Internship Report on Bank Alfalah

Limited 2015

SUBMITTED TO:
Faisal

Maam Maria

SUBMITTED BY:

Sana Qadir
MB-13-04
MORNING
2013-16

DEPARTMENT:

Institute Of
Management
Sciences (IMS)

Preface:
Internship is the basic and integral requirement of all the business study
programs in all of the business study institutes as it is the basic and
necessary requirement of MBA degree of department of IMS (Institute Of
Management Sciences) Bahauddin Zakariya University Multan. Because
it is the practical implication of the theoretical knowledge which we have
taught in our business subjects to gain further knowledge and
experience about professional business activities. It equips us with the
necessary knowledge, skills and values of business culture which are
basic requirement of the business professional and which also helps new
graduates to perform professionally as they get first step in their
practical professional life.
For this reason I was placed at Bank Alfalah Limited Corporate Branch
Quaid e Azam Road Multan Cantt where I have done my six weeks
internship. During my internship tenure I have gained a lot of knowledge
about operations under the supervision and guidance of my Internship
Supervisor. During my whole duration I was rotated in all the different
departments of the bank and was thoroughly briefed about the
procedures of all the banking operations by the concerned staff. My
internship report contains all the knowledge which I have learnt there.

Acknowledgement:
All praises are for Allah Almighty that has bestowed upon human being
the crown of creation and has endowed him with knowledge and
wisdom. After Allah, the last Prophet Mohammad (PBUH) Who brought
for us revelation and unlimited knowledge and civilized the barbarian
human being.
I am very thank full to Allah Almighty who gave me the courage to
complete this complex task and to my ever caring and loving parents
whose prayers helped me to reach this stage of my life.
Besides, there are many people who supported me in formulation of this
report and without the support of them I could never be able to
complete this report successfully. In this respect I am very thank full to
Mr. Aagha Ali (Branch Manager), Mr. Ali (Operations Manager) and the
qualified staff members of Bank Alfalah Limited Multan Cantt, who
cooperated with me with their guidance at each step of my internship.
They have provided me a lot of important information and knowledge
about the banking operations in a very short period of time.
Last but not least, my very special thanks to Mr. Farrukh Aslam(Regional
Manager) who provided me with his guidance and profitable knowledge
whenever I need that.

Thank you

Dedicated to:

My ever caring and loving Parents

&
Respectable Teachers

Table of Contents
Executive Summary

08

Introduction of Organization

08

Banking History

08

Mission, Vision of Organization

11

Objectives of Organization
Corporate, Business and Departmental
Level Strategies

12

Organizational Structure

16

Working of Various Divisions/Departments

17

15

Account Opening Department

17

Remittances Department

21

Credits

23

Trade Finance

25

Clearing

26

Financial Analysis

28

Ratio Analysis

34

SWOT Analysis

51

PESTEL Analysis

52

Suggestions and Recommendations

54

Conclusion

55

Executive Summary:
Bank Alfalah Limited is the sixth largest bank in Pakistan with a network of 648
branches across 196 cities in the country. Incorporated as a public limited
company on 21 June 1992 under the Companies Ordinance 1984, Bank Alfalah
7

commenced banking operations from 01

November 1997.
The Bank provides financial solutions to
consumers, corporations, institutions and
governments through a broad spectrum of products and services, including
corporate and investment banking, consumer banking and credit, securities
brokerage, commercial, SME, agri-finance, Islamic and asset financing.
Bank Alfalah is a private bank providing financial services to the
customers under the charge and ownership of Abu-Dhabi group under
the leadership of His Highness Sheikh Hamdan Bin Mubarak Al-Nayyan.
Bank is engaged in corporate and retail banking.

Introduction:
History of Banking:
The word Bank is derived from the Italian word Bancus or Banque
which means bench, desk or counter. Because in ancient times the
benches were used by the Jews for the purpose of exchanging money. In
ancient times the religious temples were used as the safest place for
keeping money and gold by people of that time under the supervision of
the priests. Goldsmiths then acted as the financial agents in exchange
of gold and valuables which provided the basis of modern banking.
Todays modern banking system is the ultimate and step by step
achievement of the ancient banking system of accepting deposits from
those who have surplus and lending to those who do not have it or have
little.

Banking In Pakistan:
Prior to Independence British banks controlled the banking operation in Pakistan.
After independence there were no resources so that Pakistanis could start their
own banking system in a very short period of time. Then at that time it was
decided that Reserve Bank of India will control the banking operations in
Pakistan. But this was not good for the best interest of Pakistan because British
Government at that time distributed the reserves of the Reserve Bank of India
between India and Pakistan with the share of 70% India and 30% Pakistan. Then
Quaid-e-Azam Muhammad Ali Jinnah (The Governor General of Pakistan) at that
time took a step ahead and inaugurated The State Bank of Pakistan on July 1st ,
1948 which then took control of all the banking operations of Pakistan.

Board of Directors:

H.E. Sheikh Hamdan Bin

Mubarak Al-Nahayan
Chairman

Abdu
Mr.
lla
Nasser
AlHawalileel Mansoori
Direct
or

Mr.Khalid Mana Saeed Al

Otaiba
Director

Mr. Ikram Ul-Majeed

Sehgal
Director

Organizational Hierarchy Chart :

Chairman

Board of Directors

President (CEO)
Chief Operating Officer
Group Head
Regional Manager
Area Manager
Branch Manager
Operation Manager
Officers

Non-Clerical Staff

10

MISSION:
To develop and deliver the most innovative products, manage customer
experience, deliver quality services that contributes to brand strength, establishes
a competitive advantage and enhances profitability thus providing value to the
customers.

VISION:
To be the premier organization operating locally and internationally that provides
the complete range of financial services to all segments under one roof.

OBJECTIVES:
To create an efficient system of banking in Pakistan, maintain high profits
,expanding Islamic banking, delivering every service and product under one roof.

11

Human Resource Management:

As its a universal fact that the success of any organization lies in the hands of
their human resource or the employees working for that organization and the
human resource is the most valuable asset of any organization. In this concern the
management of Bank Afalah is well known for their hard work, innovative thinking
and full dedication to satisfy and retain the clients of the Bank and keep the Bank
on front row.
The employees of Bank Alfalah is well equipped with skills, knowledge and vast
experience of financial world which is required to keep the Bank on the way of
modern banking with the objective of gaining high profits. The core ideology of
Bank Alfalah in respect of their human resource selection is to hire multi talented
and dedicated professionals, who can perform well best for the Bank with little
external and in-house training to increase the efficiency and productivity of the
human resource. Although the head office of Human Resource Management of
Bank Alfalah is in Karachi but every branch is managing its employees on its own
with the philosophy of controlling every subordinate by his supervisor because
these supervisors are working according to the policies directed by the Head
Office. In this way they are cooperating with one another and are achieving the
goals and standards of the Bank set by the top management.

Training and Development of the Human Resource:

After hiring the human resource, their training and development is
essential and necessary to keep them up to date about new methods of
working and performing operations. In this respect Bank Alfalah
conducts training programmes and conferences with the passage of
time and at regular intervals of the year at Head Office Karachi for
increasing skills, knowledge and productivity of human resource. This is
essential for every employee to attend these training and development
programmes and conferences once in a year. For this purpose Bank
Alfalah is providing training to their employees in following important
areas:

Marketing
Credit administration/documentation
Consumer Banking
operations
Performance appraisal skills
12

Credit marketing and proposals

Trade Finance

PRODUCT AND SERVICES:

Debit card/ Hilal card

Car Financing
Money gram
Agri Finance
Credit Cards
Online Banking

1. Debit Card/ Hilal Card:

Alfalah debit or Hilal card gives you the immediate and easy access to
your current or saving account anywhere and anytime with a simple
swipe of your card at millions of ATMS and retail shops. With the Visa
Network Hilal card is acceptable at more than 1.2 million ATMs and 29
Million retail outlets around the world. If you have this facility then there
is no need of dealing in physical cash withdrawal, just swipe your card
and your transaction will be completed in no time.

2. Car Financing:
Bank Alfalah has introduced Car Financing in which you have two
options, either you get the vehicle leased or financed.

There are no hidden charges

Minimum down payment
Quickest Processing
Tenure period 1-5 years

3. Money Gram:
Bank Alfalah is providing the facility of Money gram which is the person
to person transfer of money that allows consumers to receive money in
just few moments. Money Gram is available in over 180 countries and
territories and in more than 190,000 locations worldwide, and money is
13

handled by quality agents linked

through computers who makes it
sure that your money is safely
transferred to the desired place and
person.

4. Agri Finance ( Alfalah Zarie Sahulat):

In view of importance of agriculture for the Pakistan economy and
keeping in view the small farmers who have little resources for
production for them, Bank Alfalah has designed Rural Finance
Programme which is named as Bank Alfalah Zarie SahulatThis facility
is available for short, medium and long term durations.
Bank Alfalah has designed this facility to achieve following objectives:

Provide reliable infrastructure for Agri customers.

Help farmers utilize funds efficiently and effectively.
Provide farmers an integrated package of credit, supervision and technical
know-how.

5.Credit Cards:
Alfalah credit card is globally accepted at all those locations which have
the logo of VISA. It is accepted at nearly 29 million locations in more
than 200 countries around the world. and in Pakistan also. It enables you
to pay for shopping, travel, entertainment, meals and much more. The
features which makes Alfalah Credit card as an important product for
customers are:

No joining/ Annual/ Renewal fee

Electricity, Sui Gas, PTCL bill payments through 24 hour Call
Centre and Auto Debit instructions
SMS for card usage, mini statement, payment receipt confirmation
Cash withdrawl at all 1 LINK ATMs

14

6.

Online

Banking:
Bank is providing online banking services to
its customers such as balance inquiries
statement requests through automated
online telephone service and online ATM
services anywhere and at every place where
bank exists.

Corporate, Business and Departmental level

Strategies:
Bank Alfalah is successfully completing its journey towards progress with
the help of its specialized, skilled, highly qualified and professional
management at all levels. Top management formulates the strategies in
accordance with the standards formulate to achieve the desired goals
and objectives. As with the passage of time and it is fact that the
external business environment is very dynamic in nature so these
strategies keep on changing to keep the Bank up to date. For this
purpose the managerial policies which are adopted by the Bank Alfalah
are as under.

Corporate Level Strategies:

At the corporate/top level there is board of directors and executive
committee, who controls such important functions as determining goals
and objectives, formulations of business policies and strategic planning.
Corporate philosophy stresses the highest level of security, reliability
and value for its clients money which is the core strength of the bank.

Business Level Strategies:

Top management formulates the business level strategies. Chief
15

Managers are also the part of this

management level who formulates
the strategies and technical
planning which determines the
methods of getting the best and in time completion of jobs from its
human resource. They define and interpret the objectives and goals and
formulate policies to achieve them.

Departmental Level Strategies:

At this level Head of the Departments formulate these strategies. Each
and every branch manager formulates the policies according to the
branch setup and at each level of bank environment because he is
directly responsible for the management and controlling the activities of
the employees. For implementation of these policies meeting are called
with the presence of Head of the Departments to get the best and
efficient and desired goals behind these formulated policies.

16

Departments Worked During Internship:

I did my internship at Bank Alfalah Limited Quaid e Azam Road Multan Cantt.
During my whole duration of six months I have done work in the following
departments:

Accounts Opening
Remittances
Credits
Trade Finance
Clearing

Accounts Opening Department:

Most important and front line department of bank which comes under
the retail/ general banking. Following are the types of the accounts:
1. Current Account
2. Saving Account

1.Current Account:
It is a non-interest bearing account. The minimum balance requirement
for opening this account is Rs.10,000. Furthermore there is no restriction
of deposition and withdrawal of money from this account at any point of
time. All the current account holders receive a Hilal Debit Card to get
benefit from the ATM service of the bank. Following are the types of
accounts which come under the head of current account. They are:

Basic Banking Account

Simple Current Account
Alfalah Kamyab Karobar Account

The detail on each is as under:

17

i).Basic Banking Account

This account is introduced for low income people like persons with
Rs.25,000 salary and for students who cannot maintain minimum
balance of Rs.10,000 in their accounts because in this account there is
no requirement of minimum balance maintenance. This account is also
called as Student Account.

Features:

Minimum Initial Deposit of Rs. 100.

No Service charges at all
Facility of ATM
Only 4 transactions through cheque are allowed in a month otherwise Rs.58
will be charged per month.

ii).Simple Current Account:

A minimun initial deposit or Rs. 10,000 is required to open this account.

Average balance of Rs. 10,000 should be maintained in this account
otherwise Rs.58 will be charged per month to account holder.
Online service is available (on customer demand).
No charges for online service.

iii).Alfalah Kamyab Karobar Account:

This account is especially for businessmen.

Initial deposit of Rs.5000 is required.
Average balance maintenance is according to the type of category in which
the customer lies.

2. Saving Account:
Saving account is an interest-bearing account. It has following types of accounts:

Simple Saving Account

Royal Profit Account
Kifayat Account
Alfalah Mahana Aamdan Account

18

i).Simple Saving Account:

Initial deposit and average balance maintenance is Rs.5,000.

Profit rate is 5%.
Profit is distributed on half yearly basis.

ii).Royal Profit Account:

Initial deposit and average balance maintenance is Rs.50,000 for this

account.
Profit is distributed at rate of 5 % per year but its calculations are done on
monthly basis.
If there is not maintained a balance of Rs.50,000 then the account holder
will not get any profit. For getting profit there must be above Rs.50,000
balance in account.

iii).Kifayat Account:

It is a type of saving account in which minimum initial

deposit and average balance maintenance of Rs.10,000 is
required.
Maximum amount of deposit in this account is of Rs.1
million.
Profit is paid at the rate of 7% per annum. If balance falls
from 10,000 then no profit will be given to account holder.
Profit is given on Quarterly basis.
Only 3 debit transactions are allowed per month.

iv).Alfalah Mahan Aamdan Account:

Its a term deposit for three years.

Minimum balance of account is Rs.100,000 with an upper limit of Rs 1.5
million.
Profit rate is 10 % per annum and paid on monthly basis.

Opening an Account:
For new customers who want to open an account at Bank Alfalah has to
fill a Relationship Contract, which includes such information as follows
1. Title of Account.
2. Personal information of applicant
19

3. Next of Kin
This portion is important for
securing the money of the
customer in case of his/her death of
or any incident with the account holder. By this thing the account holder
specifies and provide the information and data of the person who will be
the owner of his/her money

after his/her death or any serious incident with him/her. If account

holder leaves it blank
then bank will be the owner of his/her money.
Address for correspondence

4. Type of Entity
Individual
Joint sole proprietorship
Public/Private Ltd Co.
Partnership.
5. Nature of Account
Current Account
PLS Saving Account
Royal Profit Account
Saving Account
Others
6. Currency of Accounts
Bank Alfalah deals in five currencies and account holder must have
select from them. These are PKR, USD, GBP, Euro, and JPY
7. Zakat Deduction
8. Details of other bank accounts
9. Introduced by
Basic Requisites for Opening an Account for individuals/self employed
persons

CNIC
Company letterhead or authorization (as required)
NTN certificate (optional)
20

Source of income (salary slip etc)

The basic Requisites to open an

account for a partnership:

NTN certificate (optional)

Partnership Deed
Company Letterhead
Partners CNIC

The basic Requisites to open an account for companies:

Article of Association
Directors CNIC
Memorandum Of Association
NTN Certificate (optional)
Company Letterhead

Remittances Department
Remittance means the transfer of funds form one account to another or one city to
other city.
Instruments which are used for transfer of money are:

Demand Draft
Pay slip
Pay order (payment order)

i).Demand Draft:

Its a negotiable instrument

Its a written order drawn by one branch of a bank upon another branch of
the same bank or upon another bank under special arrangements to pay
a certain sum of money according to the order by the customer.
DD is cannot be issued within the same city.

There are two ways in which a demand draft can be used for transfer of money:

Outward DD:
21

When money is transferred from

Bank Alfalah to other city on the
demand of the customer its known
as outward DD. The procedure foe
this is that the customer will fill the DD application form and present the
cash he wants to transfer through DD. After checking all the provided
details the bank officer will make a DD and pass the following entries for
this transaction:

For Cash:
Sundry Account (Dr)
Head Office (Cr)

For Cheque:
Customer Account (Dr)
Head Office (Cr)

Inward DD:
When the issuing branch of the DD send advice in the form of the copy
of the instrument or DD then following entries are passed,
Head office (Dr)
DD payable account (Cr)
When the Bank Alfalahs account holder comes with DD to receive
money then following entries are passed
DD payable Account (Dr)
Customer Account (Cr)
When the customer comes with DD who is not the account holder of
Bank Alfalah then following entries are passed
22

DD payable Account (Dr)

Cash (Cr)
Charges for making DD are Rs.58 including 16
% federal excise duty.

ii).Pay Slip:
This is Banks cheque book, used for the payment of the branch
expenses. This is also called as true banker cheque. The entries for the
payments are passed as,

Expenses Account (Dr)

Pay Slip (Cr)

iii).Pay order (Payment order):

Pay order is the way of transferring money within the same city. It is
issued, paid and maintained by the same branch. It is also called as
Banker Cheque or Manager Cheque. It is cleared in 5-6 days and it is
crossed by default.

Procedure:
The customer fills the application form for pay order along with his
details and cash or cheque. Usually cheque is used for transfer of money
through pay order. After paying the charges for making pay order the
pay order is issue to the customer. The entry for the issuance of pay
order is,
Customer Account (Dr)
Pay order Payable (Cr)
Charges for making Pay Order are Rs.58 including 16 % federal excise duty (FED).
When the customer comes to get the money through pay order then
following entry is passed by the bank,
Pay order Payable (Dr)
Customer Account (Cr)

Credits Department:
23

Credits department advances loans

to needy and eligible customers
and this department adds a big
share of profit to overall profit of
the Bank Alfalah. These loans are sanctioned by the Head Office at
Karachi. Bank Alfalahs credit department works both with Retail and
middle market group and corporate groups.

Types of Credit line Facilities:

Bank Alfalah is providing two types of credit line facilities:
i. Funded
ii. Non-Funded

1. Funded Credit Line Facility:

In funded facility the amount of loan is physically dispersed to the
customer. The products which comes under credit line facility are as
follows:

Running/Current Finance
Cash Finance
Term Finance
Lease Finance

i).Running/Current Finance:
Current finance is provided to the companies for supporting their
operations for a short time period of one year. Bank provides funds
against some securities like mortgage securities. And Bank advances
funds up to 60% of the given securities. This credit facility is very
attractive for the companies in managing their working capital because
mark up is charged by the bank only on the utilized part of the funds.

ii).Cash Financing:
Cash financing is also a short term credit facility of one year. This is
basically a stock financing for those small businessmen who can run
their business very smoothly if they get credit from the bank which they
24

cant perform well otherwise.

Financing is done on the basis of
analysis of the business.
iii).Term Finance:
Term finance is a long term credit facility of 2, 3, and 5 years. It is also
known as project financing. The important point in this credit facility is,
mark up is charged by the bank on the whole amount of funds either
customer utilized the sanction limit or not. Repayment is done in
installments.
iv).Lease Finance:
It is also a long term credit facility provided by Bank Alfalah. It is also
known as equipment financing. Actually financing is done for the
equipment. In this credit facility, the ownership is on the name of bank
first, after repayment of funds the ownership is transferred to the
customer.

2.Non Funded Credit Line Facility:

Its a commissioned based financing. In this credit facility funds are not
transferred to the customer directly. This credit facility has two products:

Letter of Credit
Letter of Guarantee/Bank Guarantee

i).Letter of Credit:
This is used for the purpose of foreign trade. It is actually a written
undertaking by the issuing bank for the payment a sum of money during
a specified duration of time on the
request of applicant (buyer) to the beneficiary (seller). It will be
discussed in detail in department of Trade Finance.
ii).Letter of Guarantee/Bank Guarantee:
It is a written guarantee by the bank on the behalf of the customer
which bank gives to the specific company because it is usually used in
bidding and tenders filling. It will be discussed in detail in department of
Trade Finance.

25

Trade Finance Department:

This department controls the trade
which occurs across the borders from Pakistan to other countries or in
short foreign trade which includes imports and exports. For this purpose
Letter of Credit is issued by the issuing bank to facilitate the trade
between two traders of the different countries. It provides security and
safety for the payment of a sum of money involves in trading to the
applicant and beneficiary who are doing imports or exports.

Letter of Credit:
As it is stated earlier in non funded credit facility in Credit Department
that Letter of Credit is actually a written undertaking by the issuing bank
for the payment of a sum of money during a specified duration of time
on the request of applicant (buyer) to the beneficiary (seller). It is issued
against some securities like mortgage properties, pledge of stocks etc.

Types of LCs:
There are two types of LCs
i.
ii.

Site LC
Usance LC

i).Site LC:
Site LC is the form of LC in which the bank honors the beneficiary
against the documents and the material stated in the LC at the place
which is stated by the mutual consent of the applicant and beneficiary.
Receiving of shipment and payment occurs at the same time.

ii).Usance LC:
In this type of LC payment is made against the acceptance of the items
stated in the LC with stated conditions. Payment is done after some
time.

Documents/Requirements for LC:

Applicant will provide the following things for a LC,
26

i.
ii.
iii.
iv.

LC application request
Sale Contract/Performa Invoice
LC application form
Customer Portfolio

Beneficiary will provide the following things:

i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.

LC amount
Quantity of imports (Weight, units)
Partial shipment allowed or not allowed
Certificate of Origin
Bill of Lending
Airway Bill
Truck Receipts
Packing List
Performa Invoice
After verification of securities and details provided by the application, a
credit line proposal is made which is sent to the Area Office. After Area
Office approval the LC is issued to the customer.

Clearing Department:
Clearing means the transfer of funds within the same bank or to other
banks. It is the part of the Remittances Department. Clearing is done for
cross cheques only. Clearing can be done in following ways:

Inward Clearing
Outward Clearing

Inward Clearing:
When a customer comes who has his account in Bank Alfalah and he
presents a cheque which is also of Bank Alfalah then transferring of
funds in this case through cheque from one account to another is
termed as inward clearing.

Outward Clearing:
When a person with his account in Bank Alfalah comes and presents a
cheque of the bank other than Bank Alfalah then transferring of funds in
this case through cheque from one account of the other bank to another
account of Bank Alfalah is termed as outward clearing. Usually it takes
27

4-5 days for clearing a cheque.

Same day clearing:

Clearing of cheques which occurs in
one day is called same day clearing. Presentation and clearing of
cheques is carried out in the same day. But there is a condition under
which a customer can use the facility of same day clearing and that is,
cheque should be above than Rs.200,000 otherwise a person cant use
the facility of same day clearing.
The process of clearing is done in a clearing house of the State Bank.
National Institutional Facilitator Technologies (NIFT) is used for this
purpose. The NIFT employees come daily and take all the cheques from
the bank for clearing purpose and deliver them to State Bank. In this
way the process of clearing is done by The Bank Alfalah.

FINANCIAL SUMMARY:
Rupees in
Million
2012

2013

2014

49,666

53,361

52,240

14,215

15,519

17,313

9,754

10,342

7,857

5,434

6,783

6,807

3,503

4,556

4,676

OPERATIONAL RESULTS
Total Income
Operating Expenses
Profit before Income Tax and
Provision
Profit before Income Tax
Profit after Taxation

Rs. In
million
Rs. In
million
Rs. In
million
Rs. In
million
Rs. In
million

BALANCE SHEET

28

Rs. In
million
Rs. In
Total Assets
million
Rs. In
Advances - net of provision
million
Rs. In
Investments -net of provision million
Rs. In
Deposits and other accounts million
Shareholders Equity

22,616

25,502

468,294 536,568
198,469 233,933
166,532 189,487
401,233 457,044

OTHERS
Imports
Exports
RATIOS
Capital Adequacy
Profit before tax ratio
(PBT/Gross mark
up income)
Gross spread ratio (Net mark
up income
/ gross mark up income )
Income / Expense ratio
Return on average equity
(ROE)
Return on average assets
(ROA)
Advances / Deposit Ratio
Cash Dividends
Stock Dividend
Book Value per share
excluding

Rs. In
million
Rs. In
million

286,550 322,633
191,820 192,132

11.60

12.60

12.27

14.72

42.01

40.32

Times

3.49

3.44

16.36

19.42

%
%
%
%

0.81

0.92

49.46

51.18

17.50

20.00

Rs.

16.76

18.90

Rs.

18.94

22.28

Rs.
No.

2.60

3.38

7,580

7,124

revaluation of Assets
Book Value per share
including
revaluation of Assets
Basic earnings per share
No of Employees

BALANCE SHEET:
Vertical Analysis:
29

ASSETS

2014
Rs. in
(000)

%age

2013
Rs. in
(000)

Cash and
balances with
treasury banks
Balances with
other banks
Lendings to
financial
institutions

50,515

6.798

61,204

12,331

1.66

34,764

5.69

26,720

18,313

2.46

2,522

0.41
2

876

324,31
9
290,59
7
15,740

43.64

219,69
0
260,77
9
14,835
1,204

35.9
3
42.6
5
2.42
0.19

189,48
6
233,93
3
13,747
384

Investments-net
Advances- net
Fixed assets
Deffered tax
assets
Other assets
Total Assets

39.10
5
2.118
-

%ag
e
10.0
1

2012
Rs. in
(000)
58,044

31,310
743,12
8

4.21
100

16,427
611,42
7

2.68
100

13,272
536,4
66

11,758
55,232
605,96
3
9,987

1.58
7.43
81.54

9,543
23,115
525,52
5
9,991

1.56
3.78
85.9
5
1.63

8,430
21,227
457,11
8
5,874

Liabilities
&
Equities
Bill payable
Borrowings
Deposits and
other accounts
Sub-oriented
loans
Liabilities
against assets
subject to
finance lease
Deferred tax
liabilities
Other liabilities
Total
Liabilities
Shared Capital
Reserves
Unappropriate
profit
Surplus on
revolution of
asset-net of tax

1.34

853

0.11

14,514
698,3
09
15,872
12,338
9,613

1.95
93.9
7
2.14
1.66
1.29

11,350
579,5
25
13,491
7,274
7,499

1.86
94.7
8
2.21
1.19
1.23

13,567
506,2
19
13,491
5,636
6,561

6,995

0.941

3,636

0.59

4,557

30

44,81
9

Total Equity

6.03

31,90
1

5.22

Horizontal Analysis:

Asset
s

2014

Cash and
balances with
treasury
banks
Balances with
other banks
Lendings to
financial
institutions
Investmentsnet

50,515

82.54

61,204

5.45

58,044

14.07

12,331

35.47

34,764

30.099

26,720

53.35

18,313

626.14

2,522

187.62

876

-88.71

Advances- net
Fixed assets
Deffered tax
assets
Other assets
Total Assets

Rs. in
(000)

14 vs.
13
%age

2013
Rs. in
(000)

13 vs.
12
%age

2012
Rs. in
(000)

12 vs.
11
%age

2011
Rs. in
(000)

50,882
17,424

324,31
9
290,59
7
15,740
-

47.63

219,69
0
260,77
9
14,835
1,204

15.94

31,310
743,1
28

90.6
21.54

16,427
611,42
7

11,758
55,232
605,96
3

23.21
138.94
15.31

9,987

-0.04

11.43
6.1

189,48
6
233,93
3
13,747
384

13.78

23.77
13.97

13,272
536,46
6

-0.13
14.59

9,543
23,115
525,52
5

13.2
8.89
14.96

8,430
21,227
457,11
8

56.02
16.84
13.92

9,991

70.09

5,874

-17.82

11.48
7.91
213.54

17.87
2.68
-8.79

7,765
166,53
1
198,46
8
13,388
421
13,290
468,16
9

LIABILITI
ES &
EQUITIES
Bill payable
Borrowings
Deposits and
other
accounts
Sub-oriented
loans
Liabilities
against assets
subject to
finance lease

5,403
18,168
401,24
7
7,148

31

30,24
7

Deferred and
tax liabilities
Other
liabilities
Total
Liabilities
Shared Capital
Reserves
Unappropriate
profit
Surplus on
revolution of
asset-net of
tax
Total Equity

853

14,514

27.88

11,350

-16.34

13,5

698,3
09
15,872
12,338
9,613

20.5

14.48

17.65
69.62
28.19

579,52
5
13,491
7,274
7,499

0
29.06
14.3

506
9
13,4
5,63
6,56

6,995

92.38

3,636

-20.21

4,55

44,81
9

40.49

31,901

5.47

30,

Income Statement:
Vertical Analysis:

Profit &
Loss
Account
Net Markup/
Interest
Income
After
Provisions

2014
Rs. in
(000)

%age

2013
Rs. in
(000)

%age

2012
Rs. in
(000)

%age

2011
Rs. in
(000)

%age

20,3
39

69.
24

15,8
41

65.
68

15,0
21

67.
35

14,2
81

72.
69

3,120

10.6

2,800

11.61

2,536

11.3

2,148

10.93

Non Markup/ Interest

Income
Fee,

32

commission
and brokerage
income
Dividend
income
Income in
dealing with
foreign
currencies
Gain on sale of
securities-net
Unrealized
(loss)/gain on
investments
classifies as
held for trading
Other income
Total nonmarkup/
interest
income
Total Income

492

1.67

482

1.998

349

2,042

6.95

1,535

6.36

1,309

1,058

3.60

1,588

6.58

1,328

160

0.54

0.033

2,162
9,036

7.36
30.7
6

1,862
8,278

7.72
34.3
2

1,756
7,281

29,37
6

100

24,11
9

100

22,30
2

20,26
1
38

68.9
7
0.13

17,28
8
2

71.68

15,20
4
-22

356

1.21

-162

0.67

130

206

0.70
1
71.0
2
28.9
8
9.78
19.2
0

184

0.76

206

17,31
2
6,807

71.7
8
28.2
2
8.83
19.3
8

15,51
9
6,783

Non
markup/Int
erest
Expense
Administrative
expenses
Provision
against offbalance sheet
obligations
Provision
against other
assets
Other charges
Total Expense
Profit before
taxation
Total Taxation
Profit after
taxation

20,86
2
8,513
2,872
5,640

2,131
4,675

0.008
3

33

2,227
4,556

Horizontal Analysis:
2014

14 vs.
13
%age

2013

13 vs.
12
%age

2012

12 vs.
11
%age

2011

Profit &
Loss
Account

Rs. in
(000)

Net Markup/ Interest

Income
After
Provisions

20,3
39

28.3 15,8
9
41

5.46 15,0
21

5.18 14,2
81

3,120

11.43

2,800

10.41

2,536

18.06

2,148

492
2,042

2.07
33.03

482
1,535

38.11
17.27

349
1,309

82.72
17.4

191
1,115

1,058

-33.38

1,588

19.58

1,328

8.49

140

160

1900

800

109.0
9

-11

2,162
9,036

16.11
9.16

1,862
8,278

6.04
13.69

1,756
7,281

-0.015
35.69

1,783
5,366

29,37
6

21.8

24,11
9

8.15

22,30
2

13.51

19,64
7

Rs. in
(000)

Rs. in
(000)

Rs. in
(000)

Non Mark-up/
Interest
Income
Fee, commission
and brokerage
income
Dividend income
Income in dealing
with foreign
currencies
Gain on sale of
securities-net
Unrealized
(loss)/gain on
investments
classifies as held
for trading
Other income
Total nonmarkup/
interest income
Total Income

34

Non
markup/Inter
est Expense
Administrative
expenses
Provision against
off-balance sheet
obligations
Provision against
other assets
Other charges
Total Expense
Profit before
taxation
Total Taxation
Profit after
taxation

20,261

17.2

17,288

13.71

15

38

1800

-2

356

319.7
5
11.96
20.51

-162

109.0
9
224.6
2
-10.68
11.55

206
20,86
2
8,513
2,872
5,640

25.06

184
17,31
2
6,807

34.77
20.64

2,131
4,675

13

0.35

20
15
9
6,

-4.31
2.61

2,
4,

35

RATIO ANALYSIS:
1. Net Profit Margin
2. Gross Spread Ratio
3. Spread Ratio
4. Non Interest Income to Total Income Ratio
5. Return on Assets (ROA)
6. Du Pont Return on Assets Ratio
7. Return on Total Equity (ROE)
8. Debt Ratio
9. Debt / Equity Ratio
10.
Times Interest Earned Ratio
11.
Advances / Deposits Ratio
12.
Operating Cash Flow Ratio
13.
Dividend per Share
14.
Earnings per Share
15.
Price/Earning Ratio

36

Net Profit Margin :

Net profit after taxa tion
Net Profit Margin
100
Net Interest Income

2012

2013

2014

3,503,130
100
14,281,193

4,556,121
100
15,021,330

24.53%

30.33%

4,675,950
100
15,841,183
29.52%

40%
30%
Ne t Prifit Margin

20%
10%
0%

2012

2013

2014

Interpretation:
Bank Alfalah has its net profit margin of 29.52% at 2014 that is good, want to
meet the 2013s ratio trend. These results show the increasing trends in the
coming years by bank Alfalah. More earning capacity makes a great goodwill
of the business in the competitive market. With the increasing margin the
market value of shares also improve.

37

38

Gross spread ratio :

Gross spread ratio

Net Interest Income

Interest earned

2012

2013
18,610,693
44,298,178

18,579,862
46,079,918

0.32 Times
0.36
0.35
0.34
0.33
0.32
0.31
0.30

2014

0.33 Times

Times
Times
Times
Times
Times
Times
Times

16,894,831
43,961,060
0.36 Times

Gross spre ad ratio

2012

2013

2014

Interpretation:
As compare to previous two years the ratio indicator go up which is positive
and favorable sign for bank Alfalah. The ratio trends of bank Alfalah are
expected to improve in the coming years. The more gross spread ratio
means more share are offered to public to extend their business volume.

39

Spread Ratio:
Spread Ratio

Interest earned
Interest expenses

2012

2013
44,298,178
25,687,485

2014
46,079,918
27,500,056

1.72 Times

1.68 Times

43,961,060
27,066,229
1.62 Times

1.75 Time s
1.70 Time s
Spre ad ratio

1.65 Time s
1.60 Time s
1.55 Time s

2012

2013

2014

Interpretation:
The spread ratio is decreasing constantly as compare to previous years but
have a favorable trend for current coming years. The banks have good
control on interest expense and more interest earn as compare to the
previous years.

40

Non-interest income to total income Ratio:

Non interest income to total income Ratio

2012

Non Interest Income

Total Profit

2013
5,367,713
4,675,950

2014
7,281,340
4,556,121

1.53 Times

1.60 Times

8,278,694
4,675,950
1.77 Times

1.80 Time s
1.70 Time s
1.60 Time s

Non-inte rest income to total income Ratio

1.50 Time s
1.40 Time s

2012

2013

2014

Interpretation:
As compare to the previous years the bank Alfalah gain more non interest
income. This is a favorable sign for Bank Alfalah and trend to improve noninterest income in coming years. A great proportion of non-interest income
mean save more expenses.

41

Return on Assets (ROA):

Return on Assets

Profit after Taxation

Total Assets

*100

2014

2013

2012

4,675,950
610,614,291

4,556,121
536,466,694

3,503,130
468,173,802

0.00766 Times

0.00849 Times

0.00748 Times

0.01 Time s
0.01 Time s
Re turn on Asse ts (ROA)

0.01 Time s
0.01 Time s
0.01 Time s

2012

2013

2014

Interpretation:
Return on Assets of Bank Alfalah show the favorable sign and want to meet
the trend of 2013. The graph of ROA shows that to improve in coming
financial years. The bank wants to improve that ratio to meet the liabilities
against assets in future.

42

Du Pont Return on Assets Ratio:

ROE
100
Equity Multiplier
Profit After Taxation
ROE=
Total Equity
Total Assets
Equity Multiplier=
Total Equity
Du Pont ROA Ratio=

2012

2013

2014

3,503,130
25,777,038

4,556,121
30,247,402

4,675,950
31,901,744

468,173,802
25,777,038

100

0.75%

536,466,694
30,247,402

100

0.85%

610,614,291
31,901,744

100

0.77%

0.85%
0.80%
Du Pont Return on Assets Ratio

0.75%
0.70%
0.65%

2012

2013

2014

Interpretation:
The difference between the two profitability measures, ROA and ROE, is
the use of debt financing. Du Pont Return on Assets of Bank Alfalah show
the improving and favorable sign. The trend of that ratio is increasing in
the upcoming years.

43

Return on Total Equity (ROE) :

ROE=

Profit After Taxation

Total Equity

2014

2013

2012

4,675,950
31,901,744

4,556,121
30,247,402

3,503,130
25,777,038

0.14657 Times

0.15063 Times

0.13590 Times

0.16
0.15
0.15
0.14
0.14
0.13
0.13

Time s
Time s
Time s
Time s
Time s
Time s
Time s

Return on Total Equity (ROE)

2012

2013

2014

Interpretation:
Return on Equity of Bank Alfalah show the improving sign but not meet
2013 results. The value of ROE aspect to improves in coming financial
years. This is a good sign for share holders.

44

Debt Ratio:

Debt Ratio

Total Debt
Total Assets

2012

2013

2014

442,396,764
468,173,802

506,219,292
536,466,694

578,712,547
610,614,291

0.94 Times

0.94 Times

0.95 Times

0.95 Time s
0.95 Time s
De bt Ratio

0.94 Time s
0.94 Time s
0.94 Time s

2012

2013

2014

Interpretation:
Debt ratio expresses total obligations or liabilities against total value of
assets. The results show that the Bank Alfalah debt values more than
previous years which means business volume expand.

45

Debt / Equity Ratio :

Debt / Equity Ratio

Total Debt
Total Equity

2012

2013

2014

442,396,764
25,777,038

506,219,292
30,247,402

578,712,547
31,901,744

17.16 Times

16.74 Times

18.14 Times

18.50 Time s
18.00 Time s
17.50 Time s

De bt / Equity Ratio

17.00 Time s
16.50 Time s
16.00 Time s

2012

2013

2014

Interpretation:
Obligations or liabilities against total value of equity represent the debt
burden face by the share holders. The results show that the Bank Alfalah
debt values more than previous years which means business affect on
share holders equity.

46

Times Interest Earned Ratio:

Times Interest Earned Ratio

Earning before Interests & Taxes

Total Interest Expenses

2012

2013

2014

19,648,906
25,777,038

22,302,670
30,247,402

24,119,877
31,901,744

1.38 Times

1.44 Times

1.39 Times

1.44 Time s
1.42 Time s
1.40 Time s

Time s Inte rest Earned Ratio

1.38 Time s
1.36 Time s
1.34 Time s

2012

2013

2014

Interpretation:
The ratio indicates how many times a company could pay the interest with
its before tax income. The results of Bank Alfalah indicate the positive
sign but not meet the 2013s results.

47

Advances / Deposits Ratio:

Advances / Deposits Ratio

Advances
Deposits

2012

2013

2014

198468512
401247886

233933358
457118723

260779850
525525770

0.49 Times

0.51 Times

0.50 Times

0.52
0.51
0.51
0.50
0.50
0.49
0.49

Time s
Time s
Time s
Time s
Time s
Time s
Time s

Advance s / Deposits Ratio

2012

2013

2014

Interpretations:
Banks liquidity measures by dividing the banks total loans by its total
deposits. The advance deposit value show positive sign but not meet
2013s value.

48

Operating Cash Flow Ratio:

Operating Cash Flow Ratio

Operating Cash Flow

Current Liabilities

2012

2013

2014

54274913
15831207

49944024
21997993

45112298
20080675

3.43 Times

2.27 Times

2.25 Times

Working:
Current Liabilities = Bills payable + Other Liabilities
2014: 9543480 + 10537195 = 20080675
2013: 8430910 + 13567083 = 21997993
2012: 5403453 + 10427754 = 15831207

4.00 Time s
3.00 Time s
Operating Cash Flow Ratio

2.00 Time s
1.00 Time s
0.00 Time s

2012

2013

2014

Interpretations:
Banks operating liquidity measures by dividing the banks total operating
cash flow by its current liabilities. The operating cash flow value show
positive sign but not meet previous year performance.

49

Dividend per Share:

Dividend Per Share

Dividend
No. of Outstanding Shares

2012

2013

2014

191,708
1,349,156

349061
1,349,156

482567
1,349,156

0.14 Per Share

0.26 Per Share

0.36 Per Share

2014: Shares Face Value @20%

= 10*0.20=2 per Share
2013: Shares Face Value @20%
= 10*0.20=2 per Share
2012: Shares Face Value @17.50%
= 10*0.175=1.75 per Share
Note: These values based on % are approved by directors and value
in column is actually distributed to shareholders. The graphical
representation is based on column.

0.40 Per Share

0.30 Per Share
Divide nd per Share

0.20 Per Share

0.10 Per Share
0.00 Per Share

2012

2013

2014

50

Interpretations:
Dividend distributed to the share holders as value improves as compare to
the previous years this is a positive sign and beneficiary for the share
holders as well as for Bank Alfalah.

51

Earnings per Share:

Earning Per Share

Profit After Taxation

No. of Outstanding Shares

2012

2013

2014

3,503,130
1,349,156

4,556,121
1,349,156

4,675,950
1,349,156

2.60 Per Share

3.38 Per Share

3.47 Per Share

4.00 Per Share

3.00 Per Share
Earnings pe r Share

2.00 Per Share

1.00 Per Share
0.00 Per Share

2012

2013

2014

Interpretations:
Earnings per share value show more earning as compare the previous years.
The value of EPS improves constantly. EPS is a positive sign for the bank and
aspect to improve in coming years.

52

Price/Earnings Ratio:
Price/Earning Ratio

Average Market Value Per Share

Earning Per Share

2012

2013

2014

10.59
2.60

15.91
3.38

19.83
3.47

4.08 Per Share

4.71 Per Share

5.72 Per Share

6.00
5.00
4.00
3.00
2.00
1.00
0.00

Per Share
Per Share
Per Share
Per Share
Per Share
Per Share
Per Share

Price /Earnings Ratio

2012

2013

2014

Interpretations:
Average market value of the shares indicates growing sign for bank Alfalah.
With increase the market value the EPS increase with increasing rate. Mostly
the price fluctuation is based on market ups and down.

53

SWOT Analysis:
Strengths:

Very attractive Brand name

Continuous and Phenomenal growth in profitability as its age is
increasing
The support of the Pakistani Government
Workforce is very energetic because most of the workforce consists
of the young employees
Highly trained, skilled and professional HR
Branch location is very ideal
Attractive buildings of bank
Less cost of funds as compare to competitors
Training schedule of employees is better than other banks

Weaknesses:

Inexperienced workforce
Lack huge foreign network
Work overload on employees
Lack of professionally trained staff at head quarters

Opportunities:

Increased demand of consumer banking

Increasing branch network in Pakistan
Increasing branch network at International level
Growing Islamic Banking branch network
Increased rate of interest

Threats:

Adverse economic conditions

Privatization of banks
Terrorism
Government policies are very much inconsistent
Trends of bank merging

54

PESTEL Analysis:
A broad view of market is important when management is interested in
introducing
better services for customers. Rapid technological change, global
competition and the diversity of buyers preferences in many markets require
the constant attention of the market vouchers to identify promises business
opportunities, see the shifting requirements of the buyers ,evaluate changes
in competitors positioning and guide the choice of which buyers to target and
classify them according to respective segments .Identification of external
and macro factors that influence buyers and thus change the size and
composition of market overtime involves initially building customer profiles.
These influences include:

Political and legal environment

Economic trends
Socio cultural environment
Technological factors

POLITICAL AND LEGAL ENVIRONMENT:

Banks are strongly affected by the political and legal considerations. This
environment is composed of regulatory agencies and government law that
influence and limit various
organizations and individuals. Mostly these laws create new opportunities for
business.

Business legislation has following main purposes:

To protect banking companies from unfair competition.

To protect consumers from unfair business practices adopted by
banking companies
55

To protect the interest of the

society from unbridled business
behavior.

ECONOMIC TRENDS:
A banking market requires better consumer market in volume along with
higher
borrowing power. The available borrowing power depends on:

Consumer income
Saving rates
Consumption patrons
Rates of interest
Budget deficit
Exchange rates
Cost of living
Inflation

SOCIO-CULTURAL ENVIRONMENT:
A society is shaped by beliefs, norms and values. People in a society
consciously and
unconsciously interact with:
Themselves
Others
Organization
Society
Nature
Following are the main factors that arise because of change in socio-cultural
environment:

Consciousness about services

56

Concern for environment

Improved customer relation

TECHNOLOGICAL FACTORS:
Forces of technological advancement have played the most dramatic role in
shaping the lives of people. The rate of change of technology has greatly
affected the rate of growth of economy. New technology is creating deep
rooted affects which could be observed in long run. The

improvement techniques involved in on line banking. In brief PESTEL analysis

affects the overall banking companies and provides us the information about
the external macro condition.

Suggestions and Recommendations:

During my internship I found some of the faults and lack of some
of the facilities in banks operations. Here are some of the
suggestions which I recommend to the Bank Alfalah:

The advertising of bank and banks products is not so

much good and exposed to people. So, Bank should hire
some of the skilled marketers who can design creative
and attractive advertisements and advertising campaigns
by using all possible medias to make every person aware
of the banks updates about old and new products and
services.
Bank is using token system to avoid difficulties for the
customers to withdraw or pay deposits. But uneducated
and some of the educated customers do not know that
which token should they get from the machine. So there
must be a bank employee for the guidance of customers.
Training sessions of bank employees of all over the
country are conducted by bank at Head Office Karachi
which is very expensive for the bank to bear the
accommodation and meal charges of the employees. So
bank should expand and establish some more training
centers in other cities of the country in order to reduce
these expenses.
57

Bank is somewhat
slow in launching
new products. So
bank should review its policies of launching new products
in short and reasonable time.
Foreign branch network should be increased in order to
capture profits from all over the world.
Employees should not be overloaded with work, this helps
in relaxation of employees and will increase job
satisfaction of employees which is in best interest of the
bank.

Conclusion:
Based on my experience and ratio analysis, the Bank Alfalah is one of the
fast growing banks in Pakistan. His main competitors have a strong position
in the competitive market. So to lead the market the Bank Alfalah wants to
improve their marketing strategy, introduce new innovative product and
technological improvement. Their focus would be to continually seek out
development opportunities through increased quality in a wider range of
products and services to their customers. It is providing top quality of
customer services.
Overall, Alfalah Bank has a very dynamic position, technologically updated.In
todays age of modern banking and business environment no one can deny
the importance of technology and it is almost impossible to control the
banking operations without modern technology thats why Bank Alfalah gave
much importance to the use of technology in their banking operations. And
bank is acting as a technological leader in the market because it is engaged
in adopting new technologies and implementing them in business to meet
the challenges of the diverse business environment.

58

Last but not the least; Bank Alfalah has

all the capabilities for coping with the
changing business environment, bad
economic conditions and political condition of the bank. If the bank will keep
on moving on its way like this with the help of their unique business policies
then the time is near when The Bank Alfalah The Caring Bank will be at the
top of all the banks.

..

59