Contents

Contents......................................................................................1 Introduction to Bank Alfalah limited..............................................3 Human Resource Assessment......................................................13 Experienced Professionals...........................................................14 Training.....................................................................................14 Benefits provided by Bank Alfalah...............................................14 Financial Analysis.......................................................................15
Balance Sheet of Bank Alfalah Limited................................................16 Income Statement of Bank Alfalah Limited..........................................17 Comments Analysis of Balance Sheet .................................................18 Comments Analysis of Income Statement:...........................................19

RATIO ANALYSES........................................................................20
Profibility Ratios................................................................................20 Debt Management Ratios...................................................................22 Liquidity Ratios.................................................................................23 Market Ratios....................................................................................24

Departments Worked During Internship.......................................25 Accounts Opening Department....................................................25

Current Account................................................................................25 Profit& Loss Saving Account...............................................................25 Basic Banking Account (BBA)..............................................................25 Royal Profit Account..........................................................................25 Kifayat Account.................................................................................25 Mahana Amdan Account.....................................................................25

Basic Requirements for Account Opening.....................................25 Internal Codes for Bank Alfalah Accounts.....................................26 Major Work Done by Account Opening Department.......................27
Account Opening...............................................................................27 Stop Payment....................................................................................27 Bank Statement and Bank Balance.....................................................27

Remittances...............................................................................28 1

Pay Order................................................................................... 29
Procedure for Transferring Money through Pay Order..........................29

Demand Draft............................................................................. 30
Outward DDs....................................................................................30 Inward DDs......................................................................................30

CREDIT MARKETING DEPARTMENT...............................................31 CREDIT FACILITIES......................................................................31 FUNDED FACILITIES..................................................................... 31

Current Finance CF.........................................................................32 Term Finance TF............................................................................32 Finance against Foreign Bills FAFB..................................................32 Finance against Packing and Credit FAPC........................................32 Finance against Imported Merchandise FIM.....................................33 Finance against Trust Receipt FATR................................................33 Local Bills Discounted LBD.................................................................33

NON FUNDED FACILITIES ............................................................33

Letter of Credits ...............................................................................34 Letter of Guarantees..........................................................................34

Trade Finance Department..........................................................35 IMPORT......................................................................................35

Requirement for the Importer............................................................35

Exports......................................................................................35
Requirement for the Exporter.............................................................36

Learning as an Internee..............................................................37 Recommendations......................................................................39 Bibliography...............................................................................41

Introduction to Bank Alfalah limited

Bank Alfalah Limited was incorporated on June 21st, 1992 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1st, 1997. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance, 1962. The Bank is currently operating through 195 branches in 74 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Bank Alfalah Limited is a private bank in Pakistan owned by the Abu Dhabi Group.

Since its inception, as the new identity of H.C.E.B after the privatization in 1997, the management of the bank has implemented strategies and policies to carve 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.

Bank Alfalah Limited

Type Founded Headquarters Key people

Private November 1997, Karachi Principal Office, Karachi Pakistan H.E. Sheikh Hamdan Bin Mubarak Al Nahayan (Chairman) Banking Capital Markets Loans, Credit Cards, Savings, Consumer Banking etc.

Industry

Products

3 Website www.bankalfalah.com

Vision
To be the premier organization operating locally & internationality that provides the complete range of financial services to all segments under one roof.

Mission
To develop & 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 stakeholders of the bank

Organizational Hierarchy
Its a general hierarchy of bank which is showing about the main authorities of Bank Alfalah Limited who are controlling its management in Pakistan. Banks management is divided into different groups, regions and areas. Co-chairman is providing supervision to group heads that are responsible for controlling the affairs of different groups. After group heads in the hierarchy regional and area managers are working who are managing and guiding the working of different branches of bank.

Chief Executive Officer Co- Chairman Group Heads Regional Managers

Area Managers Branch Managers

Board of directors
The board of directors has the authority in guiding Bank affairs and in making general policies. Some directors are the personnel of the Bank Alfalah Limited follows.

HE. Sheikh Hamdan Bin Mubarak Al Nahayan

Chairman

Mr. Sirajuddin aziz

Chief Executive Officer

Mr. Abdullah Naseer Al Mansoori

Director

Mr. Abdullah Khalil Al Mutawa

Director

Mr. Ikram Ul-Majeed Sehgal

Director

Mr. Khalid Mana Saeed Al Otiba

Director

Mr. Adeem Iqbal Sheikh

Director

FUNCTIONS

Branch banking e.g. Deposits, Remittances, Foreign trade, Lockers.

Consumer banking e.g. Credit Cards, Auto loans, Home loans, Consumer durables, RTCs.

Electronic Banking e.g. Telephone banking, ATMs, Online banking

Corporate banking e.g. Short/Long Term finance, Trade finance, Structured finance.

Treasury & Investment e.g. Money market, Forex market, Investments, Government securities, Correspondent banking

PRODUCTS AND SERVICES

CURRENT ACCOUNT: Non interest bearing checking account. Minimum account opening requirement of Rs. 10,000 only. Debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day. No restriction on number of withdrawals and on number of deposits

PLS SAVINGS ACCOUNT: Profit & Loss Sharing Saving Bank Account. Minimum account opening requirement of Rs. 5,000 only. No restriction on number of withdrawals and number of deposits. Profit on saving accounts is credited to the customer account on half-yearly basis.

Debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day.

ROYAL PROFIT:

Minimum Deposit requirement of Rs. 50,000 only. Higher returns on higher balances. No restriction on number of withdrawals and on number of deposits. Debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day. Profit is credited to the customer account on monthly basis.

BASIC BANKING ACCOUNT: Initial deposit for account opening is Rs. 1,000 with no minimum balance requirement. Non interest bearing checking account. Maximum 2 deposits & 2 withdrawals through cheque are allowed. Debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day. No restriction on ATM withdrawal. ALFALAH KIFAYAT ACCOUNT:

Any Pakistani resident over the age of 18 can open this account. This account is for individual/joint customers only. Other customers like companies, corporate etc are not eligible for opening of this account.

Minimum balance requirement for opening this account is Rs. 10,000/- with a maximum of Rs.1, 000,000/Three debit transactions are allowed in a month either through cheques or Debit Card/POS machine. There is no restriction on deposit transactions. The bank will issue the first cheque book of 25 leaves and a Debit card. Profit will be calculated on monthly minimum balance basis and will be credited in the account on quarterly basis. No profit shall be payable for a particular month, if the minimum balance for any particular day of said month falls below the amount of Rs. 10,000/-. Account statement will be generated on half yearly basis.

ALFALAH MAHANA AMDAN:

Alfalah Mahana Amdan is a 3 year TDR with expected rate of profit of 10% 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 current/PLS/RP/BBA account on 1st working day of each month. This facility is not available for business and corporate customers. Some salient features Minimum placement limit is Rs. 100,000/- and maximum placement limit is Rs.15, 000,000/Expected Rate of profit is 10% per annum (as per PLS governing rules) 9

Profit will be automatically credited on the 1st working day of each month into customers Current/PLS/RP/BBA account Free Personal Accident Insurance coverage up to the deposit amount or Rs. 1,500,000/whichever is lower. Customer can avail financing facility up to 90% of the deposit (as per banks policy) Alfalah Mahana Amdan term deposit can be maintained only at any one BAL branch with a maximum cap 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. (Included in AOF)

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 (i.e. 3 years)

Alfalah Mahana Amdan TDR will be subject to Zakat, Withholding Tax as well as any other applicable taxes

ALFALAH KAMYAB KAROBAR

Bank Alfalah presents Alfalah Kamyab Karobar (KK) - a structured, branded, tier-based current account that caters to your banking needs & aspirations. This product will provide you the opportunity to enjoy free services alongside state of the art banking facilities, linked directly to the deposit balances in your KK account. Alfalah KK Account can be opened with minimum deposit requirement of Rs 25,000, while the degree of free services will be dependent on the minimum thresholds of respective tier.

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KK Accounts have strategically been tailored into 3 different tiers, allowing you to choose the allotted free service to your benefit. The three tiers are as following: Silver Gold Platinum

The unique tier based structure ensures that you can avail smooth & cost efficient facilities based on your current level of deposits i.e. Higher the deposit, higher the number of free services. Some of the Salient features include (tier-based): Free Online Transactions Free SMS Debit Alert (Subject to availability) Free PO/DD Free Accidental Cover (Valid for up to two People) Free cash deposit across Pakistan Gold VISA debit/ATM Card with every account

In our endeavor to provide you versatile banking options to fulfill your financial needs, Bank Alfalah Limited presents the Alfalah HilalCard, a Debit Card which gives you unlimited access to your current / savings account with a simple swipe at millions of retail shops and ATMs worldwide. The Alfalah HilalCard comes with a host of conveniences and benefits combined with the wide reach of Visa Network, enabling it to be accepted at more than 1.2 million ATMs and 29 million retail outlets around the world, making it the most acceptable Debit Card available in Pakistan. What's more, it is easy to operate and can be used on any electronic self-printing POS machine where VISA is accepted, locally and internationally. No more hassle of remembering your PIN for retail transactions and no need to go to the ATM for cash withdrawal! One swipe and your transaction are complete. 11

(Effective 1st July to 31st December 2009) Schedule of charges Card Issuance fee: a) Basic card Issuance / Renewal fee c) Alfalah Karobar Finance Debit Cards Issuance / Renewal Fee d) Supplementary card Issuance / Renewal fee e) Supplementary Royal Platinum Debit Cards Issuance / Renewal Fee f) Supplementary Alfalah Karobar Finance Debit Cards Issuance / Renewal Fee a) Basic Card replacement fee: b) Royal Platinum Debit Cards replacement fee Rs 500 Rs. 750/Rs 500 Rs. 1000/Rs. 750/Rs.500 Rs. 1000/-

c) Alfalah Karobar Finance Debit Cards replacement Rs. 750/fee Transaction retrieval fee: Local Rs.350 and international Rs.800 Cash Withdrawal : a) From Bank Alfalah's ATM b) From 1-Link member bank ATM c) From MNET ATM d) From Visa member bank ATM e) From Bank Alfalah's POS Machine f) From Non-Bank Alfalah's POS Machine Balance Enquiry : a) From Bank Alfalah's ATM b) From 1-Link member bank ATM c) From MNET ATM 12 NIL NIL Rs.5/- per enquiry NIL Rs.15/- per transaction. Rs.15/- per transaction. Rs.300 or 3% of cash withdrawal amount, whichever is higher. NIL Rs.300 or 3% of cash withdrawal amount, whichever is higher.

Schedule of charges d) From Visa member bank ATM Third Party Transfers Fee a) Inter Bank Funds Transfer b) Inter Branch Funds Transfer SMS Alert Fee Virtual Card Issuance Fee Rs. 50/- per transaction Rs. 50/- per transaction Rs.30/- per month Rs. 100/Rs.25 per enquiry

No. of Employees 2001-2008

8000 6000 4000 2000 0 2001 2002 2003 2004 2005 2006 2007 2008 959 1504 2133 3352 5218 6543 7371 7584

Human Resource Assessment

Bank Alfalah Ltd. has worked hard to build its human resource team and ensure that the quality of newly inducted staff is not comprised with growth. For recruitment and selection banks policy is to hire suitable candidates. By suitable candidates bank refers to candidates having proper educational qualification, experience and background. Bank Alfalah not only is one of the fastest growing bank in Pakistan, that provides its customers with a number of financial services, but is also a great employer of human resources, that provides its employees with a conducive environment that not only is challenging but also helps them in applying and gaining knowledge.

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The above figures show that all prospect employees feel confidence in Bank Alfalah as their prospective employer. Bank Alfalah, as a response to this confidence has three ways of employing prospect employees for their organization.

Experienced Professionals
Based on requirements of experienced staff, Bank Alfalah also recruits talent from the marketplace. Bank Alfalah offers competitive salary / benefits to worthy professionals at all levels who wish to join hands with Bank Alfalah.

Training
Bank Alfalahs management believes in developing the potential of the Banks employees to the fullest extent. Training & Development Centre of the Bank are housed in state of the art facilities at Karachi and Lahore of provide training to its employees. It is obligatory for each staff member of the bank to attend at least two days of training in a calendar year, with training programs in the following areas: Consumer Banking and Operations Credit Marketing & Proposals Credit Administration/Documentation Marketing and Selling Skills Customer Service Skills Leadership and Management Skill Personal Effectiveness and Skills

Furthermore training programs have also been introduced for fresh entrants into the bank, to help them in learning and performing their new tasks.

Benefits provided by Bank Alfalah

Some of the monetary and non monetary benefits that Bank Alfalah provides to its employees are as follows: Attractive Salary Package Employee Provident Fund Gratuity Fund 14

Medical Insurance Bonuses Life Insurance Promotions Various types of Staff Loans Assistance in Pursuing Higher Education Cash Rewards on completing IBP Diploma

Financial Analysis

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Balance Sheet of Bank Alfalah Limited

Years Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax asset TOTAL ASSETS LIABILITIES & EQUITY Bills payable Borrowings from financial institutions Deposits and other accounts Subordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities TOTAL LIABILITIES REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets Total EQUITY Total Liabilities and Equity
2006 2007 2008

27,859,360 12,731,952 12,456,653 56,502,210 149,999,325 5,633,051 10,502,990 275,685,541 3,091,135 8,394,130 239,509,391 3,222,106

29,436,378 18,380,738 3,452,059 88,491,564 171,198,992 6,013,097 11,922,324 328,895,152 4,138,243 21,230,697 273,173,841 3,220,858

32,687,335 21,581,043 3,315,500 75,973,238 192,671,169 8,989,186 13,773,293 348,990,764 3,452,031 13,690,222 300,732,858 2,571,169

7,305,496 1,921,338 263,443,596 5,000,000 2,749,533 2,823,072 1,669,340 12,241,945 275,685,541

9,531,860 1,379,809 312,675,308 6,500,000 2,414,833 4,851,840 2,453,171 16,219,844 328,895,152

11,291,280 208,465 331,946,025 7,995,000 3,166,056 3,447,467 2,436,216 17,044,739 348,990,764

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Income Statement of Bank Alfalah Limited

2006 Mark-up/return/interest earned NON MARK-UP /INTEREST INCOME Fee, Commission and brokerage income Dividend income Income from dealing in Foreign currency Gain on sale of securities Unrealized (loss) /gain on revaluation of Investments Other income Total Non mark-up/ Interest income TOTAL INCOME EXPENSES Mark-up/return/interest earned expensed Provision against non-performing loans and advances-net Provision for the diminution in the value of investments Bad debts written off directly NON MARK-UP/ INTEREST EXPENSES Administrative expenses Other Provisions/Write Offs Other charges Total non mark-up/ Interest expenses Extraordinary / Unusual items PBT Taxation 17 -Current -Prior years -Deferred TOTAL EXPENSES
21,191,470 1,804,998 37,393 386,997 180,751 (27,599) 842,099 3,224,639 24,416,109 15,232,886 697,690

2007
25,783,871 2,429,599 64,722 474,510 2,053,192 (14,929) 1,031,372 6,038,466 31,822,337 16,620,963 2,370,867

2008
31,046,583 2,539,321 300,943 914,845 424,220 (181,571) 1,247,669 5,245,427 36,292,010 20,331,194 2,035,997 1,479,062

1,537 5,874,745

5,844 8,272,587 6,959 9,565 8,289,111 4,535,552 1,726,810

28,298 10,471,399 28,582 122,758 10,622,739 1,794,720 1,730,051 (221,797) (1,014,835) 34,990,709

43,306 5,918,051 2,565,945 476,226 (100,874) 427,902 22,653,418

-321,487 28,692,108

Comments Analysis of Balance Sheet

Assets:
The assets of the BAL have been growing very fast since its inception. This growth is the result of the massive expansion policy the management has been following ever since the inception of BAL. One of the important ingredients of any commercial banks growth is increase in most of current assets that is a good sign as it increases their liquidity. Let us first have a look at the liquid assets. In earning asset, the lending to financial institutions is decreasing whereas the other investments and advances continuously. However the investments have increased in 2008 with decreasing rate. Increase in the fix assets might be due to branch expansion. After analyzing the Balance Sheet, we can see that balances with other banks are increased in percentage from 5.59 to 6.18 as well as the cash balance with the bank is also increased 8.95 to 9.37 that is a good sign for management. Lending to Financial Institutions is continuously decreasing from 4.52 in 2006 to 0.95 in 2008. There is a decrease in percentage of lending to financial institutions is not a good sign.

Liabilities:
As regards the liability section of the balance sheet chief liability of commercial bank is its deposits it generates from its customer. The ratio of increase in deposits in 2008 is 21.24% which is low as compare to increase in 2007 which is 25.96%, it is concluded that the deposits are increasing but at decreasing rate. The other encouraging ratio we observe in liability section is borrowing from financial institution which shows decreasing in 2006 but it shows an increase 2007 and 2008 which proves financial strength and its credit worthiness in the money market. On liability side, borrowings from financial institutions are also decreased that is very positive sign as far as banks financial health is concerned. Borrowings are decreased by 6.46% in 2007 to 3.92% in 2008. More over there is an increase in deposits from year 2007 to 2008 which shows 18

the faith and trust of people on BAL. Deposits are increased from 83.06% in 2007 to 86.17% in 2008.

Equity:
Banks Share Capital as well as unappropriate profits is increasing at increasing rate till 2007 but in 2008 the capital share decreased slightly by 0.2% and unappropriate profits by 163%.

Comments Analysis of Income Statement:

Income:
The income of the BAL shows the increasing trend till 2007 but in 2008 its over all income has decreased by 167.48% as compare to 2007 mainly because of the perceiving world economic crisis and also by the Pakistans economy crisis. Due to increasing provisions, the profibility of the bank decreases a lot. On the income side of income statement demonstrate that major factor of the total income is interest earned which contributes more than 80% in 2006 to 2008, whereas fee, commission and brokerage income makes major part of total non-mark up interest income and its proportion to total non-mark up interest/income is decreasing every year but in 2006 it increased little, here we observe that total non mark up income is decreased in 2008, which is good sign for the bank as bank is earning more from its primary functions.

Expense:
The expenses of the bank are increasing as operations of the bank increases. The expenses have been increasing with an increasing rate since last three years. The expenses increased 104%in 2008 as compared to 100% increase in 2007. Non- mark up interest expensed is the major component of total expense in 2005. But from 2006 till 2008, interest expensed in the major part because the deposits of the banks shows increase and as bank has to pay on interest bearing liabilities.

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RATIO ANALYSES
Ratio simply means one number expressed in terms of another. A ratio is a statistical yardstick by means of which relationship between two or various figures can be compared or measured. It is defined as a systematic use of ration to interpret the financial statements so that the strengths and weaknesses of a firm, as well as historical performance and current financial condition, can be determined.

Profibility Ratios
BAL is following the trend of industry in terms of declining profits due to rising provisions.
ROE ROA

The mark-up increased by 20.4%, while the mark-up expense increased by 22.3%, limiting the net mark-up growth to 17% to Rs 10,715 million. Provisions showed a considerable increase and a new provision for diminution in value of investments is included in 2008 which valued Rs. 1,479 million. The bad debts directly written off increased by 4.8 times in 2008 compared to last year and valued Rs. 28 million.

Net profit margin Gross spread ratio

1.2 1 0.8 0.6 0.4 0.2 0

2004 2005 2006 2007 2008 0.86 0.84 0.67 1.04 0.38 26.8 30.6 20.3 25.7 9 5 7 2 9.17 19.1 13.8 12.1 4 9 8.31 4 4.19 56.9 41.1 28.1 35.5 ROA 6 7 2 4 34.51

2004

2005

2006

2007

2008

ROE

N e t pro fit m a rg in G ros s s pre a d ra tio

The non-mark-up interest income declines slightly, thus contributing insignificantly towards creating a variance in the two years. Administrative expenses swelled by 26.6% due to the expansion in branch network during 20

60 50 40 30 20 10 0 20 0 4 2 0 05 20 0 6 2 0 07 2 00 8

FY08, inline with the inflationary pressures. PAT was Rs 1301 million in FY08 as compared to Rs 3130 million in FY07 which is down by 58.4%.

Return on Average Total Assets= (Net Profit after Tax / Avg. Total Assets)*100 Return on assets (ROA) measures the firms overall effectiveness in generating profits with its available assets. This ratio indicates how well management is utilizing firms assets to make profit. ROA shows decreasing trend in starts but it increased in 2007 and reaches 1.04% to its peak and now it decreases drastically and reaches 0.38%. Return on Equity (ROE) = (Net Profit after Tax / Shareholders Equity)*100 ROE measures the shareholders return earned on their investment in the firm. This ratio indicates how profitable a company is by comparing its net income to its average shareholders equity. ROE was at maximum 30.65% in FY05 but in 2008 it reaches to lowest 9.17% from 25.72% of FY07. Net Profit Margin = (Net Profit after Tax / (Sales))*100 Net profit margin measures the percentage of sales revenue remaining after all cost and expenses, including interest and taxes have been deducted. The net profit margin has also decreased to considerable low level of 4.19% from previous years 12.14%. Gross Spread Ratio = Net Mark up Income / Gross Mark up Income Gross spread ratio measures the percentage of sales revenue earned to the gross mark up after deducting the markup expense. Gross spread ratio has decreased slightly compared to 2007 and it was lowest 28.12% in 2006.

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Debt Management Ratios

Debt Ratio = Total Liabilities / Total Assets Debt ratios tell us about the firms overall debt position and as well as it mixes of equity and debt. These ratios will also give general idea about the level of financial risk faced by firm. This ratio measures the portion of total assets financed by the firms creditors. Higher this ratio, the greater the amount of other peoples money being used in an attempt to generate profits. Even though debt ratio is in decreasing trend but this ratio is very high. Higher this ratio means higher the financial risk so its a negative sign for bank. Debt to equity compares the debt size as compared to equity. The Debt to equity is lowest in FY07 and it has increased slightly in 2008. However the deposits make the 90.5% of the total debt. The ratio of deposit time capital shows the deposit size as compare to the invested capital. The debt management figures show that the assets of the bank have become less leveraged till 2007. This was due to the fact that the debt has increased but equity has increased by a greater percentage in recent years. But it increased slightly in 2008. Equity increased by 5%in FY08. However, liabilities rose by 6.1%.
40 30 20 10 0 2004 2005 2006 2007 2008 Debt to equity Deposit times capital

Debt to equity Debt Ratio Deposit times capital 0.97

0.96 0.95 0.94 2004 2005

2004 2005 2006 2007 2008 28.4 32.2 21.5 19.2 3 7 2 8 19.47 0.97 0.97 0.96 0.95 0.95
Debt Ratio

24.6 5

29.7 9

19.5 6

16.8 4 17.64

2006

2007

2008

22

Liquidity Ratios
The advance to deposit ratio (ADR) ratio is banks financial ratio which is used to test the company financial position by keeping in view its advances and deposits. Strength of bank is judged that how much bank is capable to grasp the saving of people and how many

Earning assets to assets Advance Advance to deposit to 68.5 deposit 6

80 60 40 20 0 2004 2005

2004 2005 2006 2007 2008 0.80 0.82 0.79 0.80 0.77 53.4 6 62.6 3 62.6 64.07 7

2006

2007

2008

people are interesting to take loan facility from bank as profit of bank depends on higher advances and advances comes from
Earning ass ets to assets 0.84 0.82 0.8 0.78 0.76 0.74 2004 2005 2006 2007 2008

deposits of customers.

The figures for FY08 show that the bank has further improved its liquidity position. Advances have grown by 12.5% from 171 million to 192 million during this period.

Earning assets are interest generating assets. The ratio of earning assets to asset shows the proportion of interest generating assets to the total assets. The ratio of earning assets to total assets for the bank shows remarkable fluctuation, suggesting careful management of and investment in interest generating assets. Within earning assets, however, the bank shows a gradual trend of movement of capital into and away from lending to other financial institutions.

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Market Ratios
Banks have dominated the capital markets of Pakistan because of their superlative performance. They comprise one third of the total capitalization of the KSE. Book value per Share = Total Shareholders Equity / No. of Outstanding Shares Book value is of limited to the investment analyst since it is based on historical costs. Book value per share is showing mix trend and in Book Value per share Earning per share 2004 2005 2006 2007 2008 21.0 24.8 24.4 24.9 5 8 8 5 21.32 3.9 3.92 2.91 3.92 1.63

FY08 it has decreased to 21.32 because of large increase in no of share outstanding from 650,000 in FY07 to 799,500 in FY08. However equity has also increased slightly by 5%. Earning Per Share (EPS) = Earning / No. of Outstanding Shares

The firms EPS are generally of interest to present shareholders. EPS represent the earning on behalf of each outstanding share of common stock. EPS decreased in 2008 significantly due to lower earning which is 58.4% decreased as compared to last year.
30 25 20 15 10 5 0

Book Value per share

Earning per share

2004

2005

2006

2007

2008

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Departments Worked During Internship

I did my internship at Bank Alfalah New Airport Road, for a total duration of six weeks and the departments that I worked during this time are as follows: Account opening Remittances Credit Marketing Department Trade Finance

Accounts Opening Department

Accounts opening department is one of the departments that come under the retail/general banking facilities provided by Bank Alfalah New Airport Road. Some of the major deposit accounts opened by Bank Alfalah New Airport Road are as follows:

Current Account Profit& Loss Saving Account Basic Banking Account (BBA) Royal Profit Account Kifayat Account Mahana Amdan Account Basic Requirements for Account Opening
The basic requirements to open an account for individuals/self employed are as follows: CNIC 25

Source of income (salary slip etc) NTN certificate (optional) Company letterhead or authorization (as required)

The basic requirement to open an account for a partnership: Partnership Deed Partners CNIC Company Letterhead NTN certificate (optional)

The basic requirement to open an account for companies: Memorandum of Association Article of Association Directors CNIC Company Letterhead NTN certificate (optional)

Internal Codes for Bank Alfalah Accounts

Some of the major account opened at Bank Alfalah New Airport Road and their internal codes are as follows: Internal Codes for Some Accounts Account Type Current Account Profit& Loss Account BBA Account Royal Profits Current Account USD Code 010***** 020***** 0189**** 029***** 018*****

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Major Work Done by Account Opening Department Account Opening

Whenever a customer comes to open their account, they have to fill a relationship contract with the bank. As part of my internship I had to fill these forms and then use the appropriate bank stamps to complete these forms. Also as part of the relationship form, I also had to do a Verisys, a verification system started by NADRA on the CNIC of the new account opener. A Verisys tells, if more information pertaining to the customer is needed to open the account or not. Furthermore as all relationship forms have to be sent to Karachi, a central location, for all account relationship forms.

Stop Payment
If a customer looses their cheque book, then that customer will have to come to the bank and firstly report the loss and then stop payment, by telling the series of cheque he has lost. By stopping payment, the customer is guaranteed that no illegal payment is made from their account. The process for stopping payment, after the customer tells that he has lost is cheque book is that he fills a Form B, which is same as a cheque book requisition form and an indemnity form, stating no responsibility on behalf of the bank if any illegal payment is made before the time of announcing a cheque book lost.

Bank Statement and Bank Balance

A bank statement tells the whole activity of a bank account over a period of time. Customers often come and want their bank statements and have to fill a form, relating to the time period for which the bank statement is needed. As part of my internship, I was to assist the customer to fill the Bank Statement Form and printed statement is given through the banks software. Often

27

customers want to know their accounts balance over the phone and thus I had to tell them their account balances using the banks information system Bank Smart.

Remittances
The need of remittance is commonly felt in todays business. A major function of any bank is to transfer of funds form one place to another. Parties involve in remittances Four parties involved in remittance: Remitter Remittee Issuing Bank Paying Bank

Remitter One who initiates, or requests for a remittance. The remitter comes to the issuing or originating branch, asks for a remittance to be made, and deposits the money to be remitted. The bank charges him a commission for this service. He may or may not be the branchs customer. Remittee A Remittee is also called the beneficiary, or the payee. The person in whose name the remittance is made. A Remittee is also the one who receive the payment. Issuing Bank The bank that sends or affects the remittance, through demand drafts, telegraphic transfers, or Mail Transfers Paying Bank Paying Bank also knows as the drawee branch. The branch on which the instrument is drawn. It has to make the payment (usually located in a different city country). Kind of remittances 28

 Transfer within the branch Transfer from one branch to another Transfer from one bank to another bank in the same city Transfers from one bank to another bank in two cities.

Instruments used in remittances Demand Draft (DD) Pay Order (PO) Pay Slip Call Deposit Receipt (CDR) Telegraph Transfer Rupees Traveler Cheque (RTC) Cancellation of PO, DD & CDR Advance Tax against Remittances

Pay Order
Pay orders are made to transfer money within the city and this is a safe way to transfer money as the person who makes the transfer through pay order pays in advance. The procedure that is carried out in transferring money through pay order is as follows:

Procedure for Transferring Money through Pay Order

The customer will come to the bank and fill in the pay order application, giving in the details to which account the money is being transferred, the amount etc and attach a cheque to pay for the pay order. Pay orders can also be made through cash but mainly it is made through cheque. The officer checks all the details in the application, makes out the charges for the transfer that the customer will pay and then make the pay order for the customer and pass the following entry: Customer A/c Pay order payable

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When the customer in favor of whom the pay order was made gives the pay order to his branch, the entries passed are: Pay order payable Customer A/c

Demand Draft
Demand Draft is another way in which customers can transfer money outside the city. There are two types of situations for transfer of money through demand drafts:

Outward DDs
When a customer comes to Bank Alfalah to make a DD to transfer money outside the city is known as outward DD. The customer will fill the details in a DD application form, and will attach a cheque or pay cash as he wish. Then the officer will check all the details and make a demand draft for the customer and pass the following entries: For Cheque: Customer A/C Head Office For Cash: Sundry A/c Head Office

Inward DDs
This is the procedure adopted when the issuing branch sends copy of the instrument as an advice. When the bank receives the advice, the officer will pass the following entries: Head Office A/c DD Payable A/c When the customer comes with the DD to get his payment, the following entries are passed: 30

DD Payable A/c Cash If that customer is a Bank Alfalah account holder then the following entries are passed: DD Payable A/c Customer Account

CREDIT MARKETING DEPARTMENT

Credit means belief or trust. The quality of being credible or trustworthy. Another words we can define credit as trust in ones integrity in money matters and ones ability to meet payment when due. Credit marketing department deals with extending loans (credit facility) to customers before sanction advice. State Bank of Pakistan (SBP) has prescribed regulations which are called PRUDENTIAL REGULATIONS. Every bank has to follow these regulations. If any bank violates the regulations it should be liable for penalties. The Bank Alfalah limited credit is extended on the basis of these rules and regulations. These regulations tells the term and conditions under which you can extend loans to the borrower and to what extent.

CREDIT FACILITIES
At BAL there are two types of credit facilities Funded facilities Non funded facilities

FUNDED FACILITIES
These are the facilities in which there is direct involvement of cash fund. Following are the funded facilities. Current finance CF Term finance TF 31

Finance against foreign bills FAFB Finance against packing and credit FAPC Finance against imported merchandise FIM Finance against trust receipt FATR Local bills discounted LBD

Current Finance CF
The extensively used financing mode at BAL is current finance (CF) current finance is used to finance both individuals and industries. Individual take current finance for their personal use while in industries. It is taken for fulfilling the requirement of working capital.

Term Finance TF
Term finance is for specified time period. Term finance is given for fixed asset financing.

Finance against Foreign Bills FAFB

In FAFB facility exporter take loan from bank on the behalf of their foreign export bills. Like exporter sends shipment but at that time he needs fund for the operation of the business. He may go to the bank and surrenders all the documents including L/C, Bill of lading etc. bank checks all the documents to be in accordance with terms and conditions. If they find no discrepancy, they give money to exporter but take some margin on it.

Finance against Packing and Credit FAPC

FAPC is taken for the preparation of consignment. It has two forms. Pre shipment Post shipment

1)

Pre Shipment

Pre shipment loans are export related working capital financing. 32

2)

Post Shipment

Post shipment financing is essentially the receivable financing to the exporters till the period he is out of cash after the shipment.

Finance against Imported Merchandise FIM

This facility is allowed against the commodities imported from other countries usually through letter of credit. Some time importer does not have enough amounts for paying the imported merchandise therefore. He request to the bank to pay all dues to the exporter against the security of imported merchandise. Bank pays the amount and releases the goods, when the importer pays off its liability partially / fully.

Finance against Trust Receipt FATR

Finance is extended upon the trust receipt signed by borrower. Importer has to import the product. There are three conditions. Pay money and get thing Get fine facility

And third is that if that client is trust worthy for bank believing on him based upon his past record. He releases the goods against the trust receipt. Trust receipt is given to the bank by the customer. The customer in turn commits that I will pay on such and such date. Banks pays all taxes and gets merchandise and then gives it to client. Bank do charges markup against such financing. FATR is for specific period of time. If client does not pay with in specified time then bank will charge higher per day markup.

Local Bills Discounted LBD

Payment against documents or local bills is made by the banks as payment against L/C comes due payment is made for imported documents. For example when seller of phutti (raw cotton) gives all the documents or bills to bank as to get bills discounted in which he gets immediately payment which he would receive after the season.

NON FUNDED FACILITIES

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The facilities where there is no direct involvement of banks fund. There are two types of unfunded credit line facility, which are as follows: Letter of Credit (LC) Letter of Guarantee (LG)

Letter of Credits
A letter of credit is a written undertaking by a bank (issuing bank) given at the request and accordance of a buyer (the applicant) to the seller (the beneficiary) to a fact payment up to a stated amount of money within prescribed time limit provided that the terms and conditions are complied with. Letter of Credits issued in the international trade business.

Letter of Guarantees
Letter of guarantees is a guarantee that the bank gives to an organization on behalf of the bank. Letter of Guarantees are mainly used when a tender for a specific job is filled by a customer.

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Trade Finance Department

Trade Finance involves the import and export activities. This department provides protection to the rights of importer and exporter. The function of this department is to serve as a bridge between the importer and exporter in order to settle a transaction. When trade is taking place between the representatives of two countries (exporter and importer), the exporter involves his bank (the Advising Bank) in the transaction, as he wants to feel secure regarding timely payment of his goods in the required currency. On the other hand the importer involves his bank (the Issuing Bank), in order to get a sense of security regarding timely supply of the required product, in the required manner. Trade Finance Department handles two activities: Import Export

IMPORT
Import Department of BAL deals with the import of merchandise. Import can be defined as: The bringing of commodities into Pakistan from outside by sea, land or air.

Requirement for the Importer

These requirement / document must be fulfilled from importer before doing the import: NTN (National Tax Number) certificate Sale Registration Certificate Membership from Chamber Of Commerce Questionnaire duly filled in NIC (attested copy)

Exports
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Exports are major sources of earning foreign exchange and play an important role in the economic development of the country. It helps to utilize excess resources of the country. Exports mean selling goods to another country.

Exports of all eligible commodities through authorized banking channels are admissible under exchange control regulation.

Requirement for the Exporter

These requirement / document must be fulfilled from exporter before doing the export: Account holder of Bank Alfalah Limited Must be a Pakistani Membership from Chamber Of Commerce NTN (National Tax Number) certificate The person must have the Sales Tax Registration Certificate. Form E ( export form) dully filled in Sale Registration Certificate

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Learning as an Internee
I did my internship in Bank Alfalah New Airport Road Branch. It was a tremendous experience that I have availed with devotion and commitment. I have an interest in banking sector thats because it is the back bone of the economy of the country. My internship experience has given me a realistic preview of my field of education. Now I feel that I am better prepared to enter the world of professional work. I have come to know and been appreciated by a number of professionals who are lending their services to the banking sector for more than a decade. I feel honored that I have worked with such experienced professionals. I must admit that such interaction in this respectable professional community will help me in seeking out job opportunities in the near future. Each task I performed was a different experience in itself. But one thing I want to share its not easy that looks it has a great toughness and complications in its process but the overall it was nice and great. Here I am sharing some of my learning regarding my internship in BAL Dha ext. I learnt that every problem is solved with a systematic process like from the root of the problem. I learnt about how to deal with customers. I learnt that being a manager how to deal with the subordinates. I also learnt about how to keep different records regarding customers, and how important they are. The quality control and accuracy must be up to the mark.

By the end of it, I must say I realize my potentials, I have realized that earning money is not so easy after all, it takes a lot of hard work and devotion, and not to forget time. And I now know that if I want I can make things possible, and I also know how good it feels to having accomplished something and being appreciated for it. I definitely have learnt things, which will impact my career and my character. 37

The overall experience of my internship was very good; I have learnt the sense of responsibility in its literal meaning. I am now capable of dealing with different sort of customers, and how to be patient while doing so.

Besides this I also gained knowledge about banking which I previously lacked and many more products being offered by the bank. So in a nutshell, this internship gave me the experience, which would no doubt boost my confidence to work in future.

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Recommendations
After doing internship of six weeks in Bank Alfalah Limited, I would like to give some recommendations to count over some problems. Bank should prefer to promote worker on the basis of their talent and avoid going for personal like and dislikes. It can be harmful for the organization in the long run. In Bank Alfalah, there is misdistribution of work; some people are over burdened with the work. So I suggest that there should be fair distribution of work in all the departments. Bank Alfalah should develop modern connectivity architecture to start internet banking and to effectively maintain an online connection between other branches and banks as well. Proper IT departments should be established in all branches, with professionals having the knowledge to maintain a secured connection and backup. Bank Alfalah is only dealing in Money Gram; it should also starting providing the service of other money transfer lines like Western Union. Bank Alfalah has equipped its branches with all major IT tools being used in the industry like ATMs, fax machines, photocopiers, printers, latest computers and a good connectivity architecture, however it has been observed that when its time to work, there are many failures seen in the different devices used by Bank Alfalah, especially its connectivity architecture and remains offline with the main server, that creates problems for the customers BAL should provide loan to students at low mark up rate and easy terms & conditions. Bank Alfalah Limited needs to use more marketing channels such as radio to make the public aware of its products and services. In the presence of intense competition Bank Alfalah Limited has to realize the importance of marketing.

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There are no incentive schemes for employees of Bank Alfalah like scholarship schemes for employees that want to pursue higher education. Bank Alfalah although gives a number of incentives to its employees, like personal loans at nominal markup but they are only provided to employees that are in higher ranks. Education fees are also returned by Bank Alfalah to its employees, after the have finished their studies.

The top management should immediately start thinking in terms of rotating the employees in various departments, as this transforms work force into human capital, if a particular individual keeps on employing his\her efforts in one sphere of banking it would not only create a sense of monotony, but also not help improving the skills of Bank Alfalah Limited employees.

Bank Alfalah limited has the web site, which has not been updated. The web site is very less informative and it wont leave a good impression on the visitor. So I suggest that it should be updated to meet the requirements of the visitors.

Participative management concept should be adopted, where ideas from the employees should also be taken, not only for developing products but also on service, efficiency, employee morale etc. in order to improve them.

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Bibliography

Web Resources
Bank Alfalah (www.bankalfalah.com) Wikipedia (www.wikipedia.com) State Bank of Pakistan (www.sbp.org.pk) Info (www.info.com)

Reports & Papers

Annual Report Bank Alfalah 2008 Issues in Pakistans Economy by S. Akbar Zaidi Bank Alfalah Limited. (2009). Alfalah Mahana Amdan Plus [Brochure] Bank Alfalah Limited. (2009). Alfalah Karobar Finance [Brochure] References You can contact them if any query. Shehryar Afzal Manager Operation Bank Alfalah DHA Ext. Branch Ph #92-42-35700304 Faisal Hameed Incharge Accounts Bank Alfalah DHA Ext. Branch Ph #92-42-35700301 Mohammed Siddique Ansari Incharge Cash Dept Bank Alfalah DHA Ext. Branch Ph #92-42-35700212 Mohammed Rizwan Malik Credit Manager Bank Alfalah DHA Ext. Branch Ph #92-42-35700307

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