PLS/Current foreign currency account to the related person by describing the

relationship of the person with the customer after the death of the customer.

d) Letter of Thanks

Letter of thanks is the latter issued by the bank to the customer for two purposes
25
 • 1st purpose is to say thanks to the customer for opening the account in their bank

• 2nd purpose is to confirm the address provided by the customer while opening

the account.

e) Issuance of Cheque Book

Chequebook is issued to the customer after sending the letter of thanks when the

customer comes with the letter of thanks and requests for the issuance of the

chequebook. A chequebook (usually having 25 leaves) is issued to the customer.

4.2 Closing of Account

The customer can close the account. The customer is required to submit an application

for closing the account. The account is closed out and his balance is paid to him after

deducting the closing charges.

There are many reasons for closing of account

• Account holder Own request

• Death of account holder

• Closing of account due to the bad manners of account holder

4.3 Required Procedure for Opening an Account

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First of all, the customer gets an application from the bank, which requires all

information necessary for opening account and the documents required. An account

can be opened as:

1) An individual account

2) Joint account

3) Proprietorship account

4) Limited company account

5) Partnership

6) Club, society, association and trust

a) Information Required By The Bank

• Name

• Address

• Telephone No.

• Currency of Account

• Nature of Business

• Country of Residency

• Special instructions regarding the account

• Signatures

b) Documentation In Case Of Limited Company Accounts

• Photocopy of National Identity Card of each director

27
 • Application form

• Copy of company’s memorandum and articles of association

• List of directors

• Copy of board resolution

• Certificate of incorporation

• Their signature cards

• Certificate to commence business

c) Documentation In Case Of Partnership Account

• Application form

• A copy of partnership deed

• Signature cards of partners

• Registration certificate copy

• A copy of National Identity Card of each partner

d) Documentation In Case Of Club, Society, Association Or Trust

• Application form

• Copy of rules

• Certified copy of resolution

• Signature cards

28
When the concerned officer is satisfied then he opens the account and gives an account

number that will be used in all communications with the bank concerning the account

and when making deposits and withdrawals.

Bank has the right not to open an account without assigning any reason or to close the

account if it is not operated in a satisfactory manner by the instructions of the head

office.

4.4 Payment of Foreign Money

a) Western Union Money Transfer

Western union money transfer is a fastest way to receive money worldwide. It is

working in almost 200 countries. Different Govt and private organization are dealing

with WUMT; Govt organization e.g. banks Private organizations e.g. Zarco,

Moneychanger, Dollar East, Master Currency

Main office of WUMT is situated in Dubai; it is a procedure of counter payment

b) Procedure of Payment

WUMT just needed identification, no need of a/c, it is a counter payment.

Procedure of payment is that the customer came to specific person who is dealing with

WUMT tell him the

1) MTC NO

2) Receiver name

• First name
29
 • Middle name

• Last name

3) Sender name

• First name

• Middle name

• Last name

4) Telephone no

5) Photo copy of ID card

6) Expected amount

7) Test question

After if the that related officer feed MTC # (mail transfer control) , it is unique number

not less then 10 digits, receiver name , customer 1st name and last name, and sender

name to check whether amount is come or not . When all these things are correct then

give a form to the receiver, customer filled the specific form, after that office done his

signature and give one copy to customer, other copy send to the cash counter for

payment and the last copy for put in file for the purpose of record. Payment is made

only in Pak rupees.

c) WUMT Form

It form is divided into three sections

• 1st for receiver information, his name, address and telephone number

• 2nd section for sender, his name, address telephone number

• 3rd section is for expected amount, MTC number, test question, signature
30
There are three copies of form 1st for counter payment, 2nd for customer and 3rd for

branch record.

d) FBL Lockers

There are four types of Lockers

• Small

• Medium

• Large

• Extra large

• However, RahimYar khan branch of FBL is providing only first three types.

• Charges for various Lockers:

• For Small Locker-----------Rs.1200 per annum

• For Medium Locker--------Rs.1750 per annum

• For Large Locker-----------Rs.3500 per annum

• Despite these annual charges client pays non-refundable fee of Rs. 1500 for

availing locker service in FBL.

 Formalities

• A SS card (signature Specimen card) is also required to be filled.

• Another form is also to be filled on which client’s signature and other

authorized person (mentioned by the client himself) on the client’s locker is

mentioned.

 Insurance For Lockers

31
 • Range of insurance for various lockers is as followed:

• For Small Locker-----------Rs.500000

• For Medium Locker--------Rs.800000

• For Large Locker-----------Rs.1000000

e) Foreign Demand Draft

Foreign Demand draft is also known as FDD. A person who wishes to remit money to

someone in another place may if customer does not send his own cheque, obtain from

his bank a draft on demand payable to the person who is to be paid the money. It may

be drawn upon one of the banker’s own branches, or upon some other bank where

exists for draft to be drawn. Whenever a draft is drawn, own advice is dispatches the

same day. Advising the bank or branch as the case may be, of the particular of the draft

of that banker on whom it is drawn may recognize the draft was it is presented.

When a customer requires a draft, he should be asked to complete the prescribed

application form, in which he should state the amount of the draft, the name of the

payee and the place of payment. The bank charges are 750 for each demand draft.

4.5 Types of Accounts

a) Current Accounts

Faysal Sahulat (Pak Rupee Current Account)

32
Faysal Sahulat is a transactional account specially designed for individuals or business

customers who want instant access to their funds with no restrictions on the number of

transaction.

Features

• Account can be opened with an initial deposit of Rs. 5,000.

• Unlimited transaction facilities.

• On maintaining an average balance of Rs. 300,000, following additional facilities

are provided.

1. Unlimited cash deposit facility

2. One small locker and one ATM free.

3. 365 pay orders, 365 Demand Drafts, 365 cheque leaves per year free.

• Access to account through on-line banking at all Faysal Bank branches across

Pakistan.

b) Basic Banking Account

As per SBP prudential communicated via BPD circular No.30, Faysal Bank has

introduced the Basic Banking Account (BBA) to cater the needs of low income groups

having the following features.

Features

• Account can be opened with Rs. 1000/.

• No requirement for maintaining a minimum balance

• Maximum of two free deposits and withdrawals are allowed in a month.

33
 • Free of charge statement of account for customers once a year. In case more

statements are required than, standard charges would be applicable.

• Free ATM transactions on Faysal Bank ATM machines. However charges would

apply on non Faysal Bank ATM machines as per SOC

c) Saving accounts

Faysal Savings

Faysal Savings is specially designed to cater to your hard-earned savings.

Features

• Account can be opened with an initial deposit of Rs. 10,000/.

• No restriction on the number of transactions.

• Profit is calculated on monthly average balance.

• Profit payment on six monthly bases.

• Access to account through on-line banking at all Faysal Bank branches across

Pakistan.

d) Rozana Munafa Plus

To provide the best possible returns for individual, corporate and business customers,

the Rozana Munafa plus Account offers you the opportunity to earn profit every day

and get your profit month.

Features

34
 • Account can be opened with an initial deposit of Rs. 100,000/ for

individuals and Rs. 500,000/ for corporate customers.

• Profit is calculated on monthly average balance.

• Profit payment on monthly basis.

• Tiered profit structure providing an incentive to save more.

• Access to account through on-line banking at all Faysal Bank branches across

Pakistan.

e) Faysal Premium

Faysal Premium is a savings account specially designed for high value deposits with

attractive profit rates having the following features.

Features

• Account can be opened with an initial deposit of Rs. 5 million

• Profit is calculated on monthly average balance.

• Profit payment on monthly basis.

• Tiered profit structure providing an incentive to save more.

• Access to account through on-line banking at all Faysal Bank branches across

Pakistan.

f) Faysal Moavin Savings Account

Faysal Moavin is a Savings account made for genuine individual savers like you.

Faysal Moavin offers the perfect combination of savings account matched with the

flexibility of a current account.

35
Features

• No minimum balance requirement.

• No restriction on the number of transactions.

• Profit is calculated on monthly average balance.

• Profit payment on monthly basis.

• Tiered profit structure providing an incentive to save more.

• Access to account through on-line banking at all Faysal Bank branches across

the counter.

• Easy access through chequebook an ATM/Debit card. The ATM/Debit card can

be used at over 2000 ATMs in the country.

g) Term Deposit

Faysal Izafa

At Faysal Bank, the bank realizes that every customer’s financial needs are different.

As a result, the Faysal Izafa Term Deposit is designed to provide individuals and

corporate customers an opportunity to grow their money securely and earn attractive

profits.

Features

• Account can be opened with an investment as low as Rs. 25,000/.

• Tenure from one year to five years.

• Annual and monthly option available.

• Financing facility of up to 90% of invested amount.

36
 • No annual fee for the ATM/ Debit card for the entire tenure.

• First cheque book on investment of Rs. 300,000/ or more.

h) Foreign Currency Account

Faysal Mahfooz Sarmaya

Faysal Bank endeavors to build and strengthen customer relationships by providing

innovative banking products and services. To provide convenience and value to

customers with foreign currency related needs, Faysal Bank’s Mahfooz Sarmaya

foreign currency account offers attractive features:

Features

• Account can be opened in three major international currencies: US Dollars,

Pound Sterling and Euro.

• Minimum balance for opening Mahfooz Sarmaya Foreign Currency Account is

1000 units of the currency in which the account is opened.

• Account can be opened in any of the following types:

• Savings Account

• Term Deposit Account

I) Current Account

With Mahfooz Sarmaya Account, customer become eligible for Pak Rupee financing

facility of up to 75 percent of the deposit in your account at very competitive financing

37
rate. With Mahfooz Sarmaya Account, customer automatically qualifies for special

rates for car and home financing.

j) FCY Saving Plus

FCY Saving Plus is a new foreign currency savings account with attractive profit rates

where customers get their profit on a monthly basis.

Features

• Account can be opened in US Dollars, Pound Sterling and Euro currency.

• Minimum balance for opening FCY Saving Plus is 500 units of the currency.

• Profit is calculated on monthly average balance.

• Profit is disbursed on monthly basis.

• Tiered profit structure providing an incentive to save more.

• No FCY cash deposit charges

On maintaining the monthly average balance equivalent to USD 50k or above, the

following additional facilities are provided.

• Free online banking

• Priority Banking

• Borrowing in PKR up to 90% of FCY

• Preferential rates on consumer finance

38
Chapter No 5

Services

39
a) Pocket Mate (Visa Debit Card)

Combining the wide acceptability of a credit card and the thoughtful prudence of an

ATM card, Faysal Bank Pocket Mate is the most convenient way to carry cash. No

more, fear of overspending. No more searching for the nearest ATM. Pocket Mate Visa

Debit Card provides you with the freedom of world wide acceptability at over 27

million merchant outlets as an ATM card operative at all ATMs in Pakistan plus at over

1 Million ATMs worldwide bearing VISA logo.

Debit Card vs. Credit Card

b) Better Control on Expenses

Pocket Mate Visa Debit Card gives customer a much better control over their finances.

In credit cards, there is a risk of spending more than the repayment capacity. There are

no such issues with Pocket Mate as the amount is directly debited from the bank

account and there are no chances of overspending. All Pocket Mate transactions are

40
subject to authorization, which means whenever you do a transaction the status of your

account is checked.

c) No Monthly Installments

Since with Pocket Mate customer are using his own funds there is no risk of over

spending or any worries to pay monthly bill on time.

d) No Minimum Income Requirement

Unlike Credit Cards, the Pocket Mate is easy to obtain. There is no preset income

requirement to enjoy the benefits of this fast, convenient and safe debit card. All you

need to do is open and maintain an account with any of the branches of Faysal Bank.

e) Product Features

• Worldwide Acceptance

Travel the world and enjoy the freedom of using Pocket Mate Visa Debit Card. It gives

customer to access over 27 million shops and 1 million Visa ATMs all over the world,

giving the customer freedom of payment anywhere in the world.

• Countrywide Acceptance

41
The Pocket Mate Visa Debit Card is accepted at over 40,000 merchant establishments

in Pakistan i.e. restaurants, department stores, grocery stores, petrol pumps, etc.

Besides, you can use it conveniently at more than 2,000 ATMs all over Pakistan.

• Maximum Security

The Pocket Mate Visa Debit Card contains additional security features; it can only be

used ‘Electronically’, which means lesser probability of fraudulent attempts on the

card.

• Easy Traveling

The Pocket Mate Visa Debit Card saves from carrying cash or writing cheques. It

means customers no longer have to stock up on traveler’s cheques or cash when they

travel.

f) 24-Hour Customer Service

Bank 24-Hours Customer Service is there to help customer requests. Our well-trained

and qualified Customer Service team will assist in answering the customer queries,

registering and resolving complaints, reporting a lost or stolen card and activating

customer card.

42
g) Overview of Expenses

Each single charge and each withdrawal of cash at ATM made using the Pocket Mate

shall be clearly itemized on customer bank statement enabling to easily check the status

of his account.

h) Three Supplementary Cards

The Pocket Mate also gives customer the facility of having up to three supplementary

cards issued against one primary card. All supplementary cardholders will be able to

conduct ATM or Debit transactions within the limits of the primary card account.

I) Lost Card Protection

Card is safer than cash! Feel safe even in the event of losing card! All customer need to

do is to call bank 24-hour Customer Care, and a new card would be issued to him

within a week. Customer is protected from any financial liability arising from any

purchase transaction made on his lost card after it has been reported lost.

j) How to Apply

Existing Faysal Bank Debit Card holders have to fill a simple application form to

obtain Pocket Mate. Existing account holders not possessing any card presently can

also apply for Pocket Mate by submitting the application form. To be a part of Pocket

Mate family, customer must have a current or saving account at Faysal Bank.

k) Delivery of Pocket Mate

43
The Pocket Mate will be delivered to bank branch within 5-7 days of customer

application submission.

l) Travelers Cheque

Customer may purchase American Express, US Dollar and Pound Sterling Travelers

Cheques at selected branches of Faysal Bank.

m) Transfer of Funds

Customer can deposit and withdraw cash from any branch of Faysal Bank, regardless of

which branch the customer account is in. customer need only to carry his Cheque Book.

n) Western Union Service

Customers who receive money transfers from overseas through the Western Union

service can now withdraw their funds through any Faysal Bank branch.

o) Safe Deposit Lockers

At Faysal Bank, bank offer their customers Safe Deposit Lockers in a pleasant and

secure environment. All lockers are discretely placed within the Bank’s professionally

guarded premises. Lockers are available in three different sizes to suit individual

customer needs at reasonable rentals. Faysal Bank also offers an added insurance

feature with locker.

p) Non Stop Banking

44
All branches of Faysal Bank remain open for business from 9 a.m. to 5 p.m. from

Monday to Thursday and Saturday. On Friday, the bank is open from 9 a.m. to 12.30

p.m. and then again from 3 p.m. to 5 p.m. To suit customer needs, bank have extended

our banking hours on Saturdays. Now customer can enjoy bank consistent and quality

service from 9 a.m. to 5 p.m.

45
 Chapter No 6

Faysal Financing Department

6.0 Financing Department of Faysal Bank

• Faysal Car Finance

• Faysal Home Finance

• Consumer Loan

a) Faysal Car Finance

46
Faysal Car Finance is the most flexible product designed to meet customer needs.

 Features

• Car financing for locally manufactured new and used cars and imported cars.

• Car Financing up to five years

• Down payment only 20% of the car value

• Minimum documentation charges.

• Fast processing.

• Option to prematurely terminate the facility.

 Eligibility

Now customer can swiftly, easily and cost effectively owns a car if you are:

• A Pakistani National holding the New Computerized Identity Card (NADRA)

• Minimum 20 years of age at the time of financing.

• A resident of Karachi, Quetta, Hyderabad, Lahore, Faisalabad, Multan, Sialkot,

Gujranwala, Bahawalpur, Rawalpindi, Islamabad, Peshawar, Mirpur (AK),

Gujarat or Gujjar Khan.

• A Businessman or Self-Employed with a minimum of one year experience in

the same business and profession.

• A Salaried person with at least two years employment history.

b) Housing Finance

47
Faysal Housing Finance gives customer more than great financing rates. Bank help

customer all the way to make his next move in an easy and timely manner. Whether

customer want to build a new home or are in a hurry to move into a ready built house or

just want to renovate his existing home or even transfer his existing expensive

mortgage finance balance, it is time to come to bank for help and advice. Bank offer to

customer the following

 Housing Finance Packages

• Buy a Home

• Build a House

• Home Renovation

• Balance Transfer Facility

 Features

• Flexible repayment options

• Option to partially or fully terminate the facility.

• Financing tenor up to 20 years!

• Fast processing.

• Minimum processing charges

• Enhancement option available

• Financing available up to 80% of the market value of the property.

 Eligibility

48
A Pakistani Resident and National holding the New Computerized Identity Card

(NADRA) or Non-Resident Pakistani holding a NICOP.

• Aged between 25 to 60 years if customer is a salaried person and of 65 years if

customer is in business.

• In continuous employment for 3 years and at least 1 year with the existing

employer.

• In business with at least 3 years of business or professional experience

• Earning a net monthly income of Rs.30, 000/- or more [spouse’s income can

also be combined with his].

c) Faysal Finance

Faysal Finance gives customer an opportunity to liberate his-self from financial

anxieties and fulfill his dreams and aspirations in an easy and affordable manner.

 Eligibility

Customer is eligible for “Faysal Finance” if:

• A Pakistani National holding the New Computerized Identity Card (NADRA).

• Customer age is between 21 to 60 years for salaried and 21 to 65 years for

SEB/SEP.

• Customer minimum verifiable monthly income is Rs. 15,000 for salaried and

Rs. 25,000/- for SEB/SEP.

49
50
 Chapter No 7

Financial Statements of Faysal Bank

51
52
53
 Chapter No 8

Financial Analysis

8.0 Common Size Analysis

• Vertical Analysis

• Horizontal Analysis

54
 • Ratio Analysis

8.1 Vertical Analysis

Balance Sheet

55
 As on December 2007-2009

2007 2008 2009

Assets
Cash An Balance With Treasury Banks 5% 6% 5%
Balance With Other Banks 0% 1% 3%
Lending To Financial Institutions 8% 2% 5%
Investment 31% 26% 22%
Advances 51% 60% 62%
Operating Fixed Assets 2% 2% 2%
Deferred Tax Assets-Net 1% 0% 0%
Other Assets 3% 2% 2%
Total Assets 100.000% 100.000% 100.000%
Liabilities
Bill Payable 1% 1% 2%
Borrowing From Financial Institutions 19% 9% 7%
Deposits And Other Accounts 68% 74% 72%
Sub-Ordinate Loans 0% 1% 1%
Liabilities Against Assets Subject To Finance 0% 0% 0%
Lease
Deferred Tax Liabilities-Net 4% 2% 2%
Other Liabilities 93% 5% 5%
Total Liabilities 7% 92% 89%
Share Capital
Reserves 2% 4% 4%
Inappropriate Profit 1% 3% 3%

Monitory Interest 1% 3% 3%
11%
Surplus on revaluation of assets 100% 98%

Total Liabilities and Equity 100% 100% 100%

Profit & lose statement

As on December 2007-2009

56
 INCOME STATEMENT 2007 2008 2009
Mark-up /return /interest 100% 100% 100%
earned
Mark-up / return / interest 64% 63% 71%
expensed
Reversal of provision for 18% 15% 13%
diminution in the value of
investments
Bad debts written off directly - - --

Net mark-up / interest income 18% 22% 17%

after provisions
Fee, commission and brokerage 6% 6% 5%
income
Dividend income 11% 9% 4%
Income from dealing in foreign 3% 3% 2%
currencies
Gain on sale and redemption of 10% (1)% 5%
securities
Other income 1% 1% 0%
Administrative expenses 24% 24% 25%

Profit before taxation 23% 13% 8%

Profit after taxation 20% 8% 7%

8.2 Horizontal Analysis

Balance Sheet

As on December 2007-2009

2007 2008 2009

Assets
Cash and balances with treasury banks 100% 129% 123%
Balances with other banks 100% 24% 14%

57
Lending to financial institutions 100% 40% 212%
Investments 100% 96% 179%
1
Advances 100% 103% 05%
Operating fixed assets 100% 105% 111%
Deferred tax asset 100% 135% 225%
Other assets - - -
TOTAL ASSETS 100% 98% 128%
LIABILITIES & EQUITY
Bills payable 100% 64% 61%
Borrowings from financial institutions 100% 103% 350%
Deposits and other accounts 100% 101% 121%
Subordinated loans 100% 100% 99%
Liabilities against assets subject to
100% 52% -
finance lease
Deferred tax liabilities 100% 92% -
Other liabilities 100% 96% 100%
TOTAL LIABILITIES 100% 102% 134%
REPRESENTED BY

Share capital 100% 100% 115%

Reserves 100% 106% 113%

Inappropriate profit 100% 71% 82%

Surplus on revaluation of assets 100% 98% 110%

Total EQUITY 100% 11% 25%

Total Liabilities and Equity 100% 68% 79%

58
 Profit & lose statement

As on December 2007-2009

59
 INCOME STATEMENT 2007 2008 2009
Mark-up / return / interest earned 100% 115% 146%

Mark-up / return / interest 100% 113% 160%

expensed
Provision against non-performing 100% 87% 109%
loans and advances
Reversal of provision for 100% 285% 121%
diminution in the value of
investments
Bad debts written off directly _______ _______ ------------

Net mark-up / interest income after 100% 140% 135%

provisions
Fee, commission and brokerage 100% 109% 119%
income
Dividend income 100% 99% 55%
Income from dealing in foreign 100% 111% 128%
currencies
Other income 100% 181% 184%
Administrative expenses 100% 116% 153%

Profit before taxation 100% 67% 48%

Profit after taxation 100% 49% 53%

1. The reason of increasing in cash because bank is maintaining more cash in hand

for liquidity problem, so bank increase cash in hand and reason of increase in cash

with treasury bank is that bank is maintaining the reserve with the SBP and other

foreign central banks to maintain the minimum capital requirement.

60
2. The reason of increasing in the balance with other banks is that rate of return that

in this year the bank-earning rate is between 10%-19% as compared to last year,

which is 7.8%-8.95percentage in Pakistan. In outside Pakistan the rates of return

on FE 25 deposit is same which 7% is.

3. The reason of decreasing in lending to financial institution is that bank prefers the

Call Money Lending and bank not prefer in this year reverse repo. The rate of

return increase from 9.5%-9.95percentage to 10.5%-14.5% of call money

deposit.

4. Bank investment increase in various companies like Pakistan Dollar Bond newly

purchased, but bank investment decrease due to the provision create by bank

which is 1.479 Billion and deficit balance on revaluation on assets.

5. Bank advances increase due to increase in deposits of bank. But there is special

provision create by bank which is very high as compared to last year, its mean that

credit portfolio of bank is not performing well. Bank is needed to improve in this

area because it is the basic income generated item for the banking sector.

6. Fix assets increase due to increase in the value of asset due to the gain on

revaluation by the bank and bank purchase further fix assets to meet the business

requirement.

7. Bank has not a deferred tax asset in this year as well as previous year because

bank has not a claim on tax department.

8. Other assets increase due to increase in the accrued mark up which is nearly 45%.

That is bad sign for the bank collection department or credit department, so the

61
 bank should pay attention to improve this sector because mark up is income of the

bank.

9. Bank total assets increase due increase in nearly every head of the assets but it is

not a good increasing in the assets because the bank has a provision and accrued

interest, so the bank has to improve in this sector to improve the total assets.

10. The reason of decreasing in the bill payable is that the local market of Pakistan
was not suitable for business in this year because there was inflation prevailing in

the country.

11. The reason of decreasing in borrowing from other financial institution is that bank
has a sufficient deposit account in this year so the bank has not need to borrow

from the other financial institutions

12. It is a good sign for the bank to increase in deposit. Bank has a good manage in
deposit it is working on increase fixed as well as saving account but bank should

further more increase in current account because in this account bank has not paid

mark up on such that account.

13. It is sign that bank has not increasing in further more subordinate loan and the
bank has received back the term loan and not further sanction loan as a

subordinate loan.

14. Bank has not any liabilities against asset subject to finance lease as well as in

previous year.

15. Tax liabilities increase due to increase on deferred tax. It means that bank has to
pay in future to the Federal Board of Revenue.

62
16. The reason of increasing in other liabilities is that the bank has mark up payable
increase and the bank has deferred tax in this year.

17. The reason of increasing of liabilities of bank is that bank has increase in deposit
and other liabilities. It is a good sign for the bank because it is income-generated

item.

18. It is a good sign for the bank is that its assets are more as compare to the liabilities
of the bank. Bank will not face a liquidity problem in future.

19. The reason of increasing in the share capital of bank is that the bank has issued the
bonus shares instead of paying dividend to its shareholder and the paid up capital

remaining the same.

20. Bank has increase in reserve due to increase in the deposits of the bank because
the bank has mandatory to create a 5% of deposit so the bank has increase in the

reserve.

21. The reason of decreasing in inappropriate profit is that the bank has issued bonus
shares instead of paying divided to its shareholders.

22. The reason of decreasing in the value of surplus on revaluation of assets is that the
bank has deficit on the government securities.

23. Contingencies and commitment increase due to increase in capital as well as

reserve. This is a good sign for the bank and it will help to increase credit rating of

the bank.

24. Mark up increase due to increase in advances of the bank. Bank has earned more
from its primary objective mean sanction loan to its customer. Bank has also earn
63
 from other sources like investment, deposit with financial institutions, securities

purchase under resale agreement.

25. Mark up expense increased because deposits of bank increase. Bank has paid more
on deposit and in this year bank has paid more on short-term borrowing from

other institution, which is nearly 51% increase.

26. Net mark up increase normally as increase in previous ratio. It is a good sign for
the bank that the bank has maintained the previous ratio and increase in it slightly.

Bank should more work to increase in this ratio.

27. It is a good sign for the banking credit management that bank has created less

provision as compared to previous year. Its mean that the recovery system is

working good and the credit department is doing proper job about the securities

and loan.

28. The bank has write off more as compared to previous year. Bank has nearly 80%
write off in this year. This is a bad sign that the bank is not recovered much more

as they can do.

29. Net mark up income after provision not increase as increase in previous year

because in this year bank has create a provision against diminution in the value of

investment, so it create a huge impact on the net income of the bank.

30. There is little bit increase in fee, commission and brokerage income. Its mean that
bank is not much more interest in giving a facility as an agent or may be it is the

effect due to the economy condition of the country.

64
31. Bank has earned more from the investment in this year as compared to previous
year. Bank has a nearly 68% increase in this income

32. Bank has earned more in foreign currency because in this year the rates of foreign
currencies increase to its peak point so the bank has more gain on this item.

33. The reason of decreasing in gain of sale of securities the bank has a little bit less
gain in listed shares but the bank has a much more less gain in un-listed shares

which is nearly 91%.so the bank has decrease in gain on sale of securities.

34. The reason of increasing in the value of unrealized loss on revaluation of

investment is that the stock market condition of Pakistan. The stock market is

decline to its minimum level. So the bank has a loss on such that investment.

35. Other income increases due to increase in operation of the bank because without it
a bank cannot run its business. It is better for the bank and bank has a good control

on it.

36. As compared to total non-mark up income with previous year, it is decreased.

Because the bank has more loss on revaluation of investment and in this year bank

has a very less income from gain on sale of securities.

37. Admin expense increase due to increase in salaries of the employee and the rent
also increase due to increase in inflation in this year.

38. This is effect due to exchange adjustment increase in this year. Therefore, the

bank has created a provision against off balance sheet items.

65
39. Other charges increase due to increase in penalty imposed by SBP and bank has
created in this year worker welfare fund, which is 106.621 million so the other

charges head increase.

8.3 Ratio Analysis

66
SHORT TERM LIQUIDITY ANALYSIS

• Current Ratio

Years 2007 2008 2009

Current Ratio 1.48 1.75 2.08

2.5

1.5

0.5

0
2007 2008 2009

An indication of a company's ability to meet short-term debt obligations. The higher the

ratio, the more liquid the company is. Current ratio is equal to current assets divided by

current liabilities. Current ratio of company in 2009 is 2.08. It means company has Rs.

2.08 current assets to pay Rs. 1 of current liability. When we see trend it is increasing

from 2007 to 2008 and then it decreased in 2007 and then it is again increasing. Bank

has less assets had more liabilities in 2007 and 2008.But bank increase its assets in

2009.thats why Current Ratio of bank has been increase.

• Quick Acid Test Ratio

67
 Years 2007 2008 2009

Quick Acid Test Ratio 1.37 1.7 2.0

1.5

0.5

0
2007 2008 2009

The quick ratio is a measure of how well a company can meet its short-term financial

liabilities. The acid-test ratio is far more strenuous than the working capital ratio,

primarily because the working capital ratio allows for the inclusion of inventory

assets. It increased from 2008 to 2009, then decreased in 2007, and then increased. In

2007, it is 2. It means company has Rs. 2 of the most liquid assets to pay current

liability of Rs. 1

This sign is not favorable for the bank. Because liabilities of bank roughly increase in

last 2 years as compare inventory.

68
 • Cash Ratio

Years 2007 2008 2009

Cash Ratio 0.163 0.161 0.178

0.172
0.17
0.168
0.166
0.164
0.162
0.16
0.158
0.156
2007 2008 2009

The ratio of a company's total cash and cash equivalents to its current

liabilities. The cash ratio is most commonly used as a measure of company liquidity. It

increased in 2009 as 0.178 and then badly decreased in 2008 as 0.161 and then again, it

has increasing trend. As compared other years it was high in 2009. It means in 2009

company had more liquid cash to pay current liabilities. However, bank has less liquid

for pay in 2008 as compare 2009.

69
8.4 Profit-Ability Analysis

• Net Profit Margin

Years 2007 2008 2009

Net Profit Margin 9.15% 35.70% 35.08%

40
35
30
25
20
15
10
5
0
2007 2008 2009

Net profit divided by net revenues, often expressed as a percentage. This number is an

indication of how effective a company is at cost control. In 2007, it is 9.15%. It means

on Rs.100 company earns Rs 9.15. This ratio decreased in 2007 as compared to

previous years. It is favorable for the bank if it should be High or maximum. In 2007,

the net profit margin ratio of bank was 9.15%, which was very low for banking sector

averagely. However, bank gain great repo in 2008 as 35.70% which more sufficient for

the faysal bank.

70
 • Operating Profit Margin

Years 2007 2008 2009

Operating Profit Margin 37.70% 70.35% 52.15%

80
70
60
50
40
30
20
10
0
2007 2008 2009

Operating margin is a measurement of what proportion of a company's revenue is left

over after paying for variable costs of production such as wages, raw materials, etc. A

healthy operating margin is required for a company to be able to pay for its fixed costs.

This ratio in year 2007 is 37.70%. It means company generates Rs. 37.70 operating

income on Rs. 100. It decreased as compare to previous years. This measurement

shows that in 2008 bank has a great margin ratio of profit margin, which badly decrease

in 2009.this is not a perfect sign for Faysal bank.

71
 • Return on Assets

Years 2007 2008 2009

Return on Assets 1.77% 2.78% 3.25%

3.5
3
2.5
2
1.5
1
0.5
0
2007 2008 2009

The return on assets (ROA) percentage shows how profitable a company's assets are in

generating revenue. This ratio decreased from 2007 to 2008 and then again, it increased

in 2009. In 2007, it is 1.77%, which means that the company generates Rs. 1.77 on

assets of Rs. 100. It should be higher. An indicator of how profitable a company is

relative to its total assets. ROA gives an idea as to how efficient management is at using

its assets to generate earnings

72
 • Return on total Equity

Years 2007 2008 2009

Return on total Equity 23.33% 29.57% 42.74%

45
40
35
30
25
20
15
10
5
0
2007 2008 2009

Return On total equity is one of the most important profitability metrics is return on

equity (or ROE for short). Return on equity reveals how much profit a company earned

in comparison to the total amount of shareholder equity found on the balance sheet. It

decreased from 2008 then it increased in 2009 & then again increased in 2007. In 2007,

it is 23.33%. It means on Rs. 100 of total equity the return is Rs.23.33.in 2009 bank’s

ratio was 42.74%.which sufficient for bank as compare last year.

73
8.5 Long Term Debt Paying Ability Analysis

• Debt Ratio

Years 2007 2008 2009

Debt Ratio 88.56% 83.24% 86.57%

89
88
87
86
85
84
83
82
81
80
2007 2008 2009

The amount of long-term debt on a company's balance sheet is crucial. It refers to

money the company owes that it does not expect to pay off in the next year. This ratio

has increasing trend. In 2007 is 88.56%. This ratio shows that in all the years more than

80% assets of the company were financed by outsiders. It sufficient bank if it should be

maximum. Long-term debt paying ability in 2007 was much better when it was

74
88.which -4% increases in 2008.this is negative sign for banking. Whatever banking

improves in 2009.but its not much Good.

• Debt to Equity Ratio

Years 2007 2008 2009

Debt To Equity Ratio 119.6% 70.6% 117.9%

120

100
80
60
40

20
0
2007 2008 2009

A measure of a company's financial leverage calculated by dividing its total

liabilities by stockholders' equity. It indicates what proportion of equity and debt the

company is using to finance its assets. This ratio is also very high, which means that

creditors are not very well protected. This ratio decreased from 70.6% in 2008 to

117.9% in 2009. It again increased to 119.6% in 2007.but in 2008 the Ratio of faysal

bank just 70.6% .which not good indicators for bank. An average of all bank was in

2008 110% of debt to equity Ratio

75
8.6 Analysis for Investor

• Earning Per Share

Years 2007 2008 2009

Earning Per Share 4.29 8.12 6.02

9
8
7
6
5
4
3
2
1
0
2007 2008 2009

The portion of a company's profit allocated to each outstanding share of common

stock. Earnings per share serve as an indicator of a company's profitability. The earning

per share is decreased in 2007 to 2009. In 2008, it is increased up to Rs. 8.33 & then it

76
decreased in 2007 & 2009. It shows that earning on a share of common stock has

decreased 10 2007 and 2009.this ratio should be maximum. In 2008 bank give EPS

Rs.8.12 which 90% greater than last year. But next year in 2009 its decrease 40% as

6.02

• Price Earning Ratio

Years 2007 2008 2009

Price Earning Ratio 15.35 19.10 11.38

20

15

10

0
2007 208 2009

The price/earnings ratio is a way to show how a company’s earnings relate to the stock

price. The P/E is calculated by dividing the current price of the stock by the annual

earnings per share. Price per Earning Ratio of the company has increasing trend. In

2007, it is 15.53% it means that stock has been selling for about15.53percentage

earnings. It good for bank when it maximum. Bank has Good price earning ratio in

2008.but its 40% decrease in 2009 due to un balancement on banking sector of crises.

In 2008, it was 19.10% and in 2009, it was 11.38.

77
 • Dividend Payout Ratio

Years 2007 2008 2009

Dividend Payout Ratio 58.27% 74.75% 78.47

100

80

60

40

20

0
2007 2008 2009

The payout ratio provides an idea of how well earnings support the dividend payments.

More mature companies tend to have a higher payout ratio. This ratio is increasing from

2007 to 2008, increased in 2009 and then again decreased in 2007. In 2007, it is

58.27% which means in 2007 company paid 58.27% as dividend of the earnings per

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share to the shareholders. This line indicates in 2009 bank gain Good net income. Hats

why this year ratio increase and showing positively as compare last two years.

Projected Balance Sheet 2010

Assets
Cash and balances with treasury banks 16,502,788
Balances with other banks 2,206,803
Lending to financial institutions 25,134,269
Investments 1,748,801,952
Advances 180,829,731
Operating fixed assets 5,437,468
Deferred tax asset 1,706,557
Other assets 8,351,692
TOTAL ASSETS 334,326,853
LIABILITIES & EQUITY
Bills payable 3,268,416
Borrowings from financial institutions 50,413,895
Deposits and other accounts 233,154,989
Subordinated loans 1,998,800
Liabilities against assets subject to finance 3,976
lease
Deferred tax liabilities 1,724,940
Other liabilities 13,833,746
TOTAL LIABILITIES 308,306,997
REPRESENTED BY
Share capital 11,652,178
Reserves 7,825,760
Inappropriate profit 1,369,967
Surplus on revaluation of assets 21,941,905

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Total EQUITY 4,077,950
Total Liabilities and Equity 9,515,355

Chapter No 9

Swot Analysis

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9.0 Strengths

• Bank has also invested heavily in information technology resources, which has

now allowed the bank to develop one of the most comprehensive and advanced

systems available. With the help of this system, Bank has now achieved an

"online" status via real time facilities and features available through nationwide

network. With a team of highly qualified professional, FAYSAL Bank is able to

use its real time system resources to provide customers with a comprehensive

account of their transactions on a daily basis. With the new improved system,

FAYSAL Bank is able to map all transactions and is able to provide all necessary

details to cash management clients.

• Bank has been successful in employee retention, customer satisfaction and high

profit generation. Happy employees help create happy customers. Good

reputation of the bank is because of good behavior and response of the

employees.

• Bank has undoubtedly become one of the most progressive and well-networked

banks in Pakistan. Customers are allowed to give suggestions regarding banking

services. If there is any complaint by the customer the bank, authorities

investigate the reasons for complaint. Complaint monitoring system is an

excellent one at FAYSAL Bank that shows that bank values more to its

customers.

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 • FAYSAL bank has achieved marked success in its strategy of expanding and

diversifying its customer base and launching new and innovative financial

products.

• With One-link network of ATMs, it is easy for the customers to get their cash

from any ATM machine of the partner banks with minor charges to be paid for

transactions. Thus if ATM machine at FAYSAL Bank is not working, then it’s

possible to draw cash from any other ATM of the partner bank. Now ATM

card is accepted on more than 100 ATMs in all major cities across Pakistan.

• Good and friendly attitude of the workers is the result of excellent management

of bank. The entire environment of the bank gives the impression that

customers are very important to the bank. They are offered seats even when

they come for a small purpose.

• Credit setup at FAYSAL bank is such that the credit customer is handled at

different counters. Such segmentation of credit approval processing is useful

for handling credit related tasks but customer who comes to the bank for

getting credit facility. He wants that he must be handled at one place.

9.1 Weaknesses

• FAYSAL bank has the centralized system of processing trade related transactions.

Any customer who wants to export or import any product needs spontaneous

transactions to take place. But due to centralized system, the approval of all the

transactions has to taken from head office. Although this system is good on part

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 of bank but not favorable on part of customer, as the processing time for

transactions lengthens which create bad impact on customers.

• Organizational structure of FAYSAL bank is Functional based. Functional

structure groups the members of organization based on their work activity. Every

employee is responsible for his own operations and no co-ordination exists among

departments.

• The advertising media used by FAYSAL Bank for publicity include mostly

newspapers and journals. Although this media is good one in attracting customers

to bank with FAYSAL Bank, but the most powerful media is of television through

which people within Pakistan as well as outside Pakistan can have instant

information about new products and developments of FAYSAL Bank with just a

click of TV button.

• The lengthy process of credit approval creates a feeling of dissatisfaction among

customers. Because FAYSAL bank has the centralized system of processing of

giving loan. However, due to centralized system the approval of all the

transactions has to taken from head office Multan. Most of the hiring is on

contract basis.

• Promotion is slow.

• Salary package is not so much attractive.

• Clients of Faysal Bank are less in number as compare to its some competitors

9.2 Opportunities

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• For banking industry, acquisitions are the best way and FAYSAL Bank has

adopted this strategy for the acquisitions of funds and for strengthening and

expanding itself through affiliation with leading international brands and

acquiring the operations of leading banks. It’s the fastest growing bank in

• FAYSAL Bank is an active player in the loans business. Its strength in loaning

stems from its ability to forge strong relationships not only with borrowers but

also with bank investors. Bank can capture more markets by introducing new

products for business community, as it is the only group, which can contribute

more towards increasing the assets of the bank. The products, which the bank

currently offering includes, Ready cash, Business Power, and Business Account.

Bank can touch new customer segments through these products

• FAYSAL bank is now looking in to new ways of providing banking service to

its customers. New concept of mobile banking has been introduced by the bank,

which will prove to be a remarkable success in the field of consumer banking

group.

• Competition in the field of consumer banking has been intensified as large

consumer banks continued to play a significant role in terms of products and

services. FAYSAL bank is preparing for this competition by establishing a

dynamic platform that will enabled it to launch a series of new products in years

to come. This dynamic platform will be supported with a robust operational

infrastructure and delivery mechanism.

• For banking industry, acquisitions are the best way and FAYSAL Bank has

adopted this strategy for the acquisitions of funds and for strengthening and

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 expanding itself through affiliation with leading international brands and

acquiring the operations of leading banks. It is the fastest growing bank in

Pakistan and it will prove to be the largest bank by continuing its strategy of

merging and acquisitions. Acquisition of Bank of America’s local operations

and operations of Emirates Bank International in Pakistan are the recent

acquisitions by FAYSAL Bank.

9.3 Threats

• Although merging and acquisitions are a good way of expanding the operations

but at the same, time competition and challenges also increase. Bank is required

to maintain competitive rates and facilities for its depositors and its borrowers.

Bank has to maintain a balance between its liabilities and assets structure. Turn

Over rate is very high.

• The sad part is that our industrial base is not growing and industrial demand for

credit is, therefore, low. Banks is aggressively lending in the consumer sector.

Cars, motorcycles, home mortgages. Industrial sector is the most powerful

sector, which can contribute towards assets of bank. But in Pakistan due to

instability in economic condition this sector is not flourishing too much. As a

result, the rate of industrial loaning is also very low. If bank continues in

advancing consumer loans then it will become a threat for the assets of bank and

resources of the bank will continue to be wasted.

• New incoming local and especially foreign banks are making tough competition

among banks

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• The employees of Faysal Bank are Dissatisfied.

Chapter No 10

Observations, Conclusion and Suggestions

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10.0 Observations

FAYSAL bank is a financially sound bank. It is now financially more powerful and

secure with superior operational capabilities, wider distribution, and greater depth in

human resource skills. This development has led to the formation of one of the largest

local private bank in Pakistan. The bank has come a very long way in a very short span

of time. With stronger brand image and firmer footings, the bank has been able to

leverage its infrastructure to launch new products and services.

For FAYSAL bank customers are the first priority. Sole of any business are the

customers and their satisfaction is an achievement for the organization. Management

believes that satisfied customers are one of the key factors for future growth of bank.

Keeping in mind the diverse needs of customers, FAYSAL bank has launched several

products and services ranging from deposit generating liability products to mortgage

and financing asset products to ATMs and charge cards. Bank has restructured its

consumer banking division by further dividing it into three major business units:

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 • Consumer assets

• Personal finance

• Cards

This allows having a more focused approach on different segments of the market.

10.1 Conclusion

FAYSAL bank will remain an aggressive and innovative financial institution and

continue to adhere to the tradition of understanding its customer has needs and looking

for new ways to serve them. Further integration and productivity gains will result in

stronger performance in terms of revenue as well as service quality in the coming years.

The strong leadership of Board and management and the relentless effort of the staff at

FAYSAL bank will be able to offer more superior products and services to customers

and to contribute more to economic and social development of Pakistan while

developing a bigger future for it.

10.2 Suggestions

Financially unsophisticated people might feel bank accounts, chequebooks, credit

cards, etc. are difficult to understand and to keep control thereof. Some personal sector

customers prefer not to come to branch. They increasingly want to deal with the bank in

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other ways, such as home banking or use of Automated Teller Machines (ATMs),

which need to be at the branch or some important shopping plazas.

It is widely known that there is a substantial Black Economy in Pakistan, Where people

earn income that is undisclosed to the revenues authorities. Payments for goods and

services in the black economy are necessarily in cash, because transactions by cheques

are more likely to be exposed to the revenue authorities. Some people will therefore

avoid bank accounts to preserve secrecy of earnings.

Bank must let potential customers know that all attractions for banking exist. This is

done by advertising on television and obtaining press coverage, in conjunction with

direct mail, window displays, leaflet in branches and in appropriate other locations

(such as hotels, shops, etc.) and including leaflets in statement of accounts sent to

existing customers in the hope that they will tell potential customers about the services

provided by our bank.

Arguably, there has been a little encouragement from banks to persuade people to open

a bank account. Opening hours are restricted, and there is a commonly held belief that

banks operate for their convenience and not for the convenience of the customers.

Logic leads to promotional campaign through employers who are customers of the

banks and their employees are paid in cash. Such business accounts should be

encouraged to open the accounts of their employees with the banks. It might be worth

89
offering free banking for a specific period to new accounts or simply publicizing the

services available by means of posters at the employer’s premises.

It might be possible to attract another type of personal customers through business

accounts, namely directors and denier employees, etc. Again, an incentive package

could be put together.

A short-term promotional technique is to offer price incentives, for example, low

interest rates on advances or limited issue high profit bearing term deposits. Longer

term, a Loss Leader may be offered. For example, profit-bearing current accounts are

not very lucrative but any bank cannot afford not to offer these. The reduced profits can

be augmented by profits made on other products.

It is also possible to attract/retain personal customers by investment in new technology

like ATMs and Telephone Banking facilities, which made the services quicker, easier,

cheaper and more flexible.

There is low trend of training for employees. Therefore, there should do more to train

its employees to make them more efficient.

The banks may choose to make its existing products distinctive or to introduce new

products. It is often easier to benefit from adverse changes made by other banks than to

attract customers by innovations.

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Learning as Internee

My internship experience has given me a realistic preview of my field of education.

Now I feel that I am better prepared to enter the world of professional work. I have

come to know and been appreciated by a number of professionals who are lending their

services to the banking sector for more than a decade. I feel honored that I have worked

with such experienced professionals. I must admit that such interaction in this

respectable professional community will help me in seeking out job opportunities in the

near future.

Each task I performed was a different experience in itself. By the end of it, I must say I

realize my potentials, I have realized that earning money is not so easy after all, it takes

a lot of hard work and devotion, and not to forget time. Moreover, I now know that if I

want I can make things possible, and I know how good it feels to having accomplished

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something and being appreciated for it. I definitely have learnt things, which will

influence my career and my character.

The overall experience of my internship was very good; I have learnt the sense of

responsibility in its literal meaning. I am now capable of dealing with different sort of

customers, and how to be patient while doing so. Besides this, I also gained knowledge

about banking which I previously lacked and many more products being offered by the

bank. So briefly, this internship gave me the experience, which would no doubt boost

my confidence to work in future.

References

1 Web resources

2 Guidance from my teachers

3 Resources from library

4 Resources from bank

Web resources

www.faysalbank.com

http://www.kse.com.pk

http://www.sbp.gov.pk

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 www.wikipedia.org/

Glossary

Liquidity: “The bank’s ability not only to meet possible deposit withdrawals but also

to provide for the legitimate needs of the economy as well”.

Finance: “The science and art of managing resources especially money”.

Remittance: Remittance is transfer of funds from one place to another or from one

person to another.”

Remitter: - One who initiates, or requests for a remittance

Remit tee: - A remit tee is the one who receive the payment.

Issuing Bank: The bank that sends or affects the remittance, through demand drafts,

telegraphic transfers, or Mail Transfers.

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Paying Bank: Paying Bank also knows as the drawee branch. The branch on which the

instrument is drawn. It has to make the payment (usually located in a different city

country).

Meaning of OBC:: “When an instrument is drawn on a bank, which is located outside

the city, its proceeds can be collected through a mechanism called Outward Bills for

Collection (OBC).”

Bank Statement: A statement that contains past transactions carried out on an account

in a specific time.

Lien against locker rent: Lien is an advance amount of 3xLockerRent that is

refundable upon locker surrender

BM Branch Manager
OM Operations Manager
CSM Customer Services Manager
CSO Customer Services Officer
CRM Customer Relationship Manager
CRO Customer Relationship Officer
AOF Account Opening Form
PKR Pakistani Currency
FKR Foreign Currency
A/C Account
SW Software
ATM Automatic Teller Machine
PIN Personal Identification Number
CNIC Computerized National Identity Card Number
NTN National Tax Number
TRL Transaction List
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OBC Outward Billing Collection
CBR Cheque book Request
CBI Cheque book issuance
TT Telegraphic Transfer
DD Demand Draft
KYC Know Your Customer

95