CHAPTER 1 INTRODUCTION

1.1 Purpose of the study:

This study has been carried out to fulfill requirements of the BBA (Hons).
 To understand the various operations of the banking system.
 To study the financial and SWOT analyze of Bank Alfalah main branch Haripur as
whole.
 The purpose of the study is to acquire the experience in the field by applying the
theoretical knowledge in the practical life.
 To make recommendations in light of the analysis
 To improves the technical report writing skills.

1.2 History of Bank Alfalah

 Bank of Commerce and Credit International

Pakistani banker Agha Hasan Abedi (1992), who remained its chair until 2008, founded
BCCI (Bank of Commerce and Credit International). From March 1990, it was under the
control of Sheik Sultan Zayed bin-Al-Nahayan, the ruler of Abu Dhabi.

BCCI was founded in 1972. By 1990, BCCI had offices in 69 countries, $15 billion in
deposits, and $20 billion in assets. In July 1991 evidence of widespread systematic fraud at
BCCI led regulators in seven countries to seize the bank's assets, and its operations in the
remaining 62 countries were gradually also shut down. A subsequent investigation resulted
in a New York criminal indictment of the institution and four of its units, and the arrest of
some 20 BCCI officials in Abu Dhabi for alleged fraud.

In July 1990, five former officials of BCCI were convicted in Tampa, Florida, for
laundering $32 million in cocaine profits for Colombia's Medellín drug cartel. Despite these
convictions and later evidence of BCCI’s fraudulent conduct, regulatory control was
hampered by the fact that the bank had no central office under the jurisdiction of an

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individual government. Its two central offices were located in Luxembourg and the Cayman
Islands, both tax havens with secretive banking rules.

In October 1994 a US, federal court sentenced Swaleh Naqvi, former chief executive of
BCCI, to an eight-year prison term for his role in defrauding investors, adding to a 14 years
sentence he had been awarded in Abu Dhabi. In addition, Naqvi was ordered to pay more
than $250 million to US investors.

The government of Abu Dhabi, which held a 77% share in the collapsed bank, reached an
agreement with the bank's liquidators in March 1994, when it agreed to reduce its claims
against BCCI and contribute $1.8 billion to creditors, a move approved by the High Court
in London December 1994.

In Pakistan, it was not liquidated. Govt. of Pakistan negotiated and purchased the bank.
Government of Pakistan acquired BCCI and in March 1992, associated its three branches in
Lahore, Karachi and Rawalpindi, with Habib Bank Ltd. In October 1992, the State Bank of
Pakistan, Ministry of finance and the Liquidators decided to make it a subsidiary of Habib
Bank Ltd. Now it was called ‘Habib Credit & Exchange Bank Ltd.’

Following the privatization in July 1997, HCEB (Habib Credit & Exchange Bank Limited)
assumed a new identity of Bank Alfalah Ltd. on February 25, 1997. Charged with the
strength of Abu-Dhabi based consortium, and under the leadership of His Highness Sheikh
Nahayan Mubarak Al-Nahayan, Minister of Education, Government of Abu-Dhabi, and a
prominent member of the royal family- the Bank is energized with the vision, envisaging
the development of Consumer sector in Pakistan.

1.3 Pattern of Share holding:

Abu Dhabi Consortium: 70% of shares Habib Bank limited (for & on behalf of Govt. of
Pakistan): 30% of shares. Presently Bank Alfalah has 406 branches compared to three at
the time of privatization and work is under way on new branches nationally &
internationally, prioritizing its product portfolio in line with consumer needs and wants. The

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bank is committed to develop products that give more value to its customers, be it a simple
bank account or complex financing of a major project.

With its deposits already soaring by more than 30% after privatization, Bank Alfalah has
embarked upon an expansion program to ensure physical presence in all major urban
centers of Pakistan. In addition, with a team of talented, service dedicated professional
bankers, Bank Alfalah commits all its energies, resources and time to cater to all banking
and financial needs.

1.4 Nature of Bank Alfalah Limited

Since BAL is a commercial bank, it performs a variety of functions. Like other commercial
banks, BAL MAIN BRANCH HARIPUR is engaged in financing international trade. For
the practical implementation of the structuring project, the bank hired consultants to advice
a new structural plan and growth strategy. Under this new strategy, a new organization
structure was roll out across the bank with the following business and related groups:
 Branch banking & SME
 Credit & collections
 Commercial Banking
 Corporate & Investment Banking
 Consumer Finance
 Priority banking & Wealth Management
 Leasing
 Islamic Banking
 Human Resource & Quality Assurance
 International Business
 Information Technology

Bank Alfalah in one of the progressive institutions, which has been able to achieve
significant growth on the Pakistani financial spectrum in a short span of time. The branch
network grew by s 22 percent to 406 branches at the end of 2011 from 356 in the previous
year. Branch banking & SME is focused on core banking activities and aim to extend it
outreach with diversification of services and product. Bank Alfalah over the year has
emerged as a competitive bank with a progressive approach to banking. Restructuring
processes that started to November 2010 and continued until mid-2011 has improved the

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bank to business segment specific banking model from branch- center operation. The total
assets portfolio of the commercial banking groups (CBG) stood at PKR 20.64 billion in
2011, up 22.38% from PKR 16.86 billion in 2010. The corporate and investment banking
groups (CIBG) is a specialized division that emerged from the restructuring exercise
undertaken in 2010 and implemented in janury2011 Its other major functions include
receiving deposits, advancing loans and discounting of exchange.

1.5 Functions of Bank Alfalah Limited

The functions performed by BAL MAIN BRANCH HARIPUR are:

A) Accepting Deposits
This function is important because banks largely depend on the funds deposited with them
by its customers. Deposits are of many types:
1. Current Deposits: Current deposits also called demand liability on current deposits.
BAL MAIN BRANCH HARIPUR pays practically no interest on current deposits.
Businesspersons usually open current accounts. In BAL MAIN BRANCH HARIPUR
current account can be opened with a minimum amount of Rs.1000/-
2. PLS Saving Deposit: Profit and loss sharing deposits (PLS) also known checking
accounts. One can deposit and draw money easily. Profit on PLS is calculated every
month but paid after six months. PLS account can be opened with a minimum amount
of Rs.1000/-
3. PLS Term Deposits: Fixed term deposits are deposits with the bank for certain fixed
period before the expiry of which they cannot be withdrawn unless giving due notice. In
this case, the rates of profit will be different depending upon the time.
4. Discounting Bills of Exchange: Discounting of bill is practically speaking lending for
exchange at their market rate i.e. it pays to holder of the bill an amount equal to the face
value after deducting interest at the current market rate for the period. This bill has to be
mature. This is common way used for keeping a part of assets of the bank in a liquid
form.
5. Agency Service: BAL MAIN BRANCH HARIPUR also provides best and unique
service to its valued customers. BAL MAIN BRANCH HARIPUR provides the
following agency services to the customers:

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6. Collection of Dividends: As BAL MAIN BRANCH HARIPUR deals with the
purchase and sale of various types of securities, therefore, BAL MAIN BRANCH
HARIPUR provide dividend or interest earned on share or bonds or invested money.
7. Collection of Cheque: In the collection and payments of Cheques, bills and promissory
notes etc, BAL MAIN BRANCH HARIPUR acts as an agent for its customers.
8. Acting as an Agent: BAL MAIN BRANCH HARIPUR also acts as an agent
correspondent or representative for its customer at home or abroad.
9. General Utility Services: Utilities provided by BAL MAIN BRANCH HARIPUR are
as follows:
 Clearance OF Utility Bills: BAL MAIN BRANCH HARIPUR provides the
service of clearing the utility bills i.e. electricity, gas and telephone bills of its
customers. For this purpose, it also provides evening banking services.
 Lockers Facility: BAL MAIN BRANCH HARIPUR also provides locker
facilities to its customers to keep their valuable assets in it. The charges of
different size of lockers are different.
 Acts as a Referee: BAL MAIN BRANCH HARIPUR provides useful services to
its customers by acting as a referee to their credit worthiness.
 Supply of Information: BAL MAIN BRANCH HARIPUR provides operational
and advisory service for foreign exchange accounts/activities.

1.6 Business Volume

Five-year performance of Bank Alfalah. (Rs. In Millions)

Items 2011 2010 2009 2008 2007

Total Assets 348,991 328,895 275,685 248,314 154,835
Deposits 300,733 273,174 239,509 222,345 129,715
Advances 192,671 171,199 149,999 118,864 88,931
Investments 75,973 88,492 56,502 57,426 35,5006
Shareholders’
14,609 13,767 10,573 6,738 4,369
Equity
Pretax Profit 1,795 4,535 2,566 2,563 1,654
After tax profit 1,301 3,130 1,763 1,702 1,092

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1.5.1 Business Volume in Revenue

It is increasing trend in the year 2007 to year 2007 as a change in assets 15 %. In FY-008,
assets increased 60% of last year. In the FY-009, it increased 11% as compared to year 008.
In the year, 2010 assets increased to 19.30 % as compared to last year. In FY-011, it is
increased by 6% as compare to FY-07, which reflect the low investment in total assets as
compare to year 2010.

1.5.2 Business Volume in term of Deposits

In the FY-006 to FY-007, the deposits are increases to 83 % of last year to FY-007. In Year
2008, it increased to double from last year. In FY-009 ratios of deposits increases to level of
7.71% against year 009, however in the FY-07 it almost double to last year. In the FY-011
ratios goes to 10% increased as against FY-07.

1.5.3 Business Volume in term of Advances

In the FY-006, the advance increased 18% as compared to FY-02. The increasing trend
shows that 33% advance up as compared to last year. However, the gradual increased in
advances in year 007. The steady increased in year 009, 07 and 011 shows the healthy sign
of business growth.

1.5.4 Business volume in term of investment

For the year ended December 31, 2010 the Bank's profit before provision and taxation
stood at Rs. 4,535 million as compared to Rs. 2,566 million for the previous comparable
period, registering an increase of about 45%. In compliance with the current prudential

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regulations on consumer banking, the Bank has created general provisions amounting to Rs.
2,377 million against the consumer portfolio, for the year ended December 31, 2010. In FY-
011, the profit is goes 5.4 profit as compare to last year.

CHAPTER 2 PRODUCT AND SERVICES

2.1 Product Lines of the Bank

Bank Alfalah has achieved a competitive advantage over other banking institutions by
offering a complete range of banking solutions for its valued clients. The concepts entail
creation of a financial super Market where a large variety of banking products and services
are available to meet diverse needs of the customers. Types of Deposits/Products offered by
Bank Alfalah classified based on duration and purpose of which these are kept with the
bank.

2.2 Deposit Products

1. PLS Saving (Rupee) Accounts: Saving accounts are designed to mobilize savings
primarily from a large number of individuals and household. Any one or more individuals
or partners can open a PLS saving account with the Bank. Salient features of PLS account
is as follows:
Minimum initial deposit is Rs.500/-
A smaller deposit can be accepted at the discretion of branch management if average
deposit is expected to remain above Rs.5, 000/-
Profit on PLS saving accounts is calculated on minimum monthly basis.
Profit rates are announced and paid biannually in January and July respectively.
Profit rate on the PLS saving is 2.25% per annum. However, profit rates are subject to
change in response to change in the return earned by the Bank on deployment of funds.

2. Current Rupee Account: Individual, partnerships, companies, associations, clubs,

societies and NGOs are eligible to open current accounts. Salient features are as follows:
Minimum initial deposit is Rs.5, 000/-
Minimum average is Rs.10, 000/-

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There is no restriction on number of transactions.
There is no limitation on amount of withdrawal.
No profit is paid on credit in current accounts.
3. Royal Profit Savings (Rupee) Accounts: Royal profit is a high yield rupee account
intended to provide higher rates of profit to high net worth customers and greater flexibility
and convenience in terms of transactions. Current rates of profit are as follows:

Table

Amount Proposed Rates (P.A)

From 50,000 To 999,999 1.50%
From 1,000,000 To 9,999,999 1.75%
From 10,000,000 To 49,999,999 2.00%
From 50,000,000 To 149,999,999 2.50%
From 150,000,000 & Above To be quoted by treasury
Features:
Savings account with facility of a current account.
Minimum for individuals Rs.50, 000/-
Minimum for companies Rs.250, 000/-
Profit is calculated on monthly average.
Disbursement of profit is on monthly basis
Personalized chequebook.

4. Royal Patriot (Rupee Term Deposit): Royal Patriot is a rupee term deposit scheme with
competitive rate of profit. Current rates of profit are as follows:

Table

Tenure 25,000-999,999 1,000,000-4,999,999 5,000 & Above

1 Month 1.50 % 1.60 % 1.70%
3 Month 1.75 % 1.85 % 1.95%
6 Months 2.00 % 2.10% 2.20%
1 Year 2.25 % 2.35 % 2.45%
Features:
 Short to long term deposits
 Choice of term 1, 3, 6, 12 & 24 months
 Minimum required Rs.25, 000/-

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 Profit paid on maturity of respective term.
 Profit rates increase with tenure and amount.

5. Foreign Currency Accounts: This Account is offered to resident and non-resident

Pakistani’s as well as foreigners can open foreign currency accounts. A foreign currency
account is opened as either savings account or current account.

6. Safe Deposit Lockers: Bank Alfalah provides safe deposit lockers facilities to its
customers for safekeeping of their valuables like documents, securities etc. Important
features of lockers facility are as follows.
 Various sizes to choose from small to extra large: small, medium & large
 Annul locker rent ranges from Rs.1, 000/- to Rs.3, 500/-.
 Locker rent is waived for customers maintaining a minimum deposit of Rs.2 million.
 Current account or above US $25,000/- in a current account or US $ 50,000/- in
a savings account.
 The key deposit of the Locker is Rs.1, 000/- that is refundable.

7. Locker Rates
The annual license fees of the following sizes of lockers will be as per Bank's Schedule of
Charges, which are:

Table

Locker Size Charges per annum

Small Rs.1000/-
Medium Rs.1500/-
Large Rs.3000/-
Special Rs.3500/-

2.3 Consumer Finance Products

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Consumer finance is a fast growing segment of banking business in Pakistan. Credit cards,
car finance, personal loans, loans for purchasing household appliances, computers and
related accessories and housing financing are the principal consumer finance products.
Being a market oriented bank; Bank Alfalah also has a strong focus on consumer banking
and consumer finance. A brief description of products is as follows:

2.3.1 Auto Leasing & Financing

A. Car Finance
Alfalah car scheme enables customers to own a car at easily affordable and flexible
installments with minimum down payment and insurance.
Benefits and Features
 Quickest processing
 No hidden charges
 Minimum down payment
 Complete repayment at any point of time
 Bank Alfalah transfer facility {BTF} for existing as well as new clients from other
Banks
 Tenor period ranging from 1 to 7 years
 Financing of all brand new locally assembled vehicles.
 Financing limit ranging b/w Rs. 200,000/- to Rs. 2000,000/-
 Hypothecation of vehicle in the name of the Customer.

B. Corporate & Individual Car Leasing

BAL main Haripur Branch recently introduced car-leasing facility for individuals and
corporate sector has set new dimensions for the product. Now customers are provided with
the option of either to get the vehicle leased or financed.

Features
 Renowned and reliable Insurance companies are offering the competitive rates of
insurance. Customer can pay year insurance premium in advance {at the time of down
payment} and remaining in the subsequent equal monthly installment.
 Offering lowest rate of markup of 9.5%, {per annum}.

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  Easily affordable installments on monthly basis.
 Hypothecation of vehicle in the name of the Bank Alfalah Limited.
 BAL MAIN BRANCH HARIPUR Acting as a co borrower, will enables customer’s
family members {spouse, children- 18 year and above} to avail the financing facility
and can get the car registered in their names as well.

Documents required

 Two passport size photographs.

 Copy of National ID card.
 Bank statement for the last six months.
 Salary certificate in case of salaried individual}.
 Business proof for self employed and business people}.
 National Tax Number (NTN)
 Co borrower’s NIC copy {if it is a co borrower case}.

Eligibility
 Pakistani National Identity Card holder.
 Over 20 years of age (Maximum 60 years in case of salaried and 62 in case of a
businessperson at the time of maturity of the loan).
 Salaried, Businessman or self employed.

2.3.2 Credit Cards

Credit Cards are increasingly becoming way of life in Pakistan. Bank Alfalah (visa) Credit
Card product was launched in Dec 2002. In a short period, it has achieved an unprecedented
success. BAL MAIN BRANCH HARIPUR Credit Card is unique in the sense that there is
no cared issuance fee as it is free forever.

Features
 No Joining Fee
 No Annual / Renewal Fee
 Lowest Markup
Only Bank Alfalah gives to customers the unmatched feature of the lowest mark up of
2.25% per month.

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 Bank Alfalah Transfer Facility: Bank Alfalah offers transfer facility to all its Card
members - the easy and convenient way to settle unsettled credit card payments on all
existing credit cards in Pakistan. As an Alfalah VISA Card member you can avail
transfer facility at a low rate of only 1.50% per month (for initial six months), which
happens to be the lowest in Pakistan. The transfer facility can only be availed only if the
total outstanding does not exceed beyond the credit limit assigned by Bank Alfalah for
Alfalah VISA card.
 Cash Withdrawal: Alfalah VISA credit card lets customers to pay for shopping, travel,
entertainment, meals and much more. Customers have access to ready cash at 784,190
ATMs. With VISA card and PIN (Personal Identification Number), customers can
withdraw any amount up to 50% of your assigned credit limit. Customers can withdraw
cash by requesting an Over-the-Counter Cash Advance at 360,000 financial institutions
worldwide or at any of Bank Alfalah branches, or other VISA member banks in
Pakistan.

2.3.3 Consumer Durables

Bank Alfalah continually strives to improve and add products to its consumer banking
service. BAL MAIN BRANCH HARIPUR launched Micro Financing of consumer
durables on August 007, 2007, which is yet another milestone towards its commitment of
meeting all the financial needs of esteemed customers.
The scheme is a term finance facility repayable in monthly installments, giving customers
an opportunity to own housed products. In this way, this product is facilitating the
customers and helping them out to improve their standard of living.

Features
 0% Down Payment
 Lowest Mark-up
 No Processing Charges*
 No Early Payment Charges
 12,18,24 & 36 Months Tenure
 Financing from Rs.10, 000 to Rs.500, 000

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  Free Doorstep Delivery
 Free Credit Life Insurance Coverage

Eligibility criteria
 Total gross salary / income of Rs.15, 000/- or more per month.
 Aged between 25 to 60 years (60 years at maturity of facility).
 Customer should be Pakistani.

Documents required for salaried persons

 One (1) copy of N.I.C.
 Employment certificate with date of joining, current designation emolument.
 Most recent salary slip.
 Income & wealth tax returns (for the last three years) [if required].

Documents required for self-employed

 One (1) copy of N.I.C.
 Bank statement for the last six months.
 Copy of last utility bill (residence).
 Proprietorship certificate / partnership deed (where applicable).
 Income & wealth tax returns (for last three years) [if required].

2.3.4 Home Finance

This product, which was launched on September 01, 2007, provides a wider range of Home
Finance tailor-made plans; designed specially to meet customers’ need at a very competitive
rate. At present, Bank Alfalah is the only Bank in the market, which offers a house finance
scheme for non-resident Pakistani customers based in the UAE besides Pakistani residents.
Housing finance is available from Rs.0.500 million to Rs.7.50 million to purchase, renovate
or construct a house/apartment. Important points are as under:
 Payment period ranges from three to 20 years.
 Owner only invests 30% of the value of property.
 Loan can be repaid before maturity without any penalty.
 Borrower’s age must be between 25 to 65 years.

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  Salaried persons, businesspersons and self-employed people are eligible.
 Financing is also available for purchase of residential land.
 Complete freedom to move between floating and fixed rates.
 Financing available to resident & non-resident Pakistanis.
 Minimum amount will be Rs.008.500 million & maximum of Rs.7.50 million.
 Mark-up option available for floating & fixed rates.

The Eligibility Criteria

 Pakistani Nationality.
 Age should between 25 and 65 years.
 Continuous employment in a permanent position for 2 years or more.
 Years (or more) of business or professional experience.
 Gross annual income is Rs.200, 000/- or more [spouse’s income (up to 50%) can
also be combined.
 Customer has been a Bank Alfalah borrower for past one year with clean
payment record.

Documents Required
The following documents are required to be submitted by an applicant with the completed
application.

For Salaried Person:

 Two passport size photographs.
 Copy of NIC.
 Copies of last Salary / Pay Slip duly attested by the HR department.
 Salary Certificate (original) from the employer, showing the gross salary and
deductions.
 Employment verification form from the employer.

For Self-Employed & Business Person

 Two passport size photographs.

 Copy of NIC.

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  Certified Copy of last Six Months bank Statement.
 Copy of current professional / trade body membership certificate (if Applicable).
 Copy of Latest Form 29 duly attested by the company secretary
 Letter from company secretary confirming the status and share holding.

Mark-up rates
For SVR (Standard Variable Rate) option:
SBP discount rate + 1%, currently 7.5% + 1% = 8.5%
For fixed rate option:
1 Year 7% p.a 2 Year 8% p.a 3 Year 9% p.a

2.3.5 Alfalah Karobar Finance

Alfalah Karobar Finance is a new Product of BANK ALFALAH LIMITED, which is

launched recently.
It is a hassle-free running finance facility for SMEs that meets all the business needs like no
other.
Features
 Financing facility up to Rs.10 million
 Single-digit markup rate
 Quickest processing time
 Lowest processing fee
 Special incentive for BTF Customers
 Top of Form

2.3.6 Alfalah Zari Sahulat

Bank Alfalah Ltd. (BANK ALFALAH LIMITED) agri finance program has been named as
"Bank Alfalah Zarie Sahulat”. Bank Alfalah is extending this service to the clients on a
competitive markup rate. The scheme now covers financing of a multitude of activities
related to crop production, harvesting, transportation, marketing, storage, processing,
packing, export, agri development, working capital and fixed investment financing of agri

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non crop activities, storage, silos, etc. making it quite exhaustive and comprehensive. The
products have been, therefore, designed keeping in mind objectivity of practical
applicability in market scenario and to cater to the most commonly demanded items of
agricultural financing by farmers.

Documents Required
BAL MAIN BRANCH HARIPUR requires the following documents for agriculture
financing:
 Pass Book issued by Revenue department.
 Proof of leased in land if any.
 Other documents required according to nature of finance.

Finance can be provided to all categories of farmers (owners, owner-cum-tenant, & tenant).
The under mentioned criteria shall be observed while extending agri finance to the farmers
under various products of Bank Alfalah Zari Sahulat.

Eligibility Criteria:
 The applicant is a genuine farmer.
 The applicant’s name must appear in the Revenue records.
 The applicant is not a defaulter of the banking system.
 The applicant must be able to produce proper securities / sureties / passbook
2.3.7 Structured Finance
Established in 1998 in order to provide innovative investment banking services to valuable
customer. A team of handpicked professionals, dedicated to syndicated loans and structured
products. The team’s expertise is well known in the marketplace with its capability to assist
public & private sector entities, major financial institutions, multinational corporations,
domestic & international institutional investors in innovative financing including
underwriting & private placements. The scope of SFU’s activities also encompasses
advisory assignments, such as privatization, Mergers & Acquisitions (M&As), domestic
listings, IPOs and restructuring, during the past few years, SFU has been successful in
sourcing and participating in a number of prestigious transactions involving large amounts.

Some of the value added services offered by SFU include the following:
 Loan syndication

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  Public floatation of Term Finance Certificates (TFCs) and equity
 Financial restructuring
 Private placement of Term Finance Certificates (TFCs) and equity underwriting
 Guarantee syndications
 Mergers & Acquisitions (M&As)
 Fostering joint ventures
 Privatization – Sale side and buyers side advisory
 Structuring new financial instruments
In the future, SFU is envisaged to supplement the enhanced profile and profitability of BAL
main branch Haripur through its value added services, through both asset building and
income generating aspects.

2.3.8 Travelers Cheque

Bank Alfalah presents Rs.1, 000, 5,000 and 10,000 denominations of traveler’s cheque,
making it very convenient to carry money while traveling or keeping your emergency cash
safe.

Features

 Maximum security features Special embossed intaglio printing in the UK, Alfalah
security thread and Alfalah watermark. Just some of the advanced features that
make TCs secure
 Fully Refundable
 Transferable and endorsable
 Unlimited validity
 No account needed
 Network of Branches

2.3.9 Money Gram

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Bank Alfalah Limited, in collaboration with Money Gram, offers remittance service to
Pakistan. Money Gram is person-to-person money transfer service that allows consumers
to receive money in just a few minutes.

Features
 Secure and reliable: An extensive network of quality agents, linked by computer, will
transfer your money safely and ensure that it is handled with care and immediately.
Thousands of people already use the Money Gram service all over the world. It is
trusted for its reliability and security.
 Convenient and fast: Money Gram is available in over 154 countries and in more than
40,000 locations worldwide. With Money Gram money is transferred immediately and
usually arrives at the receiving end within 10 minutes while other services can take days
or weeks. There are no complicated procedures and do not need a bank account or a
credit card.
 Free message service (for senders): There is also an added personal touch can receive a
10-word message from the sender with every transaction at no extra cost.

2.3.10 Online Banking

Bank Alfalah now offers the facility of on-line banking to its customers through its
countryside network of branches. Customers can use the ATMs or the banking counters of
any branch for day-to-day banking needs, irrespective of branch where they maintain their
accounts. For Corporate customers centralized Cash Management facility is also offered
through on-line banking.

CHAPTER 3 BAL MAIN BRANCH HARIPUR STRUCTURE

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3.1 Organizational Structures
“An organization is the group of people working together in a structured and coordinated
fashion to achieve a set of goals”.
When this group arranged in a proper order and is designated some positions with specific
tasks assignment results into the formation of organizational structure. Organizational
structure is a formally defined as framework of task and authority relationship. A good
organizational structure helps in improving the performance and overall efficiency of the
organization, its resources and management.

Distinct feature of the organizational structure of BANK ALFALAH LIMITED

The structure and system designed with an aim at achieving complete customer satisfaction.
The structure focuses on specialization of function.
The HRD to the policy making and support other departments giving the required
independence to their managers in selecting staff and having greater say in rewarding and
promoting their staff.
Responsibility and accountability at each level clearly defined. Checks and introduced at all
levels. “Customer satisfaction” comes before anything else in BANK ALFALAH
LIMITED. Organizational chart is the visual representation of an organization structure.
Organizational charts are developed in order to show the positions of margins and how
along with the principal lines of authority. These positions represented in the boxes, and
each line shows relationship among different portions of the organizational chart, attached
in annexure -1

3.2 Comments on the Organizational Structure

Under the stationary provision of companies ordinance 1984 & Banker company ordinance
the BAL MAIN BRANCH HARIPUR over all affairs are controlled and managed by a
Board of Directors. The Board comprises of a one Chairman one Chief Executive and five
other members as Directors. Out of total seven directors, two directors are appointed as
chairman and CEO, while the remaining directors are selected from renowned businessmen
of the country and are nominee by shareholders. The Board formulates the policy and
delegate financial and administrative powers for handling the day-to-day business of the
bank.

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In order to assist the board of directors, an executive board is vested the responsibility of
supervision and control of affairs of the branches. In the management of banks, the board of
directors is at the top of the controlling bodies. Since there are seven private shareholders
now, so there is general meeting of the shareholders and all elected directors. The board
now consists of a nominated chairperson, a chief executive secretary and other members.
The secretary of the board presents the annual report of the bank. The board has limited
administrative powers. Board members of BAL MAIN BRANCH HARIPUR is led by the
chairman and the CEO is Mr. Sirajuddin Aziz who is the Chief executive officer (CEO) of
the bank, together with a selected group of five directors, who bring with them vast
experience and qualities. The board of directors is as under

 H.E. Sheikh Hamdan Bin Mubarak Al Nahayan Chairman

 Mr. Abdulla Khalil Al Mutawa Director
 Mr. Abdulla Nasser Hawaileel Al-Mansoori Director
 Mr. Khalid Mana Saeed Al Otaiba Director
 Mr. Ikram Ul-Majeed Sehgal Director
 Mr. Nadeem BAL main branch Haripur Director
 Mr. Mohammad Saleem Akhtar Chief Executive Officer

The general direction and supervision of the affairs of commercial banks lies in their
respective executive boards. The appointment of the president, secretary and other members
of the board by election. The chairperson and CEO of the board direct, controls, and
manage the affairs of the bank through central management committee. BAL MAIN
BRANCH HARIPUR has an advisory committee with two directors, two senior members
and one secretary. This body sees to the day-to-day affairs of the bank, having sanctioning
authority for financial and business proposals as well as give suggestion. The central
management committee is the administrative head of a bank. Which consist of one
Chairman, 1 Co-Chairman, 1 secretary and 7 members? Chair is also CEO of bank. He
manages and controls the affairs of the bank. The CEO holds office at the pleasure of Board
of director.
In order to improve the management and operation of the bank, it has been split-up
management into a number of committee such as.

 Board Advisory Committee

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  Board Audit Committee
 Board Credit & Finance Committee
 Board Risk Management Committee
 Central Management Committee
The Head office of BAL MAIN BRANCH HARIPUR is at Karachi and the CEO controls
all the divisions of the Bank. The CEO is directly reporting to chair of the Bank.

1. Board Advisory Committee: This committee is responsible for forwarding suggestion

and advice to board of director about all matter of bank

2. Board Audit Committee: It comprises of members and director two each with one
secretary are responsible of managing the and conducting audit on regular basis from
quarterly and annual basis

3. Board Credit & Finance Committee: This committee is comprises of two director two
member and one secretary. The committee final approval of the lending and maintain the
check on the credit division of banks. BAL MAIN BRANCH HARIPUR C&F has
formulated a credit Policy duly approved by the Board of Directors for instructions manual
to be followed while taking fund based and non fun-based exposures keeping in view
bank’s own system and procedure & SBP regulations etc.

4. Board Risk Management Committee: This committee is consisting on five personal

two directors, two members and one secretary. This committee is design to evaluate the risk

associated to various project fiancé by bank and the especial risk to bank investment and

provide the solution to such type problem face by management.

5. Central Management Committee: Central management committee is comprised of one

Chairman and co-chairman along with seven members along one secretary. This group is
responsible of all the management of banks and its related activates. Organizing is a
function of management. Organization is result of organizing. It is a process of breaking
down the overall tasks of the enterprise into individual assignments/ activities and then
getting them put together in units or department or groups along with the delegation of
authority to a manager of a unit/ department/ group.

Organizational structure implies a formalized intestinal structure of Roles/ position. This is

not the end in its self; rather mean which help achieve certain objectives.

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A well-developed and properly coordinated structure is an extremely important requirement
for the successful operation of any organization. It provides the basis framework within
which functions and procedures are performed.
Note (The organizational structure of BAL MAIN BRANCH HARIPUR is shown in the
annexure-1)

3.3 Main Offices (Head office and branches)

Bank Alfalah is currently operating through 195 branches in 74 cities, with the registered
office at B.A.Building, I.I.Chundrigar, Karachi.
Since the privatization in 1997, BAL main branch Haripur has remained consistent in its
mission to excel in providing innovative products and services. Because of that, the year
2009 has been most favorable for bank in spite of varying market conditions. The Bank is
fully aware that the branch network has direct implications on the service that it provides to
its customers. In the year 2007, nine (9) commercial banking branches and five (5) Islamic
banking branches were added to the Bank. In 2009, Alfalah network extend the courage to
195 branches in 74 cities nationwide. Bank Alfalah is confident that a well-integrated
branch network, offers greater potential for serving a larger client base through high value
products.
The following are the different groups /divisional which are as under.
 Treasury International banking division
 Islamic Banking division
 IT division
 Cards division
 Corporate banking and Home Finance division
 Administration division
 Human Resource Management division
 Credit division
 Credit Monitoring division
 Legal Affairs division
 Car Finance Business division
 Finance Division
 System and Operation division

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 Audit & Inspection division

3.4 Branch Hierarchy

Chief Manager is responsible of branch management along with manager operation,
manager international banking, and manager credit and customer manager to control daily
activity based on working management hierarchy.

Table
Branches Distribution of BAL MAIN BRANCH HARIPUR according to Areas

Range Branches
Main Office KARACHI
Head office South LAHORE
Head office North RAWALPINDI
BRANCHES 406

The account-opening department is sub divided into two depts. FCA & Pak rupee account
opening. The organ gram of branch hierarchy attached in annexure-2

CHAPTER 4 DEPARTMENT OF BANK ALFALAH LIMITED

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 4.1 Different Department of BAL MAIN BRANCH HARIPUR Level

4.2 Trade Finance Department

Trade finance is one of the most important departments of the bank. It earns revenue for the
bank in the form of commission charges, L/C advising charges, foreign exchange
differences on negotiation & purchase of bills for collection.

Bank Alfalah is focused on Trade Financing; it attaches great significance to the

development and maintenance of healthy correspondent relationships with banks and
financial institutions. Towards this pursuit, it has developed excellent business relations
with renowned banks, whose support in terms of lines of credit extended to the bank, has
also enabled to handle ever-growing trade volumes. During year 2010, the bank handled
foreign trade business in excess of Pak rupees 30.6 billion, representing an increase of 92
percent over the previous year.

International Trade: International Trade is a consequence of an agreement between a

buyer & a seller, separated by geographical distances or boundaries. To ensure safe transfer
of goods to the right buyer and payment to the right seller, the services of financial
institutions are hired, which have contacts and roots in both countries. On a smaller scale,
trade involves buying & selling of goods within a country or may be a city. However, the
basic philosophy remains the same.
Letter of Credit: One of the most important functions of the commercial banks is to
finance the import and export trade. Documentary letter of credit is a bank’s written
undertaking given to the exporter for payment of a certain sum of money on behalf of the
importer, provided the exporter tenders to the bank or its overseas agents, the specified
documents within a specified period in accordance with the terms of the undertaking.

Parties to a Letter of Credit: There are four parties involved in a letter of credit.
 Importer ---Buyer
 Issuing Bank --- Buyer’s bank
 Exporter --- seller
 Beneficiary’s bank --- Seller’s bank

Types of Letter of Credit:

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Revocable L/C: A revocable credit is the one which can be amended or cancelled at any
time without prior notice to seller but before the authorized draft is presented for
acceptance or payment.
Irrevocable L/C: An irrevocable letter of credit can be amended or cancelled only with the
agreement of all the parties to it. It obligates the issuing bank to accept and pay the bills
drawn upon it so long as the terms and conditions of the credit are complied with.
All L/Cs should clearly indicate whether they are revocable or irrevocable. In case, there is
no indication the L/C treated as revocable.
Confirmed L/C: A confirmed credit is the one, which has been confirmed by the advising
bank. By confirming, the bank agrees to take on the liability of making payment to the
seller if the issuing bank defaults for any reason.
Transferable L/C: A transferable credit is the one, which can be transfers by the original
first beneficiary to one or more second beneficiaries. These are used where the supplier of
goods is other than the beneficiary of the L/C.
Sight L/C: If the exporter of goods is to obtain payment immediately on presentation of
stipulated documents, provided all the terms of L/C have been complied with, it is sight
letter of credit.
Acceptance L/C (issuance L/C): When L/C stipulates payment to the beneficiary upon the
maturity of a bill of exchange drawn under terms of the credit, it is an acceptance credit.
The exporter draws a draft for a particular time (e.g., 30, 60, or 90 days or even longer).
Upon presentation of documents to correspondent bank, the exporter does not receive
payment but acceptance, which he either holds until maturity or discounts at a fine rate.
Establishment of L/C: LC is established when it is recorded in the system of the bank.
Internationally, when it is advised by the correspondent bank to exporter’s bank, it is
considered established.
When L/C is established, a customer liability account is created with a debit and liability
account is created with a credit in Bank Alfalah. When the documents are negotiated &
returned this transfer entry is reversed.

Charges of L/C:

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Cash L/C where total volume of import business of First quarter Each subsequent
client during the period of or calendar year is quarter
L/C up to Rs 20 million 0.40% 0.20%
L/C volume from Rs.20m to Rs.100 m 0.35% 0.15%
L/C volume from Rs 100m to Rs300m 0.25% 0.10%
L/C volume from Rs300m & above 0.15% 0.008%

1.3 Cash Dealing Department:

Bank Alfalah has a very efficient and effective cash department at LDA plaza branch. The
main operations carried out here are as follows:
 Receipts & Payments
 Clearing; outward & Inward
 Govt. Securities
 Remittance (pay order, pay slip, demand draft, telegraphic transfer)

Receipts & Payments: At the cash counters, deposits are received and payments are made
through Cheques. The depositor fills in a credit slip for depositing certain amount. This slip
contains a credit voucher. This voucher is sent for posting after being entered into the ‘cash
receiving register’. Thus, the amount is credited to the customer’s account.
Payments are made through Cheques.
Cheque: Cheque is a negotiable instrument. It is an order by one person to another person
to make payment of specified amount to bearer or to the direction of bearer.
Some characteristics of Cheques are as follows. It is
 Specifically drawn on bank.
 Acceptance is necessary.
 Payable on demand
 On a specified prescribed Performa of specified branch of specified bank.
 There are three parties to Cheques: Drawee, Drawer & Payee.
 A Cheque is valid up until to 6 months.

Types of Cheques:

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Bearer Cheques: It is an open Cheque. The Cheques can be en-cashed by whoever is
holding the Cheques.
Order Cheques: This Cheque is not to be en-cashed to anyone other than to whom the
Cheques drawn on. For that purpose, the bearer of the Cheques might have to prove his
identity.
Cross Cheques: It is an endorsed Cheque. The amount specified on the Cheques cannot be
en-cashed on the counter. It can only transfer from one account to another.
The Cheques may return unpaid because of a variety of reasons.
 There is a shortage of funds in the account.
 Payment stopped by drawer.
 Exceed arrangements
 Difference in drawer’s signatures.
 Post dated / outdated Cheques.
 Mutilated Cheques.
 Amounts in words and figures differ.
 Crossed Cheques must be presented through a bank.
 Alterations in date/ figures/words etc.

Government Securities: Cash department also deals in the sale & purchase of govt.
securities. These are Rupee denominated certificates and bonds. These are floated in order
to promote a saving culture in the economy. As more the savings more the investment. The
certificates can be bought by one person or jointly by more than one person.
There are three types of securities:
Special Saving Certificates:
These certificates have these features.
 These certificates have duration of 3 years
 An interest rate of 14.20% per annum.
 The profit is given after 6 months.
 The interest is compounded if the certificate holder does not receive the profit after
6 months.
 Person does not have to be an account holder to buy a SSC.
 The minimum denomination is Rs.500 & maximum Rs.1, 000,000.
 The certificate is not en-cashable for 1 month, after being bought.

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  The bank earns commission @ 0.5% on these certificates.

 There is no Withholding Tax up until the amount of Rs.300, 000. There is W.H.Tax
of 10% above Rs.300, 000.

Defense Saving Certificates:

These certificates have the following important features.
 Duration is 10 years.
 Profit is due after 1 year.
 Profit is paid on encashment of the certificate.
 The interest compounded if the certificate is not en-cashed after one year.
 Person does not have to be an account holder to buy a DSC.
 The minimum denomination is Rs.500 & maximum Rs.1, 000,000.
 The bank earns commission @ 0.5% on these certificates.
 Withholding tax @ 10% deducted at source if the amount exceeds Rs.300, 000.

WAPDA Energy Bonds:

Bond is a debt instrument. Whenever a company needs financing, one alternative is to go
for issuing the bonds. WAPDA issued these bonds few years back to generate funds. Bank
acts as an agent and charges its commission.
 There are two types of WAPDA bonds, Bearer bonds & registered bonds.
 WAPDA issued bonds for a duration of 10 years.
 Interest paid @ 19% p.a.
 Interest is due after 6 months.
 Denominations range; Rs.5, 000 - Rs.500, 000
 Withholding tax @ 10% of the profit is deductible at source.

Remittances: A service rendered by the banks in which bank transfers the money from one
place to another. It could be between one and another branch, one bank to another bank or
from one account to another account.
Types of remittances:
 Inward remittances

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  Outward remittances
The above remittances take place through
Demand draft: DD is mode of transfer between two branches of the same bank located in
different cities.
 There are four parties to a demand draft: Remitter, Remittee/ Payee/ Beneficiary,
Issuing branch/Originating branch, Paying branch/ Drawee Branch.
 DD is a security stationary and kept in due control.
 It is valid up to three months.
 DD can be issued against: Cash, Cheques, Letter of instrument
 It can never be issued in the name of the same branch.
 There has to be a payee for a DD.
 There are certain commission, telex & postal charges for the issuance of DD.
 If the DD cancelled, physical presence of DD is necessary. There is a penalty on
cancellation.
Pay order: Pay order also called the banker’s Cheques. It is a money transfer instrument.
It is the most reliable instrument & it is usually not dishonored.
 Pay order is used for usually money transfers within city.
 PO is also liable to excise duty & commission.
 Stop payment cannot be made for PO, as it becomes property of the beneficiary.
 In order to cancel, endorsement by beneficiary is needed.
 PO can be issued against: Cash, Cheques, and Letter of instrument
Pay slip: For payment of its dues, bank issues pay slips instead of giving away cash.
 Pay slip is issued only for a particular branch.
 There is a govt. of Pakistan revenue stamp pasted on the PS.
 Pay slip is not issued for post dated & out dated Cheques.
Telegraphic transfer: TT is an electronic means to transfer money from one place to
another. Inland TT used for money transfer between the branches of the same bank. Bank
charges commission for a TT.
Clearing:

 OBC: Outward bill for collection

 IBC: Inward bill for collection

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Outward bill for collection: These include cheques drawn on other banks received in
BANK ALFALAH LIMITED. The bank collects these cheques on behalf of its customers.
The bank charges Rs.50 or 0.15%of the cheques amount whichever is greater for every
OBC. It also charges Rs.100 as postal charges.
Inward bill for collection: These include cheques drawn on BAL MAIN BRANCH
HARIPUR but presented to some other bank. These cheques are received from clearing
house for collection.

Same Day Clearing: It takes almost 2 to 3 days to get Cheques cleared. If a client needs
funds urgently, there is a provision of same day clearing. The amount should be at least
Rs.500, 000. This facility provided only at the main branch. The charges for servicing such
cheques are Rs.150 per Cheques.

NIFT (National Institutional Facilitation Technologies (Pvt) Ltd.) works within cities. It
receives cheques from the banks and delivers at the State Bank. Representatives from all
the banks collect their respective branch’s cheques from there. NIFT take service charges @
Rs.2.50 per Cheques.

There are certain things considered before a Cheque set out for clearing:

The Cheque should not be post dated. It should be valid. (A Cheques is valid up till 6
months)
Bank puts crossing & clearing stamps on OBCs. An endorsement stamp put on the back in
another city’s branch of BAL MAIN BRANCH HARIPUR where the Cheques are sent for
clearing. Then this Cheque is sent to the respective bank’s branch. The same procedure is
reversed in case of an IBC, the crossing, clearing & endorsement stamps are checked. The
amount in words & figures and the date of Cheques are duly checked.
Online Facility: When a client has bank account in some other city but he wants to en-cash
the Cheques or deposit money or wants money to be transferred from account in one city’s
branch to another city’s branch he can avail the online facility. The client has to apply for
this special arrangement between branches and that will make him able to transfer his funds
very quickly. Ideally, this transfer should take only 5 to 10 minutes but practically it takes
about half an hour or so. Charges for Withdrawal or Deposit of less/more than Rs.100, 000
are Rs.300.

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CHAPTER 5 BAL MAIN BRANCH HARIPUR FINANCE
DEPARTMENT

5.1 Number of Employee Working in the Finance Department

Sr .Mgr

Mgr
A. Mgr

Officer

Clerical

Clerical
Non-

Total
S. # Name Of Depart

5.2
1 Corporate & Investment Banking 1 4 6 2 4 15 5.2
2 Credit Management 1 2 8 2 - 3 16 5.2
3 Treasury Management 1 2 3 - 3 4 13 5.2
4 Commercial & Retail Banking 1 3 4 4 1 5 18 5.2
5 Financial department 1 2 3 1 - 4 11 5.2
Structure of Finance departments
The finance department of bank Alfalah is considered in the following ways by the opt of
the different level and areas of concern the organogram of finance department is attached in
annexure #3. The head of corporate and investment banking, credit management banking
and credit and retail banking as follows discuss these as under
Corporate & Investment Banking: The division comprising of a team of profession of 15
personal, heading by senior manager. The group is sub divided in the sub groups Corporate
Banking and Investment Banking.

I. Corporate Banking: The Corporate Banking activities relating to financing of big

customers of Rs.100 millions and above. The group formulates the business strategy to
target the big customers & multinational corporations & big business houses blue chips.
The overall policy, procedure, relating to facilitation of corporate clients made in
comparison the competitor’s policy within the policy framework of the Bank.
Similarly, this group focuses on the need and requirements of the big clients relating to
mobilization of deposits as well. The formulating of deposits schemes for attracting large
deposit and the rate of returns to be offered to such clients is a job of this group. This group
has been assigned Administration business discretionary powers. Anything, which exceeds
the financial powers of the group, directly referred to the board for necessary approval. The
group focuses on overall advances and deposits running at specific branches and monitored
the same.

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II. Investment Banking: Similarly, the group devises investment policy of the bank. All
deposits lying with the bank has to be invested so to fetch a reasonable return for the bank
as well as for the depositors? The bank keeping in view the overall deposit basket and
formulates investments in a diversified manner. Not to put all eggs in one basket. The
group also devises the rate of return the Head Office has to pay to branches so to ascertain
the cost of fund. Accordingly, after assessing the intermediation cost the new cost of fund
ascertained. The Investment Banking Group always invests above the cost of fund so as not
to distribute the profit to the branches but also to retain a reasonable rate of profit for the
bank as well.

Credit Management Division: The team of this group comprises of (16) professional
headed by one Senior Manager. The main areas of activity of this group are hereunder: -
 Formulation of credit policy in the light of credit division framework
 Monitoring & implementation of credit policies.
 Assessment of credit related risks & methods to mitigate the same.
 Policy to devise recovery of advances.
 NPL and devise policy for its recovery.
 Recovery, write-off / waiver of bad loans.
 Suit filed cases, settlement / follow up.
 Restructuring, reorganizing renewals, moratorium of credit.

The Group through Regional Credit Management Chief circulates & implements the policy
within the bank.

Treasury Management: This group comprises of 13 professional headed by one senior

manager. The main job of TMG is to keep control over the overall resources (deposit) of the
bank. It devises the policy and procedure relating to foreign currency deposits sale /
purchase disposed / transfer and its investment with the Govt. treasury. The same also deal
the pricing issues of FC. The policy is formulates and then it is implemented through
Regional Operations Chiefs in the Regional Office and that too in the branches.

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Commercial & Retail Banking: This group comprises of a team of professional of 18
person headed by one senior manager. The activity has been sub divided into commercial
banking group and retail banking Group

I. Commercial Banking: All finances extended to businesspersons and this group is

dealing commercial organizations up to Rs.100 millions. The group main areas of activity
are -
a) Policy formulation of commercial lending.
b) Implementation of commercial lending policy in the branches.
c) Pricing policy of commercial lending.
d) Procedures for extension of loans.
e) Recovery policy.
f) Write off and litigation & restoration.
g) Recovery of NPL and its treatments.

The policy implemented through Regional Credit Heads sitting in the Regional Offices.

II. Retail Banking: This group deals the following credit relating assignments
 Developing Consumers products for retail customers.
 Marketing of retail products through marketing division policies.
 Systems & procedures of retail products.
 Previewing / recovery of retail products.
 Security / collateral of retail products.
 Risk investments and mitigation of retail products.
 Recovery procedures for consumer’s loans.
 Write off / waiver off credit portfolio.
 Change / modification /collection & Recovery of retail products.

5.3 Finance Controller

This division comprises of 11 professionals headed by the senior manager. The Division
controls the overall financial issues relating to branches of BAL MAIN BRANCH
HARIPUR and foreign branches of overseas countries. This division is looking after the
foreign accounts. This group keeps a close eye on overall financial transactions routed to

- 33 -
and from overseas branches of BAL MAIN BRANCH HARIPUR as well overseas
branches of foreign banks as well.

Furthermore, the transaction relating to import / export taken core of this division.
Similarly, the cross borders, indemnities and guarantees all risks undertaken are also looked
after by this division. The service charges on all such services also determined and advised
by division to operation group for implementation of the same through the branches. This
division is also responsible for Taxation; fund management foreign and local investment
activities based on short term and long-term investment policies of the bank.

5.4 Finance & Accounting Operations in BANK ALFALAH LIMITED

The BANK ALFALAH LIMITED’s Finance & Accounting operations system has been
drawn up with a view to facilitating the expeditious transactions of branches, Regions &
Head Office dealing with public & at the same time safeguarding the bank’s interest.
All financing & accounting operations system use in BAL MAIN BRANCH HARIPUR is
formulated by specialized department of the bank. Each & every entry passed at branches &
Regional level is regulates by established standard format. No branch is allows deviating
from standards procedure as outlined by the bank’s management & SBP. In case of any
deviation, penalty is imposed on the concerned branch. However, in case of any ambiguity,
the matter taken up with the regional office & the concerned region refers the case to the
head office for clarification. Head office notifies any change in established procedure
through circulars letters. BAL MAIN BRANCH HARIPUR use double entry book keeping
system according to the established financing & accounting operations system. Debit &
Credit entries passed on through designed Dr. & Cr. vouchers & these maintained at
branches for record keeping.
On daily basis, the following books & printed for record purpose.
 Bank’s Cash.

 Bank’s Transfer.

 Bank’s Clean Cash.

 Bank’s Day Book for all Charges Head.

 Bank’s General Ledger.

- 34 -
  Bank’s General Ledger Abstract.

 Bank’s DTR.

 D.D / M.T / T.T / P.O issue & payment Register.

 Bank Alfalah General Statements.

On monthly basis branches prepare profit & loss statement & sent it to the regional office.
The regional office consolidates this P/L & transfers it to head office. The head office
consolidate these P/L received from regions & prepare P/L on monthly basis. In addition, at
the end of year head office prepare Profit & loss & other financial statements showing the
overall performance of the bank in the form of annual report.

5.5 Function of BAL MAIN BRANCH HARIPUR Finance Department

Accounts Department Activities
The accounts department deals with various routine activities for the bank. The main
Activities performed by it are
 Budgeting
 Reporting
 Maintenance & depreciation of fixed assets
 Miscellaneous functions

Budgeting: Accounts department of a bank, for a year makes budget of every branch.
Fiscal year of Bank starts from January 01 and ends on December 31. The accounts
department starts preparing budget from October for the next year.
Reporting: The accounts department, in the form of reports, clubs the details of various
departments together. Each minute detail is provided in weekly, monthly and annual
reports. The reports are submitted to head office, SBP and to the government.

The accounts department prepares many reports, of which the most common are
 Statement of Affairs
 Income & Expenditure
 Foreign Currency Report
 Royal Profit Report

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  Outstand Receipt Report
 Subsidiary Statement
 Currency Wise Deposits Report

Maintaining of fixed assets & their depreciation : Accounts department maintains the
record of all the assets and charges depreciation on them. The bank normally uses the
straight-line method to compute the depreciation. The accounts department prepares asset
purchase report and asset sale report after every 6 months that helps in changing the
depreciation. It is calculated on monthly basis and charged yearly. Bank not only
depreciates the existing assets but also the assets but also the assets transferred in and
transferred out.

Miscellaneous Functions: The accounts department also performs some other

miscellaneous functions like
 Reconciliation Statements
 Test Keys
 Closing Entries
 Foreign Exchange Forward Transaction

Reconciliation Statement: The bank prepares reconciliation statement with head office
and SBP.
Head Office: Reconciliation with head office done in department. The branches send their
reports to the head office. They check the posting of all the entries if outstanding, which has
not been posted by branch or head office. The reconciliation is carryout in the head office
and accounts department handles quarries.
State Bank of Pakistan: The SBP keeps the record of every scheduled bank. The bank
statements and statements of SBP are reconciled on daily basis. Reconciliation is setting of
outstanding entries. The reconciliation statement contains two sides. One contains entries
originated from bank but not responded by SBP and on the other side entries originated by
SBP but not responded by bank.
Test Keys: Test keys are used to authenticate and secure the transaction. These keys used
for both inward and outward transactions. In local transfer, double coding used while in
foreign transaction single coding is used. Each bank to arrive at the code uses separate test

- 36 -
keys. The basic purpose of test is to secure the transaction. Four things must be carefully
checked because code is based these four items branch, date, Currency and Amount
Closing Entries: Accounts department also passes the closing entries on monthly, 6 monthly
and yearly bases to calculate the profit and analyze the overall performance for a certain
period.
Foreign Exchange and Forward Transactions: In the past, the banks had to keep their
foreign exchange with SBP on the agreement that SBP will purchase the foreign exchange
on book rate and charge a fee for covering the risk. This whole transaction known as
foreign transaction. Now this facility is not available. Now banks can avail it by renewing
their limit on old accounts with SBP.

Statements: The predominant functions performed by the accounts department can be

categorized into two broad categories a daily activity checking and report generation
Daily Activity Checking: All the operations performed in various departments of BAL
main branch Haripur (name of the branch) are computerized. The functions performed
through the customized software of the bank called Bank Smart. In order to facilitate
double-checking of all the transactions done, every concerned official also passes vouchers
manually. At the day end all, the vouchers passed by various officers working in different
departments are given to the authorized person in the Accounts Department. Furthermore
the I.T. department also gives a very bulky report, which constitutes of the computer print
outs of all the transactions / entries which have been fed into the computer system of the
branch that day. Now after receiving all the reports the job of the person in the accounts
department is tallying the daily activity report with all the corresponding vouchers, in order
to track down any discrepancy.

Report Generation: The exact number of reports generated by the accounts department on
a daily, weekly, monthly, bi-yearly and yearly basis is somewhere in the bracket of 500. It is
neither necessary nor possible to be acquainted by all of these reports in a short period.
Some of the common reports are
Daily advance and Deposit Position
Daily Exchange Position
Daily Fund Management

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Closing Reports
Monthly Assets & Liabilities
Monthly Budget Review Report
Monthly Monitory Statement
Monthly Performance Review Report
Schedule Of Maturity Distribution
From these statements, five reports carry extreme importance. The five reports are
 Daily position of advances and deposits
 Statement of affairs
 Daily exchange position report
 Fixed assets statement

5.6 Accounting & Finance System of the BANK ALFALAH LIMITED

Accounting usually characterized as “the language of business employed to communicate
financial information” It is concerned with process of recording, sorting & summarizing
data resulting from business transactions and events. The Bank’s standard accounting
system based on the principles of double entry bookkeeping; these principles are
universally accepted & followed. It is therefore, imperative at the outset to discuss these
accounting principles. BAL MAIN BRANCH HARIPUR deal three types of accounts
Personal Account: The account of persons with whom the business deals. These are called
Personal Accounts.
Real or Assets Account: The accounts of properties dealt in by the trader in his business.
These accounts are classified as Real or Assets Accounts.
Nominal or Fictitious Accounts: This account pertains to sources of income &
expenditures. We called these accounts as Nominal or Fictitious Accounts.
Rules Governing Debits & Credits
1. Personal Accounts: Debits the account of the receiver & credit the account of the giver.
2. Real or Assets Accounts: Debits – What comes in? Credit – What goes out?
3. Nominal Accounts: Debit - Expenses & Losses Credit - Incomes & Gains

BAL MAIN BRANCH HARIPUR being a financial institution, proper arrangement is to be

made to facilitate the work of auditors & to enable him examined the Books of accounts
and makes a report on them to the shareholders. BAL MAIN BRANCH HARIPUR finance

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system play a dynamic roll in Bank’s development. Today, external factors i.e. heighten
corporate competition, technological changes, volatility in inflation & interest rate;
worldwide economic uncertainty, fluctuating exchange rate, tax law exchange & ethical
concern have an increasing impact on BAL MAIN BRANCH HARIPUR finance system.
BAL MAIN BRANCH HARIPUR finance system has the ability to adopt these changes
through rising of funds, investment in assets & increasing in interest / mark up portfolio. In
these areas, BAL MAIN BRANCH HARIPUR Finance system has a vital role in optimal
growth both in profit & customers satisfaction. In BAL MAIN BRANCH HARIPUR at
Regional Office level, finance system has no existence, but Regional Office is directly
linked with Head Office. In Head Office finance system controlled by Finance System
Group headed by Senior Executive, perform the following financial functions.
1. Financial Accounting,
2. Taxation
3. Equity of the Bank.
4. Investment.
5. Fund management.

5.7 Use of Computers and Automation in BANK ALFALAH LIMITED:

Technological developments are opening up new vistas of solutions for distributing

traditional financial products. Concurrently, raid changes in customer preference have
resulted in major shift from manual to automated services.
Bank Alfalah inherited the information system named –IBM. It devised another information
system ‘Bank Excel’ to cope with its expanding operations. The branches used to keep and
maintain record of all original entries Dr / Cr in PC kept at the branches. On every
Saturday, all the daily CD and data were sent to Regional Computer Center in batches. The
Regional Computer Centre (RCC) used to manage and update the complete record in the
main computer and use to issue computerized DTR on weekly basis. Then on 31 st of every
month, computerized ledgers were got printed and sent to the branches. The branches used
to keep their ledgers with the RCC. Thereafter, the RCC updated and upload / refined the
old data, now manual / reconciliation is between branches, and RCC has since been
eliminated. Now in Falcon -IBM system all the necessary provision made and manual has

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since eliminated. Now almost 90% branches are this system and using through computer. In
2010, BAL MAIN BRANCH HARIPUR made a further breakthrough and start using EBS
electronic banking system by upgrading its existing system. Under this EBS system cheque
of other branch, using EBS encased from any of the branch of BAL MAIN BRANCH
HARIPUR in any city of the country. The cash deposited in one branch accounted for in
your account maintained with any other branch of BAL MAIN BRANCH HARIPUR in
other cities. Likewise, any body can easily in moments can transfer its Bank Alfalah
Limited from one place to other within seconds and minutes without any hurdle. Under
these system 100% branches has been completely ON-LINE and linked together through
Internet DSL connection. The one line Branch is also linked with ONE LINK ATM facility
of other 13 major domestic Banks. The host of 100 branches starts using data of each other.
Through special authorizing and system of password, the data is shared which is using for
deposit / transfer of funds etc. Furthermore, more than 150 ATM have installed by the
BANK ALFALAH LIMITED, one could excess bank account 24 round the clock. From
these machines, the customer of online branches can withdraw sum up to 25,000/- with 24
hours. One can deposit utility bills and are issued bank statement and a request for
chequebook issuance as well. The Bank Alfalah Limited enquiry also is made through pin
codes. Now a day’s BAL MAIN BRANCH HARIPUR is thinking to use software “Core-
Banking” as being used by some of the most advanced countries of the world.
The following reports generated on daily basis by account department.

 Daily Account Activity Report

 Transaction Journal
 Income/ expenditure Affairs
 Daily Statement of SBP/ H.O.
 Files Update Report
 Due from Treasury
 Transactions in FC Accounts
 Files Update Report
 Daily Exchange Position
 List of Cheques Books Issued
 On-line Activity Report

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 5.8 Sources of Fund in BANK ALFALAH LIMITED

The fund available to BAL MAIN BRANCH HARIPUR for purpose of its business
comprise of the following paid up capital, the reserve fund deposits, borrowing from non-
deposit sources
These are very important sources of fund in BANK ALFALAH LIMITED. In addition,
these sources play a vital role in maximization BANK ALFALAH LIMITED’s financial
figures. Besides these basic sources, BAL MAIN BRANCH HARIPUR gives various
services to its customers in the form of lending & assisting daily banking transactions. In
exchange of these services bank gets Mark-up, exchange & commission from the
customers, which will contribute BANK ALFALAH LIMITED’s funds. Due to strategic
business policy adopted by BAL MAIN BRANCH HARIPUR in the last five years, these
sources increase very rapidly as shown.

(Rs. In Millions)

# Sources of Funds 2007 2008 2009 2010 2011

1 Reserve Fund 1,009 2,351 2,750 2,415 3,166

2 Deposits 129,715 222,345 239,509 273,174 300,733

3 Borrowings 12,724 5,844 8,394 21,231 13,690

5.9 Generation of Funds in BANK ALFALAH LIMITED:

BAL MAIN BRANCH HARIPUR mostly generates funds through loaning / Investment &
Commission / Exchange. Giving loans to various clients, BAL MAIN BRANCH
HARIPUR gets Markup / Interest from the client who is a greater then the bank paid to
Depositors on their deposits. BAL MAIN BRANCH HARIPUR also giving various types
of services to customers / clients, on which the Bank gets Commission & Exchange. In this
way the Bank generate fund. During the year-2010, BAL MAIN BRANCH HARIPUR
increases in profit by Rs.2430 Million, net interest income increase by Rs.25784 Million.
Dividend income & capital gains also made a healthy contribution as these increased by
Rs.65 millions and Rs.20078 million respectively. Advances increased by Rs.48 billion due
to impressive contribution by all business units. In the FY-011 Reserve fund increased to

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751 million from last year of 2415 million. Deposits also increased to 2756 as to last year
of 27317 million. In the FY-011, the borrowing decreased to 7541 as to FY-07.

(Rs. In Millions)
S# Generation of Fund 2007 2008 2009 2010 2011
1 Net Mark-up / Interest Income 2,813 4,662 6,259 6,876 7172
2 Fee Commission & Brokerage Income 676 1,159 1,8009 2,430 2539
3 Dividend Income 53 52 37 65 301
4 Income from foreign Exchange 219 290 387 475 915
5 Gain on Securities 153 2,0068 424
6 Other income 573 745 842 1,0061 1248

Above all figure for the Year–2010 were vital sources for generating of fund. The bank
significantly grew its customers footing, continued to expend its delivery channels &
further improve its process efficiencies. Thus reinforcing its leadership position in the
market & enhancing its share of income contribution to bank.

5.10 Allocation of Funds in BANK ALFALAH LIMITED

BAL MAIN BRANCH HARIPUR allocate fund in the following sector.

(Rs. In Millions)
S. # SECTOR 2007 2008 2009 2010 2011
1 Cash 19,709 24,789 27,859 29,436 32,687
2 Bank Alfalah Limited with 3,184 9,713 12,732 18,381 21,581
3 others
Lendingbank
to financial 0 27,008 12,457 3,452 3,315
4 institutions
Investment 35,500 57,4250 56,502 88,492 75,973
5 Advances 88,9316 118,86 149,99 171,19 192,67
6 Fixed assets 7,5011 10,4724 16,1369 11,9229 13,7731

The cash Bank Alfalah Limited is growing fast from FY-07 to FY-011 it reach to 2376
million from 790 million. The Bank Alfalah Limited with other banks is also gradually
increased from 8423 in 2007 and reaches to 21581 million in 2011. In similar way advance
are growing too fast as depicted in the picture.
As per international practice BAL MAIN BRANCH HARIPUR never keep their fund
liquid but keep them invested in various sector to expand their business. In order to

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diversify risk & yield a reasonable return on investment of deposit holders. BAL MAIN
BRANCH HARIPUR devised its policies of collection of fund, so that risk of loss is
minimized, above all SBP made certain restrictions with regards to total funds of the bank.
BAL MAIN BRANCH HARIPUR is duly bound to adhere strictly to SBP regulations in
this respect. The necessary for doing is that SBP enforce cheek & Bank Alfalah Limited on
BANK ALFALAH LIMITED, so that BAL MAIN BRANCH HARIPUR may not invest in
high risky project. It is also inevitable to safeguard the interest of depositors. It is policy of
BAL MAIN BRANCH HARIPUR as instructed by SBP that all Banks be required to
maintain it least 20% of total time & demand liabilities with SBP.
BAL MAIN BRANCH HARIPUR maintained at least 20% of the total time & demand
liability in a liquid security, so that in case of any immediate demand the bank is in position
to honors its obligation & pay cash to deposit holders. Similarly like other banks, BAL
MAIN BRANCH HARIPUR is required to make investment in stock exchange approved
companies not more than 5% of total time & demand liabilities. However, Bank enforced to
make investment in approved sector by board of director, keeping in view the available
Bank Alfalah Limited with the bank. Moreover most of the time SBP through various
regulation make diversion of the bank fund in selected sector of the economy. However
there is certain restriction imposed by BANK ALFALAH LIMITED’s investment division
owning to which not more than 50% of the total allocation be made in secured & unsecured
advances.
Moreover, as per SBP regulation BAL MAIN BRANCH HARIPUR like other banks keep
5% of its time and demand liabilities with SBP interest free as cash reserve ratio. Keeping
in view the credit expansion SBP may increase or decrease CRR.
As per BAL MAIN BRANCH HARIPUR bank policy, the total allocation of borrower
funds (deposits) is given hereunder: -
 Deposits 100%
 Liquid securities 25%
 CRR 5%
 Cash Branches 2%
 Lending operations 62%
 Investments 12%
 Fixed Assets 2%

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 5.11 Mobilization of Funds in BANK ALFALAH LIMITED

In line with SBP policy top management of BANK ALFALAH LIMITED, make different
policy for mobilization of fund. The Board of Directors & expert management after
working out detail cost benefits analysis formulate different mobilization schemes keeping
in view their earning capacity. Before launching a scheme Bank’s management use it on
trial basis at selected branches. In addition, if perm well, the same is fully marketed through
the entire network of branches.
At present, the following methods / schemes used for mobilization of fund in BANK
ALFALAH LIMITED.
1. Current Account.
2. Saving Account.
3. Term & fixed Deposit Account.
4. Monthly Income Scheme.
For the mobilization of these funds, banks offer competitive rate keeping in view the
competitive rate of other banks.

(Rs. In millions)

YEAR 2007 2007 2008 2009 2010 2011

Fixed Deposits 1110 2189. 8016.7 8885 8552 11668
Saving Deposits 4462 6596.5 81008 7889. 10788 86417
Current Accounts 1863 3621 4581 5823 6760 7832
Other Deposits 1452 3519 1179 9913 8901 7715
Total Deposits 8887 15925 21881 32510 35000 113632

In the FY-006, fixed deposits are 1110 it increased to 1079 to F-007, which shows the
healthy sign of organization growth. The growth in Fixed, Saving, Current and other
accounts are 5828, 15011, 960 and 2340 respectively in year 2008. The increase in almost
all sectors of banks in year 009 but not to that extent of FY-007 to FY-008, Savings deposit
is increasing 2899 in the year 2010 but the fixed deposits are decreased of 333 million.
However, in the year 2011 fixed deposits are reaching to 3116 million as compared to
financial year 011. In the FY-011 saving decreased, but current account increased 1072
million as to last year. It means the liquidity of the company increased and number of
customer in current account growing fast.

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 5.12 Critical Analysis of Theoretical Concepts

Concepts relating to practical experience in BAL MAIN BRANCH HARIPUR are studied
in the following prospective as of last five-year reports.
I worked under the supervision and guidance of experienced officials who were always
very cooperative and helpful. I was taught about almost all the banking operations being
carried out and which have already been discussed in detail as under “various departments
of BANK ALFALAH LIMITED”.
This internship has proved to be a very learning opportunity for me. Whatever have I learnt
during the past two years, I saw the practical demonstration of all of it? It is very
informative to see the theory being put to practice. All the concepts of Accounting,
management, marketing, banking, business communications, organizational behavior and
finance were revised. I worked for some time in the Area office. There I observed the
procedure of correspondence between branches all over the North region. That surely was
interesting and informative. In addition, I felt more confident about my computer skills
after working for the Area Manager and the Senior Operations Manager. I managed to spare
some time from our tight schedule and met officials of departments where we were not
scheduled to work. I gained some insight into the working of Special Assets Management
Division, Credit administration, Personnel department by arranging these sessions. In
addition, I had these sittings with the corporate head that gave clear concepts regarding the
subject of Finance and work on the different issue of corporate investment works such as
analysis of investment as well as evaluate the performance of investment at branch levels.
Occasional chitchats with the staff gave interesting insights into the culture and
environment of the bank. Hence, it was a great experience working in such a prestigious
organization. I am sure the knowledge and skills gained, shall help me during the course of
my career.

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CHAPTER 6 FINANCIAL ANALYSIS

6.1 Financial Analysis

Financial statement analysis is the principal mean of reporting the financial condition and
the result of operations of an organization, or in other words we can say that financial
analysis are carried out for the purpose of identifying the financial strengths and
weaknesses of an organization by properly establishing the relationship between the Bank
Alfalah Limited sheet and income statement items. This analysis helps many parties in
making decision who are interested in business activities. To improve the quality of
decision-making, proper analysis of these statements helps a lot. The firm itself and
outsider providers of capital, creditors and investors all undertake financial statement
analysis. The type of analysis varies according to the specific interests of the party
involved.
For example, suppliers are interested in liquidity of the firm. Their claims are short term,
and the ability of the firm to pay these quickly is best judged by an analysis of the firm’s
liquidity. The claims of the bondholders, on other hand, are long term. Therefore,
bondholders are more interested in cash-flow ability of the firm. Investors are commonly
concerned with present and future earnings. As a result, investors usually focus on
analyzing profitability. They would also be concerned with the firm’s financial conditions
insofar as it affects the ability of the firm to pay dividend and avoid bankruptcy.
Management also analyzes financial analysis for the purpose of internal control and to
check the performance of the firm. Similarly, government agencies analyze financial data
for the tax purpose.

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6.2 Last Five Years Balance Sheet of Bank Alfalah Limited
BANK ALFALAH LIMITED.
BANK ALFALAH LIMITED SHEET
2007 – 2011

2011 2010 2009 2008 2,007

ASSETS (Rupees in Millions)
Cash 32,687 29,436. 27,859 24,789 19,709.
BAL main branch Haripur 21,581 18,381. 12,732. 9,713. 3,184
with other Banks
Lending to other financial 3,315 3,452 12,457. 27,0080
inst.
Investments 75,973. 88,492 56,502. 57,426. 35,5006
Advances -- net of provision 192,671 171,199 149,999. 118,864. 88,931
Operating fixed Assets 13,733. 11,922. 10,5006. 6,620. 4,281
Other Assets 8,989. 6,013. 5,633. 3,852. 3,227
Total Assets 34,900 328,895 275,685 248,314 154,835
Liabilities
Deposits & other liabilities 30,073 273,174 239,509 222,345 129,715
Borrowings from other banks 13,690. 21,231 8,394 5,844. 12,724
Bills Payable 3,452 4,138 3,091 3,733 2,234
Sub-Ordinate. Loans 2,571 3,221 3,222 3,223 1,899
Other Liabilities 11,291 9,532 7,3008 5,220 2,725
Deferred Liability 2011 1,380 1,921 484 276
Total Liability 33,195 312,675 263,442 240,849 149,573
Net Assets 17,0074 16,220 12,243 7,465 5,262
Share Capital 7,995 6,500 5,000 3,000 2,500
Reserve funds & other 3,166 2,415 2,750 2,351 1,009
reserves
Un appropriated profit 3,447 4,852 2,823 1,387 860
Shareholder’s Equity 14,6011 13,767 10,573 6,738 4,369
Surplus/(deficit) on 2,436 2,453 1,670 727 893
revaluation of Investments
Total Equity 17,0075 16,220 12,243 7,465 5,262
.

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 6.3 Last Five Years Income Statement of Bank Alfalah Limited
BANK ALFALAH LTD
PROFIT & LOSS STATEMENT
2007 - 2011

2011 2010 2009 2008 2007

(Rupees in Millions)
Markup/ Interest earned 31,0076 25,784 21,191 12,247 5,620
Markup Exp 20,331 16,621 15,233 7,2008 2,423
Gross Profit 10,715 9,163 5,958 5,0072 3,186
Less: Provisions 2,0065 2,377 699 380 373
Net markup income 8680 6,876 6,259 4,662 2,813
Fee, Commission & 2,539 2,430 1,8009 1,159 676
brokerage
Dividend Income 300 65 37 52 53
Exchange income 914 475 387 290 219
Gain on securities 424 2,0068 153 1 1
Other Operating Income 1,247 1,0061 842 745 573

Total Income 12,417 12,825 8,484 6,9011 4,334

Operating Expenses
Administrative Expenses 10,471 8,273 5,875 4,314 2,678
Other provisions 29 7 1 10 1
Other charges 123 10 43 21 2
Profit before Taxation 1,794 4,535 2,566 2,563 1,654
Taxation 493 1,4008 8006 861 562

Profit after tax 1,301 3,130 1,763 1,702 1,092

.

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 6.41 Ratio Analysis

Ratio defined as a quantitative relation between two magnitudes of the same kind. In the
words of Van Horne, “A financial ratio is an index that relates two accounting numbers and
is obtained by dividing one number by the other.” One may think that why there is a need to
mingle with these ratios and not take the actual figures straightforwardly. Among various
reasons one strong reason can be put forwarded that ratios help in comparison. When ratio
analysts are to compare the internal performance of the organization in relation to time,
only ratios are the viable option for them. Along with it, comparison with the other
competitors in the same industry can only be carried out with the help of financial ratios.
With a greater understanding of the Bank Alfalah Limited sheet and how it is constructed,
we can look now at some techniques used to analyze the information contained within the
Bank Alfalah Limited sheet. The main way this is done is through financial ratio analysis.
Financial ratio analysis uses formulas to gain insight into the company and its operations.
For the Bank Alfalah Limited sheet, using financial ratios (like the debt-to-equity ratio) can
show you a better idea of the company’s financial condition along with its operational
efficiency. It is important to note that some ratios will need information from more than one
financial statement, such as from the Bank Alfalah Limited sheet and the income statement.
The main types of ratios that use information from the Bank Alfalah Limited sheet are
financial strength ratios and activity ratios. Financial strength ratios, such as the working
capital and debt-to-equity ratios, provide information on how well the company can meet
its obligations and how they are leveraged. This can give investors an idea of how
financially stable the company is and how the company finances itself. Activity ratios focus
mainly on current accounts to show how well the company manages its operating cycle
(which include receivables, inventory and payables). These ratios can provide insight into
the operational efficiency of the company.

6.165 Profitability Ratios

These relate profits to sales and investment. These are a good indicator of a firm’s overall
effectiveness of operation.

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 6.5.1 Net Profit Margin
It is a measure of the firm’s profitability of sales after taking account of all expenses and
income taxes. It shows the net income per Rupee of sales.

Net Profit Margin = (Net Profit after taxes / Net sales)*100

Particulars 2007 2008 2009 2010 2011
Net profit after taxes 1,092 1,702 1,763 3,130 1,301
Net sales 5,620 12,247 21,191 25,784 31,0076
Net Profit Margin % 19.431 13.897 8.320 12.139 4.191

The Net Profit Margin of BAL MAIN BRANCH HARIPUR has mixed results; it was
19.43% in the Financial Year 2007 but has decreased to 13.987% in the FY-008. This is
because of the fall in the profit rates offered to the depositors due to high levels of liquidity
in the market. The net profit margin measures the profit that is available from each rupee of
sales after all expenses have been pad, including cost of sales, selling, general, and
administrative expenses; depreciation; interest; and taxes.
For the Year 2009: 8%
For the Year 2010: 12%
For the Year 2011: 4.19%
This shows the improvement in the net profit over time, but the change in gross profit is
more than the change in the net profit margin. This results into the conclusion that either the
selling price has increased or the cost of sales has decreased. There is also another factor of
the tax rate, which also affects the income.
6.5.2Gross Profit Margin
It shows the Gross profit Margin in the total revenue of the Company. Gross profit includes
the Revenue minus the expenses.

Gross Profit Margin = Gross Profit / Net Sales (Rs in Millions)

Particulars 2007 2008 2009 2010 2011
Gross profit 3,186 5,0072 5,958 9,163 10,715
Net sales 5,620 12,247 21,191 25,784 31,0076
Gross profit margin 56.7 41.2 28.1 35.5 34.5

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In the 2007, the gross profit Margin of was 56.7% in the Total Income of the Bank. In 2008,
this margin goes down to 41.2%; the cause is a huge increase in the Total income and a less
increase in the Gross profit of the company. In 2009, the mark-up revenue of the bank is
less. Gross profit is critical because it represent the amount of money remaining to pay
operating expenses, financing costs, and taxes and to pay for profit. Gross profit margin is
the amount of each sale rupee left over after paying cost of goods or services sold.
The profitability of the bank has decreased as the gross profit has decreased from 2008-
2009. The decreasing trend shows that there has been a remarkable increase in the markup
expense; this markup expense increase is due to the management’s inefficiency. However,
in the FY-07 & 011 it increased to 35.5 and 34.5 percent.

6.5.3Return on Investment
It also called the earning power and measures the overall effectiveness in generating profits
with available assets/ invested capital i.e. it measures the profitability per rupee of
investment in the firm.

ROI = (Net Profit after Taxes / Total Assets)* 100 (Rs in Millions)

Particulars 2007 2008 2009 2010 2011

Net profit after taxes 1,654 2,563 2,566 4,536 1,795
Total Assets 154,835 248,314 275,686 328,895 348,991
ROI % .86 .84 .67 1.007 0.38

BANK ALFALAH LIMITED’s ROI was 0.86% in the FY 2007 and in, 2008-it decreased to
.84%. This is because of the increase in the net profit of the Bank, on the other side the total
assets of the bank also increase but with more than that profit, at which the Net Profit
increased in 2008. This ratio shows that to how much extent the assets being utilized. Here
it is obvious that the bank is not efficiently utilizing its assets. This ratio shows that the
return is lesser in 2009 as compared to return on assets in the year 2008, which shows that
the cost on deposits and borrowing, which is the major expenditure of bank, has increased
more in the current year than the last year. Another reason of decrease in return is the
reduction in lending rate and increase in financial cost; total assets in 2009 have also
increased substantially than last year so return on assets has decreased in 2009. In the FY-

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07 profit, almost doubled but total assets not increased to same proportion. However, the
profit in the FY-011 is decreased very sharply and the ROI reduced to remain to 0.38%,
which is lowest ever in its history because of heavy expenses.

6.5.4 Return on Average Equity

This ratio measures the earning power on shareholders’ book value investment and is
frequently used in comparing two organizations in the industry.

ROE= (Net Profit after Taxes / Shareholders Equity) * 100 (Rs. in Millions)

Particular 2007 2008 2009 2010 2011

Net profit after taxes 1,092 1,702 1,763 3,130 1,301
Shareholders’ equity 4,369 6,738 10,573 13,767 14,609
Return on Equity 26.89 30.65 20.37 25.72 9.17

The ROE of BAL MAIN BRANCH HARIPUR has decreased to 79.011% in 2007 to 26.89
in the FY-007. That is why although the shareholders equity has increased over the last
year, yet the improvement in the net profit margin has shown improvement. But in 2007 it
again goes down to 26.89% it is due to huge competition in the market in banking sector
and the other reason is due to the expansion of branches which show downward tread but in
2008 again show upward trend which goes down again in 2009 show downward tread. This
downward trend is only due to expenses deposits bank Alfalah take deposits from market
on expenses rate, which show downward tread. The performance going to decreased in
FY011.

6.6 Asset Utilization Ratios

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This ratio measures the relative efficiency with which a firm utilizes its assets to generate
revenue. The more productive the assets of an organization the higher would be the ratio.
These include:

6.6.1 Total Asset Turnover

This shows the revenue generated per Rupee investment in total assets
TAT= Net Sales / Total Assets (Rs in Millions)

Particulars 2007 2008 2009 2010 2011

Net sales 5,620 12,247 21,191 25,784 31,0076
Total Assets 154,835 248,314 275,685 252,023 34,900
TAT 0.007 0.008 0.011 0.10 0.0067

This ratio has slightly fallen as compared to the previous year. It stood at 0.007 in 2007 and
came down from 0.07 in 2007. This was because of an increase in the total assets not
matched by proportionate increase in the mark up revenue. This can also be attributed to a
selective approach in making advances and an increase in the non-performing assets in the
form of bad debts. However, 2008 and 2009 both are favorable period for total assets
turnover because in these two periods the mark up revenue also increases with total assets.
However in the financial year 2011 the performance going to slow down at lowest level
because of economic condition of the country.

6.6.2 Fixed Asset Turnover

This shows the revenue generated per Rupee investment in the operating fixed assets.

FAT= Net Sales / Fixed Assets (Rs in Millions)

Particulars 2007 2008 2009 2010 2011

Net sales 5,620 12,247 21,191 25,784 31,0076
Fixed Assets 4,281 6,620 10,5006 11,922 13,733
FAT 1.66 2.19 2.23 2.35 2.26

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In 2007, this ratio declined to 2.65. This further declined in 2007 to 1.66. This is due to
huge increase in the Operating Fixed Assets of the BAL MAIN BRANCH HARIPUR and
a small increase in the Mark-up Revenue of the Bank. Because of expansion in the branch
network BAL MAIN BRANCH HARIPUR increases it Fixed Assets day by day. However,
goes upward both in 2008 and 2009 this is due to increases in markup revenue. However, in
the FY-07 and 011the performance slightly batter because of the increase in sale revenue
but not increased in fixed as to it.

6.6.3 Current Asset Turnover

This ratio gives the revenue generated per Rupee investment in the total current assets of
the bank that includes short-term investments and lending.

CAT= Net Sales /Total Current Assets

(Rs in Millions)
Particulars 2007 2008 2009 2010 2011
Net sales 5,620 12,247 21,191 25,784 31,0076
Current Assets 150,555 241,694 265,182 316,973 335,216
CAT 0.006 0.008 0.011 0.011 0.093
7 1 0 1

The Current Asset Turnover ratio shows a decline as compared to 2007 and 0.007 times in
2007. This is mainly due to large increases in the short-term investments and advances.
However, increase in 2008 to 0.0081 times and now 0.011 in 2009. The increase is due to
increase in markup. In FY-07 it further improves to .0111, the current asset increased in FY-
011 but not to the level of net sale, and the ratios in result reach to 0.093 times.

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6.7 Liquidity Ratios
These ratios used to measure a firm’s ability to meet short-term obligations as they become
due. From these, an insight into the cash solvency of the firm and its ability to remain
solvent in the event of adversity can be judged. These are
6.7.1 Current Ratio
This shows a bank’s ability to cover its current liabilities with its current assets. It is
calculated by dividing the total current assets with the current liabilities for a particular
period.
Current Ratio = Current Assets / Current Liabilities
(Rs in Millions)
Particulars 2007 2008 2009 2010 2011
Current Assets 150,555 241,394 598,337 316,973 335,216
Current liabilities 144,949 23,4009 252,915 299,923 47,423
Current Ratio 0.170 1.006 1.008 1.009 1.011
0 0 0 0

BANK ALFALAH LIMITED’s Current Ratio is declining with time. It was 1.15 in 2002
and it is 1.01, which explains an increase in the risk of short-term insolvency. This change
is because the bank has decreased its short-term investments more than proportionately as
compared to its short-term liabilities. Current Ratio measures the number of times a
company’s current assets cover its current liabilities. The company will be able to meet its
short-term obligations if this ratio is high.
For 2007: 0.17 times
For 2008: 1.006 times
For 2009; 1.008 times
For 2010; 1.009
For 2011; 1.0110

The ratio has increased that shows the company is able to pay its liabilities by effectively
using the assets.

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6.8 Financial Leverage Ratios
These ratios show the extent a firm uses debt financing as compared to equity. Two major
debt ratios are as follow:

6.8.1 Debt to Equity Ratio

This shows the extent to which the firm financed by borrowings and by the shareholder’s
equity.
Debt Ratio = Total Debts / Equity (Rs in Millions)

Particular 2007 2008 2009 2010 2011

Total Debts 149,573 240,849 263,442 312,676 312,676
Equity 5,262 7,465 12,243 16,220 17,0074
Debt Ratio 28.425 32.264 21.518 19.277 18.345

BANK ALFALAH LIMITED’s Debt to Equity ratio shows that for every Rs. 1.00 of equity
provided by the shareholders the bank debt of Rs. 16.83 in 2002 in the form of borrowings
and deposits. Although the debt to equity figure has improved. In 2007, it jumped to 22.23
times. This is due to the increase in the Total Debt. This current year ratio shows an
increase in ratio from 28.42 times to 32.26 times. The ultimate increase in this ratio has
decreased the long-term solvency of the bank. Because lesser is the equity financing lesser
will be the soundness of the bank. It also shows that bank has not laid-off its liabilities, so
the bank is not able to generate good returns. The reason behind this increase is an increase
in external borrowings although there is an increase in internal debt but rate of increase in
external borrowing. However, in current year it goes down to 21.51.

For FY-07; 19.27 and

For FY-011; 18.34

In the last two-year the debt to equity ratio improved as to last three year.

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 6.8.2 Debt to Total Assets Ratio
This ratio highlights the relative importance of debt financing to the firm by showing the
percentage of the firm’s assets that are supported by debt financing.

Debt Ratio = Total Debts / Assets (Rs in Millions)

Particular 2007 2008 2009 2010 2011
Total Debts 149,573 240,849 263,442 312,676 312,676
Total Assets 154,835 248,314 275,686 328,895 348,991
Debt Ratio 0.966 0.970 0.956 0.951 0.896

BANK ALFALAH LIMITED’s Debt to Assets ratio was same 2007 and 2008 that is 0.96 in
2007 it is slightly increased and goes to 0.95 times compare to 0.94 in 2002. It shows that in
2007, Rs. 0.95 of debt was financing every Rs. 1.00. This increase is attributed to an
increase in the total short-term and long-term liabilities. The rest of result shown as

For FY-007; 0.966 for FY-008; 0.970 for FY-009; 0.956

For FY-07; 0.951 for FY-011; 0.896
In the FY-011 ratio, improve to the level of asset increased as to last four years.

6.9 Other Ratios

Apart from the above, certain other ratios can help better analyze the performance of a
bank. They are as

6.9.1 Advances to Deposits Ratio

This ratio shows the advances made per unit of deposits i.e. what amount of advances made
per Rs. 1.00 of the customers’ deposits.
Advance to Deposit ratio = Advance / Deposits (Rs in Millions)
Particular 2007 2008 2009 2010 2011
Advance 88,931 118,864 149,999 171,199 192,671
Deposit 129,715 222,345 239,509 273,174 300,733
Ratio 0.686 0.535 0.626 0.627 0.641

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The ratio has come down from 0.54 in 2002 to .53 in 2008. In 2007, it increased to 0.64.
This is because the advances extended match the increase in the deposits of the bank. The
ratio has increased 0.62 in 2009 its all due to increase in advances the ratio of advances
increase in current year due to rate offered by bank. In the

6.9.2 Income/Expense ratio

This ratio tells about interest expense incurred in accepting funds for deposits. It is the cost
of funds.

Income to Expense Ratio = Total income /Expense (Rs in Millions)

Particular 2007 2008 2009 2010 2011

Total Income 7,140 14,515 24,416 31,822 36,292
Total Expenses 2,680 4,335 5,918 8,283 10,594
Debt Ratio 2.664 3.348 4.126 3.842 3.426

The interest Expense to Deposits Ratio has decreased. It was 4.43 in 2002 and came down
to 4.12 in 2007 and this downward tread also continued in 2007 which was 2.67.but shows
upward tread both in year 2008 and 2009, which was 3.34 and 4.13.This shows that the
interest paid and payable has increased more in comparison to the deposits. Although the
Deposit Rate offered to the customers fell, yet the bank incurred interest expense due to
borrowed funds. In FY-07 it decreased as to last year and same trend in FY-011 reach to the
level of 3.426%

6.9.3 Earnings Per Share Ratio (EPS)

Earnings per share Ratio shows that, what the stockholders earn on per share, which they
have purchased. This can be finding by dividing the Profit after Taxation by Share
outstanding.

ERP= Net Profit after tax/ no of outstanding shares (Rs. In millions)

Particular 2007 2008 2009 2010 2011

Net profit after taxes 562 861 8006 1,4008 493
No of share
48,500,000 510,000,000 540,000,000 650,000,000 799,500,000
outstanding
Return on Equity 3.90 3.92 2.91 3.92 1.63

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In 2007, the EPS was Rs.2.23, in 2008, it increases to Rs.8.49. This is because of the huge
increase in the Profit after taxation in 2007. Profit after Taxation is increase from the Non-
markup income in There is low issuance of share capitals in the current year, but profit has
increased in 2009 and that is why earning per share has decreased. The EPS has decreased
it can lower the price of the shares. In FY-07 the EPS 3.92 and in year 011 it decreased to
1.63.
The bank presents basic and diluted earnings per share (EPS) for its shareholder. Basic EPS
calculated by dividing the profit or loss attributable to ordinary shareholders of the bank by
the weighted average number of ordinary shares outstanding during the year. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding for the effects of all dilutive
potential ordinary shares, if any. In FY-011, the EPS is reach to lowest level because of high
interest expenses that leads to decrease the earning.

6.9.4 Profit before tax ratio

Profit before tax ratio shows that, a earning before tax is how much available and what will
remain after tax for investors. It is calculated in the following way.

PBT = PBT / Gross Markup income (Rs. rupee)

Particular 2007 2008 2009 2010 2011

Profit before Tax 1654 2563 2566 4,536 1795
Gross markup Income 5,620 12,247 21,191 25,784 31,0076
PBT 29.43 20.93 12.11 17.59 5.78

In 2007, the PBT was Rs.29.43, in 2007, it decreased to Rs.20.93. This is because of the
huge increase in the markup expenses and resultantly the profit before taxation in reduced.
In FY-009performace also decreased and reach to 12.11% and in next year the goes up due
to increase markup and reduced to markup expenses and batter management policies of
bank.

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6.9.5 Gross Spread Ratio
Gross spread ratio shows that, a relation between net markup incomes to gross mark up
income. This means it shows that how much markup income to gross markup. It calculated
as follows:

Gross spread Ratio = Net markup income/Gross markup income

Particular 2007 2008 2009 2010 2011

Net Income 1654 2563 6259 6876 8680
Gross markup Income 3186 50072 5958 9163 10715
Gross Spread Ratio 56.69 41.17 28.12 35.54 34.51

In 2007, the GSR was Rs.56.69, in 2008, it decreased to Rs.41.17. This is because of the
huge increase in the net markup and resultantly net markup reduced. In FY-09, it further
decreased to reach 28.12, in next FY-07, it goes up to 35.54%, and in the FY-011, it again
reduced 34.51%.

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6.10 Horizontal analysis of Bank Alfalah Limited
Analysis of Balance Sheet
2007-2011
2007 2008 2009 2010 2011

ASSETS
Cash 100.0 125.8 141.4 149.4 165.8
BAL main branch Haripur 100.0 3008.1 399.9 577.3 677.8
with other Banks
Lending to other financial 100.0 2,7008,000 1,245,700 345,200 331,500
inst.
Investments 100.0 161.7 159.1 249.3 214.0
Advances -- net of provision 100.0 133.7 168.7 192.5 216.7
Operating fixed Assets 100.0 154.6 245.3 278.5 320.8
Other Assets 100.0 119.4 174.6 186.3 278.6
Total Assets 100.0 160 0 178 0 212.0 225 0
Liabilities
Deposits & other liabilities 100.0 171.4 184.6 210.6 231.8
Borrowings from other banks 100.0 45.9 66.0 166.9 107.6
Bills Payable 100.0 167.1 138.4 185.2 154.5
Sub-ordinate. Loans 100.0 169.7 169.7 169.6 135.4
Other Liabilities 100.0 191.6 268.1 349.8 414.3
Deferred Liability 100.0 175.4 696.0 500.0 75.4
Total Liability 100.0 161.0 176.1 209.0 221.9
Net Assets 100.0 141.9 232.7 3011.2 323.9
Share Capital 100.0 120.0 200.0 260.0 319.8
Reserve funds & other 100.0 233.0 272.5 239.3 313.8
reserves
Un appropriated profit 100.0 161.3 328.3 564.2 400.8
Shareholder’s Equity 100.0 154.2 242.0 315.1 334.4
Surplus/(deficit) on 100.0 81.4 187.0 274.7 272.8
Total Equity 100.0 141.9 232.7 3011.2 323.9

6.10.1 Bank Alfalah Limited Sheet Comments:

Horizontal analysis is applied when a firm wants to evaluate performance over time.
Developing trends can be seen by using multiyear comparisons, and knowledge of these
trends assists the organization in planning future operations. Any significant year-to-year
changes can be evaluated to assess whether they are symptomatic of a major problem.
Assets:

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The level of cash has been increasing over the years. In 2008, despite economic turbulence
and resultant downturn, bank made considerable improvement in comparison to the
corresponding period for the years 2007 and 2007. A FY-009 was a successful year for the
bank in all respects, a huge and steady increase in deposits kept the level of cash very high.
In addition, cash in hand in local currency increased in 2009. Bank enjoyed a very sound
capital adequacy ratio of 9.48 whereas the industry requirement was 8%. The level of cash
has increased in 2010 but at a decreasing rate, this is attributed to the efforts to mobilize the
deposits, the bank is advancing the deposited money and keeping a comparatively low level
of cash.
Bank invests money preferably in government securities like treasury bills, federal bonds
etc. that are risk free. Investment is decreasing over the years that are a good sign as the
deposit money is used for lending purposes. In 2008 investment increased by a huge
percentage reason being the book value of unquoted investments increase. Investment in
fed. Bonds and the book value of unquoted TFCs decreased in 2009 bringing the level of
investment down to very low. However, in the year 2010, a tremendous increasing trend
was seen in the investments. An analysis of the investments and advances shows that bank
has consistently been using the major chunk of deposit money for advances. The advances
of the bank are increasing over the years. This is a very good sign as it shows growth in the
business of bank. A considerable portion of the advances portfolio that was inherited by
Bank Alfalah at the time of privatization was sub standard as per prudent banking
standards. Through extensive efforts of the Special Asset Management Department and
strict credit policies, a number of accounts have been revived and the provision for bad
debts has decreased over the years. The advances of Bank Alfalah are considered good as
they are fully secured.
Operating fixed assets are increasing over the years. In 2009, office premises were revalued
by independent values and are shown at revalued amount less accumulated depreciation.
That led to an enormous increase of 278% in FY-07 as compare to FY-007. Surplus on
revaluation of fixed assets also amounted to a great increase in the equity base.
Total Assets have increased very consistently at more than 30%, over the short span that is
considered the infancy stage in the banking industry; this shows a very encouraging and
favorable Bank Alfalah Limited sheet footing. It also shows the growing stage of bank Al-
Falah.
Liabilities:

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Customer Deposits went up with a considerable percentage on a year-to-year basis. This
reflects very positively on the business and growth of the bank. This deposit base is also a
result of the expanded branch network, which has ensured diverse presence in different
areas of the country. This increase in deposit money reduces the cost of deposits and is a
cheaper source of financing. The confidence of customers reposed in the bank is reflected
in the results of the bank as despite the economic downturn, the bank made considerable
improvement by the prevailing industry standards.
The Borrowings from other banks have been on the fall up to the year 2008; however, in the
year 2010 a tremendous increase is recorded. This shows that the bank is a regular buyer
from the inter-bank money market. This adversely affects the cost of funds and the liquidity
position of the bank. However, this increase is not considered very alarming as it shows
only the frozen picture of the last day of financial year. Here the encouraging sign is that
the borrowings follow a declining trend. Other Liabilities of the Bank are on a constant rise
from FY2007 onwards. This increase has been amounted to by the increase in the markup
paid on the increasing number of deposits. In addition, the interest paid on bank borrowings
has been increasing. The amount of proposed dividend has increased by 90 million. Total
Liabilities are on the rise in the last five years, but the increase in liabilities matched with
the increase in Assets so it is not an alarming sign.
The equity base has been increasing along with in reserves. Bank is declaring dividend for
the last five years but un-appropriated profit is also increasing. Deficit on revaluation of
investments in FY2008 and FY2009 has affected the equity base further.

6.11 Horizontal analysis of Profit and Loss Statement

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 Horizontal Analysis
Profit & Loss Statement
From 2007-2011

2007 2008 2009 2010 2011

(Rupees in Millions)
Markup/ Interest earned 100.0 217.9 377.1 458.8 552.4

Markup Exp 100.0 297.4 628.7 686.0 839.1

Gross Profit 100.0 158.3 187.0 287.6 336.3

Less: Provisions 100.0 101.9 187.4 637.3 545.6

Net markup income 100.0 165.7 222.5 244.4 3011.6

Fee, Comm. & brokerage 100.0 171.4 267.2 359.5 375.6

Dividend Income 100.0 98.1 69.8 122.6 566.0

Exchange income 100.0 132.4 176.7 216.9 417.4

Gain on securities 100.0 100.0 15,300.0 2007,800 42,400.0

Other Operating Income 100.0 130.0 146.9 179.9 217.6

Total Income 100.0 159.4 195.8 295.9 286.5
Operating Expenses
Administrative Expenses 100.0 161.1 219.4 3011.9 391.0

Other provisions 100.0 1,000. 100.0 700.0 2,900.0

Other charges 100.0 1,0080.0 2,150.0 500.0 6,150.0

Profit before Taxation 100.0 155.0 155.1 274.2 1011.5

Taxation 100.0 153.2 142.9 250.0 87.7

Profit after tax 100.0 155.9 161.4 286.6 119.1

6.11.1 Horizontal Analysis Profit & Loss Comments:

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The figure of total revenue includes the mark up earned, Fee, commission & brokerage,
profit from dealing & investment securities, dividend income and other operating income.
The total revenue of the bank has been increasing over the years, which reflects very
favorably on the bank. However, in the year 2008, a slight fall is seen; it is only due to
considerable amount of increase in the provisions in the specific year.
Total revenue has increased tremendously in FY2008 as compared to same period in
FY2007 because of effective policies by management to strengthen the financial position
after privatization. A steady increase in Advances has led to an increase in markup earned.
In addition, Fee & Commission has increased along with the trade business volume. Bank
has enhanced its domestic & international banking services. In addition, the cost of deposits
is lower than the return on advances.
The Cost of funds/ Markup paid are also increasing over the years but the increase in not
more than the increase in total revenue. There is a spread of almost 4 –5% in the lending &
borrowing rates of the bank. Also banks cost of funds has been decreasing over the years
because of increase in deposits. Advances are increasing at a fast pace. Deposits are being
effectively mobilized and the bank borrowing is decreasing. Reduced bank borrowing also
lowers the cost in the form of reduced interest payable. Lower cost of deposits enables the
bank to lend at lower rates in comparison to the competitor banks and attract the AAA
clients.
The administration expenses of the bank are on a higher side. This increase can be
attributed to the expansion programmed of the bank. In 2009, the Administrative expense is
the highest because of early set up and establishment problems. The increase in
Administrative expense is not worrying as it is not under the control of the bank. In
addition, the increase in deposits is at a higher rate than the increase in Administrative
expenses. The Administration expense to Deposits ratio is quite satisfactory according to
industry standards.

6.12 Vertical analysis of Bank Alfalah Limited

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 Vertical Analysis
BAL main branch Haripur Sheet
From 2007-2011
2007 2008 2009 2010 2011

ASSETS
Cash 12.73 9.98 10.11 8.95 9.37
BAL with other Banks 2.009 3.91 4.62 5.59 6.18
Lending to other financial inst. 10.89 4.52 1.008 0.95
Investments 22.93 23.13 20.50 26.91 21.77
Advances -- net of provision 57.44 47.87 54.41 52.008 55.21
Operating fixed Assets 2.76 2.67 3.81 3.62 3.94
Other Assets 2.011 1.55 2.007 1.83 2.58
Total Assets 100 100 100 100 100
Liabilities
Deposits & other liabilities 86.17 83.009 86.88 89.54 83.78
Borrowings from other banks 3.92 6.46 3.007 2.35 8.22
Bills Payable 0.99 1.26 1.12 1.50 1.44
Sub-ordinate. Loans 0.74 0.98 1.17 1.30 1.23
Other Liabilities 3.24 2.90 2.65 2.10 1.76
Deferred Liability 0.009 0.42 0.70 0.19 0.18
Total Liability 95.12 95.07 95.56 96.99 96.60
Net Assets 4.88 4.93 4.44 3.01 3.40
Share Capital 2.29 1.98 1.81 1.21 1.61
Reserve funds & other
reserves 0.91 0.73 1.00 0.95 0.65
Un appropriated profit 0.99 1.48 1.02 0.56 0.56
Shareholder’s Equity 4.19 4.19 3.84 2.71 2.82
Surplus/(deficit) on
revaluation of Investments 0.70 0.75 0.61 0.29 0.58
Total Equity 4.9 4.9 4.4 3.0 3.4

6.12.1 Vertical Analysis Bank Alfalah Limited Sheet Comments:

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Cash, investments and Advances are the major constituents of total assets. This is typical
for a bank, as banks do not go for creating fixed assets. The advances have increased
considerably whereas the investments are decreasing. As bank is able to reduce its cost of
funds, it might have been able to get AAA clients and lucrative business, so it prefers to use
deposit money for advances. BAL main branch Haripur with other banks has also increased
over the years; this is quite normal, as it is a very safe mode of financing.
Deposits and bank borrowings are the major heads on the liability side. Bank Alfalah’s
deposits have been increasing with a steady rate of 30% over the years. Deposits are a
cheaper source of funds and it reflects very positively on bank’s efficiency and profitability.
An increase in borrowings from other banks also observed which not a very favorable sign
is. Borrowings adverse affect the cost of funds but then these figures do not depict the true
picture of whole year. Bank should concentrate on decreasing these borrowings and
mobilizing the deposits.

Asset: - The cash is total 12.735 of total asset of organization in the but Bank Alfalah
Limited a with treasury and other bank is 2% of total assets and investment is 22.93% of
which shows the positive sign of bank investment strategy and lead to generate the high
profit. Advance in FY-007 is 57.44%. In the FY-008 the extra-ordinary performance it is
advance, which is 47.87%. However, it has increasing trend and reach to 54.41% to 52.008
and 55.21 % in FY-009, 07 and 011 respectively.
The investment is 22.93 in FY-008, steady increased in 23.12. However, it decreases in
2009 and again increased to 26.91 and 21.77% in FY-011. The operating fixed assets are
steady growth that shows the banks confidence to growth strategy.
Liabilities: - A deposit and other liabilities are 86.17% in FY-007 and 83.009 but in the
financial year 009, the 86.88 % increased in deposit of banks it is steady growth. The stable
deposit in year 2010 and 011. However the borrowing from other banks are steady
increased in FY-008 of 6.46% and again it reduced to3.007% of total but the 8.22 of total in
FY-011. The total liabilities are 95.12% in FY-007. The total liabilities are increased in FY-
7 & FY-011.
Shareholder‘s equity is 4.19 % in FYF007 and remains same two year, but it decreased in
FY07 & FY-011 is 2.82%.

6.13 Vertical Analysis of profit & loss statement

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 Profit & Loss Statement

From 2007-2011

2007 2008 2009 2010 2011

Markup/ Interest earned 78.69 84.49 86.79 81.02 85.12

Fee, Commission & brokerage

9.47 8.00 7.40 7.64 6.96

Dividend Income

0.74 0.37 0.15 0.20 0.83

Other income

11.10 7.15 5.66 11.14 7.09

Total Income 100.00 100.00 100.00 100.00 100.00

Interest/ Return /non Interest expenses

33.93 49.71 62.39 52.23 55.74

Markup expense
37.50 29.76 4.009 26.00 28.71

Operating Expenses
Provision 5.24 2.69 7.49 7.49 4.13

Taxes 7.87 5.94 4.42 4.42 1.30

Total Expenses- Percentage of 84.71 88.26 93.15 90.16 96.43

total income

Profit/(loss) after taxation 15.29 11.74 6.85 9.84 3.57

Total 100.00 100.00 100.00 100.00 100.00

6.13.1 Comments of vertical analysis of: Profit & Loss

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The Vertical analysis of BAL MAIN BRANCH HARIPUR shows a very satisfactory
picture. Major portion of total revenue consists of Markup earned. This is a good sign and
shows healthy growth in advances. The main source of bank’s income should be the mark
up earned. It shows expansion in the business.

Markup Revenue:
The Fee and Commission is steadily increasing. The cost of deposits is gradually decreasing
that shows efficiency of management. An increase in administration expenses and provision
for losses has increased the operating expenses, which has reduced the profit before tax.
Still as compared to the FY2008, the later years’ figures show considerable improvement in
profitability. In the FY-011, the performance goes to up net income increased from certain
level to 582 % as compare to the year 2002. The total markup in FY-007 is 78.69 of total
income and it goes up in FY-008 and reach to 84.49 %, it again increase to 86.79% in FY-
07 that shows the performance of bank is batter and confidence of public on bank that lead
to increased the markup revenue to 85.12% in FY-011.

Fee Commission & brokerage, Dividend & other income:

The commission and brokerage in the FY-007 is 9.47, which reduced in FY-008 to remain
at 8 percent then gradually reduced from year to year and reach 6.96 in FY-011.
Dividend income also reducing trend from 007 to 07 but increased in FY-011 is 0.83.
However, the other income has mixed trend decreased in 008 and 009 but increased in 07
and again reduced in Fy-011.

6.14 BANK ALFALAH LIMITED‘S analysis with reference to other banks

listed on stock exchange.

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 Comparison of BAL MAIN BRANCH HARIPUR with other Commercial Banks listed
on Stock Exchange as on 31.12.2010 & up to 31.12. 2011.

BANK NBP HBL UBL MCB

ALFALAH
LIMITED
Bank Alfalah Limited 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
Sheet

Cash of Bank Alfalah 54.268 47.8 121 142 84 89 39 49 42 60

Limited.
Invest. 75.973 88.492 180 140 187 120 115 66 125 64

Advances 192.671 171.199 320 316 346 349 289 255 191 198

Assets 13.733 11.922 668 635 653 590 499 436 385 343

Deposits 300 273.174 523 502 528 459 392 344 288 257
Equity 17.0075 16.2 97 82 63 53 39 33 50 42

Income Statement
Gross revenues 10.715 9.163 32.8 39.9 29 36.2 21.9 26.4 19.9 25.1

Net interest income 8.68 6.876 23.9 27.8 21.8 27.7 15 19.1 15.1 20.1

Non interest Income 5.424 6.0069 8.9 12.2 7.2 8.5 6.9 7.3 4.8 5

Admin. Expenses 10.471 8.273 10.4 13.4 12.9 15.4 9.7 11.6 4.6 6.5

Pre Tax Profit 1.794 4.535 22.2 26.3 16.1 18.8 11.4 14.5 16.7 18.5

Net Income 1.301 3.13 14.8 17 10.2 12.7 7.4 9.7 11.6 12.1

Loan deposit 56% 55% 61% 63% 65% 76% 74% 74% 66% 77%

Mkt Share advances 10% 8% 11% 11% 11% 13% 10% 9% 6% 7%

The five large banks enjoy a major share in the Banking industry. They together contributed
to record growth of 22% in PBT & 35.4% in PAT in 2007 as compared to HBL 4.8b, UBL
3.7b & ABL 1.5b. BAL MAIN BRANCH HARIPUR with Rs.12 billion PBT in 2007
continues to be market leader. The 33% growth in BANK ALFALAH LIMITED’s profit last
year was the highest amongst the large Bank and surpassed the entire industry’s profit
growth of 10%. The 47% growth in the Bank’s PAT was also higher over the sector growth
of 24%. The growth in the profit of HBL & UBL, although lower than BAL MAIN

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BRANCH HARIPUR has surpassed the overall industry growth. ABL profit was squeezed
by 50% and was the smallest in the Group.

BAL MAIN BRANCH HARIPUR Pre-tax return on assets further improve to 2.4% from
2.0% of the last year, Cost to income ratio of 0.39 remained very impressive, which is
appreciably the lowest amongst the above peer banks in Pakistan. Earnings per share
jumped to rs.12.68 from 8.53 of the last year, one of the highest in the banking sector.

6.15 Why BAL MAIN BRANCH HARIPUR is financially sound than MCB
and other banks
1) The BANK ALFALAH LIMITED’s Bank Alfalah Limited sheet footing s as well as
capital are nearly doubled than that of MCB as is the over all of its earnings assets base
(Pk.Rs.500 billion 262 billion)
2) BANK ALFALAH LIMITED’s market share both in terms of loans as well as
deposits are doubled that of MCB 12 % 6 %.
3) BANK ALFALAH LIMITED’s loan de4posit ratio is 10 5 lower than MCB thus
giving greater flexibility when it come to booking fresh loans to generate higher income
4) Most importantly, BAL MAIN BRANCH HARIPUR has monopoly over national
treasury (agent to SBP) for collection of Taxes and payment on behalf of Govt: of
Pakistan hence, BAL MAIN BRANCH HARIPUR has access to Rs.100 Billion per
month in interest fee fund making it lowest cost deposit taker.
5) P/E ratio of MCB, HBL, and UBL is overvalued. BANK ALFALAH LIMITED’s
revenue expense ratio is half of MCB and 50 % of UBL
6) The five major banks enjoy major share in the banking industry. They together
contributed to record growth of 22 % in PBT and 35 % in PAT in 2008 continues to be
market leader the 33 % growth in
BAL MAIN BRANCH HARIPUR profit last year was highest amongst the banks
and surpassed the entire industry’s profit growth of 10 %. The 47 % growth in the
bank‘s Pat was also higher over the sector growth of 4 % the growth in the profit of
HBL UBL although than BANK ALFALAH LIMITED’s surpassed the overall
industry growth. ABL profit was squeezed by 50 % and was smallest in the group. BAL
MAIN BRANCH HARIPUR pre-tax return on assets further improve to 2.4 % from

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 2.0 5 of the last year cost of income ratio of 0.39 remained very impressive which is
appreciably the lowest amongst the above peer banks in Pakistan. Earnings per share
also jumped to Rs.12.68 from 8.53 of the last year on e of the highest in the Banking
sector.

6.166 Future prospect of the BANK ALFALAH LIMITED

In FY-011 BANK ALFALAH LIMITED, attain its target as return after tax is 44% which
shows the positive changes in the performance of BAL MAIN BRANCH HARIPUR In
the year 2011, BAL MAIN BRANCH HARIPUR manage to strengthen the gain &
achieve strong financial feat there are still redoubtable challenges ahead, which require
concerted efforts by all. BAL MAIN BRANCH HARIPUR will continue to built &
leverage the strong franchise to foster growth by offering a universe of renowned products
in high growth impending sector, fortify risk management function in line with Central
Bank guidelines & anticipated Basel II accord, reinforce compliance function, invest in IT,
up gradation human resource development in the country. During 2011, the reduction in the
interest rate environment will over all have a negative impact on the financial sector’s
profitability in the short turn. To meet these challenges, BAL MAIN BRANCH
HARIPUR will focus on building loan portfolio, both on corporate & retail side. BAL
MAIN BRANCH HARIPUR will be focusing on those sectors in the country, which have
traditionally received less attention from the financial sectors, i.e. Agricultural, SME and of
the entire range of retail products. BAL MAIN BRANCH HARIPUR key strength
remains their customer’s base of over 09 million & BAL MAIN BRANCH HARIPUR is
confident that they are in positioned to capitalize on the opportunities. BAL MAIN
BRANCH HARIPUR would like to express sincere appreciation to all stakeholders for
their continued support & understanding. These results have been possible due to the
commitment and decision of BAL MAIN BRANCH HARIPUR staff. BAL MAIN
BRANCH HARIPUR expresses their appreciation to the Bank’s valued customers and the
regulators for their confidence as BAL MAIN BRANCH HARIPUR consolidate our
position as the “Nation Bank”. BAL MAIN BRANCH HARIPUR is servicing for the
nation betterment by investing in different sector of economy and improves the economic
growth by the development in banking sector as team leader on all banking sector of
Pakistan. Management is the process of getting activities completed affectively &

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efficiently with through other people. The process represent the function in BAL MAIN
BRANCH HARIPUR engaged in by Management are typically labeled paining,
organizing, leading & control.

In the increasingly competitive market place, BAL MAIN BRANCH HARIPUR having a
solid understanding of what management does might split the difference between BAL
MAIN BRANCH HARIPUR success & failure. BAL MAIN BRANCH HARIPUR
Management has two types of roll, interpersonal roll & informational roll. BAL MAIN
BRANCH HARIPUR Management deal the trends & issues i.e. workforce diversity, ethic,
innovative changes, TQM, reengineering, empowerment & team. In BAL MAIN
BRANCH HARIPUR workforce diversity require Management to recognize &
acknowledge employees differences, competent & successful management need to aware of
the ethical implications of their action. Because of the dynamic environment in BANK
ALFALAH LIMITED, management must stimulate innovation & changes to be
successful. Management who emphasis the use of TQM in BAL MAIN BRANCH
HARIPUR are committed to continues improvement of work activities. Management in
BAL MAIN BRANCH HARIPUR who are Reengineering their department is radically
redesigning the work process to improve productivity & performance. In BAL MAIN
BRANCH HARIPUR Management responsible for public expectation, long run profit,
stockholders interest, possession of resources & prevention over cures.

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CHAPTER 7 SHORT FALLS OF BANK ALFALAH

7.1 BAL main branch Haripur Weakness

 Low job satisfaction

During my short stay in the bank, I have observed that the level of job satisfaction is very
low. Employees are so put off that they want to flee away from the dull boring routine
work. Most of the employees plan to go & work abroad. This may be the result of the
general downturn & depression in the economy of the country. However, the management
should do something to increase employee motivation level. In addition, some senior level
employees are not very happy with the management either because of the pay packages or
because they are of the view that the environment & standard of the bank has deteriorated
from the time of BCCI.

 Accommodation problem
There is an accommodation problem being faced at the bank’s premises. The deposits of the
bank are growing at a steady rate of 30%. It is introducing innovative products every day.
Likewise, the operations are expanding like anything. In addition, there is new hiring of
management trainees. The present building is not sufficient to accommodate all these. Some
departments are so congested and especially in peak hours, there is no proper space for
clients even.

 Computerized system
One major drawback of Bank Alfalah that is keeping it from outnumbering its competitors
is the outdated management information system. In addition, many routine tasks like
vouching etc. are still done manually in most of the departments. This affects the speed and
efficiency of the employees. One task that could be performed in minutes through a
computer takes about hours. The competitor banks have very advanced computer systems
that give them an edge.

 Lack of opportunities for socializing:

There is no opportunity provided to employees to socialize on an informal level. There is
no club or society for arranging any recreational activity or programs. The bank gives one

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or two annual lunches and that is it. Need is felt that some functions should be organized
where employees can participate with their families and they can feel like a part of the
Alfalah family. That will create feelings of belongingness & affiliation. When employees
associate themselves with their organization that surely helps increase their motivation &
job satisfaction.

 Non aggressive marketing:

Bank Alfalah has a variety of innovative products and this innovation process is always in
progress. Considering such a vast product portfolio, one expects that the bank would be
spending quite an amount for publicity & advertising but in fact the Ad. & Publicity
expenditure has decreased by approximately Rs.5 million from FY99 to FY00. In addition,
there is no proper marketing campaign for consumer products like ATM cards and car
financing etc.

 Huge portfolio of nonperforming loans:

Bank Alfalah inherited a sizeable portfolio of non-performing loans (NPLs). Although the
new management is making serious efforts for recovery from the delinquent clients and has
been successful in some cases, considering the size of NPLs portfolio, it will take the bank
quite some time before the exposure can be fully settled. The bank maintains provision
coverage of about 70% of NPLs. But still this portion of advances continues to be non-
earning and weighs down the profitability.

 Low Capital adequacy ratio:

State Bank of Pakistan raised the minimum paid up capital requirement for scheduled banks
from Pak Rupees 500m to Pak Rupees 1 billion, effective January 01, 2007. The bank is
currently short of the minimum capital required and its capital adequacy ratio at 8.35% is
the lowest in the peer group. In case the bank has to follow the ambitious growth path, the
capital base of the bank would have to be enhanced.

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CHAPTER 8 CONCLUSIONS & RECOMMENDATION

7.1 Conclusion

Year- 2011 saw ABL continues its journey of remarkable growth & performance as the
Bank once again posted the growing bank in Pakistan’s financial sector history. This
performance is a reflection of the strategic business & organizational initiatives taken over
the last few years coupled with the government leading to impressive growth in all sector of
economy. BAL MAIN BRANCH HARIPUR further consolidated its position as one of the
top ten players in corporate & investment banking market of the country in 2011. BAL
MAIN BRANCH HARIPUR significantly grow it customers footing, continued to expand
its delivery channels and improve its process efficiency by basic principles of customer’s
needs, innovative solutions & quick turnaround time. Bank is working in the high
competitive market and it lead need to use of computer technology. It is also necessary to
improve the importance of banks in the economy of any country is like a backbone, so the
private participation to start the banking system in their country, and by their own
interference, they control them, secure them according to the situation, and main purpose
behind that is to facilitate their nation or their public and the private banking system. It is a
leading private bank in Pakistan. This bank works as the private department and its main
function is to facilitate all type of banks working inside specially as well as outside the
country. BAL MAIN BRANCH HARIPUR is the 7th largest bank of Pakistan; BAL main
branch Haripur is widely used, as a representative of private banks is also involved in
commercial banking. BAL MAIN BRANCH HARIPUR has a vital role in Pakistan’s
banking history as well as in the economy of Pakistan, so it has a great significance. At
present, the BAL MAIN BRANCH HARIPUR has, improving its internal and external
conditions, but due to the largest operations in Pakistan. It still faces many problems. These
problems are new marketing strategies, organizational and management problems at the
branches of backward regions, and motivation. Another main problem is faced by the BAL
MAIN BRANCH HARIPUR is lake of skill labor because labor is most powerful because
of CBA union which protect the labor's all actions. All above factors are causing problems
of banking functional and growth of banking is being resisted. Mostly recruitment and
promotions are under influence of political system of Pakistan. So it should be eliminated
or should be reduced as much as possible and make it on merit and transparent. BAL MAIN
BRANCH HARIPUR should fully concentrate to improve its performance and standards to

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meet the challenges by the economy as well as by the competitors and for this purpose it
needs to overcome the problems and improve the quality of services especially in advance
section, that will prevent it from huge losses.

7.1 Recommendations:
 Effective measures should be taken to boost up the morale of employees. Here are some
suggestions to motivate the employees and enhance job satisfaction.
 Individual differences should be recognized.
 Match people to jobs.
 Individualize rewards
 Check the system for equity
 Use goals & ensure goals are achieved.
 The work environment has a very positive impact on employee’s productivity. The work
environment should be beautified. It should give a very welcoming and lively
impression to the customers.
 Some club or society should be formed which arranges activities and functions where
employees can participate with their families and they can be a part of the Alfalah
family. That will create feelings of belongingness & affiliation. When employees
associate themselves with their organization that surely helps increase their motivation
& job satisfaction.
 There should be one casual day in the week, as it is in foreign banks where all the
employees dress up in casual outfits. That will help them interact on a more informal
basis.
 Proper steps should be taken to improve the service quality. This can be undertaken by
responding to customer needs quickly & courteously.
 BAL MAIN BRANCH HARIPUR should capitalize on its competitive advantage in
products & services portfolio, by aggressive marketing and promotional activities.
 For internship programs in future, the officers should be briefed about what they are
supposed to tell the internees. In fact if the internees are provided with the job
descriptions of the respective officers, they can have an idea about what functions are
performed by the relevant person and they can directly come to the point instead of
asking questions about things that do not relate to the respective officer.

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 BAL main branch Haripur should continue to expand its business, by increasing its
deposit portfolio through aggressive market penetration strategies.
 BAL main branch Haripur needs to use more marketing channels to make the public
aware of its products and services. In the presence of intense competition, BAL main
branch Haripur has to realize the importance of marketing.
 Management should distribute work equally among different employees. Some of the
employees are overburdened while some sections are overstaffed.
 There are a disproportionate number of seasoned bankers in the top management who
have the responsibility of making strategic decisions. This think tank should also
include a reasonable proportion of young bankers whose mindsets teem with new
creative ideas, which might prove to be invaluable for Bank Alfalah Limited.
 The top management should immediately start thinking in terms of rotating the
employees in various departments, as this transforms work force into human capital. If a
particular individual keeps on employing his / her efforts in one sphere of banking it,
would not only create a sense of monotony and boredom, but also not help improving
the skill set of BAL main branch Haripur employees.
 BAL main branch Haripur should embark upon an even more aggressive management
strategy of expansion of branch network not only in the local market (Pakistan), but also
in foreign markets because that is a huge untapped opportunity for Bank Alfalah.

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  References

Web Resources
 Bank Alfalah (www.bankalfalah.com)
 The Daily Times Newspaper (www.dailytimes.com.pk)
 Wikipedia (www.wikipedia.com)
 ABN AMRO Pakistan (www.abnamro.com.pk)
 United Bank Limited (www.ubl.com.pk)
 State Bank of Pakistan (www.sbp.org.pk)
 Askari Bank (www.askaribank.com.pk)
 MCB Bank (www.mcb.com.pk)
 Citibank (www.citibank.com/pakistan)

Reports
 Annual Report Bank Alfalah 2007 to 2011
 Banking Statistics of Pakistan 2010-011

Miscellaneous
 SBP economic Bulletin (2008-009 & 10)
 Source of rating information: SBP
 BAL main branch Haripur Finance (World Leading Financial Journal)
 Daily Business Recorder.

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  Annexure
Annexure-1

Chairman

CEO

Strategic Treasury & Islamic I.T. Cards Corporate Administ Human

Planning & Internationa Banking Division Division Banking & ration Resource
GloBAL l Banking Division Home Division Division
main branch Financing
Haripur Division
marketing
Division

Credit Credit Legal Car Finance System & Audit &

Division Monitoring Affairs Financing Division operation Inspection
Division Division Business Division
Division

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 Annexure-2

CHIEF
MANAGER

Manager Manager Manager Manager

Operations International Credit Customer
Banking Banking

Accounts Imports Customer

Department Department Credit Services &
Department Coordination

Computer Exports
Department Department S.A.M.
Department
General F-Exchange
Banking Department

Personnel Internal Audit Marketing

Department Department Department

Tele –Com
Department

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Annexure-3 Accounts & Finance department

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 Annexure-4
ORGANOGRAM
HARIPUR BRANCH

BRANCH MANAGER
SYED GHAYOUR
HAIDER SHAH CREDIT /SME OFFICER
SHABBIR AHMED

SME OFFICER
SAJID IQBANK
ALFALAH
MANAGER OPERATION
WASIM AKBAR

ACCOUNTS OFFICER
EITHSHAM AHMED CHIEF CASHIER
RAZAIB KHAN IT OFFICER
SHOAIB KHAN

OPERATIONS OFFICER
UMAIR UD DIN FAROOQUI
CASHIER
SYED SIKANDER SHAH

DARS
MUHAMMAD ZUBAIR ACCOUNT OPENING OFFICER
SADIA KHYBER CASHIER
MUHAMMAD ASHFAQ

OPERATIONS OFFICER OUTSOURCED

OUTSOURCED (NLI Services) ANEES UR REHMAN AYESHA NASEER
MUHAMMAD KAMRAN SHAFQAT ASSOCIATES
MUHAMMAD AHSAN KHAN MUHAMMAD SARFRAZ
MUHAMMAD SHAFIQUE (Gardner)
MUHAMMAD KHALID

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 Table of Contents

CHAPTER 1 INTRODUCTION................................................................................ 1

1.1 Purpose of the study:................................................................................................................. 1

1.2 History of Bank Alfalah............................................................................................................. 1
1.3 Pattern of Share holding:......................................................................................................... 2
1.4 Nature of Bank Alfalah Limited............................................................................................. 3
1.5 Business Volume......................................................................................................................... 5
1.5.1 Business Volume in Revenue............................................................................................... 6
1.5.2 Business Volume in term of Deposits..............................................................................6
1.5.3 Business Volume in term of Advances.............................................................................6
1.5.4 Business volume in term of investment..........................................................................6

CHAPTER 2 PRODUCT AND SERVICES..................................................................7

2.1 Product Lines of the Bank....................................................................................................... 7

2.2 Deposit Products......................................................................................................................... 7
2.3 Consumer Finance Products................................................................................................ 10
2.3.1 Auto Leasing & Financing............................................................................................. 10
2.3.2 Credit Cards....................................................................................................................... 11
2.3.3 Consumer Durables........................................................................................................ 12
2.3.4 Home Finance................................................................................................................... 13
2.3.5 Alfalah Karobar Finance............................................................................................... 15
2.3.6 Alfalah Zari Sahulat......................................................................................................... 15
2.3.7 Structured Finance......................................................................................................... 16
2.3.8 Travelers Cheque............................................................................................................. 17
2.3.9 Money Gram...................................................................................................................... 18
2.3.10 Online Banking................................................................................................................. 18

CHAPTER 3 BAL MAIN BRANCH HARIPUR STRUCTURE....................................19

3.1 Organizational Structures..................................................................................................... 19

Distinct feature of the organizational structure of BANK ALFALAH LIMITED.............19
3.2 Comments on the Organizational Structure..................................................................19
3.3 Main Offices (Head office and branches)........................................................................22
3.4 Branch Hierarchy..................................................................................................................... 23

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CHAPTER 4 DEPARTMENT OF BANK ALFALAH LIMITED.........................................24

4.1 Different Department of BAL MAIN BRANCH HARIPUR Branch Level..............24

4.2 Trade Finance Department.................................................................................................. 24
4.3 Cash Dealing Department:.................................................................................................... 26

CHAPTER 5 BAL MAIN BRANCH HARIPUR FINANCE DEPARTMENT......................31

5.1 Number of Employee Working in the Finance Department..................................31

5.2 Structure of Finance departments.................................................................................... 31
5.3 Finance Controller................................................................................................................... 33
5.4 Finance & Accounting Operations in BANK ALFALAH LIMITED...........................34
5.5 Function of BAL MAIN BRANCH HARIPUR Finance Department.........................35
5.6 Accounting & Finance System of the BANK ALFALAH LIMITED...........................38
5.7 Use of Computers and Automation in BANK ALFALAH LIMITED:.......................39
5.8 Sources of Fund in BANK ALFALAH LIMITED..............................................................41
5.9 Generation of Funds in BANK ALFALAH LIMITED:....................................................41
5.10 Allocation of Funds in BANK ALFALAH LIMITED.......................................................42
5.11 Mobilization of Funds in BANK ALFALAH LIMITED..................................................44
5.12 Critical Analysis of Theoretical Concepts.......................................................................45

CHAPTER 6 FINANCIAL ANALYSIS.............................................................................. 46

6.1 Financial Analysis........................................................................................................................ 46

6.2 Last Five Years Balance Sheet of Bank Alfalah Limited......................................................47
6.3 Last Five Years Income Statement of Bank Alfalah Limited..............................................48
6.4 Ratio Analysis............................................................................................................................... 49
6.16 Profitability Ratios...................................................................................................................... 49
6.5.1 Net Profit Margin.......................................................................................................................... 50
6.5.2 Gross Profit Margin...................................................................................................................... 50
6.5.3 Return on Investment................................................................................................................. 51
6.5.4 Return on Average Equity......................................................................................................... 52
6.6 Asset Utilization Ratios.............................................................................................................. 53
6.6.1 Total Asset Turnover................................................................................................................... 53
6.6.2 Fixed Asset Turnover.................................................................................................................. 53
6.6.3 Current Asset Turnover.............................................................................................................. 54
6.7 Liquidity Ratios............................................................................................................................ 55
6.7.1 Current Ratio.................................................................................................................................. 55
6.8 Financial Leverage Ratios......................................................................................................... 56
6.8.1 Debt to Equity Ratio..................................................................................................................... 56
6.8.2 Debt to Total Assets Ratio......................................................................................................... 57
6.9 Other Ratios.................................................................................................................................. 57
6.9.1 Advances to Deposits Ratio....................................................................................................... 57
6.9.2 Income/Expense ratio................................................................................................................ 58

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 6.9.3 Earnings Per Share Ratio (EPS).............................................................................................. 58
6.9.4 Profit before tax ratio.................................................................................................................. 59
6.9.5 Gross Spread Ratio....................................................................................................................... 60
6.10 Horizontal analysis of Bank Alfalah Limited......................................................................... 61
6.10.1 Bank Alfalah Limited Sheet Comments:..............................................................................61
6.11 Horizontal analysis of Profit and Loss Statement...............................................................64
6.11.1 Horizontal Analysis Profit & Loss Comments:..................................................................65
6.12 Vertical analysis of Bank Alfalah Limited.............................................................................. 66
6.12.1 Vertical Analysis Bank Alfalah Limited Sheet Comments:............................................67
6.13 Vertical Analysis of profit & loss statement..........................................................................68
6.13.1 Comments of vertical analysis of: Profit & Loss...............................................................69
6.14 BANK ALFALAH LIMITED‘S analysis with reference to other banks listed on stock
exchange..................................................................................................................................................... 70
6.15 Why BAL MAIN BRANCH HARIPUR is financially sound than MCB and other banks 71
6.16 Future prospect of the BANK ALFALAH LIMITED...............................................................72

CHAPTER 7 SHORT FALLS OF BANK ALFALAH.........................................................74

7.1 BAL main branch Haripur Weakness............................................................................... 74

CHAPTER 8 CONCLUSIONS & RECOMMENDATION..................................................76

7.1 Conclusion................................................................................................................................... 76
7.1 Recommendations:.................................................................................................................. 77

 References................................................................................................................... 79
 Annexure..................................................................................................................... 80

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