bank alfalah internship report
TRANSCRIPT
Internship Report
Internship Report
Internship Report
On Bank Alfalah Ltd.
Internship Report
Submitted To:
Institute of Management Sciences,
Bahauddin Zikriya University,
Multan.
Submitted By:
Rabia Sahar
M.Com(Finance)
Annual Program
Roll No. 517
Internship Report
PREFACE
There is a pivotal importance of experience between knowledge and work
practically in professional. We seek knowledge from books and want to owe
on it practically but working lifestyle is obviously different from the bookish
knowledge. This is the deep-seated motivator who geared up me to join my
six-week internship program in Banking Sector which provides me an
opportunity to apply my knowledge practically. Mostly student applying
concept differently whom they have learned but they should be faces the new
methodology in the business field. Owing to these new methodologies,
students face various problems in different field of professionalism but with
the laps of time they adopt these squabbles with the office environment and
learn the management behaviors, attitude and premise of work.
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ACKNOWLEDGMENT
I owe commencing my empathy and thanks to my Almighty Allah to enabled
me to liberation seek out an tough responsibility with appropriate care and
caution in rime interest of myself and to the great credit of my worth teachers ,
parents. Various people being very important for me to widen my report
devoid of their support I might never flourish to complete this report. The
planning and preparation of this report is not just my efforts owing to the co-
operation of Mr. ASIF “Credit Incharge Bank Alfalah Limited” and my
friends who helped me to compile my efforts in the shape of this report.
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Table of Contents
CONTENTS: Page#
Preface 04
Acknowledgment 05
Purpose of Internship Report 06
Executive Summary 07
Introduction to Bank Alfalah 08
Organizational Structure 10
Board Advisory Committee 11
Core Group 12
Vission & Mission 15
Philosophy 16
Bank Alfalah Khanewal Branch 17
Departments 18
Marketing Mix 41
PEST Analysis 47
Ratio Analysis 48
Trend and Vertical Analysis 64
SWOT Analysis 70
Balance Sheet 72
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Income Statement 77
Suggestion and Recomendations 80 Conclusion
81
Bibliography 82
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Executive Summary
Internship experience is very important and helpful before anyone goes
looking for a job. Employers want people who have experience. Internship
gives students the opportunity to grow, academically and personally. When
anyone initially starts out he is going to be doing the basic repetitive task that
every new person had to do. However this is not necessarily negative as it
teaches the person responsibility at the smallest level.
Bank Alfalah Limited (BAL) has 238 branches at different places in Pakistan
and main objective is to provide its customers with safe, secure and reliable
service through wide range of products. The report covers the product
information provided by the bank. Profile of banking industry, profile of
company, company business process, and departmental functions of company,
SWOT analysis of industry and company, Problems and recommendations. I
believe that this report will provide important information regarding my
departments A detailed analysis of the financial statements of Bank Alfalah
Limited has been included as a core part of this report. This financial analysis
has been divided into three parts:
Vertical Analysis of financial statements.
Horizontal Analysis of financial statements.
Ratio analysis of important aspects of financial statements.
To analyze the company from various aspects of marketing, SWOT Analysis
has been carried out with devoted efforts. The strengths, weaknesses,
opportunities and threats depict the future of Bank Alfalah Limited.
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INTRODUCTION TO BANK ALFALAH
Bank Alfalah Limited
Type: Private
(Listed in both KSE, LSE)
Founded on: June 21, 1997
Head Quarter: B.A.Building, I.I.Chundrigar, Karachi.
Industry: Banking, Capital Market
Key People: Sheikh Hamdan Bin Mubarak Al Nahayan (Chairman)Group ABU DHABI GROUP
SECTORS BANKING TELECOM SUGAR
Services: Loans, Credit Cards, Savings, Consumer Banking
Web Site: www.bankalfalah.com
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I NTRODUCTION of BAL:
BANK ALFALAH LIMITED (BAL) is a banking company incorporated in Pakistan on
June 21st, 1992 as a PUBLIC limited company under the Companies Ordinance 1984.
Its banking operations commenced from November 01, 1992. The bank is engaged in
commercial banking and related services as defined in the Banking companies ordinance
1962. The Bank is currently operating through 238 branches in 75 cities, with the registered
office at B.A.Building, I.I.Chundrigar, Karachi.Since its inception, the management of the
bank has implemented strategies and policies to shape a distinct position for the bank in the
market place.
Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set
out by its board of management, the Bank has invested in revolutionary technology to have
an extensive range of products and services.
This facilitates our commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. We perceive the requirements of our customers and match them with quality products and service solutions. During the past sixteen years, we have emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow today.
ORGANIZATION CHART
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Board of Directors
H.E. Sheikh Hamdan Bin Mubarak Al NahayanChairman
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Mr. Mohammad Saleem AkhtarChief Executive Officer
Mr. Abdulla Khalil Al Mutawa
Mr.Khalid Mana Saeed Al Otaiba
Mr. Abdulla Nasser Hawalileel Al-Mansoori
Mr. Ikram Ul-Majeed Sehgal
Mr. Nadeem Iqbal Sheikh
CORE GROUP
Mr. Sirajuddin Aziz
Chief Executive Officer of Advisory Committee
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Mr. Parvez A. ShahidCo-Chairman Central Management Committee
Mr. Shakil SadiqChief Operating Officer
Mr. Arfa Waheed MalikGroup HeadCorporate & Investment Banking
Mr. Ijaz FarooqGroup HeadIslamic Banking
Mr. Adil RashidGroup HeadConsumer Finance
Mr. Nadeem Ul HaqGroup HeadOperations
Mr. Mohammad YousufGroup HeadCredit & Collections
Mr. Bakhtiar KhawajaGroup HeadTraining & Development
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Mr. A. Wahid DadaGroup HeadCommercial Banking
Mr. Hamid AshrafGeneral ManagerLegal Affairs & Company Secretary
Mr. Zahid Ali H. JamallChief Financial Officer
Mr. Mohammad Iqbal SaifeeGroup HeadAudit & Inspection
Mr. Talib RizviGroup HeadPriority Banking & Wealth Management
Mr. Tariq MirGeneral ManagerInternational Business
Mr. Ather ShehabExecutive InchargeEstablishment & Administration
Mr. Mahmood AshrafGeneral ManagerCredit Monitoring
Mr. Falak SherChief Compliance Officer
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Mr. Imtiaz Ahmad SheikhGeneral ManagerInformation Technology
Mr. M. Mudassar AqilGeneral ManagerHuman Resource & Quality Assurance
Mr. Haroon KhalidGeneral ManagerRisk Management
VISIONTo be the premier organizations
operating locally and internationally that provides complete range of
financial services to all segments under one roof.
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.
Philosophyo Excellence in service
o Quality performance
o Product innovation
MISSION
To develop and deliver the most innovative products, mange customer
experience, deliver quality service that contributes to brand strength,
establishes a competitive advantage and enhances profitability, thus
providing value to the stakeholders of the bank.
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Customer Relationship
“Before we discover we must explore”
Dedicated Professionals
“Unusual efforts on the part of the employees who are apparently ordinary workers is one of the key indicates of the superior enterprise”
Training & Development
Bank Alfalah is committed to the personal welfare and professional development of all our
team members.
Technological innovation“Modern science is not an option, it is an obligation”.
Ethical values “Professionalism without integrity is like a book without pages”
Commitment
Integrity
Fairness
Teamwork
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BANK ALFALAH KHANEWAL BRANCH
Bank Alfalah Branch Khanewal was established in September 2006. It is located near To City
Police Station at iram hotal. This branch is under the name of BANK ALFALAH 89/10-R
KHANEWAL BRANCH.
Mfd
Officers
Manager
Mr. M. Saqib Qadeer
Operation Manager
Mr. Farhan Riaz
Officers
Cash
Mr. IqbalAccount
Mr. Tahir Malik
Agri
Mr. Naveed
Credit
Asif –ur-Rehamna
Clearing
Imran Yaseen
I.T
Mr. Tanveer
Security Guards Driver Tea Boy Others
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TRAINING PROGRAM
During internship-training program I worked in Bank Alfalah for six weeks. I had the
advantage of working in friendly atmosphere at branch of Bank Alfalah. Here I had the
chance to learn a great deal and to apply my theoretical knowledge into practically.
During the training I worked in different departments of the bank. I was able to get a good
idea of the working of a bank. It was a knowledgeable experience.
In the following pages I have explained the working of various departments in which I
worked during the period of training. I am very grateful to the officers of Bank Alfalah who
helped me during the training in understanding various aspects of bank as well as after
training in the preparation of Internship Report.
DEPARTMENTS There are various departments in which I have worked.
o Accounts opening department
o Bills / Remittances department
o Accounts Department
o Credits Department.
o Agri Department
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A) ACCOUNTS OPENING DEPARTMENT:
Business process of this department is as follows:
1. Accounts Opening:
1) Types of Accounts: There are three types of accounts and are as follows:
A) Current Account: (code number 01)
Individuals Partners, companies associations, Clubs, Societies, and NGOs are eligible to
open current account. Salient features are as follows:
Requirements:
o Minimum initial deposit Rs.10, 000/-o Minimum average balance Rs.10, 000/-o There is no restriction on number of transaction.o There is no limitation on amount of withdrawal.o Low balance penalty of Rs.50 per month is charged.o Business or job must be required for opening all type of Accounts.o Introduction is necessary.o Identity card’s copy is required. Original must be scene.
B) PLS Saving Account: (code number 02)
Saving account are designed to mobilizing 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.
Types of accounts
CURRENT A/C PLS SAVING A/C
JOINT A/C Sole Proprietor A/C Partnership A/C
Individual A/C
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Requirements:
o Minimum initial deposit is Rs.5, 000/-o A smaller initial deposit can be accepted at the discretion of branch management if
average deposit is expected to remain above RS. 5, 000/-o Profit on PLS saving account is calculated on minimum monthly balance basis.o Profit rates are announced and paid biannually in January and July respectively.o Profit rate for the period ending is 5% per annum. However profit rates are subject to
charge in response to change in the return earned by the Bank on deployment of funds.
There are four sub types of each account which are as follows:
o Individual Account:
o Sole Proprietor Account
o Joint Account
o Partnership Account:
C) ROYAL PROFIT ACCOUNT: (code number 029)
It is a special product of BAL. It can be treated both as a current account and saving account. It can be treated as a current account only in case of businessmen as they cannot open saving account. But by opening royal profit account they can earn profit on the money deposited. In this account minimum average balance should be Rs.50, 000. Every month profit is transferred to the account of client. The method of calculation of the profit is the Average Balance Method- (i.e. average balance of one month) and is paid monthly and calculated daily basis. High returns on higher balances.
D) ALFALAH MAHANA AMDAN
Alfalah Mahana Amdan is a 3 year TDR with expected rate of profit of 10.5% p.a. This term deposit will provide an opportunity to individual/joint customers to enjoy higher returns that will automatically be credited to his/her account on 1st working day of each month, but it depend upon customer when he want to take profit at monthly basis or yearly it is mentioned at form.
Some salient features
1. Minimum placement limit is Rs. 100,000/- and maximum placement limit is Rs.15,000,000/-
2. Expected Rate of profit is 10.5% Per annum (as per PLS governing rules)
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3. Profit will be automatically credited on the 1st working day of each month into customers account.
4. Free Personal Accident Insurance coverage up to the deposit amount or Rs. 1,500,000/- whichever is lower.
5. Customer can avail financing facility up to 90% of the deposit(as per banks policy)
6. Any Pakistani resident over the age of 18 can open this account
7. Alfalah Mahana Amdan term deposit can be maintained only at any one BAL branch with a maximum capacity of Rs 15 Million. An undertaking shall be obtained from the customer certifying that he/she is not availing Alfalah Mahana Amdan Term Deposit Receipt facility from any other BAL branch. Alfalah Mahana Amdan TDR will be issued for three years tenure with auto renewal facility of principal amount i.e. the facility will be renewed automatically on maturity.
Required Documents:
Documents for Individual Accounts:
Original CNIC,
o One copy of any family member CNIC for next of kin,o In case of business, business proof (letter head of company or visiting
card),o In case of job, job certificate,o Introduction of any account holder of BAL(account holders who are
operating photo account can not introduce any one),o Deposit.
Documents for Sole Proprietor Account:
o Original CNIC,o One copy of any family member CNIC for next of kin,o Business proof (letter head of business and visiting card),o Introduction of any account holder of BAL,o Deposit,o National Tax Number.
Documents for Partnership Account:a. Original CNIC of all members,b. Partnership deed,c. If instructions for operating account are not given on partnership deed then
instructions are required on letter head of company,d. Introduction of any account holder of BAL,e. Deposit,f. National Tax Number.
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Three passport size photo graphs are also required but only in case customer is unable to signature
or as well as due to shaky signatures.
ACCOUNT OPENING FORM
The first step is to fill an “account opening form” by the applicant. Following information is
to be given:
Contents of Account opening form:
TITLE OF ACCOUNT
PERSONAL ACCOUNT
JOINT ACCOUNT
NEXT OF KIN:
TYPE OF ORGANIZATION
ZAKAT DEDUCTION:
DETAILS OF OTHER ACCOUNTS:
INTRODUCER: etc
SIGNATURE SPECIMEN CARD:
It is card on which specimen of applicant’s signature are taken for future reference. Every time a cheque is presented for payment, the signature on the cheque is verified by comparing it with S.S Card. In case of joint account two applicants can sign on one SS card. In case of more than two joint account holders more than one SS card are required.
CHEQUE BOOK REQUISITION:
Cheque book is issued to the applicant after filling the cheque book requisition. It contains the account number issued to the new account holder, serial numbers (range) of cheques in the book.
GETTING APPROVAL:
The next step is to get the form approved by at least three higher authorities.
ALLOCATING THE ACCOUNT NUMBER:
After the form is approved the account number is allocated to the applicant and
account is opened in the system. Record is maintained in the register as well. The allocated
account number is written on the application form as well as SSC.
INITIAL DEPOSIT:
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The applicant is asked to deposit initial amount in the account. The amount is
deposited after filling the pay in slip. The initial deposit amount requirement varies with the
nature of account.
FILLING THE CHEQUE BOOK REQUISITION:
After depositing the amount the requisition slip is filled. Against this requisition slip
the cheque book is issued after verifying the signature of the applicant. Every cheque of the
booklet is stamped with the account holder’s name. The cheque book issued contains a
requisition slip for future use. Record of cheque books issued is maintained in “CHEQUE
BOOK ISSUE REGISTER”.
SCANNING OF SS CARD:
The SS cards are scanned by the Cash Department and entered into the system for
future reference.
LETTER OF THANKS:
After opening the account two letters of thanks are typed on letterhead of BAL. One is
mailed to the account holder and the second one is sent to the introducer. “This is done to
keep a check on fake introduction”
RECORDS OF APPLICATION FORMS:
All the application forms are kept in record in numerical order.
PHOTO ACCOUNT:
In case the signatures of applicant are shaky or in Urdu or he/she uses thumb
impression a “Photo Account” is opened. In this case a passport size photograph is posted on
the SS card as well as form. All the cheques are to be signed in the presence of a BAL
official.
FORM B:
In case of misplacement of cheque book “Form B” is filled. The signatures are verified. A
new cheque book is issued after canceling the old one. A fee of Rs.100 per booklet is
charged. In case of foreign currency account no fee is charged.
CHANGE OF ADDRESS OR TELEPHONE NUMBER:
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If the account holder has to change the address or telephone number he can do so on
giving an application on the printed form. The application is filed after making the
changes.
CHANGE OF SIGNATURES OR SIGNATORIES:
The account holder gives an application. A new SS card is issued and after getting the
new signatures of the account holder it is attached to the old one and kept in record. In
case of partnership or company a request signed by all partners or board resolution is
required.
STEPS FOR OPENING ACCOUNTS:
After receiving above mentioned documents from customers, steps for opening
accounts are:
a. Account opening form: is filled up (this form contains all the detailed
information about the customer).
b. Specimen signature card: is filled up and required signatures are taken.
c. For issuing cheque book signatures are taken on cheque book requisition slip.
d. In case of change signature from NIC, undertaking perform is assigned by
customer.
e. Online transaction Performa: is filled up.
o Maintaining minimum average balance of Rs.100, 000.
o No transaction is to be made for greater than Rs.25, 000.
o For any transaction of greater amount .02% will be charged.
f. If account holder is unable to signature his/her photo account is opened, thumb
impressions are taken instead of signatures in the Performa of picture account
and pasted his/her two passport size photos in specimen signature card and
account opening form.
g. In case of partnership account filled up a Performa of partnership
account.
h. In case of corporate account filled up a Performa of corporate account.
i. All the documents are attached with account opening form.
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j. All the details of customer is entered in computer (and as well as a scanned
copy of specimen signature card is also saved.)
k. While opening a new account a KYC (Know Your Customer) form is filled up
for each customer. This is a form which contains all the detail of customer and
is filled up to keep record of customer in one page.
l. Account number is given.
BANK ALFALAH ISSUES THE FOLLOWING CHEQUEBOOKS
Saving account - 25 leaves Current account - 50 leaves Current account - 25 leaves
ATM CARDS:
Procedure is:
ATM cards form and Hillal card Performa are filled up and assigned by customers,
(one copy of original CNIC with clear signatures and picture is required from
customers).
Then signatures of customers are verified by officers.
After signature’s verification submission summary of ATM cards is prepared.
ATM forms, Hillal Performa and submission summary are then sent to area office.
ATM cards are prepared and TCS to customers within a month
BANK’S STATEMENT:
If customer wants to take his/her bank’s statement (record of customer’s activities in his/her
account) he/she is filled up a Performa for the issuance of bank statement.
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My Experiences I worked in ACCOUNT OPENING DEPARTMENT for 6 days. During this short period l
learnt about the complete procedure of account opening from the point of issuance of
account opening form to the closing of account as given above. I learnt about various
stamps used in the bank. I filled number of application forms and also worked on the
previous records of Dormant Accounts, Stop Payments, Verisys etc.
I got this all above information from Mr Tanveer Sarwar. He was very co-operative and
helpful. He taught everything in a very friendly atmosphere. It was a very nice
experience to work in this department.
Remittances Department
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Transferring of funds from person to person, and from place to place, constitute the concept
of a remittance. Remittance is very important service provided by banks to customer as well
as non-customer. It is not a free service hence is a continuous source of income for the bank.
PARTIES TO A REMITTANCE
1) REMITTER
One who make a remittance. He comes to the issuing or originating branch, ask for a
remittance to be made, and deposits the money to be remitted. The bank charges him for the
remittance. He may or not be the bank’s customer.
2) REMITEE
Also sometimes called the beneficiary, or the payee. The person to whom the
remittance is made. The one who receives the payment.
3) ISSUING BANKThe bank that affect the remittances, through the Demand Drafts, Telegraphic
Transfer, or Mail Transfer.
4) PAYING BANKAlso known as the drawee branch. The branch on whom the instrument is drawn. It
has to make the payment. (usually located in a different city or country)
Remittances is fund transfer either in local or foreign currency which can be effected by way
of a TT (telegraphic transfer) and DD (demand draft) etc.
MODES OF TRANSFERING FUNDS IN REMITTANCES
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1) Demand Draft
2) Telegraphic transfer
3) Mail Transfer
4) Pay Orders
5) Pay Slip6) Rupee Traveler Cheque
1) DEMAN DRAFT
Demand draft is 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 to or to the order of a specified person.
2) TELEGRAPHIC TRANSFER T.T
Transfer of funds from one branch to another branch of the same bank or upon other
bank under special arrangements for the payment to the beneficiary through Telegram
/ Telex / Fax is called a Telegraphic Transfer (TT).
3) MAIL TRANSFER
Transfer of funds from one branch to another branch of the same bank within
or outside the city or upon other bank under special arrangement for the payment to
the beneficiary through Mail/ Courier services is called MAIL TRANSFER.
4) PAY ORDER
o Payment order is meant for bank’s own payments but in practice these are
also issued to our customer for making payments.
5) PAY SLIP
Pay slip is for payment of branch expenses.
CLEARING:
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It is the procedure for payment and collection of instruments lodged inward or outward through “State Bank of Pakistan. It is the transfer of funds from one branch of bank to the other branch of the same bank or the other bank on which the instrument is drawn, without involving cash through State banks clearing house. The procedure of clearing is facilitated by NBP (NATIONAL BANK OF PAKISTAN) on the behalf of State Bank of Pakistan The clearing procedure requires 2 days for completion if it is outward.
CLEARING can be of two types:
1) OUTWARD CLEARING:
All the instruments (i.e. cheques, pay orders, travelers cheques, demand drafts), which are
originated by some other banks, and are presented to the BAL are included in outward
clearing.
2) INWARD CLEARING:
All the instruments, which are originated by BAL and are presented for payment to the bank
by NBP are part of inward clearing.
Steps For Inward Clearing
Following steps are taken for inward clearing
1. The clearing dept. officer along with the NIFT/Clearing Schedules attached receives
cheques from NIFT.
2. Cheques are sent separately to the concerned dept.
3. The designated officer verifies all particulars from the instruments and the system for
sufficient balance etc. if any technical faults are found; the officer sends back the
instrument with a memorandum stating the reason for return.
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3-a. A copy of the memo is retained as record.
4. If no discrepancy or technical fault is found, the officer at the system posts the cheques
into the system.
5. Accounts are adjusted accordingly.
6. Cheques returned data is entered into the “O/W return of Inward Clearing” register. This
register reflects particulars such as:
Date
Account no.
Cheque/bill no.
Drawn on
Amount &
Reason
6-a. returned cheques are given back to NIFT/Clearing Rep. from where they are delivered
back to the original source.
FLOW CHART
1.Cheques received from NIFT/Clearing house
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Yes
No
OUTWARD CLEARING
Steps for outward
Cheque drawn by non-BAL customers in favor of BAL customer and deposited at one of our
branch. If cheque dishonored it will be treated as return.
2.
Cheques are sent separately to relevant personnel
Any technical faults noticed
3.
Cheques are sent to clearing dept. with memo
4.
CHEQUES posted into a system
5.
Returned cheque data entered into a register
4-a.
Accounts adjusted accordingly5-a.
Returned cheques are given back to NIFT
3-a.
Copy of memo is retained for record
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Steps For Outward Clearing
Following steps are taken for outward clearing.
1. Customer approaches the counter with the instrument and fills in the pay-in-slip at the
counter.
2-3. Cheques and pay-in-slips bear handed over by the customer to the designated officer at
the counter. After verification officer affixes crossing clearing stamp on the instrument.
3-a. The counter slip is handed over to the customer, for record and reference.
4. The officer feeds the data into system. The posting no (OBC #) thus assigned is written at
the back of the cheque and pay in slips.
5. The instruments are received back by the clearing dept. after approval, where they are
arranged in bundles of 100 each. A ticket of NIFT is filled with the total amount of the
bundle is also attached with the same. The bundle is also handed over to NIFT.
FLOW CHART
1.
Customer approaches the clearing counter
2.
cheque and pay-in-slip, are handed over to the clearing personnel
3.
Crossing stamps are affixed on the instruments
4.
Data is posted in the system
5.
cheques in bundles, NIFT ticket sent to NIFT
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STAMPS ON CHEQUES MEANT FOR CLEARING:
3-a.
Counter receipt of pay-in-slip is handed over to the customer.
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CROSSING STAMP:
It is used on all types of cheques. It shows the Branch name of the Bank.
CLEARING STAMP:
It is used on the front side of the cheque and it indicates the presenting date of the
cheques. If the cheques is dishonored and deposited again for clearing, the clearing stamp is
used again with new date of presenting. A cheque cannot be presented without clearing
stamp.
ENDORSEMENT:
It shows that cheque is meant for outward clearing “Payee’s account only” is to be
credited.
Collection:
OUTWARD BILLS FOR COLLECTION-OBC
INWARD BILLS FOR COLLECTION-IBC
It is facility given to customers for collection of their outstation checks. The checks undergo a
process of clearing. Collection involves:
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Outward Bills For Collection:
The process is as follows:
All of the outstation checks become a part of “Outward Bills For Collection”.
These checks are given OBC numbers (which is a serial number) from “OBC
REGISTER”
Information relating to the check is entered in the register such as DATE, CHECK
NUMBER, BANK ON WHICH CHECK IS DRAWN, and AMOUNT OF CHECK
etc.
These checks along with “OBC FORWARD SCHEDULE” are sent to the cities
where the banks are located on which these checks are drawn. All of the checks are
forwarded to the MAIN BRANCHES of BAL in the respective cities.
If a check is meant for a city where BAL has no branch then it is directly forwarded to
the branch of bank on which it is drawn.
For all of the checks forwarded following entry is passed.
CUSTOMER LIABILITY DEBIT
BANKERS LIABILITY CREDIT
The entry is reversed on realization.
After the realization of checks, a check along with credit advice is mailed to the concerned branch, which serves as it debit voucher.
They are asked to respond by debiting the BAL MAIN BRANCH HO ACCOUNT maintained with them.
There are 4 copies of credit advice:
i. ORIGINAL COPY
ii. RESPONDING COPY
iii. OFFICE COPY
Original and responding copies are send along with the checks to the concerned branches.
Inward Bills For Collection:
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The process is as follows:
All of the checks that are received from other cities become a part of “INWARD
BILLS FOR COLLECTION”.
Each check is given “IBC NUMBER” (which is a serial number) from “IBC
REGISTER”.
Information of a check received is entered in the register such as: DATE, CHECK NO., PRESENTED BY, AMOUNT, DATE OF PAYMENT, INITIALS, REASON OF RETURN, OTHER REMARKS, NAME OF BANK ON WHICH CHECK IS DRAWN.
A credit voucher is printed for each check.
These checks are lodged in clearing and the following is passed:
STATE BANK DEBIT
SUNDRY CREDITORS-IBC CREDIT
On the realization when checks are returned from SBP following entry is passed:
SUNDRY CREDITORS-IBC DEBIT
HEAD OFFICE CREDIT
Records in the register are regularly updated and on realization after posting in thecomputer the outstanding amounts are encircled in the register.
Stamps for collection: Bank Alfalah crossing stamp, OBC no. stamp and Payees A/c only stamp.
My ExperiencesI worked in Bills / Remmitences for 6 days. During this time I realized the importance of this
department. Reputation of the bank largely depends upon the efficiency and courteous behavior of this deparment.
Miss Sana (Remittance officer) and Sir Imran Yaseen on Clearing and Collection,they
were very helpful and I learned about general banking from them. They helped me a lot and
gave me the above-stated information regarding remittances and other functions of the Cash
Department. With the guidance of Miss Sana I learned how to make pay orders and Demand
Drafts as well as how cash is deposited and how withdrawal is managed. Sir Imran told me
about the whole process of clearing and collection.
They have a busy routine. They are on the front line and there is a heavy responsibility on
their shoulders as they deal with heavy amounted cheques. They took out time from there
busy schedules to explain to me the working of department
Accounts Department
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It is the most important department of a bank. One can have a complete view of the functions and performance of bank from the accounts. The department is responsible for:
I. Types of Statements:
This department carries four types of statements:
a. Statement Of Affairs:
These are daily transactions and involve:
Total issued advances,
Car financing investment,
Loans,
Total foreign cash,
A to Z assets and liabilities of bank.
b. Statement Of Accounts Activity:
Any transaction held by any account holder in Pakistan such as:
Current and saving cash cheques (debit),
Current and saving cash deposits (credit),
Current and saving transfer cheques (debit),
Current and saving clearing cheques.
c.Transfer Register:
Transfer register is issued instead of vouchers by the credit and car financing department when they received more then ten installments in a day.
d.GL(general ledger):
This type of statement is includes:
Vouchers of Sundry creditors and debtor,
DD (demand draft) issued,
Vouchers of expenditures,
Voucher of pay order,
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Vouchers of income,
Vouchers of letter of credit and bill for collection,
Vouchers of other assets etc.
All above mentioned statements on daily basis are check from accounts department as its responsibility and for that purpose first of all these statements are received from IT department, all the vouchers (debit and credit) of accounts opening form accounts opening department. DD, pay order, clearing cheques etc are received from clearing department. Cash cheque, online cheques etc are received from cash department and so on.
My Experience
Usually the internees are sent to Accounts after rotation from the whole bank because the functions performed by “Accounts” is related to all of the other departments. One can have a complete picture of the whole bank by sitting in “ACCOUNTS”. From this perspective it was a knowledgeable experience for me.
I worked for about 8 days in Accounts. In this short period I learnt a lot not only about the “Accounts” but also various other activities of the Bank. Muhammad Tahir Malik who is the incharge of the Accounts Department was very helpful and co-operative.
I learnt about various functions of the Accounts. He was kind enough to take out time from his busy schedule to teach me various concepts. He was responsible for “Activity Checking” which is a tiresome job and I helped him along with other interns in doing this task during the period of my internship.
Customer Service
In customer service department customers are provided with all the necessary information regarding the Bank and products it is offering. Customer service officer also help out the customers in filling different slips (cash deposit slips, online cash deposit slips, receipt for cheque deposit, credit card deposit slip, DD applications and pay orders). It is also the responsibility of customer service officer to attend the calls and provide information to the customers about their accounts i.e: amount present in it, any new online transanction deposited or any withdrawals. First greeting counts a lot, so CSO should be courteous and cooperative. He/She should have a serving attitude so that customers feel honored everytime he calls or come personally.
My Experience
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I worked in customer service department for 6 days. Here I learned how to greet the customers and how to communicate with them in a proper way. I learned to provide complete information without delay and helped out the customers in filling different applications and forms according to their requirements. Sometimes there was too much crowd in the Bank, I learned how to manage things in such a situation. It was really a good experience.
Credits Department
Purpose of Credits:
Earnings of a bank are dependent on CREDITS, because:
A bank receives (borrows) deposits. It pays cost on these deposits.
On the other hand bank lends the deposits to borrowers and charges interest on the lending. This function is performed by CREDITS in any bank.
Importance of Credits:
CREDITS is the most important department of a bank. Performance of all other departments is dependent upon “Credits”. It attracts corporate accounts, as a company prefers to do import and export business from the banks from where it is availing limit (credit) facilities.
Risk Involved In Lending:
Though lending is main source of earnings for any bank but it is risky as well. Whenever money is advanced to any customer there is always a risk involved of default. To minimize the risk involved BAL gives loans to credible customers.
Sub Division of Credits:
CREDITS is further sub divided into two sections:
CREDITS-MARKETING
CREDITS-ADMINISTRATION
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The above-mentioned two sections perform the overall activities of credits. Role of each
section is discussed below:
Credit marketing
Marketing personnel is responsible for attracting customers to bank for advancement of loan facilities. They must have complete information of trends in the industry. However several precautions are followed to give loans to only credible customers, as the aim of bank is to recover the money at time and through earnings of the client and through liquidation of securities.
BAL always prefers to give loans to credible customers. For this BAL requires information about:
Directors.
Viability of his business
Production facilities
Market reputation
Market value of the product
Capabilities of Marketing, Finance, and Administration Department.
CREDIT LINE PROPOSAL: A CLP is prepared on the basis of above facts. It is forwarded to HEAD OFFICE. If HO is satisfied then it gives a “CREDIT ADVICE”.
OFFER LETTER: On the basis of credit advice the branch prepares an “offer letter”. This letter gives a detail of the terms and conditions such as duration of facility, securities, mark up etc.
After fulfilling all the formalities loan is advanced.
After the disbursement of loan marketing personnel keeps track of every activity of the party. They continuously observe the financial statements of the customer.
Detail of credit line proposal prepared by marketing personnel is given below:
Credit Administration
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It is the second section of CREDITS. It performs very important functions for the bank. After the approval of CREDIT LINE PROPOSAL, it comes to ADMINISTRATION SECTION. The Administration decides the terms and conditions regarding securities offered against the facility given to a client. It is a highly responsible task because in case of default liquidation of securities is an important source for bank for recovery of loan amount. Other important functions such as adjustment of loans is also handled by administration section.
My Experience
I worked in this department for 2 days. I learnt about the whole procedure from first application to credit disbursement from Mr Asif ur Rehman. He was very busy because most of the time he had to go outside the bank to meet the customers at their place, even then he found some time for me and gave me briefing about the activities going on in Credits department.
M ARKETING M IX
Marketing Mix is defined as:
“The set of marketing tools that the firm uses to pursue its marketing objectives in the target
market”.
Two basic pillars of this basic concept are:
TARGET MARKET
Industries like Nestle Pakistan, Unilever Pakistan Limited, Colony Sugar Mill, are contributing much
to the Pakistan GDP. Many flour Mills, cotton ginning and oil mills,seed processing units/factories
and ghee mills exist in Khanewal and Bank Alfalah is one of the most important and active bank
among other banks of the city which are handling the accounts of these industries. Major customers of
the bank are Business Men, Factories, Flour Mills, Petrol Pumps, CNG Stations, Cotton Ginning and
Ghee Mills, Telecom Franchises and many other customers.
CONSUMER NEEDS
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Assessment of the needs and wants of consumers is an on going process at Bank Alfalah, which helps
it to continually develop new products and services. At BAL, the philosophy is that the bank should
go to all possible limits to satisfy the customer needs.
FOUR P’S OF MARKETING MIX
Marketing Mix is a Combination of Four P’s: Product, price, place and promotion.
BAL four P’s are given as under:
Category Description
Product/Service Different Service Provided by Bank
Price Interest Commission and Bank Charges Received
Promotion Promotion of Services Through Advertisement
Place Outlets of Services i.e. Network of its Branches
FIRST –P
PRODUCTS/SERVICES
Bank Alfalah presents a range of quality services to its reputable customers. BAL provides a wide
range of products/ services to its customers, which are own their examples.
Here is an overview of different products and services formulated by Bank Alfalah.
-ACCOUNTS OFFERED BY BAL
One of the basic functions of a commercial bank is to receive deposits and to honour cheques.
Accounts offered by the banks for the deposits of customers constitute the basis of their operations
and develops the basic relationship between a banker and customer.
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Bank Alfalah has formulated a number of accounts for the deposits of customers, with unique
features, to facilitate them. These are:
Deposit accounts are:
Current Account
PLS Savings Account
Royal Profit
Alfalah Kifayat
Alfalah Mahana Amdan
Alfalah Education
SECOND -P
11.2-PRICE“The amount of money the customers pay for the product of a company”.
BAL provides different products and services to its customers that have been discussed in previous
section. Pricing of products means the commission to be paid by the customer in return of services
provided by the bank. The commission paid for the services mainly includes:
Mark up/ interest
Bank charges
Fees and bank commission etc.
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These charges and commissions are prescribed on Schedule of Bank Charges (SOC) that
keeps on changing time-to-time, and issued by the bank periodically (generally after six months).
THIRD –P
11.3 -PROMOTION
“All activities that a company undertakes to communicate and promote its products”.
These days every one is facing pressure of competitors. In this world of growing competition, the
only way to survive and grow, for an organization, in the market place is the proper marketing and
promotion of its products. Same is the case with banking companies. There is large number of
foreign and local banks working in the country and it has been noticed that they are emphasizing
much on their marketing strategies. In this scenario, the key for a bank to succeed and attract its
customers is adequate promotion of its products & services. The bank can attract and retain its
customers through:
Direct Marketing
Advertisement...
Sales Promotion
Public Relations
The most prominent and important way to attract a large number of customers is the advertisement
of bank and its products/services. Bank Alfalah has adopted different approaches for the
accomplishment of this purpose.
Alfalah has adopted a different type of promotion strategy. Its strategy is to provide services to the
people from an outlet / branch which carry more attention and easy access by the people and make
the building in such a design that has new look and has not already been constructed. By following
this strategy, BAL has constructed all the branches in all the cities as new building. Not a single
branch in the country is in old shape design or building. Mostly buildings are located in the heart of
the city/business areas with adequate parking facilities and ventilations arrangements. Its design is
much attractive and people feel satisfaction by having an account and dealing with Bank Alfalah.
otion.
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Construction of Shaahdin Manzil as main branch Lahore is going to be the revolutionary step for BAL.
It would not serve just as a main branch only, but it would also be a great source of ever growing
marking and promotion of bank.
Also, some fascinating advertisements have been printed on Daewoo City Busses, which serves as a
dynamic source of marketing.
However, one drawback or shortcoming is that, BAL has formalized a lot of products and services for
its customers, even more than other commercial banks, but advertisement on electronic media has
not been seen as much as it should be. Keeping in view these threats; Bank Alfalah should emphasize
more on its advertisement.
Along with the advertisement, the bank is providing personal services to its clients with maximum
security as other banks provide. Bank also encourages the public relation policy of marketing.
Some brochures and promotional material has been printed but it is distributed mainly through the
clients who visit the branch for their day-to-day business or through the customers who come to get
information about new schemes launched by the bank. Brochures of few main products of BAL are
also attached at the end of the report for ready references.
FOURTH -P
11.4-PLACE
“The activities a bank undertakes to make products and services easily available or accessible to
the customers”.
Bank Alfalah’s objective has been to expand its branch network to meet clients’ needs. Bank is well
positioned and geographically poised, to cater for increased business demands, from its existing
potential clientele. During last year under review, BAL opened 39 new branches, spread all over
Pakistan covering major business centers and principle cities. Bank plans to add more branches to his
growing network in the ensuing years.
At present, BAL has opened all its branches at commercial and business areas or near to commercial
areas so that the customers or clients face no problem in reaching the bank.
Head Office of BAL is situated in Karachi. The detail description of its branch network is as follows:
KARACHI
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Main Branch
B.A. Building,
Chundrigar Road.
Cloth Market Branch
Laxmidas Street,
Cloth Market
Clifton Branch
FL-10, Block-5,
KDA Scheme #5,
RAWALPINDI
Mall Road Branch
B.A. Building, 8-The Mall
MULTAN
62-A, Abdali Road,
Multan
LAHORE
LDA Plaza Branch
Kashmir Road, Lahore.
Gulberg Branch
125-E/I, Main Boulevard
Gulberg III
Defence Branch
G-9, Commercial Zone,
Phase-1, Main Boulevard, DHA
Lahore Cantt
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PEST Analysis Political factors
How to government intervene in the economy specifically , political factors include areas
such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political
stability.
Overall economy is suffering form political instability banking sector also face some
problems such as government impose tax on deposits as well as on withdrawal of money .
Economic factors
Include economic growth, interest rates, exchange rates and the inflation rate. These factors
have major impacts on how businesses operate and make decisions. Exchange rates affect the
costs of exporting goods and the supply and price of imported goods in an economy.
The major source of bank’s income is credit and this sector is badly affected due to increasing
mark up on lending due this people hesitate to take loan from banks and this activity become
cause of cut down business which badly affected economy.
Social factors
Include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates.
Companies may change various management strategies to adapt to these social trends ,with
the passage of time and due to social factors banks are more conscious about employees.
They are the assets of a firm they care their heath and provide safety and different assistance
Technological factors
factors include technological and environmental aspects, such as R&D activity, automation,
technology incentives and the rate of technological change. Technological shifts can affect costs,
quality, and lead to innovation. Banking sector take fully advantage from technology such as
ATM ,online transferring of money now any one can transfer money any where just on a click.
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Ratio Analysis
A) REGULATORY RATIOS
ADVANCES TO DEPOSIT RATIO
This ratio is calculated by dividing the amount of advances by deposits. This ratios
shows the relationship of advances to deposits. It means that what is the percentage of
advances to deposit of a bank. Whether the advances are enough to pay its liabilities.
Formula
Advances
Deposits
2010 192,671,169
300,732,858
= 64.07 %
2009 171,198,992
273,173,841
= 62.67 %
2008 149,999,325
239,509,391
= 62.63 %
2007 118,864,010
222,345,067
= 53.46%
Interpretation
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This ratio shows the increasing trend in advancing. Advances should be in compliance with
deposits and in case of excess deposits idol cash becomes a non earning asset which is non
productive.
CASH TO DEPOSIT RATIO
The ration is calculating by dividing the cash on hand and cash with other banks by total deposits of the bank. This ratio shows the percentage of cash available as compared to deposits . This ratio tells that at any time if cash is needed to meet the liabilities of deposit liabilities to what percentage it is available.
Formula
Cash on hand and cash with other bank
Total Deposit
2010 54,268,378
300,732,858
= 18%
2009 47,817,116
273,173,841
=18%
2008 40,591,312
239,509,391
= 17%
2007 34,511,439
222,345,067
=16%
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Interpretation
This ratio is on increasing trend which is unfavorable. This shows that bank is not proper utilizing its deposits. on the other hand it is safety cushions depositors and investors.
B) CAPITAL ADEQUACY RATIOS
Equity to Assets
This ratio is calculating by dividing shareholder’s equity by total assets.
Formula Shareholder’s equity
Total Assets
2010 14,608,523
348,990,764
= 4.19%
2009 13,766,673
328,895,152
= 4.19%
2008 10,572,605
275,685,541 = 3.84%
2007 6,738,063
248,313,793
= 2.71%
Interpretation
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This ratio shows continuously increasing trend. Increasing equity to assets ratio means that
company’s debt is decreasing and it is getting self sufficient.
Equity To Deposits
This ratio shows the percentage of shareholder’s equity to total deposit. This ratio is
calculating by shareholder’s equity by total deposits of the bank.
Formula Total Shareholder’s equity
Total Deposits
2010 14,608,523
300,732,858
= 4.86 %
2009 13,766,673
273,173,841
= 5.04%
2008 10,572,605
239,509,391
= 4.41%
2007 6,738,063
222,345,067
= 3.03%
Interpretation
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This ratio shows increasing trend but decrease in 2008 which decrease from 5.04 to 4.86.
This ratio is getting better and better because of the enhanced repaying ability of the bank but
on the other hand if your deposits are more as compared to your equity it shows your
customers’ trust in your organization.
C) EFFICIENCY RATIOS
Deposit to Total Liabilities
The ratio is calculating by dividing total deposits by total liabilities. This ratio shows
the percentage of total deposits to total liabilities which is the major liability of the
bank.
Formula Total Deposits
Total Liabilities
2010 300,732,858
331,946,025
= 90.60%
2009 273,173,841
312,675,308
= 87.37%
2008 239,509,391
263,443,596
= 90.91%
2007 222,345,067
240,849,667
= 92.32%
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Interpretation
This ratio increases in 2008 than 2007 the ratio was greater in 2005 that is positive
sign that bank has more funds to invest. Bank is in sound position to pay
liabilities.
INVESTMENT TO TOTAL ASSETS
This ratio is calculating by dividing investment by total assets. This ratio shows the
percentage of investment to total assets.
Formula Investment Assets
2010 75,973,238
348,990,764
= 21.77%
2009 88,491,564
328,895,152
= 26.91%
2008 56,502,210
275,685,541
= 20.50%
2007 57,416,255
248,313,793
= 23.12%
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Interpretation
The investment to total asset indicates the portion of investment in bank’s total assets, in
2007 it is increasing which is not a favorable trend. This shows that management does not
work properly and efficiently and not utilizing the assets fully by investment. In 2008 when
the ratio decrease from 26.91 to 21.77 it mean management is utilizing the asset by
investment.
LEVERAGE RATIO
Debt Ratio
It shows the percentage of total funds obtained from creditors. The debt ratio compare total liabilities to total assets.
Formula Total liabilities
Total assets
2010 331,946,025
14,608,523
= 0.95
2009 312,675,308
13,766,673
= 0.95
2008
263,443,596
275,685,541
= 0.96
2007 240,849,667
248,313,793
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= 0.97
Interpretation
This ratio shows decreasing trend which is favorable for bank. Creditor would rather
see a low debt ratio because there is greator cushion for creditor losses if the firm goes
to bankrupt.
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DEBT EQUITY RATIO
Debt equity ratio is important to measure of solvency since a high degree of debt in capital structure to make it difficult for the company to meet interest charges and principal payments at maturity.
Formula Total liabilities
Share holders equity
2010 331,946,025
14,608,523
= 22.72
2009 312,675,308
13,766,673
= 22.71
2008 263,443,596
10,572,605
= 24.92
2007
240,849,667
6,738,063
= 35.74
Interpretation
This ratio shows decreasing trend which is favorable for bank , but it is same in 2007
and 2008.
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TIME INTEREST EARNED
The time interest earned ratio reflects the number of times before tax earning cover interest expense. It shows how much of a decline in earnings a company can absorb.
Formula Earning before interest& taxes interest expese
2010 1,794,720
20,331,194
= 9 times
2009 4,535,552
16,620,963
= 27 times
2008 2,565,945
15,232,886
= 17 times
2007
2,563,290
7,204,992
= 36 times
Interpretation EBIT tells about how many time a company is able to pay its interest .in 2005 it was
36 time that was good but decrese in 2006 then again increase in 2007 from 17 to 27
times but it much poor in 2008 that is just 9 times.
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D) PROFITIBILITY RATIOS
Net Profit Margin
This ratio is calculating by dividing profit after tax by total income. This ratio shows that
what is the percentage of net profit to the total income.
Formula Profit After Tax
Total Income
2010 1,301,301
36,292,010
= 3.59%
2009 3,130,229
31,822,337
= 9.84%
2008 1,762,691
24,416,109
= 7.22%
2007 1,702,094
14,515,344
= 11.73%
Interpretation
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This ratio shows decreasing trend which is not favorable this shows management
work inefficiently. Management shout make strategy to increase profit ratio to operate
business with great success.
OPERATING PROFIT MARGIN
This ratio is calculated by dividing the operating profit by total income. This ratio
shows that what is the percentage of operating profit to the total income.
Formula Operating Profit Total Income
2010 1,794,720
36,292,010
= 4.95%
2009 4,535,552
31,822,337
= 14.25%
2008 2,565,945
24,416,109
= 10.51%
2007 2,563,290
14,515,344
= 17.66%
Interpretation
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Operating profit ratio shows the profits of a firm that earn on its income. It is is in
decreasing trend which is alarming situation for management.
GROSS PROFIT MARGIN
This ratio is calculated by dividing the gross profit by total income. This ratio shows
that what is the percentage of gross profit to the total income.
Formula Gross Profit Total Income
2010 15,960,816
36,292,010
= 43.98%
2009 15,201,374
31,822,337
= 47.77%
2008 9,183,223
24,416,109
= 37.61%
2007 7,310,352
14,515,344
= 50.36%
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Interpretation
Gross profit ratio shows the profits of a firm that earn on its income. It is is in
decreasing trend as compared to 2007 which is not good for management.
RETURN ON EQUITY
This ratio is calculating by dividing net profit by total equity. This ratio shows that
how much the company is earning on shareholder’s equity.
Formula Net Profit Total Equity
2010 1,301,301
14,187,598
= 9.17%
2009 3,130,229
10,252,368
= 30.5 %
2008 1,762,691
8,655,334
= 20.4%
2007 1,702,094
8,655,334
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= 19.7%
Interpretation
In 2008 the ratio is 9.17% while it was 30.5% in 2007. This shows that management
is not utilizing its equity in good way. So this is not favorable for bank.
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RETURN ON TOTAL ASSETS
This ratio is obtained by dividing net profit by total assets. This ratio shows that what
percentage of earning the company is attaining on total assets.
Formula Net Profit Total Assets
2010 1,301,301
338,942,958
= 0.38 %
2009 3,130,229
338,942,958
= 0.92 %
2008 1,762,691
261,999,667
= 0.67 %
2007 1,702,094
261,999,667
= 0.65 %
Interpretation
This ratio measure bank ability to utilize its assets to create profit by comparing profit
with assets generates profit. This ratio shows increasing trend but in 2008 it is
decrease from 0.92 to 0.38 this mean that management is not properly using its
assets.
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MARKET VALUE RATIO
A ratio used to find the value of a company by comparing the book value of a firm to its
market value. Book value is calculated by looking at the firm's historical cost, or accounting
value. Market value is determined in the stock market through its market capitalization.
Following are the market value ratios.
Earning per share
Formula Profit for the year Weighted average number of ordinary shares
2010 1,301,301
799,500.00
= 1.63
2009 3,130,229
799,500.00
= 3.92
2008 1,762,691
456,132.00
= 3.86
2007 1,702,094
434,208.00
= 3.92
Interpretation
EPS is almost same is same in 2005 to 2007 but decrease in 2008 from 3.92 to 1.63 so the
value of company is going to down.
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PRICE /EARNINGS RATIO
A measure used in the financial world to illustrate the quantity of something for one share of
a company's stock. Such measures are used in the analysis and valuation of a company.
Formula Market Price Per Share
Earnings per share 2010 10
1.36 = 7.35
2009 10
3.92
= 2.55
2008 10
3.86
= 2.59
2007 10
3.92
= 2.55
Interpretation
A valuation ratio of a company's current share price compared to its per-share
earnings.Earnning per share is in increasing trend which shows the company worth .
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Trend and Vertical AnalysisTrend Analysis of Balance Sheet
Trend analysis is based on the idea that what has happened in the past, gives traders an idea
of what will happen in the future. Following five years trend analysis shows the position of
company.
Bank Alfalah LimitedBalance sheet (Trend analysis)
As at 30th juneRupees '000'
2010(%) 2009(%) 2008(%) 2007(%)Assets
Cash & balance with Treasury Bank 131.81
118.70 112.34 100
Balance with other banks 222.18
189.23 131.08 100
Landing to financial institutions 12.26
12.76 46.05 100
Investments 132.32
154.12 98.41 100
Advances 162.09
144.03 126.19 100
Other Assets 233.39
156.12 146.25 100
Operating fixed Assets 208.05
180.09 158.65 100
total assets 140.54
132.45 111.02 100
liabilities
Bills payable 92.47
110.85 82.80 100
Borrowing from financial institution 234.25
363.27 143.63 100
Deposits & other accounts 135.26
122.86 107.72 100
Sub-coordinated loans 79.77
99.92 99.96 100
Other liabilities 216.32
182.61 139.96 100
Deferred tax liabilities 43.07
285.05 396.92 100
total liabilities 137.82
129.82 109.38 100
NET ASSESTS 164.01 100
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228.36 217.30 Presented BY
Share capital 266.50
216.67 166.67 100
Reserves 171.03
130.45 148.53 100
Unappropriated profit 182.71
257.14 149.62 100
share holder equity 216.81
204.31 156.91 100
Surplus on revluation of assests-net of tax
335.54
337.87 229.92 100
Note: The Balance sheets has been placed in Annexure “A” which has been used to calculate
trend analysis.
Assets
The position of the assets is as cash and balances are increased in 2010 other assets ,fixed
assets also increased which is good for bank image but investment decrease better than
previous year and year 2010 which show that assets are not utilizing properly. This ratio is
higher which invite the attention of management to utilize the assets for better return.
Liabilities
The bills payable and borrowing from others decline which shows the sound position of firm
but the problem is that deposits increase which show the customer trust on bank but it depict
not proper utilization of deposits which decrease profits.
Equity
Share capital, reserve and share holder equity increase which show firm paying back to its
debtors but profit is in decreasing trend because not proper utilization of funds.
Vertical analysis of Balance Sheet
A method of financial statement analysis in which each entry for each of the three
major categories of accounts (assets, liabilities and equities) are assigned equal to 100
percent the main advantages of analyzing a balance sheet in this manner is that the
balance sheets of businesses of all sizes can easily be compared. It also makes it easy to
see relative annual changes in one business.
Bank Alfalah Limited
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Balance sheet (vertical analysis)As at 30th June
Rupees '000' 2010(%) 2009(%) 2008(%) 2007(%)Assets Cash & balance with Treasury Bank 9.37 8.95 10.11 9.99Balance with other banks 6.18 5.59 4.62 3.91Landing to financial institutions 0.95 1.05 4.52 10.89Investments 21.77 26.91 20.50 23.12Advances 55.21 52.05 54.41 47.87Other Assets 2.58 1.83 2.04 1.55Operating fixed Assets 3.95 3.62 3.81 2.67Total assets 100.00 100.00 100.00 100.00liabilities Bills payable 1.00 1.27 1.13 1.51Borrowing from financial institution 3.95 6.50 3.06 2.36Deposits & other accounts 86.78 83.68 87.41 89.80Sub-coordinated loans 0.74 0.99 1.18 1.30Other liabilities 3.26 2.92 2.67 2.11Deferred tax liabilities 0.06 0.42 0.70 0.20Total liabilities 95.78 95.78 96.14 97.28NET ASSESTS 4.92 4.97 4.47 3.01Presented BY Share capital 2.31 1.99 1.82 1.21Reserves 0.91 0.74 1.00 0.75Inappropriate profit 0.99 1.49 1.03 0.76Share holder equity 4.22 4.22 3.86 2.72
Note: The Balance sheets has been placed in Annexure “A” which has been used to calculate
vertical analysis.
Analysis
Assets
Balances with treasury and other banks increasing in 2010 and advances also increasing
which is a good omen for bank in this competition era but the firm basic purpose to earn
profit disturb due to decreasing investments so the management should take measures to
achieve core purpose of the firm.
Liabilities
Liabilities little bit increase deposits increase which provide safety cushion share holders
equity also increasing and firm paying debts but due increasing operating and other expenses
and not proper utilization of assets and fund firm loosing profit which is alarming situation
for firm.
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Bank Alfalah LimitedProfit & loss account(vertical analysis)
for the year ended 30th june Rupees "000"
2010(%) 2009(%) 2008(%) 2007(%)
Mark up/return/ interest earned 100.00 100.00 100.00 100.00
Mark up/return/ interest expensed 65.49 64.46 71.88 58.83
Net Mark up/ interest income 34.51 35.54 28.12 41.17
Provisions against loans and advances 6.56 9.20 -3.29 (3.28)
Bad debts written of directly 0.09 0.02 -0.01 (0.00)
Net Mark up/ interest income after provision 23.10 26.32 24.82
37.88
Dividend income 0.97 0.25 0.18 0.42
Other income 4.02 4.00 3.97 4.12
Total Non Mark up / interest income 16.90 23.42 15.22 18.52
Non Mark up / interst expense -
Other charges 0.40 0.04 0.20 0.17
Total Non Mark up / interest expense 34.22 32.15 27.93 35.47
Profit Before Taxation 5.78 17.59 12.11 20.93
Profit After Taxation 4.19 12.14 8.32 13.90
Profit available for appropriaation 19.90 23.18 17.34 21.13
In this analysis the total mark up /interest earned has been taken as base and then other
relevant accounts have divide on this.
Analysis
Mark up interest expenses slightly increasing in 2010 than 2009 but expense was higher in 2006 due to increasing its interest expenses the profit ratio decreasing due to higher expenses in operating activities the operating profit decrease and this situation is harmful to any firm because.
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It is a critical time for the firm has very low rate operating profit then how is able to pay taxes and other expenses. the firm has much decreasing profit before tax and after tax due to this its earnings per share also decreasing.
Bank Alfalah LimitedProfit & loss account(Trend analysis)
for the year ended 30th june Rupees "000"
2010(%) 2009(%) 2008(%) 2007(%)Mark up/return/ interest earned 253.51 210.54 173.04 100Mark up/return/ interest expensed 282.18 230.69 211.42 100Net Mark up/ interest income 212.53 181.74 118.18 100 Bad debts written of directly -5526.95 -1141.41 300.20 100Net Mark up/ interest income after provision 154.60 146.29 113.37 Non Mark up / interest income Dividend income 578.58 124.43 71.89 100Other income 247.08 204.25 166.76 100Total Non Mark up / interest income 231.23 266.18 142.15 100Non Mark up / interst expense Total Non Mark up / interest expense 484.61 52.91 138.67 100Profit Before Taxation 70.02 176.94 100.10 100 Profit After Taxation 122.38 211.57 93.13 100Profit available for appropriaation 122.38 211.57 93.13 100
Note: The Income statement has been placed in Annexure “B” which has been used to
calculate vertical analysis.
Critical Analysis
Mark up and money come from other general banking and by giving services to customer is
the source income of bank. We can analyze by the above mentioned analysis that income is
decreasing gradually by each year. On the other hand mark up / interest expenses and other
non mark up expenses increased by each year, the increasing trend in non mark up expenses
is much higher in2010than the previous years .The ratio of the expenses of the organization is
more than income. That is why company is losing its profit. The management is required
serious attention to reduce their expenses. There are number of employees who do not
contribute in the productivity of the organization. So these employees may be fired by
providing golden shake hand or retirement benefits. So by this way the salary expenditures
can be reduced. The firm can reduce expenses of refreshment the electricity expenses can
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also be reduce by use of fine instead of air conditions which are blowing all the working
time. So that the organization may go to profit side instead of bearing loss.
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SWOT ANALYSISSTRENGHTS
o BAL provides its customers a complete range of banking products and services
including retail banking, corporate and institutional banking, trade finance and
consumer finance.
o BAL has planned to institute major improvements in customer services and
internal systems to improve efficiency. It also intends to launch innovative
products. The bank is increasing resource mobilization through regular deposit
campaigns and accelerating the process of recovery of outstanding advances.
o The Management of ALFALAH Bank Limited (BAL), in order to further improve
the quality of service.
o Bank has very good financial resources.
o Bank has good brand name.
o Banks have competent human resource.
o Automated process and procedure.
o The services rate is competitive in market.
o BAL has attracted most of customers in Pakistan. BAL has attractive and good
Buildings.
o Bank is providing best services according to the requirement of the customers
WEAKNESS
o Smaller branch network
o Some management positons needed are not professional.
o Customers having accounts with small amounts are not given same services and
dealing given to those with high accounts.
o Swift facility is not available in all the branches.
o Human resource and marketing department is not available in all the branches.
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OPPORTUNITIES
o Business in market
o Branch network
o Technology
o Better and convenient services to employees and business class.
THREATS
o Growing global technological advancement.
o Emerging banks
o Innovative services of other banks
o Change in economic trend
o Change in international banking services
PROBLEMS IN BANK ALFALAH
Bank is facing a high tax rate, which affects its profitability and attractiveness
for new entrants.
Middle class and low income group have limited access to bank credit.
Weak internal controls, non-merit based recruitments and high administrative
costs affected the performance of bank.
No proper material of banking was provided during my internship.
The branch, where I did my internship is providing very few customer
services.
.
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Bank Alfalah Limited Annexure A Balancesheet
As at 30th june Rupees '000'
2010 2009Assets Cash & balance with Treasury Bank 32,687,335 29,436,378 Balance with other banks 21,581,043 18,380,738 Landing to financila institutions 3,315,500 3,452,059 Investments 75,973,238 88,491,564 Aadvances 192,671,169 171,198,992 Other Assests 8,989,186 6,013,097 Operating fixed Assests 13,773,293 11,922,324 Defferd tax Assets - 348,990,764 328,895,152 liabilities Bills payable 3,452,031 4,138,243 Borrowing from financial institution 13,690,222 21,230,697 Deposits & other accounts 300,732,858 273,173,841 Sub-coordinated loans 2,571,169 3,220,858 Liabilities against assest subject to finance lease - - Other liabilities 11,291,280 9,531,860 Deffered tax liabilities 208,465 1,379,809 331,946,025 312,675,308 NET ASSESTS 17,044,739 16,219,844 Presented BY Share capital 7,995,000 6,500,000 Reserves 3,166,056 2,414,833 Unappropriated profit 3,447,467 4,851,840 14,608,523 13,766,673 Surplus on revluation of assests-net of tax 2,436,216 2,453,171 17,044,739 16,219,844
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Bank Alfalah Limited Annexure ABalancesheet
As at 30th june Rupees '000'
2008 2007Assets Cash & balance with Treasury Bank 27,859,360 24,798,070Balance with other banks 12,731,952 9,713,369Landing to financila institutions 12,456,653 27,050,493Investments 56,502,210 57,416,255Aadvances 149,999,325 118,864,010Other Assests 5,633,051 3,851,529Operating fixed Assests 10,502,990 6,620,067Defferd tax Assets - -
275,685,541
248,313,793
liabilities Bills payable 3,091,135 3,733,124Borrowing from financial institution 8,394,130 5,844,389Deposits & other accounts 239,509,391 222,345,067Sub-coordinated loans 3,222,106 3,223,355Liabilities against assest subject to finance lease - - Other liabilities 7,305,496 5,219,666Deffered tax liabilities 1,921,338 484,066
263,443,596
240,849,667
NET ASSESTS 12,241,945
7,464,126
Presented BY Share capital 5,000,000 3,000,000Reserves 2,749,533 1,851,218Unappropriated profit 2,823,072 1,886,845
10,572,605
6,738,063
Surplus on revluation of assests-net of tax 1,669,340 726,063
12,241,945
7,464,126
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Bank Alfalah LimitedAnnexure B
Profit & loss accountfor the year ended 30th june
Rupees "000" 2010 2009
Mark up/return/ interest earned 31,046,583 25,783,871
Mark up/return/ interest expensed 20,331,194 16,620,963
Net Mark up/ interest income 10,715,389 9,162,908
Provisions against loans and advances 2,035,997 2,370,867
Provisions for diminution in the values of investment 1,479,062 -
Bad debts written of directly 28,298 5,844
3,543,357 2,376,711
Net Mark up/ interest income after provision 7,172,032 6,786,197
Non Mark up / interest income
Fee, commission and broketage income 2,539,321 2,429,599
Dividend income 300,943 64,722
Income from dealing in foreign curencies 914,845 474,510
Gain on sale of securities 424,220 2,059,793
Unrealized loss on revaluation of investments
classified as held for trading (181,571) (21,530)
Other income 1,247,669 1,031,372
Total Non Mark up / interest income 5,245,427 6,038,466
12,417,459 12,824,663
Non Mark up / interst expense
Administrative Expense 10,471,399 8,272,587
Provisions against off -balance sheet loligatons 28,582 6,959
Other charges 122,758
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9,565
Total Non Mark up / interest expense 10,622,739 8,289,111
1,794,720 4,535,552
Extra Ordinary/ unusual items - -
Profit Before Taxation 1,794,720 4,535,552
Taxation
1,730,051 1,726,810
(221,797) -
(1,014,835) (321,487)
493,419 1,405,323
Profit After Taxation 1,301,301 3,130,229
Unappropriated profit brought forward 4,851,840 2,823,072
Transferred from surplus on revalof fixed assests - net of tax 24,586 24585
Profit available for appropriaation 6,177,727 5,977,886
Rupees
Basic and diluted earning per share 1.63 3.92
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Bank Alfalah Limited Annexure BProfit & loss account
for the year ended 30th june Rupees "000"
2008 2007
Mark up/return/ interest earned 21,191,470 12,246,811
Mark up/return/ interest expensed 15,232,886 7,204,992
Net Mark up/ interest income 5,958,584 5,041,819
Provisions against loans and advances (697,690) (402,298)
Provisions for diminution in the values of investment - -
Bad debts written of directly (1,537) (512)
(699,227) (402,810)
Net Mark up/ interest income after provision 5,259,357 4,639,009
Non Mark up / interest income Fee, commission and broketage income 1,804,998 1,158,747Dividend income 37,393 52,014Income from dealing in foreign curencies 386,997 290,091Gain on sale of securities 180,751 239,551Unrealized loss on revaluation of investments classified as held for trading -27,599 23,163Other income 842,099 504,967
Total Non Mark up / interest income 3,224,639 2,268,533
8,483,996 6,907,542
Non Mark up / interst expense Administrative Expense 5,874,745 4,313,023Other provisions / write offs - 10,125Other charges 43,306 21,104
Total Non Mark up / interest expense 5,918,051 4,344,252
2,565,945 2,563,290
Extra Ordinary/ unusual items - -
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Profit Before Taxation 2,565,945 2,563,290
Taxation
476,226 592,635
(100,874) 1,037
427,902 267,524
803,254 861,196
Profit After Taxation/net income 1,762,691 1,702,094
Unappropriated profit brought forward 1,886,845 860,300
Transferred from surplus on revalof fixed assests - net of tax 26,074 24870
Profit available for appropriaation 3,675,610 2,587,264
Rupees
Basic and diluted earning per share 3.86 3.92
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SUGGESTIONS & RECOMMENDATIONS
The following are the suggestions that I have recommend for the Alfalah bank limited.
The behavior with the customers should be improved.
There is a great need of proper training of employee.
The branch should improve his position to attract more customers.
Also do marketing through internet
Try to establish effective communication between top-level management and
executive.
Effective training and qualified, dutiful and vigilant inspection teams are inducted per
force in all the bank.
The bank must have to apply the marketing strategies to attract the customers which
are depositors.
Management should distribute work equally among different employees. Some of the
employees are overburdened while some sections are overstaffed.
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Conclusion
The overall analysis indicating that the bank progress has mainly attained through
dedication of employees. We have to compare the ratios analysis which shows overall
performance of the Bank Alfalah Limited ,bank earned higher total income in 2008 as
compared to previous 3 years but net income decrease while deposits also increase the
cause of decrease in net income is higher operating expenses.
The overall profitability position of Bank Alfalah Limited in 2008 is not satisfactory.
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BIBLOGRAPHY
www.bankalfalah.com
www.investopedia.com
www.google.com
www.findfast.com
www.pakistaneconomist.com
www.pakistanbanks.org
www.dawn.com
www.nation.com.pk
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PURPOSE The internship report is submitted to the DEPARTMENT OF COMMERCE Bahauddin Zikriya University, Multan as the partial fulfillment of the requirement for the degree of M.COM.