Internship Report

On
Financial Performance Analysis of
Al-Arafah Islami Bank Limited (AIBL) Khilkhet Branch.

Supervised By
Md. Shamim Hossain
Senior Lecturer in Accounting Information System
Department Of Business Administration
Manarat International University

Prepared By
Mohammad Aminul Islam
Id:1334MBA01051
Major in Finance & Banking
Masters of Business Administration
Department of Business Administration
Manarat International University

Manarat International University

Submission Date: 18 August, 2014

LETTER OF TRANSMITTAL

18 August, 2014
Md. Shamim Hossain
Senior Lecturer in Accounting Information System
Department of Business Administration
Manarat International University
Subject: Submission of Internship Report
Dear Sir,
With due respect to state that I am a student of MBA (34 th batch), Department of Business
Administration of Manarat International University. I am delighting to submit here with a
copy of internship report for your kind evaluation and appreciation.
I have given my best effort to prepare the report with relevant information that I have
collected from Al-Arafah Islami Bank Ltd and from other sources during my internship
program from 01 May to August 14, 2014 on financial performance analysis of Al-A
rafah Islami Bank Ltd. I have the immense pleasure to have the opportunity to study on
Financial Performance analysis of Al-Arafah Islami Bank Ltd. There is no doubt that the
knowledge I have gathered during the study will help me in real life.
For your kind consideration I would like to mention that there might be some errors and
mistakes due to limitations of my knowledge. I expect that you will forgive me
considering that I am still learner and the process of learning.
Thanking for your time and reviews.
Sincerely Yours,
Mohammad Aminul Islam
ID: 1334MBA01051
Department of Business Administration
Manarat International University

Manarat International University

SUPERVISORS CERTIFICATE

This is to certify that the internship report on Financial Performance Analysis of AlArafah Islami Bank Ltd is a genuine record at the report is done by Mohammad Aminul
Islam, bearing ID: 1334MBA01051 as a partial fulfillment of the requirement of the
degree of Masters of Business Administration from the Department of Business
administration of Manarat International University.

The report has been prepared under my direct guidance and supervision and a record of
genuine work carried out successfully.

Md. Shamim Hossain

Senior Lecturer in Accounting Information System
Department of Business administration
Manarat International University

Manarat International University

Declaration

I am Mohammad Aminul Islam, bearing ID 1334MBA01051, student of MBA program of

Manarat International University, Major in Finance & Banking do hereby declare that the
internship report titled Financial Performance Analysis of Al-Arafah Islami Bank
Limited is an original. The Assigned work is done by me for partial fulfillment of my
MBA degree, as a part of Academic Curriculum. It has not been submitted by me before
for any other degree.

..
Mohammad Aminul Islam

Id:1334MBA01051
Major in Finance & Banking.
Department of Business Administration.
Manarat International University.

Executive Summary

Manarat International University

For economic development of a country, the banking sector plays a vital role. Al-Arafah
Islami Bank is one of the markets leading bank in the banking sector and it has already
proved it presence and contribution in the socio economic prospect.
The internship report titled on Financial Performance Analysis: A Study on Al-Arafah
Islami Bank Limited (Khilkhet Branch) is submitted as a partial prerequisite of the MBA
Program of Manarat International University. The purpose of this internship report is to
learn how to apprise the employees in banking sector. The topic was assigned by my
internship supervisor Md. Shamim Hossain, Senior Lecturer in Accounting Information
System, Department of Business Administration, Manarat International University.
Performance appraisal plays an important role to develop employees performance day by
day in progress of bank sectors.
As a part of my MBA program my internship at this bank for a period of three month.
During this period I have learned about this organization and its workings environments
which inspire me to work on my topic which is Financial Performance Analysis: A
Study on Al-Arafah Islami Bank Limited (Khilkhet Branch). The report segmented into
four chapters.
The first chapter of the report will give an idea about how the report is being prepared and
background, objectives, scope, methodology and limitations of the report.
In my second chapter I have tried to describe detailed description the organization.
Then come to third chapter which is the body part of the report. It mainly focuses on the
analysis of the financial report and statement of the organization. It also describes the
findings of the study which is the important point of the report.
In chapter four I have mentioned Recommendation, Conclusion, Bibliography, and
Appendix of this report.

Acknowledgement

Manarat International University

First I would like to thank almighty Allah for blessing me with the ability to write and
submit this report. A large number of individuals have contributed directly and indirectly
in the preparation of this report. I am thankful to all of them for their assistant and
encouragement. At first I dedicate all the credits to the Manarat International University.
Special mention must be made to some persons from whom I have received continuous
support without which it might not be possible for me to complete the report. Among
them Md. Shamim Hossain, Senior Lecturer of Department of Business Administration
Manarat International University who has spent his valuable time in supervising my study
very closely and cordially. I cannot deny his suggestions to apply new indebted to her
contribution.
I would like to thanks my gratitude to Md. Sharif Chowdhury (Vice-President &
Manager) at Khilkhet branch of Al-Arafah Islami Bank Ltd. I am also grateful to other
personnel of this Bank. They tried their best to manage their valuable time for me in
finishing information, as well as give me suggestion to conduct the study.
I also express my thanks and gratitude to the authority of AIBL to allow me to complete
my practical orientation at their bank and helped me by providing all sorts of information
to prepare of this report. I would like to thank all other officers in this branch to help me
despite tremendous work pressure. I would very much appreciate and sincerely
acknowledge suggestions from friends for improving of this report.

TABLE OF CONTENTS

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Chapter
No.
Chapter:1

Chapter:2

Title
INTRODUCTION
1.1 Introduction
1.2 Background of the Study
1.3 Objectives of the Study
1.4.Scope of the Study
1.5. Methodology of the Study
1.5 Limitations of the Study
Profile of the Organization
2.1 Introduction of Al-Arafah lslami Bank Limited
2.2 History of Al-Arafah lslami Bank Limited
2.3 Corporate Information of AIBL
2.4 Mission of Al-Arafah lslami Bank Limited
2.5 Vision of Al-Arafah lslami Bank Limited
2.6 Special Features Al-Arafah lslami Bank Limited
2.7 Management structure of Al-Arafah lslami Bank Limited
2.7.1 Basic management structure of Al-Arafah lslami Bank Limited
2.8 Shariah Broad of Al-Arafah lslami Bank Limited
2.8.1. Managerial structure of shariah board of Al-Arafah lslami Bank
Limited
2.9 Function of Al-Arafah lslami Bank Limited
2.9.1.Divisional function of AIBL
2.9.1.1.Investment Divison
2.9.1.2.Financial Administration
2.9.1.3. Audit and Inspection Division, H.O.
2.9.1.4.Marketing and Public Relation Division
2.9.1.5.Common Service Division
2.9.1.6.Human Resource Division(HRD)
2.9.1.7.Computer (IT) Division
2.9.1.8.International Division
2.9.2.Department of The Bank
2.10.Products and Service of Al-Arafah lslami Bank
2.10.1.AIBL Deposit
2.10.2.AIBL Investment Products
2.10.3.AIBL Foreign Trade
2.10.4.AIBL SME Banking
2.10.5.AIBL Micro Finance
2.11.AIBL Corporate Social Responsibilities
2.11.1.AIBL Al-Arafah lslami International School&college
2.11.2.Al-Arafah lslami Bank Library
2.12. SWOT Analysis
Analysis & Findings
3.1. Financial Highlights
3.2. Financial Ratio Analysis
3.3. Findings of the Study
Recommendations & Conclusion
4.1. Recommendations
4.2. Conclusion
4.3. Bibliography

Page
No.
8
9
9
10
10
10
11
12
13
13
14
14
15
15
16
17
18
18

CHAPTER
1
19
19
19
19
19
19
20
20
20
20
20
20
21
21
21
22
22
23
23
23

INTRODUCTIO
N

Chapter:3

Chapter:4

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25
26
27
33
35
36
36
37

1.1 Introduction
Banking is one the most competitive industries of Bangladesh that has seen a huge
amount of growth during the last decade. A large number of new banks have made their
places in the industry and yet there are more to register in the list. In such a highly
competitive service industry, the importance of customer satisfaction cannot be deemphasized.
In a Bank there are main three division are remain which are General Banking,
Investment & Foreign Exchange. Investment is main part of the Bank. Basically it is the
main part of a Bank. Because it proper distribution and collection increases cash inflow in
the Bank. This is the main source of owner dividend. A Bank can be disrupted by the miss
distribution of Investment. A bank always wants to maximize the investment but in the
investing time it important to analyze the proposal of the respective client. Actually a
bank growth depends on proper investment.
To keep pace with this situation, we need banking knowledge for future career. If we want
to build our career in banking area, only theoretical knowledge would not help us. As
internship program is established to gather practical knowledge regarding various sector
of economy, I chose to get practical knowledge regarding banking sector and I select AlArafah Islami Limited Bank as my organization to work.
The duration of my program was 3months and during this period, I have learned many
things. I observed that there is a great difference between theoretical knowledge and
practical knowledge. I learned many terms, functions and nature of banking activities. I
also get practical knowledge regarding organizational environment.

1.2 Background of the study

To write a report it is necessary to select topic. A well-defined topic reflects what is on to
be discussed throughout the report. The topic assigned to me by supervisor Financial
Performance Analysis of Al-Arafah lslami Bank Limited. The report has discussed how
Al-Arafah lslami Bank Limited can improve its performance by different types of
banking activities. The general operations of foreign exchange, customer service, cash,
accounts, investment and SME department of Al-Arafah lslami Bank Limited (AIBL)
described and analyzed. The prevailing mode of investment of AIBL is analyzed to a large
extent. A brief comparison between Islamic Bank & conventional Bank is made. To
analyzed the financial performance of AIBL, different types of analytical tools are used.
So the Title of the report is Financial Performance Analysis of Al-Arafah lslami Bank
limited especially focusing on Khilkhet Branch.

1.3 Objectives of the study

Manarat International University

Broad Objective
The main objective of this report is to gather knowledge about Financial Performance
Analysis of Al-Arafat Islami Bank (Khilkhet Branch).

Specific Objectives
The specific focuses of the study are:
To evaluate different ratio of AIBL and detect the problem involved and obtained
relevant solution.
Evaluating Financial Performance of AIBL with its peer groups.

1.4 Scope of the Study

Internship experience plays a vital role for every student to implement their theoretical
knowledge and get a practical knowledge from any organization. A student can
implement this internship experience in his future work area. Al-Arafah Islami Bank
Limited gives me the opportunity for gathering practical experience and preparation
Of the report. Finally I prepared this report under the supervision of Md. Shamim
Hossain, Senior Lecturer in Accounting Information System, of Manarat International
University.

1.5 Methodology of the Study

Data Collection
The report is based on the basis of information collected from primary and secondary
sources. Primary sources include from branch operation observation. The secondary data
been collected mainly from the annual report, bank website, investment, foreign exchange
related monthly statement.
Primary Sources
Major sources of Primary information have been collected through field survey which is
structured by interview through questionnaire.
Direct interviews with relevant personnel.
Experts opinion
Direct observation
Official records of AIBL
Secondary Source
Sources of secondary information are as follows
Annual Report of AIBL

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Official Website
Relevant books and references.
Relevant paper and publications
Research papers

Sampling:
Population: All Branch of located in everywhere in Bangladesh have
been taken into consideration as population.
Sample: Khilkhet Branch is the vital sample.

Data Analysis Method

In analyzing these data, I used MS-excel to classify the data and locate the pattern to sort
out the data under different head and criteria. The statistical tools are used for in-depth
ratio analysis.

1.6 Limitations of the study

There were a few limitations faced while reaching the objectives of this report. Some of
these following limitations are apparent in this study:

Lack co-operation: It was difficult to communicate with the officers of all

departments of bank most of them were busy with their respective jobs, besides
some respondents were conservative as they were hesitated to express their real
opinion, which is also a constraint for this report.
Lack of Secondary information: Lack of secondary information like sufficient
Books, and other official papers, financial facilities and some other facilities are
not available. So I cant prepare the report, as I want.
Time limitation: Within such a short period of time, it was not possible for me, to
study everything about Al-Arafah Islami Bank. Besides due to time limitation
many factors could not be discussed in this Term Paper.
Poor Bank website: Information that is collected from bank website was not
detailed.
Secrecy: Main limitation of this report was that the bank did not disclose all the
data and main information for obvious reason which was could have been very
much vital.

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Chapter 2

Profile of the Organization

2.1. Introduction of Al-Arafah Islami Bank Limited

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Al-Arafah Islami Bank Limited is a Banking company incorporated in the peoples

republic of Bangladesh with limited liability which was established (registered) as a
private limited company on 18 June 1995 with the objective of achieving success here &
hereafter by pursuing the way directed by Allah and the path shown by His Rasul (SM).
But the inaugural ceremony took place on 27 September 1995. Al-Arafah Islami Bank
Ltd. has 78 branches and a total of 1711 employees (up to December 2010). Its authorized
capital is Taka 5000 million and the paid-up capital is Taka 4677.28 millions as on
31.12.2010. Renowned Islamic Scholars and pious businessmen of the country are the
sponsors of the Bank. 100% of paid up capital is being owned by indigenous
shareholders. The equity of the bank stood at Tk. 9647.45 million as on 31 December
2010, and the number of shareholders was 49,386. It has achieved a continuous profit and
declared a good dividend over the years. High quality customer service through the
integration of modern technology and new products is the tool of the bank to achieve
success. The bank has a diverse array of carefully tailored products and services to satisfy
customer needs. The Bank is committed to contribute significantly to the national
economy. It has made a positive contribution towards the socio economic development of
the country with 78 branches of which 21 is AD throughout the country.

2.2. History of Al-Arafah Islami Bank

Islam provides us a complete lifestyle. Main objective of Islamic lifestyle is to be
successful both in our mortal and immortal life. Therefore in every aspect of our life we
should follow the doctrine of Al-Qur'an and lifestyle of Hazrat Muhammad (Sm.) for our
supreme success. In this context Al-Arafah Islami Bank started its journey in 1995 with
the said principles in mind and to introduce a modern banking system based on Al-Quran
and Sunnah. A group of established, dedicated and pious personalities of Bangladesh are
the architects and directors of the Bank. Among them a noted Islamic scholar, economist,
writer and ex-bureaucrat of Bangladesh government Mr. A.Z.M Shamsul Alam is the
founder chairman of the bank. His progressive leadership and continuous inspiration
provided a boost for the bank in getting a foothold in the financial market of Bangladesh.
A group of 20 dedicated and noted Islamic personalities of Bangladesh are the member of
Board of Directors of the bank.
In the world of consumerism the business organization of the world strive for the
consumers satisfaction as a number one business strategy whatever may be the product of
the organization, either service or non-service. Service is the product of bank. There is a
saying that consumer service starts rights right from the stairs of the bank building. The
guard at the door is first person of the bank, receives a customer with wishes in smiling
face. Al-Arafah Islami Bank Ltd. Was established not only to earn profit and to develop
economy of the country but also it had an ultimate goal to get reward in the Heaven by
banning interest in business. Since its commencement the bank has been trying to achieve
this goal. The Islam loving people specially who are not interested with interest, should
help this Bank giving deposit and taking investment from this bank. Wisdom of the
directors, Islamic bankers and the wish of Almighty Allah make Al-Arafah Islami Bank
Ltd. most modern and a leading bank in Bangladesh

2.3. Corporate information of AAIBL:

Name of the Company

Al-Arafah Islami Bank Ltd.

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Legal Identity

Founder of the Bank

Member of BOD
Nature of Business
Registered Office

Telephone No. and Fax No.

SWIFT Code
E-mail
Web Page
As on December 2010:
No. of Branches
No. of ATM Booth
No. of Employees
No. of share Holders
Stock Summary:
Authorized Capital
Paid up Capital
Face value per share
Total Equity

A public limited company registered in

Bangladesh on 18 June1995, under the
Companies Act 1994 and enlisted in Dhaka
Stock Exchange Ltd. & Chittagong Stock
Exchange Ltd.
Ex-bureaucrat of Bangladesh government
Mr. A.Z.M Shamsul Alam
A group of 20 dedicated and noted Islamic
personalities
Commercial Banking based on Al-Quran
and Sunnah.
Head Office
Peoples Insurance Building (6th 9th
Floor)
36, Dilkusha Commercial Area
Dhaka-1000
Bangladesh.
9567885, 9567819, 9569353, 9568007,
9560198, 7123255-7, F-880-2-9569351
ALAR BD DH* [* means Branch Code]
aibl@al-arafahbank.com
www.al-arafahbank.com
78
1711
49386
Tk.5000.00 millions
Tk.4677.28 millions
Tk.9647.45 millions

2.4 Mission of Al-Arafah Islami Bank Limited

Basically every organization established with some specific purpose to achieving their
organizational goal. This is called mission which is make first before the establishment.
Like as other organization Al-Arafah Islami Bank Limited also establishes with some
specific mission according to the Islamic shariah to meet their goal. The missions of
AIBL are:
Achieving the satisfaction of Almighty Allah both here & hereafter.
Proliferation of Shariah Based Banking Practices.
Quality financial services adopting the latest technology.
Fast, efficient and high quality service to customers
Maintaining high standard of business ethics.
Balanced growth, Steady & competitive return on shareholders' equity.

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Innovative banking at a competitive price.

Attract and retain quality human resources.
Extending competitive compensation packages to the employees.
Firm commitment to the growth of national economy.
Involving more in Micro and SME financing.
Developing social services.

2.5. Vision of Al-Arafah Islami Bank Limited

After setup the mission, the organization tries to implements it, which is called vision. Viz
basically vision is made after setup the mission. To fulfill their deserve mission the
AAIBL ensure the following vision:
To provide quality services to customers.
To set high standards of integrity
To enhance customers trust & wealth, employees value.
To make quality investment with profit loss sharing basis.
To execute the banking activities through Islamic shariah
To ensure the secure banking service through advanced technology
To contribute significantly to the growth of the national economy
To establish an interest free transaction in the economy.
It vision in brief could be stated as,
COMMITTED TO CORDIAL SERVICE

2.6. Special Features of Al-Arafah Islami Bank Limited

As an Islami bank, AIBL has some special features that make it notable in Islami banking
sector are as follows:
1. All activities of AIBL are conducted under a profit/loss based system according to
Islamic Shariah to get the nation rid of Usury.
2. Its investment policies under different modes are fully Shariah compliant and well
monitored by the board of Shariah Council.
3. During the year 2009, 70% of the investment income has been distributed among
the Mudaraba depositors.
4. In 2010, AIBL has included online banking in its wide range of services.
Bangladeshi software has been introduced in this feature to promote the local
developers.
5. AIBL regularly arranges its AGMs (Annual General Meeting). Whenever needed
EGMs (Extraordinary General Meeting) are also arranged.
6. AIBL regularly pay dividend to their valued shareholders. For the year of 2009,
AIBL declared 30% bonus dividend to their shareholders.
7. AIBL believe in providing dedicated services to the clients imbued with Islamic
spirit of brotherhood, peace and fraternity.
8. The bank is committed towards establishing a welfare-oriented banking system to
meet the needs of low income and underprivileged class of people.
9. The Bank upholds the Islamic values of establishment of a justified economic
system through social emancipation and equitable distribution of wealth.

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10. Following the Islamic traditions, it is assisting in the economic progress of the
socially deprived people; in the creation of employment opportunities and in
promotion of rural areas to ensure a balance development of the country.
11. The Bank believes in social and philanthropic activities and has established AIBL
English Medium Madrasha and AIBL Library. More endeavors will inshallah
follow in future.

2.7. Management structure of Al-Arafah Islami Bank Limited

The Management of AAIBL consists of a group of 20 dedicated and noted Islamic
personalities of Bangladesh are the member of Board of Directors who are responsible for
the strategic planning and overall policy guidelines of the bank. Further, there is an
Executive Committee of the board to dispose of urgent business proposals. The Executive
Committee is assembled by nine members. Besides, there is a three member Audit
Committee in the board to oversee compliance of major regulatory and issues.
There is another eight member Shariah Council to accelerate, monitor, control, supervise
and maintain the modes of banking system. Key issues are managed by a Management
Committee headed by the CEO and Managing Director to facilitate rapid decisions. A
board of directors is mainly home country then managing the bank. The board of
directors is for efficient and smooth operation of the bank from executive committee.
Besides a management committee looks after the affairs of the bank.

2.7.1. Basic management structure of Al-Arafah Islami Bank Limited

Chairman

Vice chairman

Directors

Executive president

Secretary

Executive committee

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Audit committee

2.7.1. Managerial Hierarchy of Al-Arafah Islami Bank Limited

Top Level Management

Chairman
Board of Directors
Executive Committee
Managing Director

Additional Managing Director

Deputy Managing Director

Executive Level Management

Senior Executive Vice President

Executive Vice President
Senior Vice President
Vice President
Senior Assistant Vice President
Assistant Vice President

Mid-Level Management

Junior Level Management

First Assistant Vice President

Senior Executive Officer
Executive Officer
Principal Officer

Senior Officer
Management Trainee Officer
Junior Officer

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2.8. Shariah Board of Al-Arafah Islami Bank Limited

The Scholars of high reputation with extensive experience in law, economics and banking
systems and specializing in law and finance as prescribed by Islamic Shariah make up the
AIBL's Fatwa &Shariah Supervision Board. The Board is appointed by the bank's Board
of Directors. The Shariah Board supervises the development and creation of innovative
Shariah -compliant investment and financing products and services. The Board is
empowered to issue fatwas on any matter proposed to it by different business units of the
bank. The Shariah auditors ensure that all the transactions are carried out in strict
compliance to Islamic principles of banking. This framework along with a stringent
compliance to rules has made AIBL the pioneering organization to practice Islamic
finance in true letter and spirit. The name AIBL has come to signify innovation, financial
dynamism, leadership and above all a complete assurance that all the transactions are free
from riba (interest).

2.8.1. Managerial structure of shariah board of Al-Arafah Islami Bank Limited

2.9. Function of Al-Arafah Islami Bank Limited

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The organizational function of AIBL is two types such as Divisional Function and
Departmental Function.

2.9.1. Divisional function of AIBL

The Head Office of Al Arafa Islami Bank Ltd. has 9 major divisions and comprising of
various departments. The major divisions of Head Office are as follows:

2.9.1.1. Investment Division

This division has the authority to determine the party or the client who will get the credit
facility from the bank. The credit clients are selected according to the criteria of credit
policy. This division has the full authority to take any decision against or favor the client
and these divisional works is supported by the Credit Services Division.

2.9.1.2. Financial Administration Division

This division can handle the credit proposal, disbursement, monitoring and credit
recovery position that is given by all branches. Each branch has their own credit division
and all branch-wise activities are supported to the head office credit services division.

2.9.1.3. Audit and Inspection Division, H.O.

This division can control all the financial position, activities of overall organization. They
provide the total budgetary limitation to every department for the respective year. They
also carry out the financing activities with the access and operational activities.

2.9.1.4. Marketing and Public Relation Division

This division mainly works for:

To improve the marketing network throughout the country.

To implement the marketing strategies and the concept of Trade Marketing.
To improve the procedure which is ultimately provided data regarding to
competition and relative market.
To arrange the several workshops and seminar this can improve the quality of
existing officers as a competitive edge position.

2.9.1.5. Common Service Division:

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This division can handle all the genera activities except the credit and financial sector. All
the administration activities are designed and implemented by this division.

2.9.1.6. Human Resource Division (HRD)

This division deals with the employees as the core resources of the organization, basically
emphasis on the recruitment of employees and the employee benefits and services. The
main philosophy of this division is to motivate the employee to work with efficiently and
effectively.

2.9.1.7. Computer (IT) Division

This division can handle the IT activities. Each branch has their own IT division and all
branch-wise activities are studied to the head office IT division.

2.9.1.8. International Division

This division can work on internationally. The entire branch-wise international work is
controlled and monitored by this division.

2.9.2. Departments of the Bank

The Dhaka Main Branch of Al-Arafa Islami Bank Ltd. has been in operations since 18
June 1995. It is in the first floor of the building which holds the Head Office of AAIBL
and remains to be the centerfold of AAIBLs overall branch activities. AAIBL has a total
of 78 branches operating all over the country. The overall branch activities of AAIBL can
be primarily divided into four different divisions. These are:

General Banking Department

Accounts Department
Credit Department
Foreign Trade Department

2.10. Products and Service of Al-Arafah Islami Bank Limited

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Al-Arafa Islami Bank Ltd. launched following financial products and services for its
valued clients:

2.10.1. AIBL Deposit

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

Al Wadeah Current Deposit (CD)

Mudaraba Saving Deposit (MSD)
Mudaraba Term Deposit Receive (MTDR)
Mudaraba Short Notice Deposit (SND)
Monthly Profit Based Term Deposit (PTD)
Al Wadiah Current Deposit (CD)
Mudaraba Short Notice Deposit (SND)
Mudaraba Savings Deposit (MSD)
Mudaraba Term Deposit (MTDR)
Monthly Profit Based Term Deposit (PTD)
Monthly Installment Based Term Deposit (ITD)
Al-Arafah Monthly Hajj Deposit (MHD)
Al-Arafah Termed Hajj Deposit (THD)

14. Monthly Installment Based Marriage Savings

15.
16.
17.
18.
19.
20.
21.

Investment Scheme (MIS)

Al-Arafah Savings Bond (ASB)
Foreign Currency Deposit (FCD)
Pension Deposit Scheme (PDS)
Cash Waqf Deposit Scheme (CWD)
Mudaraba Lakhpoti Deposit Scheme (LDS)
Mudaraba Millionaire Deposit Scheme (MDS)
Mudaraba (Special) Pension Deposit Scheme

(MSPDS)
22. Mudaraba Kotipoti Deposit Scheme (MKDS)
23. Mudaraba Double Benefit Deposit Scheme
(MDBDS)

2.10.2. AIBL Investment Products

Al Arafa Islami Bank Ltd. being an ideological banking organization is firmly committed
to implement and materialize the economic and financial principles of Islam in the
banking arena and thereby to do disparity and establish justice in the trade, commerce,
and industry and build socio-economic infrastructure, create opportunities for
employment and income generation and property alleviation, contribute to the socioeconomic enlistment and sustained economic growth of the country by providing
different types investment facilities. Keeping the same in view, side by side with
Commercial and Industrial Investment operations, many special Investment Schemes
have been introduced by the Bank over the years like:
1.
2.
3.
4.
5.
6.
7.

Investment in Agricultural Sector

Investment in Industrial Sector
Investment in Business Sector
Investment in Foreign Trade
Investment in Construction and Housing
Investment in Transportation Sector
Hire Purchase (HPSM)

8.

Investment Schemes in Masque and

9.

Madrasa (MMIS)
Village and Small Investment Schemes

(GSIS)
10. Small Enterprise Investment Schemes
(SEIS)
11. Consumer Investment Schemes (CIS)

2.10.3. AIBL Foreign Trade

Foreign Trade is one of the pioneer business activities of the bank conducted by and
routed through the International Division. International Division of AIBL has been
functioning successfully having a good number of skilled officials headed by Senior Vice
President who has a long experience in this business line.

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In order to accelerate/promote the Foreign Exchange business of the bank , man power of
this Division has been exerting their all-out efforts in establishing Correspondent Banking
Relationship with world reputed bank , in hunting corporate clients to boost up Import &
Export business by rendering their best and skilled services.
International Division has been giving utmost importance to the functioning of treasury
operation i.e. dealing as it has always been considered as an important avenue for
generating income of the bank. Besides, ID has continuing its utmost efforts to establish
the remittance arrangements with the world renowned companies to bring the wage
earners remittance from the Bangladeshi nationals in abroad to contribute in widening the
national revenue of the country for increasing remittance. As a result significant result has
been made in the Foreign Trade.

2.10.4. AIBL SME Banking

Small and Medium Enterprise (SME) is playing a significant role to the growth of overall
GDP of the country. Of all industrial productions, a huge part stems from SME. In order
to boost up the small and medium enterprises of the country, Bangladesh Bank has
recently advised the commercial banks to enhance the flow of investment and offered
directives and policies to supervise and monitor this sector. As SME has emerged as a
thrust sector, Al-Arafah Islami Bank Ltd. also considers it important to extend and
enhance finance for the same. Keeping this idea in the forefront, the bank has prepared an
integrated policies, methods and procedures for SME investment. With this project, Bank
is working for the following purpose:

To facilitate small and medium level entrepreneurs

To boost up the small business in the country
To facilitate the growth of agro-industries
To create employments
To broaden the base of Islamic Banking in the society
To encourage women entrepreneurs

2.10.5. AIBL Micro Finance

The economy of Bangladesh mostly depends on rural development. Poverty stands in the
way of the growth of this economy. Although a number of NGOs and financial
organizations work in the sub-urban and villages with a view to alleviating poverty, a very
few are found working with the compliance of Islamic Sariah. It is a national
responsibility to alleviate abject poverty from the rural area. To help change the socioeconomic condition of the impoverished people of the villages, Al-Arafah Islami Bank
Limited has initiated a project entitled "Krishi O Grameen Khudra Biniog Prokolpa
(Microfinance). With this project, Bank is working for the following purpose
To facilitate rural entrepreneurs
To reduction of poverty
To creation of job opportunities
To development in agricultural sectors
To develop socio-economic condition of rural people
To save rural people from usury

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To create employment scope

To broaden the base of Islamic Banking in the rural society

2.11. AIBL Corporate Social Responsibilities

Al-Arafah Islami Bank Foundation:
The Bank has a Foundation launching philanthropic activities. Al-Arafah Islamic
International School & College and Al-Arafah Islami Bank Library are major two wings
for launching philanthropic activities.

2.11.1. Al-Arafah Islamic International School & College:

Al-Arafah Islamic International School & College has been established by the Al-Arafah
Bank Foundation with a view to building next generation according to the ideals of peace
and equality of Islam and to establishing banking and other aspects of life in the way of
Islam. The prime aim of this Islamic International School & College is to contribute
towards building human resource and in the broader sense to ensure human welfare. With
the view Al-Arafah Islami Bank Foundation has established Al-Arafah Islamic
International School & College at Dhanmondi in 1998. Such institution up to O level of
its kind is for the first time in Bangladesh.

2.11.2. Al-Arafah Islami Bank Library:

Library is the carrier & reservoir of knowledge. Al-Arafah Islami Bank has shown that
other than generating profit, it can also contribute significantly in the field of providing
good source of knowledge by establishing a public library at 32, Topkhana Road,
Chittagong Bhaban (1st floor), Dhaka, thus strengthening social development. It is
situated in sound, healthy surroundings. It harbors 23,000 books of reference for the
researchers, students, professionals, bankers, physicians, engineers, politicians, writers or
journalists, even for the kids. It is open to all from the year 2000 and well located &
accessible to everybody. It procured some exceptional collection of books on religion,
economics, banking, computer science, business administration, sociology, English &
Arabic language and juvenile literature in Bangla, English, and Urdu& Arabic, which are
very rare.

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2.12. SWOT Analysis:

SWOT analysis means strengths, Weakness, opportunities, and threats analysis.

EWSIOT n hxtW p te r tr e ep aeO r no k r n T nr a t a l l

uFngAa a tne shc si a t t s ly o y r s s i s
Strength of the Bank
Strong liquidity position
Stable source of fund
Strong management team
Largest network of Branches among the Bank
Strengthened and segregated its internal control and Compliance Division

Weakness of the Bank:

Lack of Shariah compatible regulator and supervisory standards
Inappropriate organization of the Shariah Councils and weak follow-up of the
Shariah implementation governance in the lslami banks
Lack of corporate governance in the lslamic banks
Lack of lslamic Money market
Opportunities:
Rising awareness of lslami banking
Provide new employees with appropriate training
Regulatory environment favoring private sector development
Goodwill
Threats:

Increased completion in the market for public sectors.

Absence of an organized lslamic inter-bank money market

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Shrinkage in export, import and guarantee business due to economic slung and
war government rules and regulation.

Chapter
3

Analysis &
Findings of AlArafah Islami

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Financial information and its achievements:

AIBL has continued to deliver consistent, diverse and sustained growth while investing to
underpin future momentum and building balance sheet resilience:

3.1 Financial Highlights of AIBL:

Particulars
Total Capital

Year-2013
Tk. 9,183 million

Year-2012
Tk. 7,747 million

Total Assets

Tk. 107,229
million
Tk. 83,350
million
Tk. 80,592
million
Tk. 82,341
million
Tk. 79,225
million
Tk. 92,569
million
11.40%
1.89%
Tk. 126.76
million
Tk. 2.62 million
Tk. 17.78 million

Tk. 78,800
million
Tk. 62,965
million
Tk. 61,440
million
Tk. 60,066
million
Tk. 48,857
million
Tk. 67,139
million
10.08%
1.91%
Tk. 88.68 million

Total Deposit
Total Investment
Import Business
Export Business
Profit Earning Assets
Capital Adequacy Ratio
Classified Investment
Provision Surplus
Earnings Per Share
Net Asset Value per
Share

Tk. 4.56
Tk. 19.70

Year-2011
Tk. 5,430
million
Tk. 58,921
million
Tk. 47,459
million
Tk. 43,958
million
Tk. 39,543
million
Tk. 29,434
million
Tk. 53,132
million
9.52%
0.94%
Tk. 98.70
million
Tk. 3.13
Tk. 17.98

Deposit an Investment:
In 2008 total deposit of AIBL was TK. 18090.65 million and total investment was TK.155
15.79 million, so they invest 85.77%. In 2009 total deposit was TK.226 18.20 million and
total investment was TK.20616.61 million, so they invest 91.20%. In 2010 total deposit
was TK.342798.79million and total investment was TK.329 18.77 million, so they invest
96%. In 2011 total deposit was TIC 47549.23 million and investment was TK .43958.26
million, so they invest 92.62%. In 2012 total deposit was TK.62514.95 million and
investment was TK.61440.08 million, so they invest 97.58%.
In 2013 total deposit was TK.82404.35 million and investment was TK.8205 7.67 million,
so they invest 99.58%.

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90000
80000
70000
60000
50000

Deposit (Million Tk.)

40000

Investment (Million Tk.)

30000
20000
10000
0
2008

2009

2010

2011

2012

2013

Figure-1: Deposit and Investment Position

Investment gathered increased pace as it reached to 24.73 percent of GDP (19.46 percent
for private investment and 5.28 percent for public Investment) in FY2O1O-11, up from
24.41 percent in the previous fiscal year.
Different years deposits of, A1BL are shown in the above diagram. Where X-axis
represent the years and V-axis represent the take in million. We saw the graph; the trend
of Banks deposits has significantly been improved. During 2011, customer deposit
increased by Taka 13179 million from the previous year. In 2012, it soared up to
T1C62965 million. In 2013 deposit touched 83350 million and trend show that growth
rate will increase.

3.2 Financial Ratio Analysis

I am using three types of ratio analysis in finding the evaluation of financial condition of
Al-Arafah Islami Bank Ltd. Those are profitability ratio, liquidity ratio and solvency
ratio.
1-Liquidity Ratio:
The ability of a business to pay its debt when they fall due is called liquidity ratio. It is the
ability of the business to convert its assets into cash, which is liquid asset. The liquidity
ratio is given bellow:

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Current Ratio:
A liquidity ratio that measures a companys ability to pay short-term obligations is called
current ratio.
The Current Ratio formula is:
Current ratio=Current assets/Current liabilities:
2011
2012
1.74:1
2.30:1

2013
2.32:1

2.5
2
1.5
Currecent Ratio

1
0.5
0
2011

2012

2013

Chart 2: Graphical presentation of Capital Adequacy of AIBL.

Equity Margin:
The equity margin reveals the proportion of bank total assets and total equity.
Formula: Equity margin=total assets/total equity
2009

2010

2011

2012

2013

22.54

14.16

15.05

14.92

11.67

Source: Annual Report 2011& 2012 of Al-Arafah Islami Bank Limited.

25
20
15
Equity Margin

10
5
0
2009

2010

2011

2012

2013

Chart 3: Graphical presentation of Equity Margin of AIBL

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Operating Efficiency:
It is a sign of how efficiently banks are managing its operating expenses keeping in mind
that employees are satisfied. If this ratio increases it affects net operating margin, net
profit margin and ROE in particular.
Formula: Operating efficiency=Total op. expenses / Total op. revenue

Operating
Efficiency

2011
0.30

2012
0.27

2013
0.34

0.35
0.3
0.25
0.2
Operating Efficiency
0.15
0.1
0.05
0
2011

2012

2013

Chart 4: Graphical presentation of Equity Margin of AIBL.

Capital Adequacy:
Capital adequacy ratio refers to the extent to which net worth (current assets- current
liabilities) is satisfactory for safe and sound operation. The higher banks capital betters
the prospect for the banks survival in case of adverse condition. Capital provides a
cushion against unexpected losses. The banks capital adequacy is determined by the
lending activities the bank, that is, by the assets held.

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Formula: Capital adequacy ratio Total capital / risk- weighted Assets

14
12
10
8
Capital Adequacy
6
4
2
0
2009

2010

2011

2012

2013

Chart 5: Graphical presentation of Capital Adequacy of AIBL

2 Profitability Ratio Analyses:
The ability of the business to earn a reasonable return on the owners investment is called
profitability. Profitability ratio analysis is given bellow:
Return on Asset:
ROA is particularly an indicator of management efficiency. It indicates how capably the
management of the bank has been converting its assets into net income. Increase of the
ROA is good for the company.
Return on
2009
2010
2011
2012
2013
Assets
(ROA) (%)
2.60
2.26
2.08
3.01
1.26

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3.5
3
2.5
2
1.5
1
0.5
0

ROA

2009

2010

2011

2012

2013

Chart 6: Graphical presentation of Return on Asset (ROA) of AIBL

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Return on Equity (ROE)

This ratio indicates the degree to which the firm able to convert operating income and
after tax income that eventually can be claimed by the shareholders. ROE is the measure
for the stockholders benefit from their investments. In a sense, investors cause to place
their funds is increasing its value in terms of earning an opposite return.

40
35
30
25
20

ROE

15
10
5
0
2009

2010

2011

2012

2013

Chart 7: Graphical presentation of Return on Equity of AIBL.

The return on equity ratio tells us how much profit earns from the investments the
shareholders have made in their company.
Earnings per Share
EPS measures the returns to the banks to the stockholders. Earnings per Share is
calculated by the following equation
EPS=Net income\ No of Ordinary shares outstanding
50
40
30
EPS

20
10
0
2009

2010

2011

2012

2013

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Chart 8: Graphical presentation of Return on Equity of AIBL

EPS represent the number of money earned during the period on behalf of each
outstanding share of common stocks..This has been calculated by dividing the basis
earning by the weighted average number of ordinary share outstanding during the year. In
the graph we can see EPS was highest level in 2009. In 2010, 2011&2012 EPS is more or
less similar.
3. Solvency Ratio
The solvency ratio measures the size of a companys after-tax income, excluding noncash depreciation expenses, as compared to the firms total debt obligations. It provides a
measurement of how likely a company will be to continue meeting its debt obligations.
Debt to total Asset ratio:
A metric used to measure a companys financial risk by determining how much of the
companys assets have been financed by debt This ratio is calculated by adding shortterm and long-term debt and then dividing by the companys total assets. If the ratio
decrease year to year then it is good for the company.
Debt to total Asset ratio= Long term Debt/Total Asset
50
49.5
49
48.5
48

DTAR

47.5
47
46.5
46
45.5
2010

2011

2012

Chart 9: Graphical presentation of DTAR of AIBL

Debt to Equity:
The debt-equity ratio provides another vantage point on a companys leverage position, in
this case, comparing total liabilities to shareholders equity, as opposed to total assets in
the debt ratio. Similar to the debt ratio, a lower the percentage means that a company is
using less leverage and has a stronger equity position.
Debt to equity measures how the organ is financed and the associated risk. The ratio is
given bellow:

Debt-Equity Ratio =

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Year
Debt to equity

2010
7.16

2011
4.96

2012
5.79

8
7
6
5
Debt to Equity

4
3
2
1
0
2010

2011

2012

Chart 10: Graphical presentation of Debt to Equity of AIBL.

3.3 Findings of the Study

Islamic Banking in Bangladesh has been a tremendous success over the last decade or so.
The annual growth of Islamic banking is 30%. Islamic Banking is based on cordial two
principles laid down in Shariah:

Prohibition of interest.
Replacing it with profit sharing wherever feasible and desirable.

The major findings of my study about Al-Arafah Islami Bank are is the following:
Total deposit of the is accelerating from year to year. In 2012 deposit was
Tk.62965 (in million) and in 2013 it boosts up to Tic. 83350 (in million).
Amount of investment in fixed asset if AIBL is well satisfied. In 2012 the value of
fixed asset was 1,473(in million) and in 2013 it was Tk.1, 525(in million).

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The equity margin started to decline from 2009. It again raised at 2011 and fall at
2012. That means that this bank is a bit dependent on the outside debt rather than
theft own sources. In the year 2013 equity margin decrease by huge percentage
that is indicating that bank become highly dependable on outside debt rather than
own sources.
The capital adequacy reveals that the capital adequacy ratio is decreasing from
year 2009. The capital fled of AIBL is increased by TIC 5018 taka (in million)
during 2010. On the other hand the total risk weighted assets increased by 6595
taka (in million) in the year 2013. That means, AIBL is depending on more outside
liabilities (Debt) rather than inside liabilities. It is better for stock holders. It also
enhances the risk amount.
From our analysis operating efficiency, it is found that the company is incapable
of meeting its mission of cost reduction. It is likely that banks stockholders can
be discontented from its performance.
ROA ratio indicates the profitability on the assets of the firm after all expense and taxes.
The analysis of return on total Asset ratio shows that from 2011 ROA is decreasing but in
2013 ROA decreased a lot But as ROA is still positive so this is not a big problem for the
Bank..
AIBL are accelerating from 2009 to 2012 in ROE. In 2010 ROE was 30.71% but
in 2013 it fall down 13.80%. The graph-7 shows that AIBL in the year 2013 earn
less profit from the year20l2.that are not good sign for a bank.
AIBL is falling to implement the Islamic modes of investment in its true sense.
Conventional bank can invest their excess liquid amount in approves securities
and in other banks crisis. But-AIBL cant take this opportunity due to the
existence of interest element in the transaction.
AIBL has shortage of trained manpower specially in handling Islamic Investment
mode.
In cannot invest in long-term profitable projects based on Mudarabah principles.
Lack of promotion and advertisement.

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Chapter
4

RECOMMENDATI
ONS &
CONCLUSION

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4.1 Recommendations of the Study

According to the financial statement of AIBLs it seems that financial condition fluctuates
year to year for various reasons and circumstances. In order to improve in these areas,
Ive tried to make some recommendation for AIBL Investment division.
It has to invest their extra liquid money. By increasing investment scope, AIBL
can proper utilize their idle money through Shariah.
ROA decline in a great volume in 2013. Managements most important job is to
make wise choices in allocating its resources.
Debt to total Asset is increasing day by day. It means that AIBL is dependent on
the outside source. So they should invest more in and minimize.
From our farther analysis on operating efficiency, we find net operating margin,
net profit margin and ROE ratios have turned down. In the year 2009 operating
efficiency ratio was lower that indicating that bank is capable to earn more
revenue compared to operating expense but in 2011 the operating efficiency ratio
goes up that means bank is incapable to lower theft operating expense compared
to revenue. We can recommend that the bank can lessen this problem by trimming
down their operating expenses.
As their ROE is decreasing so their bank authority should more careful about their
ROE ratio. They should increase their equity holding earning in this aspect.
Number of branches and ATM booth has to be increased.
Bank use different software for operating the work, which refers old system
Management, has to be concerned about that.
By arranging various seminar and symposium, it can possible to understand the
people about Ha1a1, Haram & Shariah and influence them to increase Halal
business.
To run Islamic Banking Law in Bangladesh, the authority of AIBL should create
pressure to the government.
By provide sufficient manpower skilled, especially on Islami aspect, can increase
their investing assets in proper way.

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4.2 Conclusion:
Today the banking service is very competitive, so the real from the practical
materialization of customer dealing procedure during the whole period of my practical
orientation in AL-ARAFAH-ISLAMI Bank limited I have reached a firm and concrete
conclusion in a very confident way. I believe that my realization will be in harmony with
most of the banking thinkers. It is quite evident that to build up an effective and efficient
banking system to the highest desire level computerized transaction is must.ALARAFAH-ISLAMI Bank Ltd. is a new generation Bank. It is committed to provide high
quality financial services/products to contribute to the growth of G.D.P of the country
through stimulating trade and commerce, accelerating the pace of industrialization,
boosting up export, creating employment opportunity for the educated youth, poverty
alleviation, raising standard of living of limited income group and overall sustainable
socio-economic development of the country. AL-ARAFAH-ISLAMI Bank Ltd definitely
satisfies their corporate customers and to maintain this scenario in a more efficient and
prospective manner the Bank can surely accept this project in a cordial manner. To enrich
and maintain a better reputation is the only solution to make a business more progressive.
From the starting period of internship I really enjoyed very much. During this period I can
learn more things and gather more experience about banking sector activities. Actually I
can say that I really enjoyed my internship at AL-ARAFAH-ISLAMI Bank Ltd. from the
very first day. I am sure that this Three months internship program at AL-ARAFAHISLAMI Bank Ltd. will absolutely help me to build up my carrier in the job market.

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3.3 Bibliography
Books:
1. Chapra, M.U, (1995). Toward a just Monetary System. Leicester: The lslamic
Foundation.
2. DR. M. Kabir Hassan at text Book on lslamic Banking, lslamic Economics
Research Bearue, Dhaka, 2004.
3. Rahman, A.A.M.Habibur. lslamic banking
Report:
1. Annual report 2013, Al-Arafah lslami Bank Limited (AIBL).
2. Various types of publication of AIBL.
Website (AIBL)
1. http://www.al-arafahbank.com
2. http://www.bangladeshbank.ord.bd.com

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