01.

INTRODUCTION TO BANK ALFALAH:

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 Islamic banking,
commercial banking and related services as defined in the Banking Companies
Ordinance, 1962. The Bank is currently operating through 195 branches in 74 cities, with
the registered office at B.A.Building, I.I.Chundrigar, Karachi.

Management of Bank Alfalah accepted the challenge to transform this bank into a highly
professional, most efficient & service oriented institution. The management has been
successful in fulfilling the undertaken challenge. It has been successful in making a
significant contribution to both corporate and retail banking in Pakistan.

Over the years, its emphasis on growth has resulted in a strong entity capable of offering
high quality services to a wide spectrum of clients, in a highly challenging business
environment. Its strategy is to maximize the synergies of branch network through an
optimal allocation of financial resources in the face of dynamic challenges of present
financial environment.

Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals
set out by its board of management, the Bank has invested in revolutionary
technology to have an extensive range of products and services.
This facilitates their commitment to a culture of innovation and seeks out synergies with
clients and service providers to ensure uninterrupted services to its customers.  The bank
perceives the requirements of its customers and matches them with quality products and
service solutions. During the past ten years, we have emerged as one of the foremost
financial institution in the region endeavoring to meet the needs of tomorrow today.

Bank Alfalah Limited has continued its upward climb in pursuit of excellence.
Strengthened by the backing of the Abu Dhabi Group and driven by strategic goals set

1
out by its Board and management, Bank Alfalah Limited increasingly inspires trust and
confidence of all its clients. Within a short span of time the bank has carved a significant
niche for itself in the banking industry.

These achievements have been preceded by concerted effort to provide highest levels of
service and value to our customers. The bank aims to further enhance performance
standards through implementation of innovations in both products as well as customer
care, by discovering newer avenues of client benefit. This customer-focused strategy has
enabled Bank Alfalah Limited to evolve as a single source financial service provider of
corporate and retail banking services. Bank Alfalah reputation has been built on its
tradition of high quality and the expertise of its extremely motivated and qualified staff.
With strategic mergers and acquisition, Bank Alfalah has become a leading player in the
global banking arena.

The Bank Alfalah Limited team comprises of dedicated professionals equipped with a
diverse array of skills, vast experience and pro customer attitudes. The management
concentrates its energies on making informed economic decisions, translating it into
greater returns for our investors and customers. This prudent attitude has created a
synergistic organizational structure leading to improvements in profitability and a
sustainable competitive advantage for the bank.

A Highly Responsive Product Portfolio is not only comprehensive but also customizable
to match the needs and preferences of the customers. These characteristics of the
portfolio have helped Bank Alfalah Limited to face challenging economic conditions.
The product lineup continues to fulfill and satisfy the banking requirements of not just
the conventional consumer, but the demanding financial needs of the corporate sector as
well. Today, as Pakistan moves into the 21 st century with its ambitious expansion and
development programs, Bank Alfalah is here to join the efforts to help the country meet
its growth objectives. The bank offers an extensive range of financial services
specifically designed to cater to the needs of its successful associations with the
Government and Private Sect

2
02. HISTORY AND PRESENT STATUS OF BANK
ALFALAH:
Bank of Credit & Commerce International (BCCI) was a Pakistan based bank,
established by Mr. Agha Hassan Abdi from UBL, in association with U.A.E and Europe.
BCCI has its branches in 74 different countries of the world. It had its 3 branches in
Pakistan. In 1991, the BCCI was banned, when was accused by European countries that
the bank was involved in some illegal operations with Gulf countries. The major reason
behind European accusation was that BCCI was of Islamic mode. Therefore, the bank
was closed due to international pressure. Then, its 3 Pakistani branches were taken over
by the Government of Pakistan, which were named as Habib Credit and Exchange Bank
(HCEB) and these were working as subsidiary of Habib Bank Limited.

Following the privatization in July 1997, Habib credit and Exchange Bank assumed the
new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based bank as
the family of H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan purchased 70% of its
shares and 30% shares remained with Habib Bank on behalf of Government of Pakistan.
Since its inception, as the new identity of H.C.E.B 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.

Since 1997, the bank has made great strides towards growth and profitability. BAL
network has expanded from 3 in 1997 to 195 as on March 2009. The deposit base moved
from less than Rs.9 billion to over Rs. 227 billion, advance from 5.8 billion to 109
billion. Being a bank that is focused on financing of foreign trade, volume of foreign
trade business has grown from Rs. 5.8 billion to over Rs. 190 billion as on December
2008.
Charged with the strength of Abu Dhabi consortium, and under the leadership of His
Highness Sheikh Nahayan Mabarak Al-Nahayan, Minister of Higher Education and
Scientific Research, Government of Abu Dhabi, and a prominent member of Royal

3
Family, the bank is energized with the vision, envisaging the development of various
sectors in Pakistan.

03. Mission and Vision

3.01Mission:
“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”

3.02Vision:
“To be the premier organizations operating locally and internationally that provides the
complete range of financial Services to all segments under one roof.”

04. OBJECTIVES OF BANK ALFALAH:

The objectives of Bank Alfalah are as follows:
 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
services. For this the management has adopted the strategy of
 “Caring for you… Our Customers”
 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 other countries of the world.
 To reinforce a corporate culture that fosters learning, creativity and flexibility.
 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 value to the clients.
 BANK AL-FALAH’S SLOGAN

“The Caring Bank”

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05. COMPANY MANAGEMENT SYSTEM:
Management means the administration and the governing body that is concerning the
whole organization. All the decision and strategies are been proposed and evaluated the
management of the organization. At Bank Alfalah, the management is pretty strong and
there is lot centralization in the whole network of the bank. The management at Bank
Alfalah has been divided into 3 major parts i.e. Board of Directors, the Top management,
and the group of middle managers, supervisors and the employees.

5.01-The Board of Directors:

The upper most part of the management is the Board of Directors or the Executives. The
Board of Directors are responsible for the first phase of the management process, i-e,
planning. So, all the decisions and the strategies are being proposed and implemented
under the instructions and the supervision of the board of directors or the executives.
Also the policies and the overall objectives of the Bank are being proposed at this level of
the organization.

5.02-The Top Management:

The top management involves the branch managers and the chief managers of the bank
including the operations managers as well. The major responsibilities include the strategy
formulating for the bank and supervising the whole staff at the branch. They define and
interpret the objectives and vision and then formulate policies for their completion.

5.03-The middle management, supervisors and the employees:

Departmental heads constitute this level of management at Bank Alfalah. They are
directly responsible for planning and controlling the activities of officers. Finally, the

5
 employees whose activities are monitored and controlled according to the desired
objectives

Chief Executive
Officer

Executive
In charge

Credit Credit Audit Internation Marketing Finance

Card al Banking

6
 Branch Setup

Assistant

Credit Credit Operations Consumer Agri

Marketing Mng.Ops Finance Finance
Admin
Help Desk

Accounts Banking
Consumer IT
CD

CRO’S Bkg/Ops/
Accounts
Cash
Cust serv

Clearing/

Collection

Peons Guards Driver

Others

7
06. Departments of Bank Alfalah Taxila Branch:
Following are the departments of Bank Alfalah Taxila Branch:
• Account Opening department
• Accounts department
• Remittance department
• Clearing department
• Credit department
• Marketing department
• Cash department

6.01 Services and Product:

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:
• Accounts
• Lockers
• Car Financing
• Home Loans
• Credit Cards
• Debit Cards
• Funded and Unfunded Loans
• Online banking
• ATM
• DD/PO/TT/PS

6.02- ACCOUNTS:
Some of the main types of accounts that bank provide are:
 Basic Banking Account (BBA)
 Current Account

8
  Profit & Loss Saving Account (PLS A/c)
 Foreign currency account
 Kifayat account
 Kamyab Karobar Account
 Royal Profit Account
 Alfalah Education
 Royal patriot account
 Mahana Amdan account
 Fixed Account/ Term deposit

07. My Internship in Bank Alfalah:

I was been assigned by our department, Bank Alfalah Ltd, Garden Town Branch, Lahore
as my internship organization. There I worked for about eight weeks.
I worked in three departments. I started up with account opening (operations), where I
worked for about three weeks and learned about different types of accounts, and how to
open a new account, etc. I was working under the supervision of the Manager
Operations, Mr. Kashif at my internship in that department.

After working in Operations, I was moved to Credits, where I learned that how finance is
advanced to the clients and different types of facilities the bank is providing to its
customers. There I worked for about two weeks with Mr. Anus officer of CAD
Department.

Taxila Branch has got a wide range of excellent services departments been supervised
under the best ambiance and a very well educated staff. The following list is showing the
main departments Taxila Branch.
 Operations Department
 Customer and Services Department
 Accounts Department
 Clearing Department

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  The Credit Administration Department
Now, I am going to discuss the five departments with which I was in touch during my
internship program. That is, the Account Opening department, the Remittance department
the Clearing department, the Accounts department and the Credits department.

08. THE ACCOUNT OPENING DEPARTMENT:

Borrowing funds from different sources has become an essential feature of today’s
business enterprises. But in the case of bank borrowing funds from outside parties is
more vital because the borrowed capital of a bank is much greater their own capital.
Banks borrowing is mostly in the form of deposits. These deposits are lent out to different
parties such deposit creation is done through open an account in the bank.
The department that is responsible for opening and closing an account assumes immense
significance and holds a central place in the basic banking operations. The Account
opening department was the very first experience of my practical life being working with
a bank, during my internship with Bank Alfalah Ltd.

This department is the best way to start with the banking career or training. This is
because the ways you deal with the customers give a lot exposure to you for the coming
days in banking because the bankers are always in contact with customers as customers
are the biggest source of assets for the bank. I really enjoyed my stay at this department
as I got to interact with the customers directly for the first time. I was given under the
supervision of Ms. Zabida, who is the Incharge of Accounts Opening.

During my stay at this department I got to fill the forms of individuals who wanted to get
their accounts opened at Bank Alfalah Limited, fill the cheque and deposit slips of
customers who were not literate enough or needed instructions, and I also got the
opportunity to give advice to the customers regarding the requirements of account
opening and the benefits of opening an account with Bank Alfalah Limited.

10
Working with the Accounts opening department gave me a lot of courage as it taught me
the way that you should deal with the customers of the bank. Now coming towards the
documentations, stuff requirement at this department for the accounts opening process.

8.01-Types of Account:
 Current Account.
 Saving Account.
 Notice Deposit.
 Term Deposit.

8.02-INDIVIDUAL ACCOUNT:
Any individual or proprietor of business can open an individual account at BAL.
PLS (profit and loss sharing) saving accounts can be opened with the minimum balance
Rs. 5000/- with expected profit rate is 2% on Rs. 25,000 or above. Following
requirements has to be fulfilled for this account.
 Signature of customer on back of AOF.
 Mention next of kin (nominee)
 Name and A/C # of introducer.
 Verified sign of introducer.
 Customer signature admitted by officer.
 N.I.C photocopy attached.
 Letter of thanks.

8.03-JOINT ACCOUNT:
When different people want to or need to share a single account it is called joint account.
The names of persons are written on the title of A/C and on S.S. card.
Joint A/C cannot be opened by single person. Both persons have to sign on cheque. When
two or more person neither partner nor trustee open account in their name is joint
account.
 REQUIREMENTS
 Sign of both customers on back of AOF

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  Sign on joint A/C # mandate
 Name and A/C # of introducer
 NIC copies of both members.
 Mode of operation.
In case of account opened by a business concern there are some documents that are
needed to be attached with the account opening form. The details of these documents are
given below.

8.04-Partnership :
 Partnership deed certified copy
 NIC photocopies of all partners.
 Partnership mandate for account signed by all the partners
 A letter duly signed by all the partners containing the operating instructions of the
account also has to be taken.

8.05-Sole Proprietorship / Individual :

 NIC/ Passport photocopy
 Letter from Proprietor confirming “sole proprietorship”

8.06-My experiences during internship in Accounts Opening
Department:
During my internship at Bank Alfalah Ltd, Taxila Branch, my experience was very good
while working in the said department that is the Accounts Opening Department. This was
the first ever experience of my life regarding working in any professional environment
with practical people working around.

Madam Zubaida (Incharge of Account Opening) was very much keen in telling me all
the details of all the workings of that accounts opening department. I was being
supervised by Madam Zubaida at that critical time who was a very ebullient person and
make me lighten up to a greater extant. Being a former PU student, university fellow and

12
admirer of Hailey College of Commerce, he went very supportive to me. He was also
very hardworking and supportive type of a colleague to me. He taught me each and every
thing that can happen in the accounts opening department also direct me about the
procedures of other banks dealings. Whenever he was busy in doing a work regarding the
accounts opening things he never forgot to tell me what he is doing and what is the
purpose of doing that thing.

During my stay at the accounts opening department, I got a chance to open some
accounts after the approval and due verification from my supervisor Madam Zubaida. He
told all the stamps, which have to be incorporated in the account opening form, to me. I
did mistakes as well while opening of accounts regarding stamping at the correct place
and writing account titles. But he never ever said a word to me regarding that. This is the
thing, which I observed that employees at Bank Alfalah are very cooperative and
supportive. This is the reason why the customer satisfactions provoking all along in the
branches of the bank.

09. Remittance Department:

Remittance department comes under the category of the ‘Domestic Banking’. By
remittance we mean transfer of money from one city to another. Hence this department
deals with the transfer of money using different mode from one place to another.

9.01-PARTIES TO A REMITTANCE:
9.1.1-REMITTER:
One who make a remittance. He comes to the issuing or originating branch, ask for a
remittance to be made, and deposits the money to be remitted. The bank charges him
for the remittance. He may or not be the bank’s customer.
91.2-REMITEE:
Also sometimes called the beneficiary, or the payee (the person to whom the
remittance is made/ the one who receives the payment.)
9.1.3-ISSUING BANK:

13
 The bank that affect the remittances, through the Demand Drafts, Telegraphic
Transfer, or Mail Transfer.
9.1.4-PAYING BANK:
Also known as the drawee branch (The branch on which the instrument is drawn. It
has to make the payment). Usually located in a different city or country.

9.1.5- Pay Order (PO):

Pay orders are made to transfer money within the city and this is a safe way to
transfer money as the person who makes the transfer through pay order pays in
advance. Pay order is usually used for the tenders. When the customer asks to transfer
money within the city, then he fill the money transfer form especially design for
remittance. The officer checks all the details in the application, makes out the charges
for the transfer and then post into the system.

9.1.6- Demand Draft (DD):

Demand Draft is another way in which customers can transfer money outside the city.
It is necessary that person who demands for DD is the account holder of the bank
from where the DD is to be made. When the customer asks to transfer money outside
the city, then he fill the money transfer form especially design for remittance. The
officer checks all the details in the application, makes out the charges for the transfer
and then post into the system.

9.1.7-Pay Slip (PS):

“It is a negotiable instrument like cheque issued by the bank on its own account to
pay a specified amount to the directed person”.
Pay Slips are used to make payment by the bank itself against certain expenses
incurred.

10. THE CREDITS DEPARTMENT:

The sum of money that a bank makes available to client in excess of any deposit Credit
means belief or trust. “The quality of being credible or trustworthy” Another words we

14
can define credit as “trust in one’s integrity in money matters and ones ability to meet
payment when due”

10.01-Types of borrowers:
Individuals:
 Existing account holders staff members
 Close relatives of staff members
 Business sponsored by staff members
 Employees of other banks
 Joint accounts
Businesses Entities:
 Sole proprietorship
 Partnership
 Limited liabilities Company
 Joint venture
 Group account\s
Others:
 Clubs and associates
 Government bodies
 Traders
 Contractors
 Transport, storage and warehousing
 Property dealers
 Manufacturers

10.02-My experience at the Credit Department:

Corporate credits was the second last department in which I was been rotated. The most
important department in any bank is considered to be the Credits department. This is, in
my opinion, is also true due to some reasons. Firstly the reason being that in credits
department, the decision-making skills of a person are explored. When you need to make

15
a decision regarding the credit proposal after due verification, this will give a little stress
to your mind either to sanction the financing or not?
Credits involve very technological procedures and also a lot of exciting activities
because each case varies from the other one. You never become unenthusiastic because
you get an opportunity to walk around new bits and pieces every time.
In this department I worked under the supervision of Mr. Touseef (Credits Officer). He
was also very supportive to me. He taught me the credit line proposal from the first step
till the end of its filling process. In the nutshell, the credits department contributed a lot
towards my decision-making and learning skills

11. CLEARING DEPARTMENT:

Clearing is the arrangement to which collection of cheque, bills and other instruments
payable or deliverable at or through the offices of the members of the clearinghouses for
credit of the customer’s account for speedy and economic collections.
The clearinghouse members are authorized to send their cheque and instruments in the
clearinghouse established in the State Bank of Pakistan.
Clearing house is the gathering of all the members of different banks and institutions
where they deliver or receive the instruments drawn on them for their clearances through
their branches in the city.

11.01-Advantages of clearing:
 Systematic arrangement for the collection and clearance of cheque.
 Speedy and economic collection and clearance of cheque.
 Clearance of cheque and other instruments of different branches of
different banks in a systematic way without any flow or mistake.
 The collection and clearance of government bills, instruments and cheque.
 The collection of government revenue through cheque, pay orders and
drafts payable through State Bank of Pakistan and National Bank of
Pakistan.

16
  It avoids the difficulties and cumbrances faced by the branches if they
collect the instruments directly from branch to branch.
 Confidence among the clearing members is produced.

12. RATIO ANALYSIS:

Ratio analysis includes calculating different ratios for the organization of the figures
taken from its financial statements. The basic purpose of ratio analysis is that absolute
figures often give misleading image so comparison with other figures is necessary which
can be done through ratio analysis. The ratios may be:
 Balance Sheet ratios
 Income Statement ratios
 Mixed ratios

12.1-PROFITABILITY RATIOS:
The continued viability of any bank depends on its ability to earn an appropriate return on
its assets and capital. Good earning performance enables a bank to fund its operations,
remain competitive in the market and increase or decrease in market funds.
“Profitability reflects not only the quantity and trend in earning but
also the factors that may affect the sustainability or quality of
earnings.”

 NET PROFIT RATIO:

Net Profit after Tax X 100
Net markup/interest income after provisions

2008 2009

1325389 x 100 3506737 x 100

21194254 25816457

17
 = 6.25% = 13.58%

Significance:

 It is a more specific measure of sales profit ability. It is used to measure over all
profit ability and hence it is very useful to proprietors.
 The ratio is very useful as if the net profit is not sufficient, the firm shall not be
able to achieve a satisfactory return on its investment.
 It also indicates firms, capacity to face adverse economic conditions such as price
competitions, low demand etc.
 Higher is better is the profitability.

Analysis:
The above ratio indicates that the proportion of profit has seen increase over the years
from 6.25% in 2008; to 13.58% in 2009 the increase is significant. So it is a healthy sign
for bank.

12.2-OPERATING EXPENSE RATIO:

Non Mark Expense X 100
Gross Income

2008 2009

15235688 x 100 16645178 x 100

3290623 6142240

= 436% = 271%

Significance:

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This ratio shows how well the organization is managing its operating cost. Operating
expenses are those expenses which are incurred indirectly for the generation of revenue.
A large portion of these expenses is the administrative expenses which are incurred on
management of the organization. It is necessary to cut down these expenses especially
when interest rates on advances are declining leaving a narrower margin for payment of
such expense. So Lower it is better it is.

Analysis:
Operating expenses for the bank decreased in 2008 from 436% in 2008 to 271%in 2009
and which is a good sign as it shows decreased costs of the banks and hence increased net
income.

450.00%
400.00%
350.00%
300.00%
250.00%
2008
200.00%
2009
150.00%
100.00%
50.00%
0.00%
2008 2009

12.3-ADMIN EXPENSE TO TOTAL DEPOSITS:

Administrative expenses X 100
Total deposit

2008 2009

5952637 x 100 8383322 x 100

239480772 273172088

19
 = 2.49% = 3.07%

Significance:
This ratio measures bank’s ability to cover administrative expenses by spreading over
large number of depositors. Total deposits have been used as base as they are main
business activity of bank. A declining trend is desirable.

Analysis:
In 2008 bank’s administrative expenses were 2.49% and in 2009 they are on rising side
i.e. 3.07% it’s not good for the bank. Bank should try to control its expenses.

3.50%

3.00%

2.50%

2.00%
2008
1.50% 2009
1.00%

0.50%

0.00%
2008 2009

12.4-TOTAL ASSET TURNOVER:

Interest- markup- return earned

Total Assets

20
 2008 2009
21194254x 100 25816457x 100
275511483 330679872
= 7.96% = 7.81%%

Significance:
This ratio indicates the efficiency with which total assets have been utilized to generate
net interest income. If a bank has ROA on a higher side but the relation of net interest
income to total assets is not very significant, this may translate into the fact that bank is
relying on sources of income other than interest income which is not a healthy sign.

Analysis:
It is decreasing which is unfavorable. It means bank is not able to utilize its assets
efficiently in generating its main stream income. It was 7.96% in 2008, 7.81% in 2009.

8.00%

7.95%

7.90%

7.85% 2008

2009
7.80%

7.75%

7.70%
2008 2009

12.5-RETURN ON ASSETS:
Net profit after tax x 100
Total assets

21
 2008 2009

1906672 x 100 5004600x 100

275511483 330679872

= 0.69% =1.51%

Significance:
ROA is the most comprehensive measure of bank’s earning capacity. Net profit margin
ignores ‘efficiency concept’ while total asset turn over ignores earning perspectives.
ROA takes both perspectives into account. That’s why it is most widely used indicator
for representing the earnings of bank over time period. Higher it is better it is. An
increasing trend of this ratio signifies increased efficiency of management of a bank to
improve upon its earnings capacity.

Analysis:
As this ratio explains how much you are utilizing your assets. In year 2009 it is improved
from 1.151% to 0.69%. But still it is not very good, so bank should try to improve it.

1.60%
1.40%
1.20%
1.00%
0.80% 2008
2009
0.60%
0.40%
0.20%
0.00%
2008 2009

12.6-RETURN ON EQUITY:

22
Net profit after tax x 100
Share Holder’s Equity

2008 2009
1325389x 100 3506737x 100
11827209 17414154

= 11.21% = 20.14%%

Analysis:
In real sense ordinary shareholders are the real owners of the company (preference
shareholders have a preference over ordinary shareholders in the payment of dividend as
well as capital. Preference shareholders get a fixed rate of dividend irrespective of the
quantum of Profit Company).The rate of dividend very with the availability of profit in
case of ordinary share only. Thus ordinary shareholders are more interested in the
profitability of the company.

Return of equity of BAL is showing a good situation in year 2009 as compare to year
2008. In year 2008 the return on equity of BAL was 11.21 % and in year 2009 it was
20.14%, this increase shows that company is utilizing its funds properly relating to its
previous year.

12.7-NON INTEREST INCOME TOTAL ASSETS:

Non interest income x 100

Total assets

2008 2009

3290623x 100 6142240x 100

275511483 330679872

23
 = 1.19% = 1.86%

Significance

Non interest income represents fees, commission, brokerage, and other income and extra
ordinary or unusual items if they represent income. Non interest income is also an
important source of banks earnings. While analyzing this ratio the trend of non interest
income to total assets should be considered. Whether the bank has maintained this ratio at
a reasonable level or are there any significant changes over time? If this ratio increases
significantly, then there is a problem with the bank in generating revenue from its
mainstream activities. But on the other hand, high non interest income can also represent
a positive point for a bank. This income represents a diversification from earnings
generated from the taking and placement of money, which is subject to interest rate and
credit risk. An emphasis on fee income is another global trend along with the growth of
capital and rising ROA's.

Analysis
This ratio is increasing in the year 2009 but shows decreasing in year 2008. Over all non
markup income is increasing for the Bank. It is a positive sign.

2.00%
1.80%
1.60%
1.40%
1.20%
1.00% 2008

0.80% 2009

0.60%
0.40%
0.20%
0.00%
2008 2008

24
12.9-NON INTEREST EXPENSE TO TOTAL ASSETS:

Non markup expense x 100

Total assets

2008 2009

= 0.93% = 1.37%
2554019x 100 4535382x 100
275511483 330679872

1.40%

1.20%

1.00%

0.80%

0.60% 2008 2009

0.40%

0.20%

0.00%
2008 2009

Significance:

Non interest expenses represent operating expenses such as administrative expenses, staff salaries and other
charges plus extra ordinary and unusual items if they represent expense. Lower this ratio better it is for the
bank. If the level of non interest expense to total assets is high this will also distort the ROA of the bank.
Non interest expense is a very critical number.

Analysis:

25
This ratio is good when it is low. This ratio is higher in year 2008. It shows non mark up
expense in increasing and it should be controlled.

12.10-RISK ASSET TURNOVER RATIO:

Net mark up after provision

Risk assets

2008 2009

3296623x 100 6142240x 100

149942717 171031183

= 2.19% = 3.59%

Significance:

Advances are the main use of bank’s assets. So it is necessary that bank earns sufficient
value of income on its investment of risk assets. So a steadily rising trend is desirable.

4.00%
3.50%
3.00%
2.50%
2.00% 2008
2009
1.50%
1.00%
0.50%
0.00%
2008 2009

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Analysis:
In year 2009 it is higher than 2008. This is a good sign.

12.11-LIQUIDITY RATIOS:

Liquidity represents the ability of a bank to efficiently and economically accommodate

deposits withdrawal as well as fund increase in assets. A bank has a liquidity potential
when it has the ability to obtain sufficient funds in a timely manner at a reasonable cost.
Illiquidity is a primary factor leading to a bank’s failure whereas high liquidity helps
otherwise weak institutions to remain funded during the period of difficulty.

“Liquidity reflects the adequacy of the

institution’s current and prospective sources of
liquidity and funds management practices.”

12.12-CURRENT RATIO:
Current Assets

Current Liabilities

2008 2009

259122914x 100 311886135x 100

254203477 302091341

= 1.02 = 1.03

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Significance:

Current ratio may be defined as the relationship between current asset and current
liabilities. This ratio is also known as working capital ratio. It is a measure of general
liquidity and is most widely used to make the analysis for a short-term financial position
or liquidity of a bank. It represents the margin of safety or cushion available to the
creditors. It is an index of the bank’s financial stability. It is also an index of the strength
of working capital.

A relatively high current ratio is an indication that the bank is liquid and has the ability to
pay its current obligations in time as and when they become due. On the other hand, a
relatively low current ratio represents that the liquidity position of the bank is not good
and the bank shall not be able to pay its current liabilities in time without facing
difficulties. An increase in the current ratio represents improvement in the liquidity
position of bank while a decrease in the current ratio indicates that there has been
deterioration in the liquidity position of the bank. A ratio equal or near to 2: 1, i.e.,
current assets double the current liabilities, is considered to be satisfactory. The idea of
having doubled the current assets as compared to current liabilities is to provide for the
delays and losses in the realization of current assets. However, the rule of 2 : 1 should not
be blindly followed while making interpretation of the ratio, because banks having less
than 2 : 1 ratio may be having a better liquidity than even banks having more than 2 : 1
ratio. This is so because the current ratio measures only the quantity of current asset and
not the quality of current assets. If a bank’s current assets include debtor which are not
recoverable, the current ratio may be high but it does not represent a good liquidity
position.

Analysis:
BAL has maintained its liquidity position over the years. In 2008 and 2009 there is
increment in ratio which shows it have current assets to pay current liabilities.

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 1.03%
1.03%
1.03%
1.02%
1.02% 2008
2009
1.02%
1.02%
1.02%
1.01%
2008 2009

12.13-INTEREST COVERAGE:
Earning before interest and tax

Financial charges

2008 2009

15235688 5004600
1906672 16645178

= 7.99 =3.32

7.99%

6.39%

4.79%
2008
3.20% 2009

1.60%

0.00%
2008 2008

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Significance:

This ratio measures bank’s ability to pay financial charges. Interest expense is main
expense of bank just like cost of goods sold. So higher the ratio better is the ability of
bank to pay this compulsory obligation and hence better is the liquidity potential of bank

Analysis:

We observe a decreasing trend which is not favorable.

12.14-DEBT TO EQUITY RATIO:

Long term debt x 100

Shareholders founds

2008 2009

263684274 *100 313265718

11827209 17414154

= 22.29% =17.98%

22.37%

19.18%

15.98%

12.78%
2008
9.59% 2009

6.39%

3.20%

0.00%
2008 2008

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Significance:
It shows amount of long term debt per rupee of equity. In case of manufacturing concern,
acceptable ratio is 40:60. This ratio high lights composition of capital employed of bank.
In a banking concern this ratio could be 3:1

Analysis:
Debt equity ratio of BAL is showing decreasing trend. It means that company is trying
to rely on its own resources and increasing its Capital.

13. THE S.W.O.T ANALYSIS OF BANK ALFALAH LTD.

Key External Forces:

 External forces can be divided into four broad categories:

 Social, cultural, demographic, and environmental Forces

 Political, governmental, and legal forces
 Economic forces
 Technological forces, and
 Competitive forces
While performing an external audit, our company gathered the competitive intelligence
and information
About social, cultural, demographic, economic, political, and technological forces as
well. The overall motive was to consider and evaluate the Opportunities and Threats for
the company.
Following can be some of the key opportunities and threats for Bank Alfalah.

13.01-Opportunities:
The opportunities on which bank Alfalah can capitalize upon are delineated as under.
13.1.1-Extension of Local Branch Network:
One of the biggest opportunities for bank Alfalah Limited is to extend its branch network
in Pakistan. The essential pre-requisites for a vast branch network are all there; sponsors

31
have the money, managerial expertise are available, and last but not the least any bank
with ‘Bank Alfalah Limited written in blue at its front is accepted in the market’.

13.1.2-Establishing Foreign Branch Network:

Going global could have been termed as a fad a few years ago, but now for those business
organizations that want to survive and thrive globalization has become the order of the
day. In order to increase the bottom line figure, it really is crucial. But the senior
management would start implementing this course of action once they feel that they have
got a strong hold in Pakistan.

13.1.3-Capitalizing On Information Technology:

The information revolution has certainly made its inroads in almost all human functions.
If Bank Alfalah Limited’s senior management and the IT division make a concerted
effort to make best possible use of this miracle of human mind it would enable Bank
Alfalah Limited to harness unexplored benefits of immense magnitude.

13.1.4-Unexplored Market of Multinational Corporations:

Unfortunately in spite of unprecedented image building efforts, Bank Alfalah Limited
still is an unattractive bank for big multi nationals functioning in Pakistan. If the
management is able to develop a strong relationship with such MNC’s then it would open
doors of huge and unimaginable opportunities for Bank Alfalah Limited. If even a single
MNC becomes a corporate client of Bank Alfalah Limited i.e. it deposits its revenue with
Bank Alfalah Limited, pays its salaries through Bank Alfalah Limited, does trade
dealings through Bank Alfalah Limited, and avails credit facilities offered by Bank
Alfalah Limited, it would make a world of difference to Bank Alfalah Limited.

13.1.5-Customers are more willing:

Muslims are more consciously differentiate the Islamic-base banking from interest-base
banking. That is why there is large caution of expansion.

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13.02-THREATS:
The predominant threats Bank Alfalah is facing at the moment are discussed in the
following lines.

13.2.1-Private Sector Banks:

Bank Alfalah Limited is at present facing really tough competition from not only the first
line international banks (ABN AMRO, Standard Chartered, Citi Bank) but is also having
a neck to neck race with other privatized banks such as Askari Commercial Bank
Limited, Union Bank, Prime Commercial Bank, Faysal Bank Limited, Bank Al-Habib
Ltd etc. All the new schemes launched by these banks and their plans to expand branch
networks are a real threat for Bank Alfalah Limited.

13.2.2-New Trade Polices:

Introduction of new trade policies and laws are also been a source of threats to the
organization due to the imposition of new rules and terrifies, previous maintained
regulations have to be amended.

13.2.3-Network Expansion by Foreign Banks:

Foreign banks have a lot of plus points as compared to Pakistani banks (state owned and
private); they have better products, better and personalized service, desirable interest
rates, foreign branch network, but they definitely lack in local branch network (in
Pakistan). Literary no foreign bank has been able to expand its network to far-fetched
places of Pakistan. Pakistani banks (private banks in general and state owned banks in
particular) are spread all over Pakistan. This is an intangible asset for Pakistani banks.
But if any of the foreign banks expands it network, backed by their traditional powerful
service, then it might prove to be the start of downfall for Bank Alfalah Limited, unless
and until Bank Alfalah Limited raises its level of service and product feasibility to the
international standards.

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13.2.5-Terrorist Image of the Country:
After the 9 / 11 incident every kind of transaction that uses to take place with the outside
world has assumed a different mode. The trade finance transactions are the bread and
butter for the commercial bank, were also hampered by that terrorist attack on 11 th of
September i.e. the magnitude of orders the exporters were receiving decreased by a great
deal, but as far as our image in the international community is concerned there is still a
considerable room for improvement. If this situation further aggravates rather than
improving, the trade finance business would really be hampered, and one of the major
earning avenues for Bank Alfalah Limited will loose its footings. This fact poses a real
threat to the sanctity of Bank Alfalah Limited.

13.2.6-Inconsistency in Government Policies:

This is a phenomenon that could hamper smooth functioning of any organization working
in a particular country. Although the sponsors of Bank Alfalah Limited --- Al-Nahayan
Family --- are really committed to invest more and more in the country but still any
drastic change in either the economic policies like increase in taxation rates, or any
change in the foreign policy, which could hurt Pakistan’s image could also shake the
investor confidence and also could lead to a decrease in the repute of the entire banking
sector of Pakistan.

13.03-STRENGTHS:
The predominant strengths of Bank Alfalah Limited are

13.3.1-Humble Management:
The senior management of Bank Alfalah Limited is considerably humble. Their humility
is an integral part of the organizational culture of the bank. The modern management
techniques have discarded the bureaucratic style of management in which employees
were treated as servants if not as slaves. In the contemporary business world employees
are said to be the biggest and the most crucial assets of a business concern, specifically if
we are talking about a service industry and this is precisely the management policy Bank

34
Alfalah Limited follows. The humility of the management serves as a big morale booster
and encouragement catalyst for all employees in general and new inductees in particular.

13.3.2-Strength and Commitment of Sponsors:

Bank Alfalah Limited is a project of Al-Nahayan family, which is a renowned Abu Dhabi
based investor family. The first project of this particular family was Bank of Credit and
Commerce International (which later on became on of the most renowned banks of the
Muslim world). BCCI was acquired by Habib Bank Limited (a nationalized bank) and as
a result BCCI became Habib Credit and Exchange Bank (H.C.E.B). The bank functioned
under this particular name for six years and then Al-Nahayan family bought 70% of its
shares from Habib Bank Limited and renamed the institute as Bank Alfalah Limited.
Thus in real terms the same family reinvested in their lost project and tried to rejuvenate
their brainchild. This reinvestment shows the investor’s trust, commitment, and
perseverance to transform Bank Alfalah Limited into one of the strongest financial
houses of Pakistan. The “Al-Nahayan” family is a royal family and this fact further adds
to the bank’s inherent strength.

13.3.3-‘Kaizan’:
Kaizan is a process of continuous improvement in production and every aspect of value
added (Japanese). In a very short time span the management of Bank Alfalah Limited has
been able to develop its image in a very effective and efficient manner. Through the
laborious efforts of the top management and the employees, the entire organization as a
whole has been able to continuously add its prestige as a reliable, service oriented, and
flourishing financial institution. When we compare the image of Habib Credit and
Exchange Bank with that of Bank Alfalah Limited we find a world of difference, and
when we compare the image of Bank Alfalah Limited at its inception with its present
image we find an even greater difference. This fact proves the thesis that there has been
continuous value addition. The number of individuals and corporate entities that feel
comfortable while dealing with Bank Alfalah Limited is increasing on a daily basis.
.
13.3.4-Image Building Activities:

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Activities such as building of Alfalah Square at Liberty Lahore, the China Khan at the
Alfalah Square, Alfalah Mini Golf Course, and Shahdin Manzil (proposed main branch,
Lahore at The Mall, under construction) have really contributed a lot towards the image
building process of Bank Alfalah Limited. Such activities also make people aware of the
rejuvenation process of Bank Alfalah Limited. Such activities are classified as strength
because they involve people in the change process that contributes a lot towards building
customer loyalty.

13.04-WEAKNESSES:
The chief weaknesses are enlisted as under
13.4.1-Small Size:
Bank Alfalah Limited is small in size; there is no doubt about this fact. Although, as I
mentioned in the strengths section, the branch network is expanding at a phenomenal rate
but still the size is not big enough as compared to some of the big banks present in the
market. Bank Alfalah limited has 189 branches in the whole of Pakistan. A huge branch
network is always an invaluable asset for any bank. Customers simply love it when they
could see another branch of their own bank at every turn they take. Extensive branch
network might reduce per branch profit but it is very likely to raise the overall profit
figure for the entire organization as a whole.

13.4.2-Lack of Research Cell:

There should be a research cell in the bank, which should be engaged in gathering the
information about the present actions of its competitors

13.4.3-Uneven treatment with customers:

Customers having accounts with small amounts are not given same services and dealing
given to those with high accounts.

13.4.4-Bank Alfalah Limited Does Not Possess Foreign Network:

Foreign banks and some local banks having international network have this edge over
Bank Alfalah Limited. Banking transactions regarding trade finance constitute a very

36
important part of contemporary banking and moreover they are said to be the bread and
butter for the commercial bank. Bank Alfalah Limited, for such transactions has to rely
on its correspondents and agents in other countries, and naturally has to pay them some
remuneration --- an expense banks having foreign network do not have to incur.

14. RECOMMENDATIONS:

It was an interested experience to do internship in Bank Alfalah Limited. The staff was
highly cooperated and due to their help I learned big deal about modern banking. I
suggest that such an internship program highly integrative for the students of commerce
education so that the students should be enquired with the knowledge of practice world .I
do summarize that it would be a great help to me in selection of job or future field of
work.

Here I am putting some suggestions, which will enable the bank to compete with other
banks more effectively & efficiently.

 It is observed that the employees were overburdened so they have to stay at

branch till late at night. In this way their efficiency is affected and hiring more
employees can reduce their work.

 The employees should be signed jobs for specific period and than they should
shifted to other department so that they gain knowledge of other jobs.

 Bank Alfalah Limited should properly advertise and Communicate to public about
the services provided by it, so that more customers will be attracted.

 The bank’s management should give more incentives and pay scale of officers
should be revised & improved.

 System and operations should be more defined and organized.

37
  Administration drawbacks should be improved by the strict control of general
issues.

 Lockers, all these facilities should be provided to attract more customers.

 Expenditures must be control, which are very high.

　15. CONCLUSIONS:

If I have to express my experience of internship in Bank Alfalah Limited Taxila Branch

Taxila I would briefly say:

 Bank Alfalah is a good Organization in the way that anybody can join it for his/
her long-term career. Overall working environment is comfortable. Management
of branch cares a lot of its employees and considers them as the Asset of bank.
Behavior of senior executive of bank is very polite and they are caring about the
individual’s career and their growth

 .However management is very demanding about the targets but good reward at
the achievement of assigned targets is awarded.

 Employees at Bank Alfalah are quite efficient. As Taxila Branch is a new one, its
employees have to bring their bank among the list of good banks. Therefore, they
work more than their working hours and it is all according to their will. It also
shows their loyalty, commitment to organization.

 Employees are given the benefits like bonus, gratuity funds, loans, increments,
and medical.

 All the customers are entertained individually. Same kind of behavior and
attention is given to all the customers. Getting ideas for improvement from
customer side is a new idea and that is working very well in Bank Alfalah Ltd. All

38
 the customers are asked to fill a suggestion form and the standards of the bank are
improved through them.

 Prioritizing its product portfolio in line with its corporate and consumer needs and
wants the bank is committed to develop products that give more value to its
customers in both the sectors.

 In bank, all the work is done on computers. All the entries are made in computer.
Balance is fed into the computer. This increases efficiency of the bank.

 During my internship training I gathered information regarding how a successful

bank operational aspect decorticated with the practical.

 I found my internship training at Bank Alfalah Taxila Branch to be a very

rewarding experience. The training was beneficial because it helpful me to aware
a real life working environment.

So far my learning is concerned; all the employees at branch were quite cooperative.
They helped me to understand the activities of a bank to possible extent. Their good
attitude gave me more confidence to learn more and to ask if I have any query in my
mind. Besides their ever going activities they never get irritant by my questioning. I had
made an honest efferent to present the working & operation of Bank Alfalah Limited
Taxila Branch Taxila in simplest way.

I feel pleasure that I have really gained a lot during 8 weeks & enjoyed working with
experienced cooperative & intelligent staff.

-The end-

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