Internship Report

INTERNSHIP REPORT ON

Chowk Shaheedan Branch Multan.

Submitted to:

Mr. Mohsin Ali Khan

Submitted by:

Jhon Abbas ; Roll # 10557

MBA Marketing (morning)

Session Jan 2009 to Dec 2010

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Internship Report

DEPARTMENT OF MANAGEMENT SCIENCE

National University of Modern Languages, (Multan Campus)

PREFACE:

Banking sector owes a pivotal importance in the economy of any country though it’s vibrant
functions. This is the deep-seated motivator that geared up me to join any bank for internship.

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Moreover, the practice and familiarity learned during this tenure would also attest very
helpful and alleviating in the awaiting proficient life. Making analysis of financial statements
is an important part of our MBA program. It is a comprehensive, practical and extremely
accessible presentation about Bank Alfalah Limited. I have tried my best to present this
report with full description.

Every effort is made to expose all the relevant concepts in this report. There is a balance of
clarity. My objective in making analysis this report is to provide a fundamental knowledge
about the company. I hope, it serves a stock of knowledge about the Bank Alfalah Limited.

It is the requirement of the MBA course that all the students of MBA have to spend six weeks
in any organization to get practical exposure and get familiarized with the ways to live in the
organizational environment which is dramatically different from the educational enjoinment.
That period is called ‘’Internship Period”

If spends properly and sincerely, enables the students to be more confident, more
knowledgeable, more responsible and more committed to its work in the practical field. I
have also assigned to do internship of six weeks period in Bank Alfalah Limited it has
enabled me to understand the practical scenario and sharpen our decision making power and
utilizing the resources in an effective manner. So that our resources could generate maximum
profit.

In preparation of this report. I have putted all my best efforts and tried my level best to give
maximum knowledge. Despite of my all coherent efforts. I do believe that there will be a
room for improvements in the efforts of learner like me.

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ACKNOWLEDGEMENTS:

All praise & thanks go to Almighty ALLAH, the creator who is the entire source of
knowledge & wisdom endowed to mankind. Offer my thanks from the depth of my soul to
the last messenger Hazrat Muhammad (PBUH), who is forever a torch of guidance and
knowledge of entire humanity.

I also acknowledge with thanks to Mr. Mohsin Ali Khan who give me opportunity to do
internship and make an internship report.

I have also completed a report based on familiarity with my past studies in order to get a bit
familiar with practical experiences in the organization. By the grace of ALLAH Almighty I
have accomplished this report.

I am very thankful to Mr. Syed Arif Raza Zaidi (Branch Manger) and his team especially to
Mr. Sohaib, Mr. Adnan, Mr. Ishaq, Mr. Naqaash, Mr. Salman and Mr. Almaas who provided
me every kind of help during internship and in preparing this report.

I am very grateful to my entire well-wisher for this support, love & sincerity. May ALLAH
give them reward in kind of His bless and love!

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MY LOVING PARENTS,

RESPECTED TEACHERS,

&

DEAR FRIENDS

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Internship Report

EXECUTIVE SUMMARY:

Pakistan after getting independence, did not inherent a strong banking industry and since then
a number of events in the industry, like the nationalization of banks in the 1970. However
today the banking industry of Pakistan has been growing over the past few years, mainly
because of consistent policies implemented by the government of Pakistan. Also the state
bank of Pakistan monetary policy has been very friendly toward banking sector.

There are number of different banks established in Pakistan, including local incorporated
commercial banks, foreign incorporated commercial banks, development financial
institutions, investment banks, discount & guarantee houses, housing finance companies,
venture capital companies, micro finance banks and Islamic banks.

Bank Alfalah Ltd was incorporated in 1997 and was later privatized by the government of
Pakistan. The Abu Dhabi Group bought the majority shares of the bank and so got the right to
control the bank's operations. Since the privatization of the bank, Bank Alfalah has
implemented different policies to make it one of the best bank in Pakistan. Bank Alfalah
Limited also introducing new products and services and increase its operations by opening
new branches in Pakistan.

Today Bank Alfalah Limited is operating in more then 95 cities of Pakistan and operating its
foreign branches in Bangladesh, Afghanistan, and Bahrain. The total employees of Bank
Alfalah in 2009 were 7,642, which increase of 15% from the past year was. The increase in

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the number of employees joining Bank Alfalah shows that people feel confident in Bank
Alfalah as a prospect employer. Behavior of employees with customer also helps to
increase the number of customer every day.

The financial statistic of Bank Alfalah are also as Impressive as their human resources.

The profit after taxation for Bank Alfalah in 2008 amounted to Rs 1,301,301 (000)
and its total assets for 2008 amounted to Rs 348,990,764 (000).
This figure shows improvement as compared to previous years but in 2009 the earning after
tax reduces to Rs 897,035(000). The reduction in earning is due to the financial crises in all
over the economy. Te stock prices and earning per share of the bank have also increased over
the years but it is before the year 2009.The earning per share in 2008 is 1.41 that reduce in
2009 earning per share is 0.71.

Bank Alfalah Limited promotes its products and services through print and electronic media.
It also promotes itself by sponsoring different events.

For Bank Alfalah Limited, it has to compete in an industry that has grown in 2009 in overall
assets The major 5 competitors of Bank Alfalah, pose close competition and are mainly large
nationally incorporated banks and a few international banks, that all wants to become the
leading bank of Pakistan, by creating some edge in the industry. To create this edge,
technology has played an important role in the industry as banks are continuously trying to
improve its products and services by introducing innovative products.

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TABLE OF CONTENTS

Topics page #

Introduction 9
Industry History and Background 9
History of Organization 11
Information about the organization 12
Vision & Mission statement 12
Products and Services 13
Organizational structure and Department 16
Structure 16
Board of Directors 17
Board Audit committee 18

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Departments 19
Internship Experience 38
Internship Experience 38
Working Experience 39
Duties and responsibilities 39
Accomplishment 40
Problems during Internship 40
Strategies 41
Marketing Strategy 41
Competitive Strategy 43
Financial analysis 44
Balance sheet 44
Profit &loss Account 45
Horizontal & Vertical Analysis 46
Ratio analysis 48
SWOT analysis 55
PEST Analysis 58
Conclusion 61
Recommendation 62
Certificate 63
References 64

Industry Introduction and Background:

It has not so far been decided as to how the word ‘Bank’ originated. Some authors opine that
this word is derived from the words ‘Bancus’ or Banque’, which mean a bench. Other
authorities hold the opinion that the word ‘Bank’ is derived from the German word ‘Back’,
which means ‘joint stock fund’. It is therefore, not possible to decide as to which of the
opinion is correct, for no record is available to ascertain the validity of any of the opinions.

Banking in fact is primitive as human society, for ever since man came to realize the
importance of money as a medium of exchange; the necessity of a controlling or regulating
agency or institution was naturally felt. Perhaps it was the Babylonians who developed

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banking system as early as 2000 BC. IT is evident that the temples of Babylon were used as
‘Banks’ because of the prevalent respect and confidence in the clergy.

At the time of independence, there were 631 offices of scheduled banks in Pakistan, of which
487 were located in West Pakistan alone. As a new country without resources it was very
difficult for Pakistan to run its own banking system immediately. Therefore, the expert
committee recommended that the Reserve Bank of India should continue to function in
Pakistan until 30th September 1948, so that problems of time and demand liability, coinage
currencies, exchange etc. are settled between India and Pakistan. The non-Muslims started
transferring their funds and accounts to India. By the end of June 1948 the number of
officers of

Scheduled banks in Pakistan declined from 631 to 225. There were 19 foreign banks with the
status of small branch offices that were engaged solely in export of crop from Pakistan, while
there were only two Pakistani institutions, Habib Bank of Pakistan and the Australian Bank.
The customers of the bank are not satisfied with the uncertain condition of banking. Similarly
the Reserve Bank of India was not in the favor of Govt. of Pakistan. The Govt. of Pakistan
decided to establish a full-fledge central bank. Consequently the Governor-general of
Pakistan Quaid-e-Azam inaugurated the State Bank of Pakistan on July 1, 1948. Thus a
landmark was made in the history of banking when the state bank of Pakistan assumed full
control of banking and currency in Pakistan. The banking structure in Pakistan comprises of
the following types,

 State Bank of Pakistan

 Commercial Bank of Pakistan

 Saving banks.

 Cooperative banks

 Specialized credit institutions.

Commercial banks have been the most effective mobilizes of savings and have been
providing short-term requirements of working capitals to trade, commerce and industry.

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Up to December 31, 1973, there were 14 Pakistan commercial banks that functioned all over
the country and in some foreign countries through a network of branches. All these
commercial banks were nationalized in January 1, 1974, and were recognized and merged
into the following five banks:

 National Bank of Pakistan

 MCB Bank Limited

 Habib Bank Limited

 United Bank Limited

 Allied Bank Limited

The state bank of Pakistan is the Central bank of the country and was established on July 1,
1948. The separation of East Pakistan and its repercussion in the form of economic
depression has caused a lot of difficulties to the banking system in Pakistan. The network of
bank branches now covers a very large segment of national economy. The numbers of
branches have increased appreciably and there is now on branch of bank for every 3000
heads of population approximately. There is done reasonable growth in deposits from the
establishment of Pakistan.

Besides this growth, specialized credit and financial institutions have also developed over the
years. The Government of Pakistan in the late 90’s introducing the need for the privatization
of state owned banks and companies.

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Historical Overview of BAL

Bank Alfalah has gone through different phases over the years. Its name had been changed in
the following sequence.

Bank of Credit and Commerce International (BCCI)—1972

Habib Credit and Exchange Bank—1992

Bank Alfalah—1997

Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited company
under the Companies Ordinance 1984. Its banking operations commenced from November
1st, 1997.The bank is engaged in commercial banking and related services as defined in the
Banking companies ordinance, 1962. The Bank is currently operating through above 301
branches in 95 cities, with the registered office at B.A. Building, I.I. Chundrigar Road,
Karachi. Since its inception, as the new identity of Habib Credit Exchange Bank (HCEB)
after the privatization in 1997, the management of the bank has implemented strategies
and policies to carve a distinct position for the bank in the market place.

The Bank has invested in revolutionary technology to have an extensive range of products
and services. This facilitates commitment to a culture of innovation and seeks out synergies
with client and service providers to ensure uninterrupted services to it customers.

This facilitates our commitment culture of innovation and seeks out synergies with clients
and service providers to ensure uninterrupted services to its customers. We perceive the
requirements of our customers and match them with quality products and service solutions.
During the past five years, we have emerged as one of the foremost financial institution in the
region endeavoring to meet the needs of tomorrow and today. The bank is listed on the
Karachi and Lahore Stock Exchange with a ticker name of “BAFL”.

Credit Rating:

PACRA, a premier rating agency of the country, has rated the bank ‘AA’ (double A), Entity
Rating for long term and A1+ (A one plus) for the short term. These ratings denote a very
low expectation of credit risk, strong capacity for timely payment of financial commitments
in the long term and by highest capacity for timely repayment in the short term, respectively.

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The ratings of first and second and third unsecured listed and subordinated TFC issues of
PKR 650 million, PKR 1,250 million and Rs.1,325 million have been maintained at AA-
(Double A minus).

Information about the organization:

Vision:

"To be the premier organization operating locally & internationality that provides the
complete range of financial services to all segments under one roof".

Mission:

"To develop & deliver the most innovative products, manage customer experience, deliver
quality services that contributes to brand strength, establishes a competitive advantage and
enhances profitability, thus providing value to the stakeholders of the bank".

Values:

The values of Bank Alfalah Limited are philosophy of honesty, transparency in customer
dealings, product innovation, excellence in customer service and our commitment to being a
responsible corporate citizen.

Objectives

To please their customers by fulfilling the financial needs as best as possible, they believe in
placing the client at the center of business and all of the products and service. For this the
management has adopted the strategy of, caring for you …..Our customer"

The objective of Bank Alfalah is as follows:

 To get maximum share of the market

 To price the products optimally

 To expand more the network of branches in several other cities of Pakistan as

well as in the countries of the world.

 To reinforce a corporate culture that fosters learning, creativity and flexibility.

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 To invest further in banking innovations which include Islamic banking, SME

 Home loans and other areas of product development to provide higher levels of
services and values to the clients.

 To create maximum economic values for share holders through a constant

relationship focuses on financial services.

Product and Services:

With the mission to provide all-encompassing banking services to the customers, Bank
Al-Falah has a uniquely defined menu of financial products. Currently it is one of the most
comprehensive portfolios of personalized financial solutions that are custom-tailored to serve
the requirements not only of conventional customers but also fulfill the needs of the corporate
sector:

 Money Gram

 Agriculture loans

 Swift

 Car Financing

 Rupee Travelers Cheque

 Online Banking

 Credit Cards

 ATMs

 Home Financing

 Corporate and Structured Financing

Money Gram

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Money Gram provides the faster transfer of money from one country to other. It is the easy
and safe way to send money to the relatives. The charges is deducted from the person who
sends the money.

Agriculture loans

The bank also offered agriculture loan this loan is used various purposes for the development
of agriculture sector. It provide loan for cultivation of land and equipment for the
development of this sector

SWIFT

The bank has also started replacing conventional telex messaging system for fund transfer,
L/C opening etc., by connecting on-line with the world wide interbank Financial
Telecommunication Network (SWIFT).

Car Financing

Car Financing is one of the major renowned products of Bank Al-Falah and can be utilized in
terms of Financing of Used Vehicles, Loan against Car, Balance Transfer Facility,
Refinancing Facility (only for Al-Falah Customers) and it is characterized in terms of:

 Lowest Mark up

 Lower Insurance

 Quick Processing

 Lower Down Payment

Rupee Travelers Cheque

Rupees Travelers Cheque are as good as cash and are accepted at the major shops, travel
agents, hotels business establishments and all over the country and abroad. This service is

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being offered to facilitate instant fund availability to travelers and business people who used
to carry a large sum of money with them.

Online Banking

To provide enhanced and value added products to customer bank is constantly striving for
additional facilities. Bank provide fully automated on-line telephone banking facilities to its
customers enabling them to carry out banking transactions like balance inquiries, statement
requests, product information and exchange rate.

Credit Cards

Bank Al-Falah Visa Card is everywhere and globally accepted and welcomed at locations
displaying the VISA logo. It is accepted at nearly 30 million merchants and 870,000 ATMs in
more than 150 countries around the globe and over 10,000 establishments in Pakistan. Al-
Falah VISA pays for shopping, travel, entertainment, meals and much more. There are 3
major types of Al-Falah credit cards.

Automated Teller Machine (ATMs)

The bank offers 24 hours self service banking facilities to it customers on country wide basis
through deployment of Automated Teller Machine. This system allows the banking facilities
such as cash with drawls, cash deposits, and funds transfer, balance inquiries, account
statements. All ATMs are linked through a state-of-the-art Satellite Based Communication
System which offers 24 hours real time service.

Home Financing

Major features of Bank Alfalah Home Financing are Lowest Mark-up, Quick Processing,
Multiple Repayment Options and Free Valuation. It has been bifurcated in terms of “Home
Buyer, Home Construct, Home Improver, and Home Balance Transfer Facility”.

Financing Limit : up to Rs. 10,000,000/-

Tenure : up to 20Years

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Equity Participation : 30% Borrower / 70% Bank

Organizational Structure & Departments:

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Chief Executive Officer

Co-Chairman Central Management Committee

Group Heads

Regional Managers

Area Managers

Hub Managers

Branch Managers

It’s a general hierarchy of bank which is showing about the main authorities of Bank Alfalah
Limited who are controlling its management in Pakistan. Bank’s management is divided into
different groups, regions and areas. Co-chairman is providing supervision to group heads that
are responsible for controlling the affairs of different groups. After group heads in the
hierarchy, there are regional, hub and area managers who are managing and guiding the
working of different branches of bank.

Board of Directors

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The board of directors has the authority in guiding Bank affairs and in making general
policies. Some directors are the personnel of the Bank Alfalah Limited follows

H.E. Sheikh Hamdan Bin Mubarak Al Chairman

Nahayan
Mr. Abdullah Nasser Hawalileel Al- Director
Mansoori
Mr. Abdull Khalil Al Mutawa Director
Mr.Khalid Mana Saeed Al Otaiba Director
Mr. Ikram Ul-Majeed Sehgal Director
Mr. Nadeem Iqbal Sheikh Director
Mr. Sirajuddin Aziz Director & CEO

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Board Audit committee

The board audit committee is guiding in the affairs and in checking the policies made by
board of Directors. Some auditors are the personnel of Bank Alfalah Limited.

Mr. Abdullah Nasser Hawalileel Al- Director

Mansoori
Mr. Khalid Mana Saeed Al ofaiba Director
Mr.Nadeem Iqbal Sheikh Director

Mr. Yasar Rashid Sectary

Auditor A.I Ferguson & co

Chartered accountant

Chief Operating Officer Mr. Shakeel Sadiq

Company Sectary Mr. Hamid Ashraf

Registered Office B.A.Building

I.I. Chandigar Road

Karachi.

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Departments of BAL:

 Account opening Department

 Accounts Department

 Trade Finance Department

 Agriculture Department

 Clearing Department

 Cash Department

 Credit Administration Department

 Human Resource Department

Accounts opening Department

Account opening department is one of the departments that come under the general banking
facilities provided by Bank Alfalah Limited. This department maintains all formalities of the
accounts and account holders like it account name, account holder’s name, code number and
full address. Different debit and credit voucher come from different department like clearing,
Remittances, Cash, Foreign exchange and advances posted against some of the major deposit
accounts opened

Accounts opening department is one of the departments that come under the retail/general
banking facilities provided by Bank Alfalah. Some of the major deposit accounts opened by
Bank Alfalah are as follows:

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Major Deposit Account Products:

Current Account

Current Accounts are non interest bearing accounts that have a minimum account opening
requirement of Rs. 10,000. No zakat is deducted on the accounts balance. Furthermore all
current account holders receive a Hilal debit card and there are no restriction on the number
of withdraws or deposits made to and from the account.

Profit& Loss Saving Account

Profit& Loss saving accounts can be opened with a minimum balance requirement of Rs.
5,000 and profit is credited on a half yearly basis. There are no restrictions on the number of
deposits and withdrawal made to and from the account and all account holders receive a Hilal
debit card as well. Profit and loss saving account cannot be opened by a business corporation,
however can be jointly opened by individuals. Profits are paid at 2% on all account balances.

Basic Banking Account (BBA)

Basic Banking Account was introduced by banks on an order by the State Bank of Pakistan
and is current in nature. There is no minimum balance requirement for BBA, however initial
deposit must be Rs 1000. Maximum two withdrawals and deposits are allowed by Cheque,
while there is no restriction on ATM withdrawals.

Royal Profit Account

Royal profit accounts are opened with a minimum balance requirement of Rs 50,000. The
basic aim of this account is that the higher the balance the higher the return, as profit is
credited on a monthly basis. The profit paid to account holders is as follows:

Profits paid on Royal Profit Account

Amount Profit pa.

From Rs.50,000 to 999,999 2.50%

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From Rs.1,000,000 to 4,999,999 3.50%

Rs.5,000,000 and above Negotiable

Kifayat Account

Kifayat account is another saving account product that can be opened with a minimum
balance requirement of Rs 10,000, with a maximum limit of Rs 1 million. Profit is calculated
on a monthly basis, while it is credited on quarterly basis. Bank Alfalah pays 7% pa interest
on Kifayat Account.

Mahana Amdan Account

Mahana Amdan account is Term Deposit Receipt (TDR) for three years that can be opened
with a minimum balance requirement of Rs 100,000, with a maximum limit of Rs 15 million.
Profits are paid at 10% pa, credited on a monthly basis. Other features of this account include
free personal accident insurance and automatic renewal for another 3 years, after the expiry
of original period.

Alfalah Education

Alfalah education is a one year TDR that can be purchased by people having school going
children’s. A person can purchase a unit for Rs 100.000, with a maximum of 3 years. This
TDR pays 7%, paid at maturity and gives an additional advantage of giving monthly school
fee of the children’s if the breadwinner of the family dies.

Requirement of Account opening:

Standard Requirements

 Photocopy of computerized N.I.C

 Photocopy of passport, if computerized N.I.C not available

 Introduction( Existing Account Holder of Bank Alfalah)

 Account opening form duly signed and completed by all concerned parties

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 Vermicular form if signature are not in English

 Any photo ID if computerized N.I.C is not carrying a photo

 Two passport size photographs with thumb impression for illiterate

The requirements of these accounts are as follows

 Individual account

 Company account

 Partnership account

 Clubs / Association accounts

 Trusts

1) Individual Accounts

There are two types of individual accounts

1. Salaried individual

2. Self Employed

Salaried Individuals

 Employment certificate by the employer acknowledging the individual as employee

along with his salary, designation and period of employment on the letter head and
signed under rubber stamp of company

 Attested copy of service card, or any other acceptable evidence of service

Self Employed

 Copy of N.T.N certificate of the individual

 A letterhead along with a rubber stamp for proof of business or any other acceptable
evidence for verifiable source

 For sole proprietorship, letter from the proprietor confirming proprietorship

2) Company Accounts

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 In this case the following documents are required

 Copies of NIC of Directors of the company

 Certificate of incorporation of business

 Certificate of commencement of business(in case of Public Limited Company)

 Article and Memorandum of Association

 Latest copy of Form-29

 List of Directors

 Copy of Board Resolution

3) Partnership

 Attested copy of partnership deed duly certified by notary public and signed by all
parties of the firm

 Attested copy of computerized N.I.C of all partners

 Rubber stamp of all partners

 Partnership mandate on the firm’s letterhead to operate the account

 Attested copy of registration Certificate

 Attested copy of N.T.N certificate

4) Clubs / Associations / Societies

 Certified copies of rules / By laws

 Certified copies of certificate of Registration

 Resolution of the Governing body / Executive committee for opening of account

authorized the person to operate the account and attested copy of computerized N.I.C
of that authorized persons.

 An undertaking by all the authorized person on the behalf of the institution

mentioning that any change will be informed to the bank immediately

5) Trusts

 Attested copy of certificate of registration

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 Attested copies of Computerized N.I.C of all trustees

 Certified copy of instrument of trust

 Board Resolution resolving to open and operate the account

 Certified copy of By- laws.

Account Opening Procedure:

The procedure of opening the account is as follows.

Account Opening Form:

First of all, the customer fills the account opening form (AOF). Filling of account opening
form includes type of account, currency of account, name, address, signature of customer and
signature of introducer and attach a photocopy of national identity card. He also signs an
undertaking that he will follow the rules and regulations of the bank.

1) Introduction:

The signature and account number of the account holder introducing the account to the new
person is obtained on the account opening form.

2) Specimen Signature Card:

The signature of the client is obtained on a specimen signature card (S.S Card). The card is
obtained with two signatures from the customer. Every time a Cheque is received for
payment from the client, the signature on the Cheque is verified by comparing it with S.S
Card.

3) Requisition slip

A requisition slip for Cheque book is also given to the customer. The customer fills it and
gives it to the account opener.

4) Know Your Customer Form

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Every account holder fills this form. The basic purpose of this form is to get some
information about the customer.

5) Account Number:

When all the formalities are completed, an account number is allotted to the customer and all
the information is entered into the computer and register. Then that account number is written
on S.S Card and account opening form.

6) Depositing of amount in account:

The client deposit cash in the account. For this purpose cash pay-in-slip is used. The
minimum initial deposit is fixed for each account according to the nature of account. For
example for PLS / saving account the minimum requirement is Rs.5,000 only.

7) Issuance of a Cheque Book:

After opening an account with the bank, the account holder makes a request in the name of
the bank for the issuance of a Cheque book. Such a request is known as Requisition Slip.
BAL issues Cheque books of at least 25 leaves. When he used this book completely then he
can apply for another. This process takes a day because the Cheque books comes from
Karachi head office.

8) Entry of Cheque Book:

Before issuance of a Cheque book the bank stamp every leaf with the account number of the
customer, enter it in the Cheque book register and computer and issues the Cheque book to
the customer after his signature on the register.

9) Filing of AOF:

Account opening forms are basic documents of the contract therefore these are filed in
numerical order and kept for reference.

10) Letter of Thanks

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A letter of thanks is prepared. One letter is for the customer and one for the introducer. One
copy is send to the customer and the other copy is kept in the record along with other
documents.

Amendments in Accounts:

BAL provides the facility of amendments in accounts, whenever required by the customers.
Account holder gives an application along with necessary documents to the bank. Then the
amendments are made in the account of the depositor. These amendments can be made by
filling certain application forms.

These forms are as follows:

 Change of Address Form

To change the address of the account holder

 Change of signature form

To change the signatures of the customer.

 Liability / Inquiry Form

This form is used if some person has acquired loan from the bank and he wants to close his
current account, then he fills this form and this form is send to credit department. When the
credit department declares him free from any debt obligations then his account is closed.

 Vernacular Form

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This form is used when some person wants to sign in any language other than English.

 Mandate to the third party to operate the account

This form is used to enable any third party operate the account.

Closing of accounts

The procedure of closing of account is as follows.

 First of all the customer gives the request to close the account.

 His signatures are verified.

 He withdraws all his money from his account but in case of current account Rs. 150 is
deducted as a charge of closing the account.

 A liability form is send to the credit department if he has taken a loan from the bank.
If he is cleared from all the liabilities then further proceeds are taken.

 Permission is granted by the authorized person (the manager).

 Account is closed in the computer system.

 Hic specimen signature card is attached with the account opening form and marked
closed.

Accounts Department

Every transaction which takes place recorded in the computer so all transactions in
different departments are forwarded to account department. Since all vouchers from different
departments are forwarded to current department so this department tallies all such
transactions with current department after maintaining the ledger of each department.
Following are different functions performed by this department:

 Budgeting

 Reports

 Funds management

 Activity checking

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 Reconciliation

 Foreign exchange, old Account Contracts

 Maintenance of fixed assets and calculation of their depreciation

 Test Keys

Budgeting

The main task performed by the accounting department is the preparation of the budget.
Budget is based on forecasting and their own inspiration for future, whereas forecasting is
based on past performance. This is one important task on the basis of which funds are
allocated to various branches and also the targets are determined. The targets determined
Deposits, Advances, and revenues. Every branch prepares its own budget for the fiscal year
and then budgets of all the branches across the country are consolidated at the head office in
Karachi. In this way a consolidated budget is also prepared.

Fiscal year of the bank starts from January to December. Accounting department starts
preparing the budget from October for the next year.

Before the preparation of budget the bank reviews its sources and funds it has and the uses of
those sources.

The main sources of the bank are the follows:

 Deposits, Capital, Borrowing from other banks, etc

The main uses of a bank are the follows:

 Advances, Investment in securities, placement in interbank markets,

Other things which are undertaken into account while formulating the budget are:

 Income, Expenses, etc.

The revenue target is fixed keeping in view the past performance. The cost of generating
these revenues is also estimated. Then budget of each branch is submitted to head office for
modifications and for approval. After the modification and approval the budget for a specific
branch is being set by the head office. Monthly budget meeting is held to analyze the monthly

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performance by all the branch mangers with head office. The actual performance is compared
with the estimated and variance is calculated.

Reports

In Bank Alfalah many types of reports are being prepared. These are daily, weekly, monthly,
semiannual and annual reports. These are generated from the main frame and are used for
proper analysis. The following reports are generated daily from the main frame which are
being used by the accounts department for the preparation of their own reports:

 Statement of affairs:

It includes information about assets, liabilities and their balance. Daily position of deposit
and advances are also calculated in this report.

 Subsidiary Statement:

This is a detailed report which includes all the information regarding the statement of affairs.

 Income and Expenditure report:

It includes all the details regarding to both the heads of income and expenditure in detail.

 Royal Profit Report:

It includes the details of the deposit of royal profit account.

 Currency wise report (ccy):

It provides the details of all the deposits currency wise.

 New Fcy report:

This report includes the information regarding only the new foreign currency accounts. The
old foreign currency accounts are those, which were at the time of nuclear explosions in
Pakistan and were being freezed by the Nawaz Sharif government.

 Sub 66 Report:

It contains income, expenditure, general ledger accounts and their balances.

Now following are the reports, which are being prepared with the help of the above reports:

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 Daily position of advances and deposits:

This report is being sent to the head office daily in which the detail is given regarding the
new accounts of deposits and advances.

 Statement of affairs:

This report includes assets and liabilities. Two copies of this report are made daily, one is
sent to the area office and one to the head office for analysis but the format is different for
both of them. Statement of Affairs also prepared at the weekend for the whole week as well
as at the end of a month.

 Monthly Budget Review Report:

This report is made to review the performance of the month by calculating the variance. And
then if the variance is in negative, positive actions are taken and reasons will also be
mentioned in the report.

Activity Checking

Activity checking is the process of the entire banking, which has taken place. A report known
as activity report is prepared on daily basis. The report specifies every vouchering, which has
taken place. Sorting is made according to the mainframe-generated report. All the vouchers
are checked that whether they are properly posted or is there any transaction left to be posted.
This checking makes the working of the bank more efficient and avoids any loopholes.

Maintenance of Fixed Assets and Calculation of their Depreciation

Account department maintains the record of fixed assets. The accounts department calculates
the depreciation the assets by using straight line method. Depreciation is the allocation of cost
of the asset over the useful life. Depreciation is accrued on monthly basis and charged at
year-end. Department prepares Asset purchase report and Asset sale report after every six
months.

Depreciation is charged at the following rates:

Building 2.5%

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Furniture 10%

Carpets & curtains 25%

Equipment 20%

Test Keys

Test is a coding system used to authenticate money transactions between banks. Whenever
money is transferred through TT, the concerned officer requests the accounting department to
apply test to the message. The test is applied to the message; three copies of this message are
prepared. One goes to the test key department, one to the Telex/fax operator and the third one
goes to the department record. When the TT is received at the other end, this test is verified.
The transaction will be carried out if and only if the test matches with their own test.

Banks have arrangement with other banks with which they have quite a large volume of
business and it is beneficial to have a direct arrangement with these banks. This test
arrangement can be with banks within country and outside country. For example BAL has
test arrangements with ABN Amro N.Y, American express N.Y, Citibank N.Y, etc. When
this arrangement is carried out a test key is provided to the concerned bank, which contains
codes. This test key is different for every bank. This test key is also different for inward and
outward TT.

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Trade Finance Department

Trade Finance involves the import and export activities. This department provides protection
to the rights of importer and exporter. The function of this department is to serve as a bridge
between the importer and exporter in order to settle a transaction. When trade is taking place
between the representatives of two countries (exporter and importer), the exporter involves
his bank (the Advising Bank) in the transaction, as he wants to feel secure regarding timely
payment of his goods in the required currency.

Trade Finance Department handles two activities:-

 Import

 Export

IMPORTS

Import Department of BAL deals with the import of merchandise. Import can be defined as:

“The bringing of commodities into Pakistan from outside by sea, land or air.”

Requirement for the Importer

These requirement / document must be fulfilled from importer before doing the import:-

 NTN (National Tax Number) certificate

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 Sale Registration Certificate

 Membership from Chamber Of Commerce

 Questionnaire duly filled in

 NIC (attested copy)

EXPORTS

Exports are major sources of earning foreign exchange and play an important role in the
economic development of the country. It helps to utilize excess resources of the country.

“Exports mean selling goods to another country.”

Exports of all eligible commodities through authorized banking channels are admissible
under exchange control regulation.

Requirement for the Exporter

These requirement / document must be fulfilled from exporter before doing the export:-

 Account holder of Bank Alfalah Limited

 Must be a Pakistani

 Membership from Chamber Of Commerce

 NTN (National Tax Number) certificate

 The person must have the Sales Tax Registration Certificate.

 Form E ( export form) dully filled in

 Sale Registration Certificate

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Methods of Doing International Trade

 Letter of Credit

 Contract

LETTER OF CREDIT (L / C):

LETTER Of Credit (L / C) ADVISING

Letter of Credit (LC) is a written and conditional undertaking by a bank on the behalf of
applicant to the beneficiary to pay a certain amount at a certain date; if the stipulated terms
and conditions are complied with.

The process of International Trade starts with asking of importer to its bank for L/C. Then
importer’s bank will be called as issuing bank. The issuing bank sends the L/C to Bank
Alfalah Limited. A bank that receives the L/C is called an advising bank because after
receiving the L/C, it performs the L/C advising function. A cover letter is prepared and is sent
to the beneficiary of the L/C, advising him his L/C has reached Bank Alfalah Limited and he
should collect it immediately. A copy of the L/C is sent along with the letter.

ISSUANCE OF E-FORMS

Government has provided facility to exporter in taking E-Form from any bank and is a part of
the exchange control mechanism of the State Bank of Pakistan. When an exporter receives an
L/C, his next job is to get an E-form from an authorized Bank.

On the E-form sent by the commercial bank following things are mentioned

 Description of the commodity

 Quantity of the commodity exported

 Amount realized

 Foreign bank charges

 Country of the importer

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CERTIFICATION OF THE E-FORM

After filling in the complete information about the goods to be exported, the exporter brings
the E-form to the bank for verification. Bank issues E-form certification to exporter and he
submits it to the custom officer along with E-form certification to certify E-form.

Documents

After getting the E-form verified the exporter starts preparing his shipment. Banks only deal
in documents. In order to receive payment from his goods the exporter has to send certain
documents to the issuing bank via his negotiating bank. These documents are.

Bill of exchange

A bill of exchange is an instrument in writing containing an unconditional order, signed by

the maker, directing a certain person to pay a certain sum of money only to, or to the order of,
a certain person or the bearer of the instrument. It is drawn by the exporter (drawer) and
orders the importer or the importer’s bank (Drawee) to pay to the order of Bank Alfalah
Limited (payee) a specific amount. If the draft is drawn at sight, the importer must make the
payment on receipt of the documents. If it is time draft, the payment must be made within the
specified time limit.

Commercial Invoice

The exporter prepares it. Its amount must tally with that of the L/C. It shows the name and
address of the importer as well as the invoice number. This number is very significant as it is
used in all the correspondence between the exporter and his bank. It also contains all the
specifications of the commodity being exported. The standard definition of commercial
invoice is that it is an itemized list of goods shipped to a buyer, stating quantities, prices, and
shipping charges.

Bill Of Lading

The shipping company or the airline that has been assigned the task of transporting the goods
issues these. The shipper must ensure that the goods are shipped and handed over the right
person when documents are presented to him. The standard definition of a bill of lading is
contract between the seller of the goods and the carrier.

The following are types of bill of lading:

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 OCEAN Bill Of Lading

 Air Waybill

 Inland Bill Of Lading

Packing List / Weight List

The exporter prepares these lists in order to show that the consignment is according to the
order of the buyer. It gives a detailed account of the manner in which the goods have been
packed and the number of cartons they have been packed in.

Certificate of Origin

This document certifies the origin of the exported goods. In the case of exports from
Pakistan, the certificate of origin shows that the country of origin of the goods is Pakistan.
The certificate of origin is a document in which the exporter certifies to the place of origin of
the goods to be exported.

E-Form

It is a necessity for all exports out of Pakistan. All commercial banks always issue the E-
form in quadruplicate.

 Original: is sent to the custom officer

 Duplicate: Bank receive the duplicate

 Triplicate: is sent to the State Bank Of Pakistan

Export Visa

This document is required when the destination of consignment is Canada, America, and
U.K. Different countries fix quota for different commodities and restrict imports of those
goods with in a specific limit. There fore visa is required which is in fact a permission to
export goods to the specified countries.

Payment by importer

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Exporters bank sends all the documents negotiated in LC to importers bank. Once the
shipment arrives in importing country, documents are kept with the bank until the importer
makes full payment to bank.

COLLECTION / NEGOTIATION:

When the exporter comes to the bank with the documents, he has two options.

 Send them for collection

 Get Them negotiated

Collection

The bank sends the documents on behalf of the exporter to the importer’s bank for payment.
The payment is made in Pak Rupees and the exchange rate is the Buying rate of the day
normally called the T.T. Clean Buying Rate. When the reimbursing bank is to pay Bank
Alfalah Limited it credits its nostro account maintained with it (the reimbursing bank), and
afterwards bank debits the exporter’s account with the local equivalent of the export proceeds
calculated at the TT clean buying rate.

Negotiation

The bank purchases the documents from the exporter i.e. the exporter gets them discounted
before their maturity. For example, the drafts are at 90 days from B/L date. In simple words,
the payment for the exports would be received after three months. The exporter might not
want to block his funds for such a long time. He can get his documents negotiated the day he
presents them to the bank. The exchange rate he will get will however be lower than the TT
clean buying rate because the bank is paying him an amount that it is going to receive after
three months itself.

Contracts are not negotiated however in any case. This is because they are unsafe documents
and the bank does not take the risk.

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Dispatch

The documents brought by the exporter are in the form of sets containing an original and a
number of copies. The number of each document required by the importer is mentioned on
the credit. Usually they are:

 Manually signed commercial invoice

 Bills of lading

 Packing list in quadruplicate

 Bill of exchange

Filing

A separate file is maintained in each case and if the documents have been negotiated, it is
titled FDBP that is the abbreviation of Foreign Documentary Bills Purchased. If the
documents have been sent for collection, a file in the similar fashion is kept but it is labeled
FDBC i.e. Foreign Documents Sent For Collection.

CONTRACT

The exporter might export the goods based on a CONTRACT with the importer. In such a
case, there is no surety to the exporter that the importer will make the payment. The importer
might reject the goods on receipt and deny and payment to the exporter. Therefore, the
contract is an unsafe document. There are two types of contracts.

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Credit Administration department (CAD)

Credit means belief or trust. “The quality of being credible or trustworthy”. Another words
we can define credit as “trust in one’s integrity in money matters and ones ability to meet
payment when due”.

Credit marketing department deals with extending loans (credit facility) to customers before
sanction advice. State Bank of Pakistan (SBP) has prescribed regulations which are called
“PRUDENTIAL REGULATIONS”. Every bank has to follow these regulations. If any bank
violates the regulations it should be liable for penalties.

The Bank Alfalah limited credit is extended on the basis of these rules and regulations. These
regulations tells the term and conditions under which you can extend loans to the borrower
and to what extent.

Credit Facilities

At BAL there are two types of credit facilities

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 Funded facilities

 Non funded facilities

Funded facilities

These are the facilities in which there is direct involvement of cash fund. Following are the
funded facilities.

Current finance “CF”

Term finance “TF”

Finance against foreign bills “FAFB”

Finance against packing and credit “FAPC”

Finance against imported merchandise “FIM”

Finance against trust receipt “FATR”

Non Funded facilities

The facilities where there is no direct involvement of banks fund. There are two types of
unfunded credit line facility, which are as follows:

Letter of Credit (LC)

Letter of Guarantee (LG)

Clearing Department

Banks collect Cheque for their customers that are drawn on other banks. This function of
clearing its customers’ Cheque by a bank is performed for settling payments through the
clearing houses in the State Bank of Pakistan. In cities with no SBP coverage, the clearing is
than supervised by National Bank of Pakistan. BAL also provides a facility of clearing.

Types of Clearing are follows

 Inward Clearing

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 Outward Clearing

Cash Department

Cash department of Bank Alfalah works under the operations department. This department is
given the complete responsibility of cash, as result of transaction in touch local and foreign
currencies. It is also responsible for the book keeping of these transactions and the safe
custody of cash. Out of five counters of cash department one counter is fixing for senior
citizens and females. All counters are dealing at the same time in deposits, withdraw and
online transaction processes.

This department performs the main function.

 Cash receipts

 Cash payments

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Internship experience

I did my internship at Bank Alfalah, chowk Shaheedan Multan branch for a total duration of
six weeks and the departments that I have worked during that time are as follows:

 Account Opening

 Operations

 Accounts

 Credit

First day, I reported to the manger of the branch who gave me brief introduction about the
management and working of the branch, he also check my knowledge about banking by
taking a short interview. Then he introduced me with employees. Total twenty employees are
working with one manger. Security system is very strict, hidden cameras are there. Branch
environment is very good.

1st I worked with Mr. Salman. I learned about KYC ( knowing your customer). In this
department I learned about customers behaviour, and for why he is opening A/C.

2nd I worked in account opening Department with Mr. Sohaib-us-Sabah. I learned how to fill
current and saving deposit slips, how to fill account opening form, KYC (know your
customers) forms, How to update accounts on daily basis, what are the requirements of
account opening what type of document are required. What types of account Bank Alfalah is
offering to the customers. I have learnt the procedure that an account opening officer has to
follow in order to open and maintain an account.

If customer wants to close the account then he has to given written application to head of the
Operation Department. After verifies the signature the account will be close. The Charges fee
is Rs.150.

I also learned the procedure of issuance of Cheque book. When the Cheque book is issued
then the signature of customer is taken on the Cheque book issuance register. Stock of
Cheque books are balanced at the end of each day and kept under safe custody.

3rd I worked with account officer Mr. Rameez & Mr. Naqaash in Account Department. I have
learned all the transactions in different departments are forwarded to account department.

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Since all vouchers from different departments are forwarded to current department so this
department tallies all such transactions with current department after maintaining the ledger
of each department. I have learned how to make the budget which depends on the forecasting
of person. Daily, weekly, Quarterly, Semi annually, annually reports are made that describes
the proper analysis of branch. BAL prepares its reconciliation statements. All the debit and
credit entries of the main office account are recorded in the statement. Then it is checked with
physical vouchers and if there is any problem, they reconcile it.

Account department maintains the record of fixed assets. The accounts department calculates
the depreciation the assets by using straight line method

Depreciation is charged at the following rates:

Building 2.5%

Furniture 10%

Carpets & curtains 25%

Equipment 20%

Working Experience Impact on career

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

feel that I m better prepared to enter the world of professional work. I have come to know and
have been appreciated by a number of professionals who are lending their services to the
banking sector for more then a decade. I feel honored that I have worked such experienced
professionals.

The overall experience of my internship was very good. I learned 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 gain knowledge about banking which I
previously lacked and many more products being offered by the bank. No doubt this
internship gave me the experience, which would boos my confidence to work in future.

Duties and Responsibilities

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My duties and responsibilities are as follows:

 Maintain a good relationship with the bank senior staff.

 Create a good and effective learning environment in the bank,

 Equally deal all the type of people belonging to any type any gender, race,
religion etc.

 To help the senior staff during working hours to reduce his work load.

 Whenever a customer comes to open their account, they have to fill a

relationship with the bank. As part of my duty I had to fill these forms and
then use the appropriate bank stamps to complete these forms.

 Maintain the secret information of customer accounts.

Accomplishment

The main purpose of internship is to get a practical experience in the market and to get some
practical knowledge. Usually the period of internship is short but we can learn a lot from this
period. First time in my life when I was doing some reasonable practical tasks.

 I learnt how to implement my MBA knowledge on this job. I learnt what the practical
implementation of the book knowledge is

 It was first time in my life to work whole day in the company with full responsibility,
to go in time and to off in time.

 I learnt from this short period of job is punctuality.

 The other thing is dressing, professional dressing matters a lot. By seeing my senior
and colleagues I start to copy them in dressing.

 It was a big achievement for me, that I learn how to do the work in team and group of
people. Working in team should be learnt.

Problems

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For any job skills and abilities are acquired to perform the job but in case to perform
professional task then man should perfect and have a lot of skills to perform any type of task.
But during the internship I faced some problems

 There is no proper way to give proper training to internee.

 Lack of skill with dealing with different type of customers

 Difficult to perform work in excel because major work is done on excel.

 Operate different type of computer program especially in software.

 Acquired the skill of communication & other professional skill.

 Lack of Knowledge how to face problems encountered.

Strategies:

Marketing Strategy

This is an age of competition. Numerous organizations are providing financial services to the
customer. These days everyone is facing pressure of competitors. In this world of growing
competition, the only way to survive and grow, for an organization, in the market place is the
proper marketing and promotion of its products. Same is the case with banking companies.
There is large number of foreign and local banks working in the country and it has been
noticed that they are emphasizing much on their marketing strategies. In this scenario, the key
for a bank to succeed and attract its customers is adequate promotion of its products
&services. BAFL for the promotion of its new and existing products invest heavily, it
advertises its product through:

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• Electronic media i.e. television

• Print media i.e. newspaper

• Billboards

• Business magazines

• Website

• Sponsorship

Electronic media

The major way in which today’s organizations promote its products and services is through
television, not only because it’s economical but also because the visual and audio aids help in
promoting its product.

Television ads for Bank Alfalah mainly try to emphasis the ‘The Caring Bank’, message in its
advertisements, by showing how its services can help you with the different financial
problems that you face in your every day life. For example, an advertisement showed how
Bank Alfalah Credit Cards helped a couple when they had no cash left during a shopping trip
or how a father happily shows his family a new car that he had financed from Bank Alfalah.

Another major way in which Bank Alfalah advertises its products electronically is through its
website, which is designed in an effective manner with detailed information, so that visitors
can effectively know about the different services that the bank provides.

Print media

Print advertisements are another major way in which Bank Alfalah advertises its product to
the masses. Print media advertisements are mainly printed in major English and Urdu
newspapers across Pakistan.

The messages of these advertisements are mainly of new financial services that the bank may
introduce over time.

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Sponsorships

Bank Alfalah also gives a significant consideration not only to its product publicity but also
to the creation of public relations. Bank has proves its public goodwill by contributing money
and time to public service and activities. Bank Alfalah has been sponsoring different sporting
tournament, especially cricket which is the most popular sports activity of Pakistanis and is
watched by millions whenever there is a tournament featuring the Pakistani cricket team and
is thus a great way to advertise their products. Some of the tournaments that Bank Alfalah has
sponsored over the year are as follows:

Series Sponsored By Bank Alfalah

Series Year
Pakistan Vs England 2005
Pakistan Vs West Indies 2006
Pakistan VS South Africa 2007

Now days, BAFL is sponsoring the cricket rankings updates on Ten Sports.

But due to terrorism no series is held in Pakistan from previous three years. Now the BAL
focuses on the domestic series sponsorship.

Competitive Strategy

Despite notable economic uncertainties, the financial strength of Bank Alfalah Limited has
greatly enhanced during the previous years. The successful expansion program proved their

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capability and commitment in comparison with the competition in the financial sector. The
Banking structure in Pakistan comprises of:

 Central Bank

 Commercial Banks

 Investment Banks

 Development finance Institutions (DFIs)

 Specialized Banks

 Foreign Banks

 Bank Alfalah is a private commercial bank so the major competitors of Bank

Alfalah are the following:

 Muslim Commercial Bank

 Union Bank Ltd

 Soneri Bank Ltd

 Prime Commercial bank

 The bank of Punjab

 Bolan Bank Ltd

 Bank Al-Habib Ltd

 ABL

 Faysal Bank Ltd

 Platinum Bank Ltd

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Financial Analysis:

Balance Sheet

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Profit and Loss Account:

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Horizontal and Vertical Analysis:

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BALANCE SHEET Horizontal Vertical

ASSETS 2008 2009 2008 2009 2008 2009
Cash and balances with
treasury banks 32,687,335 35,056,012 100% 107% 9% 9%
Balances with other banks 21,581,043 22,722,639 100% 105% 6% 6%
Lending to financial
institutions 3,315,500 14,947,435 100% 451% 1% 4%
Investments 75,973,238 99,159,957 100% 131% 22% 26%
192,671,16 188,042,43
Advances 9 8 100% 98% 55% 49%
Other assets 9,869,367 14,649,380 100% 148% 3% 4%
Operating fixed assets 13,773,293 14,492,194 100% 105% 4% 4%
Deferred tax asset
348,990,76 380,070,05
TOTAL ASSETS 4 5 100% 109% 100% 100%
LIABILITIES & EQUITY
Bills payable 3,452,031 3,766,144 100% 109% 1% 1%
Borrowings from financial
institutions 13,690,222 20,653,921 100% 151% 4% 5%
300,732,85 324,759,75
Deposits and other accounts 8 2 100% 108% 86% 85%
Subordinated loans 2,571,169 7,570,181 100% 294% 1% 2%
Liabilities against assets
finance lease -
Other liabilities 11,291,280 10,006,786 100% 89% 3% 3%
Deferred tax liabilities 208,465 179,851 100% 86% 0% 0%
331,946,02 366,936,63
TOTAL LIABILITIES 5 5 100% 111% 95% 97%
REPRESENTED BY
Share capital 7,995,000 13,491,563 100% 169% 2% 4%
Reserves 3,166,056 3,587,969 100% 113% 1% 1%
Inappropriate profit 3,447,467 2,690,728 100% 78% 1% 1%
Surplus on revaluation of
assets 2,436,216 2,363,160 100% 97% 1% 1%
Total EQUITY 17,044,739 22,133,420 100% 130% 5% 6%
348,990,76 380,070,05
Total Liabilities and Equity 4 5 100% 109% 100% 100%

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INCOME STATEMENT Vertical Horizontal

2008 2009 2008 2009 2008 2009
10,472,28 10,907,13
Mark-up/return/interest income 3 2 100% 100% 100% 104%

Provision against loan and advances 2,035,997 3,694,546 19% 34% 100% 181%
Provision for diminution in value of
investment 1,479,062 317,164 14% 3% 100% 21%
Bad Debts written off directly 28,298 59.817 0% 0% 100% 0%
3,543,357 4,071,527 34% 37% 100% 115%
Net Mark-Up / intreset income after
provision 6,928,926 6,835,605 66% 63% 100% 99%

NON MARK-UP /INTEREST

INCOME

Fee, Commission and brokerage

income 2,116,818 1,913,004 20% 18% 100% 90%
Dividend income 300,943 248,217 3% 2% 100% 82%
Income from dealing in Foreign
currency 914,845 1,019,732 9% 9% 100% 111%
Gain on sale of securities 424,261 688,924 4% 6% 100% 162%
Unrealized (loss) /gain Investments -181,571 2,849 -2% 0% 100% -2%
Other income 1,247,628 1,309,527 12% 12% 100% 105%
Total Non mark-up/ Interest income 4,822,924 5,182,253 46% 48% 100% 107%
11,751,85 12,017,85
0 8 112% 110% 100% 102%
NON MARK-UP/ INTEREST
EXPENSES

10,923,50
Administrative expenses 9,805,790 7 94% 100% 100% 111%
Other Provisions/Write Offs 28,582 -1,419 0% 0% 100% -5%
Other charges 122,758 79,454 1% 1% 100% 65%
11,001,54
Total non mark-up/ Interest expenses 9,957,130 2 95% 101% 100% 110%
1,794,720 1,016,316 17% 9% 100% 57%
Extraordinary / Unusual items
Profit Before Tax (PBT) 1,794,720 1,016,316 17% 9% 100% 57%
Taxation
-Current 1,730,051 1,066,301 17% 10% 100% 62%
-Prior years -85,613 -179,674 -1% -2% 100% 210%

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-Deferred -1,151,019 -767,346 -11% -7% 100% 67%

493,419 119,281 5% 1% 100% 24%
Profit After Tax (PAT) 1,301,301 897,035 12% 8% 100% 69%

Ratio Analysis

Ratio Analysis is a most common tool used by individuals to conduct a quantitative analysis
of information in a company’s financial statements. Ratios are calculated from current
year numbers and are then compared to previous years, other companies, the industry, or
even the economy to judge the performance of the company.

Ratio analysis is an important and age-old technique of financial analysis. A financial ratio is
a relative magnitude of two selected numerical values taken from an enterprise's financial
statements. Often used in accounting, there are many standard ratios used to try to evaluate
the overall financial condition of a corporation or other organization. Financial ratios may be
used by managers within a firm, by current and potential shareholders (owners) of a firm, and
by a firm's creditors. Security analysts use financial ratios to compare the strengths and
weaknesses in various companies. If shares in a company are traded in a financial market, the
market price of the shares is used in certain financial ratios.

Ratios are important and helpful in the reference that:

 These simplify the comprehension of financial statement and tell the whole story of
changes in the financial conditions of the business.

 These provide data for inter-firm comparison. The ratios highlight the factors
associated with successful and unsuccessful firms, also reveal strong and weak firms.

 These help in investment decision in case of investor and lending decision in case of
Bankers etc

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1. CURRENT RATIO

Formula and Calculation:

Rs.(000) 2009 2008

Current assets 57778651 54268378

Current Liabilities 24420065 17142253

2.37 3.17

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Graphical Representation:

Interpretation

Financial position of BAL is strong in 2008 as compare to 2009. This ratio tells us about
short term solvency of the organization

Current ratio is showing better trend in 2008. Cash balance is increasing in 2009 as compare
to 2008.

2. CASH RATIO

a. Formula:

Cash Ratio = Cash Equivalent / Current Liabilities

b. Answers:

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Rs.(000) 2009 2008

Cash Equivalent 35,056,012 32,687,335

Current Liabilities 24420065 17142253

1.43% 1.9%

c. Graphical Representation:

d. Interpretation:

Cash ratio describes the declining condition for the bank. If the cash ratio increases it
is better for the bank. It shows the financial condition of the bank.

3. DEBT RATIO

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a. Formula

Debt Ratio = Total Liabilities / Total Assets

b. Answers:

Rs.(000) 2009 2008

Total Liabilities 366936635 331946025

Total Assets 389070055 348990764

0.94% 0.95%

c. Graphical Representation:

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d. Interpretation:

Debt Ratio describes the firm’s debt position as well as its liabilities. it also describe
the level of financial risk. If the ratio is high then it is negative sign for bank. The
ratio is decrease slightly but it is not good for bank overall.

4. WORKING CAPITAL

a. Formula:

Working Capital = Current assets – current liabilities

b. Answers:

2009 = 57778651 - 24,420,065 = 33,358,586

2008 = 54268378 - 17142253 = 37,126,125

c. Graphical Representation:

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d. Interpretation:

Calculation shows that the working capital has been decreased in 2009 as compare to
the previous fiscal year 2008.

5. RETURN ON EQUITY

a. Formula:

Return on Equity = (N.P.A.T / Share holders equity) X 100

b. Answers:

Rs.(000) 2009 2008

N.P.A.T X 100 897035 X 100 1301301X100

Share holder equity 19442692 1359727

4.6% 9.6%

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c. Graphical Representation:

d. Interpretation:

Return on equity describes the shareholder earned on their investment in any

firm. it also describe the profitability of the company. Return on equity in 2009
reaches in lowest position as compared to previous year.

6. NET PROFIT MARGIN

a. Formula:

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Net Profit margin = N.P.A.T x 100 / Sales

b. Answers:

Rs.(000) 2009 2008

N.P.A.T X 100 897035 x 100 1301301x100

Sales 35554930 31046583

0.28% 0.43%

c. Graphical Representation:

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d. Interpretation:

Profit margin tells how much profit a company makes, this ratio shows the decline
in profit margin in 2009 as compared to fiscal year 2008.

SWOT Analysis:

SWOT stands for strengths, weaknesses, opportunities and threats. SWOT analysis is a
careful evaluation of an organization’s internal strengths and weaknesses as well as its
environmental opportunities and threats. In SWOT analysis the best strategies accomplish an
organization’s mission by exploiting an organization’s opportunities and strengths while
neutralizing its threats and avoiding its weakness. During my internship I also observe these
factors of bank and made a conclusion which is as follows

Strengths

 Being the private organization its main aim is not to earn profit but also to satisfy its
customers and slogan of BAL is also the representative of this purpose as Bank
Alfalah “The Caring Bank”.

 Bank has AA (Double A) and A1+ (A one plus) Credit Rating for long term and short
term loans respectively.

 Main source of profit for any financial institution is public saving which only comes
from public confidence and BAL is getting this confidence which is one of the main
strengths of bank

 Bank Alfalah is also getting fame in the market due to its name “ALFALAH” which
is leaving the Islamic and favorable impact on the minds of public.

 BAL is providing the facility of Money Gram to its entire people who are its customer
or not and through this service it has got the leadership in Money Gram because any
other bank is not offering this service.

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 With in very short period it has got a superb accomplishment which shows the
competency of top management.

 Personnel of Alfalah are well trained and highly skilled.

Weaknesses

Beside all these strengths I also noted some weaknesses in the operations of bank Alfalah
which are described below:

 Bank Alfalah is charging online charges for transfer of money but some other banks
not charge online transfer charges.

 Majority of the workforce consists of young professional, they lack in their

experience. And sometimes lack of experience becomes a hurdle while serving to the
customers. It is the point where they feel difficulty while competing with the other
banks.

 It was observed that at present the motivation level of the employees is not very
much.

 No job rotation for employees..

 BAL’s lending procedure is quite complicated that some people hesitate to come as
they are requiring a huge file of documents.

 Bank Alfalah is not offering any credit facility for students.

Opportunities

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It is mandatory to try to make progress with consistency as well as to adopt changes with
needs of time, in order to cope up with both conditions.

 Bank Alfalah is spreading its network outside the boundaries of Pakistan and it has
more opportunities to extend this network as State Bank of Pakistan has prescribed
new policies in the prudential regulations.

 In addition to excellent routine banking, it has earned a good name by offering special
products like car, home and credit cards facility. So the penetration of these products
could enhance market shares.

 There is a very good growth trend in the Islamic banking in the country and in the
world as well. BAL has the advantage of having Islamic Banking network and the
growth in this particular field can be very fruitful for the bank, bank has an
opportunity to introduce new products and services in Islamic banking.

Threats

Threats are the negative trends in external environmental factors. As on one side
environment provides opportunities to one organization, on the other hand it also has to face
some threats. Bank Alfalah also has to face this situation.

 The conventional banks those having high growth rate and high market share are
always being a threat

 There is an average not low turnover rate, mainly because of low incentives as
compared to the other banks.

 Large business parties have fewer attractions in being a client of BAL-IBD, mainly
because of excessive amount of documentation

 Other foreign financial institutions like City Bank, Standard Charted etc also having
strong banking policies and there’s a chance that people might move toward these
financial institutions to secure their investments, transactions and related services.

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PEST Analysis

A broad view of market is important when management is interested in introducing better

services for customers. Rapid technological change, global competition and the diversity of
buyers preferences in many markets require the constant attention of the market vouchers to
identify promises business opportunities, see the shifting requirements of the buyers, evaluate
changes in competitors positioning and guide the choice of which buyers to target and
classify them according to respective segments.

Identification of external and macro factors that influence buyers and thus change the size
and composition of market overtime involves initially building customer profiles. These
influences include:

 Political environment

 Economic Indicators

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 Socio cultural environment

 Technological factors

Political Environment

The events in the last couple of years; ever since the sacking of Chief Justice Iftikhar
Choudhary, Pakistan has faced crisis after crisis, including the lawyers’ movement, violence
in Karachi, the Lal Masjid debacle, militancy in FATA and NWFP and its impact on other
parts of the country, the return of Benazir Bhutto and her subsequent assassination, and
current ongoing military operation in Swat– all the above events indubitably made a huge
impact on the economy.

Stability and law and order situation under the political regime is very important for the
economy as a whole. The present state of the government in Pakistan is directly affecting the
policies of banks. Continuous political changes have disrupted the policies and objectives as
each regime brings with it its own agenda. Organizations need time to adjust to one regime
and then work with it towards economic enhancement. Due the wrong policies of the
government, the talibanization also develop in Pakistan and become the international issue in
Pakistan and badly affected the Pakistan repute in the world and promote the uncertain
conditions for the business in the Pakistan. Due to this the investors are not interested in the
Pakistan.

Economic Indicators

The economy of any country directly influences any financial organization. Economic
indicators include Gross Domestic Product (GDP), inflation, balance of payment, debt of the
government.

Pakistan’s economy has witnessed the most challenging period after posting six consecutive
years of healthy economic growth. However, the strong fundamentals were compromised to
prevailing global crises that’s shacked the confidence of global investors and FDI flowing in
the country. The steep rise in oil prices to U$ 147 a barrel, soaring inflation hitting a 24%
mark, huge fiscal deficits and balance of payments issues coupled with plummeting forex
reserves added to the economy’s move to an unstable growth trajectory.

Also the load shading is another factor that affects the Pakistan economy badly. This not the
end of the story after this Pakistan’ economy face lot of problems like bomb attacks in

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Pakistan no electricity and the unstable government, due to this the investor are not invest in
the Pakistan and the existing business men are loosing their business unit due to the loss.

Socio cultural environment

A low saving culture has offset the huge population advantage this is enjoyed by Pakistan.
Also culture is dedicated by the religion, and in Pakistan a significant segment of the
population is reluctant to accept interest for their deposits due to the negative religious
implications of such an act. About 70% of Pakistan’s population is based on rural areas and
literacy rate of the country is very much low, thus making it harder for banks to mobilize
their deposits within these regions.

However, in today world, the customers are becoming more intelligent and through media
they keep themselves up to date. Thus, the lifestyle and expectations of the customers from
the service provider is increasing day by day.

Technological Factors

Banks in the developed world have been turning to heavy IT investments, which differentiate
their products, provide response times, enhance accessibility and improve customer
satisfaction. Though investing in state-of-the-art host banking solution, ATM and POS (point
of sale) networks, visa, MasterCard, and, smart cards, telebanking, internet banking and now
mobile banking are common IT investment in the developed world, it is now that these
products and services are gaining faster acceptance in Pakistan.

In BAFL technology has great effect on the working environment. BAFL is always willing to
introduce new computer systems for keeping its staff up to date. With the successful
implementation of new centralized database system, the bank also achieved remarkable
progress in business process re-engineering, turnaround time compliance by centralizing
outward remittances, account opening and credit administration.

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Conclusion and Recommendations

Conclusion

At present there is no such organization in the world that is free from problem and
challenges. Every concern has to strive and struggle a lot to be more profitable and to get
more competitive edge.

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It has been eighteen years since the establishment of Bank Alfalah, and since its
establishment it has aimed to become the leading bank of Pakistan by that provides
outstanding services to its customers. The bank has seen phenomenal growth in the past few
years by opening more branches in the country, increasing the deposit base, while also
increasing the assets and profits of the bank. The services that Bank Alfalah provides have a
great market penetration not only because of their features but also the profit and markup
rates that they charge. The management of BAFL is taking strategic steps to enable the bank
to emerge as a strong and progressive institution. It is continuing to make efforts to refine its
products and operations to make them more compatible. New deposit schemes have been
introduced and an action plan to maintain revenue growth in future. As the business and
economic conditions remain uncertain, BAL continues to develop the new products like it has
been doing in past.

Recommendations

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After doing internship of six weeks in Bank Alfalah Limited, I would like to give some
recommendations to count over some problems.

 Bank should prefer to promote worker on the basis of their talent and avoid going for
personal like and dislikes. It can be harmful for the organization in the long run.

 In Bank Alfalah, there is misdistribution of work; some people are over burdened with
the work. So I suggest that there should be fair distribution of work in all the
departments.

 Bank Alfalah is only dealing in Money Gram; it should also starting providing the
service of other money transfer lines like Western Union.

 BAL should provide loan to students at low mark up rate and easy terms &
conditions.

 Bank Alfalah Limited needs to use more marketing channels such as radio to make
the public aware of its products and services. In the presence of intense competition
Bank Alfalah Limited has to realize the importance of marketing.

 There are no incentive schemes for employees of Bank Alfalah like scholarship
schemes for employees that want to pursue higher education.

 Bank Alfalah although gives a number of incentives to its employees, like personal
loans at nominal markup but they are only provided to employees that are in higher
ranks.

 Education fees are also returned by Bank Alfalah to its employees, after the have
finished their studies.

 Bank Alfalah Ltd should continuous to expand its business, by increasing its deposit
portfolio through aggressive market penetration strategies.

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Internship Certificate:

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References:

Web Resources

Bank Alfalah (www.bankalfalah.com)

Wikipedia (www.wikipedia.com)

State Bank of Pakistan (www.sbp.org.pk)

Reports & Papers

Annual Report Bank Alfalah 2009

Issues in Pakistan’s Economy by S. Akbar Zaidi

International Finance by Maurice D. Levi

Bank Alfalah Limited. (2009). Alfalah Mahana Amdan Plus [Brochure].

Bank Alfalah Limited. (2009). Alfalah Quick Finance [Brochure].

Bank Alfalah Limited. (2009). Alfalah Milkiat Finance [Brochure].

Bank Alfalah Limited. (2009). Alfalah Karobar Finance [Brochure].

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