CHAPTER 01

Introduction to Report
The report has been written as a result of internship work done at Bank AlBaraka Haripur during the
period July-August 2014. The core objective of this report is to discuss the banking operations,
organization behavior and to present the detailed analysis of financial performance of the bank. Along
with this, the unique selling point of bank AlBaraka, The Islamic Banking will also be discussed in
comparison with commercial banking system
1.1Background of the study
The study has been carried as a requirement of the degree with CIIT, the internship is done to get the
practical knowledge of business operations and business policies. And to learn how an organization
behaves in todays dynamic environment and how response to such turbulence affect the performance
of the organization.
1.2Purpose of the study
The purpose of the study is to give comprehensive review of the ABPL to analyze the operational
procedure and financial aspects of banking organization. Besides that, the purpose of the study is

To compare the Islamic mode of banking with commercial banking

To study banking operations and customer care that a banking organization has

To analyze the financial performance of the organization

To recommend the suggestions or the improve

1.3 Data collection methodology

Data has been recorded during the period of internship work at the bank. Data has revealed a lot about
banking tactics, market scope, bank services to fill the market imperfections, and the implications of
its current business policy on the financial performance of the bank
1.3.1 Primary data
Personnel at AlBaraka were highly cooperative in providing data. Data is collected by means of

Personal observations during the eight-week internship program.

Interviews and Discussion with the Bank personnel.

The primary data collected included

use and tactics of financial instruments

1

reporting procedures

1.3.2 Secondary data

Financial analysis has been done through the secondary data. that consist on the financial statements
collected and the background of the organization through

Websites

Journals

Pamphlets

books

1.4 Limitations
Though it was a great opportunity to learn the practical application of business theories and formulas
the study has to be restricted due to
1.4.1 Available time
In the period of 40 days the study couldnt go behind the activities done in regular routine. This has
lemmatized the learning on banking behavior on seasonal changes, its dealing with headquarter and
financial adjustment s during the year.
1.4.2 Secrecy issues
Due to the banking policies and commitments with its customers bankers do not reveal the
information publicly so most of the times some of the information is kept secret.

1.5 Scheme of the study conducted

Internship report is divided to reflect following aspects of study
Chapter One
Includes introduction to the report, objectives, limitations, merits, methodology
Chapter two
It includes background and history of banking services in Pakistan, Historical background of Al
Baraka Pakistan Limited, Organizational Structure, roles, functions and branches.
Chapter Three

Is about the Financial Position and Products and services provided by Al Baraka Bank Pakistan
Limited (ABPL)
Chapter Four
This chapter discusses the financial analysis, SWOT analysis and findings of the study.
Chapter Five
Gives feasible and constructive recommendations for different departments of AIB Branch, Haripur.

CHAPTER 2
Introduction to AlBaraka Islamic Bank Limited

2.1Formulation of the bank

Al Baraka Banking Group is a Bahrain Joint Stock Company, it is listed on Bahrain stock exchange
and Nasdaq Dubai. It is a leading international Islamic bank with Standard long term and short-term
credit ratings of BBB- and A3 respectively. ABG offers wide range of services in the form of retail,
corporate and investment banking and treasury services which are in accordance with the principles
of the Islamic Sharia. The authorized capital of ABG is US$1.5 billion, while total equity amounts to
about US$1.8 billion. Al Baraka Bank (Pakistan) Limited 29 branches of Al Baraka Islamic
Bank B.S.C. since 1991. In October 2010, it acquired Emirates Global Islamic Bank to form Al
Baraka Bank (Pakistan) Limited now present with a total of 110 branches.

2.2 Background
Al Baraka Banking Group was founded in 2002 in Manama, Bahrain. It is a JSC and is listed on the
Bahrain Stock Exchange and NASDAQ Dubai, it offers retail, corporate and investment banking and
treasury services on the basis of the principles of the Shari'a in 12 countries.

2.3 International presence

The global network of Al Baraka Banking Group is expanded in 12 countries, under the AlBaraka and
other brand names.

2.3.1 Al Baraka today

Al Baraka has started with Islamic Finance with a steady growth in beginning. It is now making a
progress in the Pakistani banking sector. From a meager 0.3% share in 2003, Islamic banking
institutions (IBIs) have now captured around 9.9% of the total asset in the banking industry as of June
2012

2.4 Al Baraka (Pakistan) Limited (ABPL)

Al Baraka (Pakistan) Limited (ABPL) has been formed as a result of the first merger in the Islamic
Banking sector of Pakistan. The merger took place between the branch operations of Al Baraka
4

Islamic Bank (AIB) Bahrain, Al Baraka Islamic Bank Pakistan (AIBP) and Emirates Global Islamic
Bank (Pakistan), and thus from 1 November 2010, the operations of the merged entity began in 2013,
the Bank has a national presence in Pakistan with a network of 94 branches in more than 42 cities
across the country.
2.4.1 Islamic banking
Al Baraka Islamic Bank is one of the pioneers of Islamic Banking in Pakistan. It has been operating in
the country since 1991 as branch operations of Al Baraka Islamic Bank Bahrain. During this period
since its presence in the country, the bank effectively developed and sustained its identity as one of
the pioneers in providing Shariah based banking products and services. . Islamic Banking to a system
of banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its
practical application through the development of Islamic economics. While the modern/conventional
principles of banking have been used for prospering the banking businesses but since then Muslim
community is seeking its way out leading to Sharia compliance. Fees for renting money, also called
Riba, usury being Haram in Sharia as well as investing in activities that provide products or services
considered against to Islamic principles (Haraam, forbidden).
All policies, procedures, products and services of ABPL are approved by the bank's Shariah Advisory
Committee headed by Justice (R) Khalil urRehman. Further research and study is brought
consistently to remove any loophole at the presnt banking practices of Islamic banks.

2.4.2 Vision
Al Baraka says
We believe that society needs a fair and equitable financial system which rewards
effort and contributes to the development of the community.
2..4.3 Mission
Al Baraka underlying mission is to meet the financial needs of communities across the world by
conducting business ethically in accordance with the Shariah, practicing the highest professional
standards and sharing the mutual benefits with the customers, staff and shareholders who participate
in our business success.
2.4.4 Core values

Partnership their shared beliefs create strong bonds that form the basis of long term relationships
with customers and staff.

Driven they have the energy and perseverance it will take to make an impact in our customers
lives and for the greater good of the society.

Neighbourly they value and respect the communities we serve. Our doors are always open; our
customers always experience a warm-hearted, hospitable welcome and accommodating service.
5

Peace of Mind customers are rest assured that their financial interests are being managed by us to
the highest ethical standards.

2.5 Strategic planning

Bank alBaraka is highly committed with shariah compliance all the time. It focused on following key
areas for Shariah governance and compliance framework for Islamic banking industry of Pakistan.
Bank AlBaraka does not provide full spectrum of banking products and services, it is rather
committed to provide innovative products that are not contrary to the principles of Islam. Now a days
it has become a major challenge for banks to provide ongoing services continuously to remain
competitive in the market. In this race AlBARAKA Pakistan has not been the winner and is struggling
in the market. With a vision for complying services, dedication to Islamic principles of banking,
increasing network in different countries, and innovative product line, Al Baraka Bank (Pakistan)
Limited is committed to the Banking Industry in Pakistan.
2.6 Corporate profile
Full name
Al-Baraka Islamic Bank Pakistan (Al-Baraka Islamic Bank Pakistan)
Headquarters
162 Bangalore Town, Main Shahrah-e-Faisal; Karachi; Sindh
Status: Non-Listed
Legal Form: Public Limited Company
Operational Status: Operational
Financial Auditors: Ernst & Young Ford Rhodes Sidat Hyder (2010)
Incorporation Date: April 28, 2008
Total Employees: 1,400

2.7 World ranking of the bank

Capital intelligence, a leading market rating agency has rated bank consistent at BB+. In Pakistan bank
has been rated as A by JCR-VIS, for long term and A+ for short term ratings. This rating shows high
future growth perspective and strong support from principal shareholders.

2.8 Organization hierarchy

Board of Directors
Chairman
MahmudJameel Hassoubah
Vice Chairrman
Adnan Ahmed Yousif
Directors

Abdul Latif Abdul Rahim Janahi

Moosa Abdulaziz Shehadah

Othman Ahmed Suliman

Abdul Hameed Mohideen Nazer

Ashraf Al Ghamrawi

Director Executive Committee

Adel Saud Dehlawi

Othman Ahmed Suliman

Members

Adnan Ahmed Yousif

Abdul Latif Abdul Rahim Janahi

Audit Committee
Chairman
Mohamed Isa Al Mutaweh
Members

Moosa Abdulaziz Shehadah

Abdul Hameed Mohideen Nazer

Ashraf Al Ghamrawi

Source: self made

2.9 Bank AlBaraka unique selling preposition
AlBaraka unique selling point are it consistency in compliance with shariah board. ABPL
offers customers Islamic mode of banking filling the gap in Pakistan banking market for
Islamic mode of banking
2.10 Bank AlBaraka prizes and contributions
Al Baraka Banking Group won the first prize for its Implementation of and Compliance
with Corporate Governance Principles at its Head office and subsidiary banks. The prize
also recognized Al Barakas contribution to the development of Islamic banking, its
outstanding achievements in the field and for its regional as well as global standing.
Source Gulf Daily News, November, 2010.
AlBaraka achievements include LARIBA Award for Excellence in Achievement in 2012,
best Islamic financial institution 2014 by global finance magazine.

Chapter 3
Products and Services at AlBaraka Bank Haripur Branch
3.1 Products
3.1.1 Deposit accounts
3.1.1.1 Al Baraka Basic Banking Account
As most of the banking accounts require minimum balance requirements and other
restrictions, so most of the people do not want worry of balance limits. This account does not
requires such criteria. Salient features of this account are mentiond beloow.
Special features

It is a current account with no minimum balance requirements

No profit / return will be paid to the depositor on the balance maintained in the account

Can be opened with minimum of Rs. 100

No minimum balance requirement and no penalty for low balances

Qarz is the basic Islamic principle on which The ABPL Basic Banking Account is based,
using this account the customer becomes the lender and the bank becomes the borrower.
ABPL has a commitment invests customer funds with utmost care in Riba free business
activities only, they are payable on demand, with no addition or penalty.
3.1.1.2 Al Baraka Current Account
Al Baraka current account has been designed so as to help its customers in with day to day
business transactions and personal service needs conveniently

There are no minimum balance charges

There is no limit for deposits and withdrawals

ATM card issue is free with unlimited access to all ATMs, nationwide.

Qarz is the basic Islamic principle on which The ABPL Basic Banking Account is based,
using this account the customer becomes the lender and the bank becomes the borrower.
ABPL has a commitment invests customer funds with utmost care in Riba free business
activities only, they are payable on demand, with no addition or penalty.
3.1.1.3 Al Baraka Savings Account
Al Baraka Savings Account is consist of all facilities of an investment i.e. income, security
and growth. This account is specifically designed to meet the requirements of individuals and
business entities.

Does not include charges for minimum balance

Calculation of profits are made monthly average basis

Profit can be acquired by the customer on monthly basis.

No limits for withdrawl as well as deposits

Customers can earn high profit by keepin high deposits with the bank.

ATM card issue is free of cost and can be accessed to ATM Network, nationwide

Underlying concept of the saving account of Al Baraka is Islamic concept of Mudarabah.

Following this principle the customeris considederd to be Rab-ul-Maal (Investor) and the bank
becomes Mudarib (Fund Manager). It is made sure that customer deposits are being invested
in business which are legal, profitable and Shariah compliant. The profit/loss is shared on a
pre determined ratios which are calculated each year. As Fund Manager, the bank is entitled to
a part of the profit as a service fee, whereas profit distribution is made on the basis of
weightages assigned to the investment of depositors and shareholders at the beginning of each
month.
3.1.1.4 Al Baraka Khazana Account
For those looking for higher profits on this account profit is calculated on average monthly
balance product basis and distributed on a monthly/quarterly basis.

It is started with minimum investment of Rs. 100,000/-

Investment should be in PKR

limitless deposits and withdrawals can be made

Profit is assigned on monthly/quarterly basis and is calculated on a average monthly

balance product basis

Profits are higher as much as balance is high

Underlying principle of Al Baraka Khazana Account is Mudarabah.

Al Baraka Term Deposit
Al Baraka Term Deposit is a perfect solution for customers seeking high profits in a Shariah
compliant way which can secure future. Sales offices at AL Baraka happily assist in designing
an investment plan their customers

It is strated with minimum investment: Rs. 25,000/-

Investment should be in PKR

It can also be in Other currencies likeUSD, GBP, EURO & AED

Available tenures: 1 month, 3 months, 6 months, 1- 5 years

Payment of profit: Quarterly, Bi-Annually, Annually or Maturit

Al Baraka Term Deposit is based on the Islamic concept of Mudarabah.

3.1.1.5 Al Baraka Mahana Amadani
For those customers who are interested in continuous flow of incone Mahana Amadani which
gives competitive profit earnings on savings.
With a minimum investment/ savings of Rs. 50,000, you can enjoy monthly returns.

Profit is calculated monthly

Payment of profit is made monthly

It can be open in Pak Rupee

Time period is 1 Year to 5 Years

Al Baraka Mahana Amadani is based on the Islamic concept of Mudarabah.

3.1.1.6 Al Baraka Business Plus
Al Baraka Business Plus account is mainly for the business customers. By maintaining Rs.
100,000/-, an account holder can avail free services of the Al Baraka Business Plus Account.
Profit is calculated on monthly average balance. Moreover there is a guiding team for a
customer who give financial advice on benefits and use of this account.
Free Services:

ATM Card

Cheque Books

Duplicate Bank Account Statements

Pay Orders

Online Banking Transactions

Hold Mail Facility

e-Statement, continuous Phone Banking & SMS Banking

Al Baraka Business Plus is based on the Islamic concept of Mudarabah.

3.1.1.7 Al Baraka Senior Citizens Account
Al Baraka Senior Citizens Account has been designed to enable senior citizens to
independently carry out the day- to- day banking transactions with convenience and
confidence. This account is suitable for senior citizens who wish to have healthy returns on

their savings. Al Baraka Senior Citizens Account comes along with a wide range of free
services and benefits.
The account provides multiple privileges to the account holder. These are mentioned below

It is opened in Pakinstani currency

Profit is calculated on the basis of weigtages assigned so that account of higher balance can
receive higher profit.

Profit is calculated daily, its effect is revealed on monthly basis in respective accounts.

There is no requirement of minimum or maximum balance.

Unlimited withdrawals and deposits can be made.

Higher returns will be allocated on having balance above RS 25000, below that normal
weightages will be assigned.

First check book is made available to customer free of cost.

Senior citizen account holders will be given annual lockers, payorders and demand draft on
discounted rates.

All other charges as per Banks schedule of charges.

Al Baraka Senior Citizens Account is offered on the basis of Mudarabah principles of Islamic
Banking.
Mudarabah is a special kind of partnership where one partner gives money to another for
investing in Shariah compliant avenues. The investment comes from the first partner who is
called Rabb-ul-mal (Customer), while the management and work is an exclusive responsibility
of the other, who is called Mudarib (Bank).
The Bank will announce weightings and profits sharing ratios 3 days before the beginning of
the month. The Bank will share the profit at the gross income level and will subsequently
credit the proportionate profit in the customers account at the end of the month. In case of
loss, the customer will bear the loss as per the ratio of his investment.
Latest profit sharing ratios and weightings are available on our website or can be obtained
from any branch of Al Baraka Bank
3.1.1.8 Al Baraka Mahana Barkah Account
For the people who are salaried, self employed, professional or even retired, this is the savings
account. Ideal for individuals who wish to:

Place their savings in a Shariah compliant savings scheme.

Save on regular basis and expect good returns on daily balance.

Have the liberty of having no limitation on cash withdrawals.

Invest with an absolute peace of mind!

1

To qualify for Al Baraka Mahana Barkah Account profit rate minimum balance of PKR
10,000 and maximum of PKR 5.0 million is required to be maintained during that month
otherwise normal savings account rate will be applicable.

Profit calculation on daily balance and credited in the account on monthly basis.

Free first Al Baraka Union Pay Debit Card.

Free e- statement.

Free Phone banking services through which pay orders can be places and, cheque books, stop
payments, ATM card replacement, duplicate bank statements at an exceptional discount.

All other charges as per banks Schedule of Charges.

Al Baraka Mahana Barkah Account is offered on the basis of Mudarabah principles of Islamic
Banking.
The Bank will announce weightages and profits sharing ratios 3 days before the beginning of
the month. The Bank will share the profit at the gross income level and will subsequently
credit the proportionate profit in the customers account at the end of the month. In case of
loss, the customer will bear the loss as per the ratio of his investment.
3.1.1.9 Tifl-Young Savers Account
Tifl- Young Savers Account is being offered to youngsters to help them learn the importance
of saving at an early age. it is designed in such a way that it aims to become every youngsters
first bank account. It caters to the new generations future financial needs gradually and
conveniently. Through the benefits of this account, youngsters are motivated to save more
because of the returns they will get based on their savings.

3.1.2 Consumer Finance

3.1.2.1 ABPL Auto Ijarah
Al Baraka Islamic Auto Finance is one of the most distinctive Shariah compliant products
offered by Al Baraka Bank (Pakistan) Limited. It allows to get a vehicle of choice with
comfort and complete peace of mind. This product is ideal for individuals looking for car
financing without compromising their beliefs and values. Al Baraka Islamic Auto Finance is

designed to cater to all the needs regarding the purchase of a brand new, used or an imported
vehicle for your personal use. Now you can steer yourself onto the right path effortlessly.
3.1.2.2 Rahnuma Travel Services
Rahnuma Travel Services has been designed to assist the travelers world wide. This service
enables the customers to enjoy the journey convinently and reliably
Rahnuma Travel Services provides a solution for travelling through VISA processing,
accommodation and hotel reserving transfers and many other privilages to the customers. Al
Baraka Bank Pakistan Limited has made agreements with leading and reliable travel agents to
bring unmatched travel products for its customers that are interest-free as well as convenient
and less costly. Complete travel service packages are available for various destinations i.e.
Umrah, Hajj, Dream Destinations for Dubai & Malaysia.

Profit on finances is zero percent

Easy installment plan of 6 & 12 months

No Security Deposit

There is no requirement of advance payments

Documentation is easy and processing is faster.

Benefits
Rahnuma Hajj Packages 2014
There are three packages provided by bank for Hajj 2014 17, 25 and 40 days
Rahnuma Umrah Packages 2015
Rahnuma packages include different packages like Super Economy, economy, economy plus,
premium and standard package for 2015
Rahnuma Dream Destinations 2014
it provides packages for different destinations like Malaysia, Dubai, Thialand (for 9days and 7
days)
3.1.2.3 Sarparast Family Takaful Plan
Al Baraka Bank (Pakistan) Ltd. in association with Pak-Qatar Family Takaful Limited is offering
an exclusive product Sarparast Family Takaful Plan. Sarparast is a Shariah Compliant

savings and investments plan exclusively designed to cater to your Takaful needs. Saving for
long-term needs in the future.
Al Barakas Sarparast, safeguards your future, while giving you the financial freedom you
deserve. It helps you plan necessary events of your life from marriage to education, retirement
to vacations or pure savings in accordance with the Islamic principles.
Al Barakas account holder enjoys following benefits:

There is no requirement of large documentations accounts are processed according on basis

of copy of CNIC. There is no requirement of medical examination for account opening

3.2 Services
3.2.1 Banking through telephone
Al Barakasfacilitates its customers and answers queries through service of telephone. Bank is
equipped with the latest tecknology and softwares to access the information readily. Al Baraka
makes this service secure through various security measures. This service makes it cost
effective and convenient.
3.2.1.1Financial Transactions (Local Currency Only)
Bank Al Baraka issues Pay Order (PO)/ Demand Draft (DD) and request for a Pay Order
or a Demand Draft can be made through telephone and can collect from any branc of Al
Baraka in Pakistan
3.2.1.2Funds Transfer

Transfer funds from one account to another. Both accounts must be linked to our Business
Relationship Number (BRN). You can transfer up to Rs.100,000/- in a single day.

Balance & Transaction Inquiry

3.2.1.3Service Requests
To make banking experience more convenient, requests for the following can be placed over
the phone:

Duplicate Bank Statement

Request for cheque Book

3.2.1.4Inquiry

Following inquiry can be made on phone :

Product (s) / Service (s)

Monthly account related profit rates

Currency exchange rates

Branch & ATM location

3.2.1.5Complaints
Our Phone Banking Officers are receives complaints from its customers. ABPL values its
customers so it identifies ways to help improve its service. If for any reason customers are
dissatisfied with the service, a complaint can be registered on phone.

3.2.2 SMS Banking

Al Baraka Bank (Pakistan) Limited provides a banking solution;SMS Banking is a smart way
to access account(s) especially for people on the go. It enables immediate access to account(s)
24 hours a day, 7 days a week, custoners have to register theirselves for SMS Banking and get
complete control of your account.
1.2.2.1 Use Al Barakas SMS Service for:

Account balance inquiry, Mini statement (last five transactions Credit/Debit), Cheque book
request,PIN change request can be made

On the spot transaction credit / debit alerts about your account on any mobile phone you
carry- avoiding any misuse of account. Maximum of six accounts can be tagged to the same
mobile number within the same Business Relationship.

3.2.3 eStatements
To enable the customers to access their accounts by thereselves, Al Baraka Bank (Pakistan)
Limited (ABPL) provides eStatement that allows to access account(s) statements online. This
service is available for all the rupee and foreign currency account holders,
3.2.3.2 Security
ABPLs eStatement has been made digitally secured through VeriSign.
3.2.4 Inter Bank Fund Transfers
IBFT is a service for transferring funds instantly from one account to another account. The
need for IBFT service has grown with growing businesses and awareness, education. It has

reduced the hassle of writing cheques, making Payment Orders (or demand drafts etc.), it is
also less costly

There is no prior registration requirement to use IBFT on ATMs

If you need to transfer Funds from your account, you will need an Al Baraka ATM Card to
transfer funds through IBFT on ATMs.

However, if you need to receive funds through IBFT, there is no need for an ATM card- your
unique 13 digit account number will be all that will be needed.

The funds can be transferred to any account of the member banks on 1-Link IBFT network.

Charges will be applicable according to Schedule of Charges (SOC).

There is a daily limit of PKR 250,000/- on IBFT transactions

3.2.5 Utility Bill Payments through ATMs

For utility bills payments , Al Baraka customers are able to pay their Utility Bills through
ATMs, at their convenience without fretting over parking space or bank timings.
Al Baraka account holders can enjoy round the clock convenience of paying utility bills via
any of the Al Baraka ATMs across the country. Customers can make payments of utility bills
not only on the counter but also through Al Baraka ATM for this customer needs to have AL
Baraka Union Pay Debit Card. Multiple bills can paid through single account. This service is
freee of cost.
3.2.6 Safe Deposit Lockers
The underlying concept of safety lockers are based on Islamic principle of Amanat. Customers
keep their valuables with Al Baraka for the trust Al Baraka maintains with its customers.
Al Baraka is commited to put values foremost, hence providing with banking solutions.

3.2.6.2 Levies
Fees and charges will be levied according to the prevailing Schedule of Bank Charges, while
taxes and Zakat will be applicable according to Government regulations and directives of
State Bank of Pakistan.
With this product line ABPL Haripur is serving the community

CHAPTER 04
Analysis of Al Baraka Pakistan Limited
Report evokes analysis of Al Barakas present position through its financial as well as SWOT
analysis.

4.1 Financial statement analysis of ABPL

Four year analysis of financial statements are made to acquire complete understanding on
Bank Al-Barakas performance in the highly dynamic business environment. For the purpose
of comparison two type of analysis have been done in the report

Common size analysis

Ratio analysis

4.1.1 Common size analysis

Items on the balance sheet have been compared and analyzed to show the prevailing trends
through vertical as well as horizontal analysis of balance sheet and income statement
4.1.1.1Vertical analysis
Asset are compared to total assets, liability to total liabilities and stockholder equity to total
stockholder equity

4.1.1.1Analysis of Assets
Chart 4.1: ABPL Assets 2011

Assets 2011
Cash and balances with treasury banks

Balances with other banks

4% 1% 3% 5%
Due from financial institutions
10%

Investments

Islamic financing and related

40%assets

Operating fixed assets

36%

Deferred tax assets

Other Assets

Source: Self generated

Chart 4.2: ABPL Assets 2012

Assets 2012
Cash and balances with treasury banks

Balances with other banks

4% 2% 2% 6%
Due from financial institutions
9%
1%

Investments

Islamic financing and related

assets
39%

Operating fixed assets

37%

Deferred tax assets

Source: Self generated

Other Assets

Chart 4.3:ABPL Assets 2013

Asset 2013
Cash and balances with treasury banks

Balances with other banks

2%2% 7%
Due from financial institutions3%

Investments

19%
Islamic financing and related
42%assets

Operating fixed assets

25%

Deferred tax assets

Other Assets

Source: Self generated

Interpretation
Vertical analysis of balance sheet shows that the banks cash and reserve with the treasury bank
has slightly increasing trend from 2011 to 2013 i.e. from 5% to 13%. Similarly the banks
lending to financial institutions has increased from 2011 to 2013(5% to 7%). The banks balance
with other banks also increased from 10% to 19% in three years (2011 to 2013) The net
investments decreased from 36% in 2011 to 25% in 2013. The advances rate showed an increase
in 2011 to 2013 (40% to 42%) and in 2012 it decreased by 1%.

4.1.1.1.2 Analysis of liabilities and equity

Chart 4.4: Liability and Equity 2011
Bills liability
payable

and equity 2011

Due to financial institutation

Deposits and other accounts
Sub-ordinated loans
1% 2% 1% 2%
11%
Liabilities against assets subject to finance leases
3%
Deferred tax liabilities
Other liabilities
Share capital
Discount on issuance of shares
80%
Reserves
Accumulated loss
Surplus/(Deficit) on revaluation of asssets-net of tax

Source: Self generated

Chart 4.5: Liability and Equity 2012

Bills liability
payable

and equity 2012

Due to financial institutation

Deposits and other accounts
Sub-ordinated loans
1% 3% 1% 3%
11%
Liabilities against assets subject to finance leases
2%
Deferred tax liabilities
Other liabilities
Share capital
Discount on issuance of shares
80%
Reserves
Accumulated loss
Surplus/(Deficit) on revaluation of asssets-net of tax

Source: Self generated

Bills liability
payable

and equity 2013

Due to financial institutation

Deposits and other accounts
Sub-ordinated loans
1% 3% 1% 3%
9%
Liabilities against
assets subject to finance leases
2%
1%
Deferred tax liabilities
Other liabilities
Share capital
Discount on issuance of shares
80%
Reserves
Accumulated loss
Surplus/(Deficit) on revaluation of asssets-net of tax

Chart 4.6:Liability and Equity 2013

Source: Self generated
Interpretation
On the liability side the bills payable of the bank remained constant at 1%. The banks borrowings
does not shows much fluctuation The Banks deposits ratio is considerably good and remained
constant. Share capital of the Bank decreased in 2013 as compared to 2012-11 (12% to 10%)
Reserves of the Bank Decreased to 0.094% from 0.11% in 2011 and 2012.

4.1.1.2Horizontal analysis
Three year trend in the some of the major liabilities of bank have been plotted here for
comparison purpose. It shows that in 2012 there is a noticeable reduction in equity holding of
the bank and in 2013 deposits and accounts have shown an increase.
Figure 4.7 Horizontal Analysis of Income Statement
140%
120%
100%
80%

Deposits and other

accounts

60%

equity

40%
20%
0%
2011

2012

2013

Source: Self generated

Figure 4.8:Trends in Net Income
Income statement has been analyzed horizontally for the comparison purpose. From chart
below, it shows a highly declining net income from 2011 to 2012. In 2013 loss have been
covered.

Net profit/loss
150%
100%
50%
0%
2011
-50%
-100%
-150%
-200%

Source: Self generated

Net profit/loss
2012

2013

4.1.2Ratio analysis
4.1.2.1 Profitability ratio
4.1.2.1.1 Net profit margin
Table 4.1:Net Profit Margin
Description

2013

2011
410370

2010

-41231

2012
-644940

Net profit
return on Islamic
financing

6201186

12970318

16798188

18168220

-4.97%

2.44%

-5.72%

ratios
-0.66%
Source: Self generated

1039595

ABPL is continuously showing loss from 2 years, though this loss has been reduced in 2013
but it is still not showing a good performance.
4.3.1.2 Return on asset
Table 4.2:Return on Assets
Description

2013

Net Profit

-41231

Avg
Total
87759404
assets
Return
on
-0.04%
asset
Source: Self generated

2012
-644940

2011
410370

2010

73812558

66654364

40263057

-0.87%

0.61%

-2.58%

1039595

It tells the efficiency of assets utilized by generating income. The results of the Bank
shows that Except from 2011, ABPL is failing to generate profits from its assets.

4.3.1.3 Return on equity

Table 4.3:Return on Equity
Description

2013

NP

-41231

2012
-644940

2011
410370

2010
1039595

5,935073

EQUITY

Return
on
-0.69%
equity
Source: Self generated

6,273310

6,321872

4806018

-10.28%

6.49%

-21.63%

2010
60,763,664

4.3.2 Solvency ratio

4.3.2.1Leverage ratio
Table 4.4:Leverage Ratio
Description

2013

2012

2011

T.A

87759404
81,911,211

73812558
67,847,098

72545064
66,020,396

0.91:1

0.91:1

DEBT

Leverage
o.93:1
ratio
Source: Self generated

54,644,587
0.89:1

Bank is showing a high leverage ratio. This shows assets of the bank are financed by its debt
that includes upto 80% deposits from customer. It has also increased the risk of ABPL
4.3.2.1 Debt/ Equity ratio
Table 4.5: Debt/Equity Ratio
Description
Debt

2013
81,911,211

2012
67,847,098

2011
66,020,396

2010
54,644,587

Equity

5,848,193

6,019,460

6,524,668

6,119,077

11.2:1

10.1:1

8.93:1

Debt/ Equity
14:1
ratio
Source: Self generated
4.3.3 Efficiency ratios
4.3.3.1 COST / INCOME RATIO
Description
Operating
Expense
Net Revenues.

2013

2012

2011

2247137

2105964

1926488

1791138

1545891

1697956

Cost

125%

136%

113%

Income

Ratio
Source: Self generated
Cost to revenue ratio reveals high operating expenses while showing inefficiency in its
performance.

4.2 SWOT analysis

SWOT is useful tool to make assessments in terms of internal and external environment of the
organization and to formulate strategies by analyzing its internal strengths and weaknesses,
external opportunities and threats.

4.2.1Strengths
4.2.1.1 Commitment to Islamic Shariah
ABPL is striving to develop and an integrated Islamic Financial System . Core philosophy of
ABPL is the compliance with Shariah principles. At this point ABPL has succeeded in
implementing the corporate principles and guidelines from the experts like Religious scholars
and monitor its performance. The Banks activities and operations are regularly monitored by
its Shariah Advisory Board.
4.2.1.2 Experienced and Qualified Staff
During the research it has been observed that the staff/personnel of the organization is
qualified and experienced. Many they have a good knowledge and experience in the fields of
management and practice.
4.2.1.3 Good PR with Customers
There is a good relationship among the workforce at all levels. ABPL makes a fair PR with its
customers.
4.2.1.4 Quick delivery of services
Customers get highly satisfied with AlBarakas quick services and open heartedly guidance
over their concerns relating to their financial decisions.

4.2.1.5 Job Satisfaction

Job satisfaction is one of the important factors for the employees to retain the valuable
employees.their employees are satisfied with the work environment.
4.2.1.6 Friendly environment
The environment of the organization is very friendly. People over here are very cooperative,
not only with the customers but among themselves as well.
4.2.2 Opportunities
4.2.2.1Growing business
Due to growing business in the area, potential customers are increasing these days. This is a
great opportunity for AlBaraka to capture the market share.
4.2.3 Weaknesses
4.2.3.2 Lack of Awareness
Al Baraka has still not succeeded in the very basic stage of marketing i.e. Awareness of
concept and benefits of its products. Its products are considered to be the same as in
conventional banking system and are known to be so-called Islamic Banking.
4.2.3.3 Weak top management
Top management is very week in decision making. Most often it fails in maintaining its
market presence and recognition.
4.2.3.4 Unavailability of ATM
ATM now has been a major facility a bank can provide to its customers. Al-Baraka is far away
in providing this facility to its customers. Though it issues ATM cards but unavailability of its
own ATM in many areas doesnt allow many of its potential customers to opt for its services.
4.2.4 Threats
4.2.4.1 Good job opportunities outside.
The other organizations of similar nature are offering more salaries and benefit packages to
their employees. So, there is a threat to the organization that their current employees may
leave it.

4.2.4.2Uncertainty about future change

An uncertainty about the future changes among the employees results in dissatisfaction and
demotivation of the employees, which is a serious threat to the organization.
4.2.4.3 Loss of customers
AL-Baraka fails to retain its valuable customers and they leave away when a dissatisfied
employees, of whom they are clients, leaves his job.

Chapter 5 Conclusion and Recommendations

The Al Baraka Islamic Bank is a new emerging bank and it is trying to get market share in the
presence of national and foreign banks operating in the country.
After observing this ABPL following outcomes have been concluded.
5.1 Conclusion and arguments
5.1.1 Centralized decision making
The decision making is still centralized as recommendations from middle and low level
employees are not considered.
5.1.2 Huge expenses
ABPL has huge operating expenses. These expenses are proven to be ineffective to generate
profits for the bank
5.1.3Less employees
ABPL should hire more competent staff to capture market share and generate business relations
5.1.4Low employee Retention
Employee leaves whenever they are offered better salaries taking away the large deposits and
competent abilities
5.1.5 Slow recruitment
The recruitment process is very lengthy and leads to the short of working staff.
5.1.6 Discipline
The marketing efforts at the branch level are less disciplined and there are no integrated efforts
from all the staff members.
5.1.7ATM
ABPL is suffering from a huge threat i.e. it does not have its own ATM in many cities.
5.1.8Less motivated staff
The bank has been applying the modern concepts of management and marketing at both micro
levels. The interior and exteriors of the branch have been changed but the staff of the branch has
been found less motivated towards the organizational objectives.

5.2 Recommendations
During the period of internship at ABPL and observing its environment some of the strengths and
weaknesses have been observed. On the basis of this observation there are some
recommendations particularly related to the ABPL, Haripur Branch, and can be applicable to the
ABPL whole as well.
.
From the analysis of financial statement it has been analyzed that ABPL performance is not
markably good. ABPL is posing several loopholes and weaknesses mentioned
5.2.1 Training programs
Employees Training programs must be introduced on continuous basis so that
Employees have understanding with the latest developments especially with the customers.
5.2.2 Incentive for employees
Bank should introduced incentive plans for employees on regular basis so that if employees may
work whole heartedly for the welfare of their organization. While giving incentives qualification,
work, experience, hard work and such other factor must be considered.
5.2.3 Efficient management of assets
Mismanagement of resources must be avoided as much as possible as it decreases profit but also
discourage hard worker and honest employees.
5.2.4 New, qualified blood
Fresh graduates must be recruited. As the combination of Experienced and fresh can produce
better results and it will improve the efficiency of management.
5.2.5 Awareness program
ABPL is going towards mobile banking but the problem is that a common client has no idea of
its usage due to lack of marketing. a proper marketing programe must be launched for clients
awareness.
5.2.6 Use of marketing tools
Banks different schemes must be conveyed to the targeted customers so that to have a reasonable
share in market.
5.2.7 Employees salaries
To motivate the employees their remuneration/salaries should be made at par with top tier Banks.
5.2.8 Publicity

Aggressive publicity campaign must be introduced through press and Electronic media for new
products and scheme by initiating vigorous marketing policy.
5.2.9 Customer awareness
Bank should adopt such an induction plan that when a customer opens his account with the
bank he should be supplied with a booklet which enables him to know the procedure of filing
the cheques, pay-in-slip etc. It will save a lot of time of the bank staff afterward during the
conduct of the account of that customer.
5.2.10 Staff behavior
The attitude of the bankers with all of their customers should be same; pay more attention and
good service to some of the customers may neglect a major portion of customers. All the
customers should be treated equally.
.
5.2.11 Effective use of bank resources
Misuse of telephone internet, fax machines and other facilities available to the employees of the
bank must be handled properly.
5.2.12 Recruitment criteria
In ABPL mostly recruitments are done through recommendations or references of employees.
Recruitment should be strictly on merit with no other favor given to any candidate. Selection
should be on the basis of test and interview.
5.2.13 Scholarship programs
Scholarship programs should be designed for senior employees and branch managers.
The AIB should get into contract with top foreign universities. Every year the bank should
finance and send their senior managers for further education abroad. After completion of higher
education employees will be in a better position to attain the strategic objectives of the bank and
increase the overall business and profitability portfolio of the bank.

References
Brigham.E.F & Houston.J.F (2011); Fundamentals of Financial Management 11e: South-Western Cengage
Learning.
Van Horne.J & Wachowicz.J.M (2008); Fundamentals of Financial Management 13e : Financial Times
Nasir.M.S (2003); Money, Banking and Finance: Kitab Markaz
Brigham.E.F & Ehrhardt.M.C.(2014); Financial Management;Theory & Practice 13e;South-Western College
Lewis.M.K; Handbook of Islamic Banking Products & Services
www.albaraka.com (Accessed: 10 Decemeber, 2014).

ALBARAKA BANK (PAKISTAN) LIMITED

STATEMEND OF FINANCIAL POSITION
AS ON 31 DECEMBER 2013
2013

2012

2011

2010

(Rupee
s' 000)
Restate
d

ASSETS
Cash and balances with treasury
banks

3,945,48
1
7,577,18
6

Other Assets

0
22,161,
963
37,020,
644
2,725,7
53
1,431,0
64
2,127,1
96

4,221,38
1
6,712,47
7
1,100,00
0
27,421,4
61
28,728,4
48
2,629,17
6
1,292,13
9
1,707,47
6

Total

87,759,40
4

73,812,55
8

72,545,06
4

746,651
1,991,73
8
63,278,6
55

451,030
1,736,12
0
61,559,0
26

Other liabilities

0
0
2,177,9
89

0
0
1,830,05
4

5,123
0
2,269,09
7

2,116,583

Total Liabilities

81,911,21
1

67,847,09
8

66,020,39
6

54,644,587

Balances with other banks

Due from financial institutions
Investments
Islamic financing and related assets
Operating fixed assets
Deferred tax assets

5,727,4
07
16,565,
377

0
26,179,4
16
29,155,4
76
2,798,16
5
1,030,85
2
1,858,48
8

4,460,257
7,409,620
80000
15,617,589
27,652,687
3,030,269
1,029,055
1,484,187

60,763,664

LIABILITIES
Bills payable
Due to financial institutation
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to
finance leases
Deferred tax liabilities

725,60
9
2,201,9
45
75,647,
097
1,158,5
71

427,600
2,756,892
49,324,209

19,303

CAPITAL/OWNER'S EQUITY
Share capital
Discount on issuance of shares
Reserves
Accumulated loss

8,935,20
0
-767,290
82,074
2,419,22
4

8,935,20
0
-767,290
82,074
2,366,44
5

8,935,20
0
-767,290
82,074
1,723,54
3

-2,052,024

5,830,760

5,883,539

6,526,441

6,115,886

17,433

138,414

-1,773

6,021,953
73,869,05
1

6,524,668
72,545,06
4

6,119,077

Surplus/(Deficit) on revaluation of asssets-net

of tax

Total
Total Liabilities & Owner's equity
Equity

5,848,193
87,759,40
4

ALBARAKA BANK (PAKISTAN)

LIMITED
STATEMEND OF FINANCIAL
POSITION
AS ON 31 DECEMBER 2013

ASSETS
Cash and balances with treasury banks
Balances with other banks
Due from financial institutions
Investments
Islamic financing and related assets
Operating fixed assets
Deferred tax assets
Other Assets

Total

8,935,200
-767,290

Vertical Analysis

2013
7%
19%
0%
25%
42%
3%
2%
2%

2012
6%
9%
1%
37%
39%
4%
2%
2%

2011
5%
10%
0%
36%
40%
4%
1%
3%

1%
3%
86%
0%

1%
2%
85%
0%

100%

LIABILITIES
Bills payable
Due to financial institutation
Deposits and other accounts
Sub-ordinated loans

1%
3%
86%
1%

3,1
91

Liabilities against assets subject to finance leases

Deferred tax liabilities
Other liabilities

Total Liabilities

0%
0%
2%

0%
0%
2%

0%
0%
3%

93%

92%

91%

10%
-1%
0%
-3%
7%

12%
-1%
0%
-3%
8%

12%
-1%
0%
-2%
9%

0%

0%

0%

7%

8%

9%

CAPITAL/OWNER'S EQUITY
Share capital
Discount on issuance of shares
Reserves
Accumulated loss
Surplus/(Deficit) on revaluation of asssets-net of
tax

Total
Total Liabilities & Owner's equity Equity

ALBARAKA BANK (PAKISTAN)

LIMITED
STATEMEND OF FINANCIAL
POSITION
AS ON 31 DECEMBER 2013

Vertical
Analysis
horizont
al
2011

201200
%
2012

20130
0%
2013

Cash and balances with treasury banks

Balances with other banks
Due from financial institutions
Investments
Islamic financing and related assets
Operating fixed assets
Deferred tax assets
Other Assets

100%
100%

107%
89%

145%
219%

100%
100%
100%
100%
100%

Total

100%

105%
99%
94%
125%
92%
102%

85%
127%
97%
139%
114%
121%

100%

166%

161%

ASSETS

LIABILITIES
Bills payable

Due to financial institutation

Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to
finance leases
Deferred tax liabilities
Other liabilities

100%
100%

115%
103%

127%
123%

100%

0%

0%

100%

Total Liabilities

100%

81%
103%

96%
124%

100%
100%
100%
100%
100%

100%
100%
100%
137%
90%

100%
100%
100%
140%
89%

100%

-7807%

-983%

92%
102%

90%
121%

CAPITAL/OWNER'S EQUITY
Share capital
Discount on issuance of shares
Reserves
Accumulated loss
Surplus/(Deficit) on revaluation of
asssets-net of tax

Total
Total Liabilities & Owner's equity Equity

100
%
100%