FINANCIAL AND ENVIRONMENTAL (SWOT) ANALYSIS OF

BANK ALFALAH: EVIDENCE FROM PESHAWAR BRANCH

BY
Abdul Sattar
Class No. 6043
SESSION: 2014-2018

An Internship report submitted to Abasyn University Peshawar in partial

fulfillment of the requirements for the degree of

BACHELOR OF BUSINESS ADMINISTRATION (HONS)

(FINANCE)

Faculty of Management and Social Sciences,

Abasyn University Peshawar Campus,
Ring Road (Charsadda Link), Peshawar, Khyber Pakhtunkhwa

FEB-2018

1
 FINANCIAL AND ENVIRONMENTAL (SWOT) ANALYSIS OF
BANK ALFALAH: EVIDENCE FROM PESHAWAR BRANCH
BY
ABDUL SATTAR
Class No. 6043
SESSION: 2014-2018

An Internship report submitted to The Abasyn University , Peshawar in partial

fulfillment of the requirements for the degree of

BACHELOR OF BUSINESS ADMINISTRATION (HONS)

(FINANCE)
Approved By:

______________________________ Supervisor
Miss. Sajida Gul

______________________________ Incharge Management Science

Mr.

______________________________ Additional Director (Abasyn University)

Faculty of Management and Social Sciences,

Abasyn University Peshawar Campus,
Ring Road (Charsadda Link), Peshawar, Khyber Pakhtunkhwa

2
 FEB-2018

ACKNOWLEDGEMENTS

Innumerable thanks to Almighty ALLAH, whose unlimited and unpredictable sources of

help made me able to win honors of life. I also pay all my respect to last Holy Prophet
Muhammad (PBUH) who is a beacon to well wishes of mankind and his faithful
companions, who is forever a true torch of guidance for humanity as a whole.

The internship reported in this manuscript was conducted under the kind supervision of
Miss Sajida Gul , Lecturer abasyn university. The Abasyn University Peshawar for their
inspiring guidance cooperation, valuable suggestion and sympathetic attitude throughout
the course of this project work.

I express my highest regards to my sympathetic and respectable parents, and other family
members for their prayers, good wishes, everlasting encouragement and financial support
throughout my academic life.

Abdul Sattar

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 EXECUTIVE SUMMARY

The Islamic banks being money market players play a vital role in the development of the
economy. With the emerging, development and growth of the leasing market in Pakistan,
the car Ijara being relatively a new concept is going popularity day by day. New
companies are emerging with new and different kind of schemes, so in this way the
customers is getting more and more aware due to string competing and persuading from
them. Due to this rapid development car leasing the car sales of automobile companies
have increase from 15% to 20%.

Moreover the proportion of total debts in the house hold sector has significantly
increased. The auto-financing schemes in different banks are coming with a lot
improvements but still there is many come for the banks to avail the opportunities present
in the growing market in Pakistan. The banks can still come with a lot new or
improvements in the existing products and services. Due to this reason the State Bank of
Pakistan is coming with reforms in the banking sector, which is the by factor of
motivating the banks to come of with new products and services. A brief overview of the
regulations been made by SBP for the auto finance has been given in the report followed
by the scheme being used by Bank Alfalah, in order to see the limitations being followed
by BAL. is one of the leading commercial banks in Pakistan. In the least for years it has
improved a lot, making a better cooperate image. The demand of car financing in BAL is
very high. It offers different models and kinds of which on lease, therefore capturing
different segments of different income class people.

The previous thoughts being kept in mind, a proposed auto finance scheme is given for
bank Alfalah Limited. It a product with much flexible tenures, markup rates and a few
other features with the aim to attract greeters fact of the market. So a product with a good
detail and segmentation is proposed in a suppurate section. Furthermore the Islamic

4
mode of auto finance is included in order to attract the segment attracted towards Islamic
banking. For that purpose the automobiles can be financed through Mudarabah and
Musharakah modes of financing. A brief SWOT analysis of the proposed product is done
is order to be aware of the external and internal environment. The most significant part
and positive aspects of the product is that it will attract the part of market to bank Alfalah
which is not availing its services due to not being in accordance with their demands. In
the end some recommendations have been made for making the proposed product more
feasible for operations.

5
 CHAPTER 1

INTRODUCTION TO THE REPORT

1.1 Background of the Study

This report is an essential part of the BBA (Hons) Finance degree requirement
that is offered by the Abasyn University. It is based on the Eight weeks internship
program that the students had to undergo with the major banks in Peshawar region. I am
doing BBA (Hon’s) from this university and for my internship I selected Bank Alfalah
because BAL-IDB is one of the strongest banks of Pakistan and now a day it has a strong
hold in banking sector. As per rule of our University I worked as an internee In IBG
Charsadda Road Branch Peshawar.

1.2 Purpose of the study

The purpose of the study is to experience real life banking practices in order to
bridge the gap between the theoretical and the actual for better comprehension and
knowledge of the different aspects of this vast field of profession. The main purpose of
this report is to critically analyze and comprehend banking operations and suggest
measures in the form of concrete and weighted recommendations. Besides, the report also
aims to inculcate amongst the students the method of collecting relevant material and
shaping it in the form of formal report writing.

1.3 Scope of the study

Banking is a much diversified field and has various dimensions and treatments.
However, for a meaningful dialogue resulting in a definitive conclusion the study for this
report has been confined to banking operations as the objective is to make an
acquaintance with the practical aspect of banking.

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1.4 Methodology of study

The report was prepared using both primary and secondary data that included the
following methodological tools:

1.4.1 Primary data

The data, which is collected for the first time and exist in raw form, is called
primary data.

It includes:

 Personal observations during the eight- weeks of internship program by applying

participant observation method.

 Unstructured interview method used to collect the data from different employees
regarding their performance and job speification

 Discussion with the Bank personnel from time to time.

1.4.2 Secondary Data

The data gathered from existing sources are called secondary data. They are in
processed form.

The main sources of secondary data of BAL are: -

 Journals, newspapers and course books e.g book of (Financial Management) by

Van.Horne and other like that

 Brochures and manuals from the Bank branch.

 Internship reports on BAL available in the Abasyn University Peshawar library

 World Wide Web. ( Annual report )

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 1.5 Limitations of the study

The banks hesitation to reveal certain facts and figures apart from major managerial and
organizational secrets made it slightly difficult to gain all the information that would have
resulted in a report applicable to the organization as a whole along with remedial
suggestions. The daily busy routine of the employees also allowed for foregoing any
queries that cropped up in the mind while undergoing the training within the assigned
branches. Although there was enough time yet the space constraint and non-availability
of resources on the part of the writer to personally visit places of interest and relevance
has limited the study to only gather those facts and figures that are significant to the
purpose of the study and do not prove the conclusions.

1.6 Scheme of report

Five chapters included in this report in which first chapter consists of
background, purpose, scope, limitations, methodology and scheme of the report.CHAPTERS 2
Includes brief history of the organization, Nature of BAL, Business volume, product
lines, competitors, introduction to banking, banking history
CHAPTER 3
Consist of organizational hierarchy chart, No of employees, Head office, main branches,
and function of the department
CHAPTER 4
Shows operational and critical analysis of BAL. Current strategies compare with vision
and SWOT analysis.
CHAPTER 5

Includes recommendation & conclusion and implementation plan of BAL Lawn.

8
 CHAPTER 2

OVERVIEW OF THE ORGANIZATION

2.1 History of Islamic banking

Sharia-compliant banking is fast moving from niche to mainstream, says

Christopher Watts. But while continuing growth seems certain, challenges remain. In
January this year when the UAE's Sharjah Electricity and Water Authority (SEWA)
needed cash to construct a power generation and desalination plant in the town of
Hamriyah, it was Islamic finance that provided the answer: The utility raised USD 350 m
by issuing its first ever sukuk asset-backed bonds that comply with Sharia, the Islamic
legal code that prohibits interest.

By no means is SEWA alone in venturing into the Islamic capital markets.

Corporate sukuk issuance leapt from USD 0.4 billion in 2000 to USD 24.5 billion in
2006, according to International Islamic Financial Market (IIFM), an industry
association. Growth topped 122% in 2006 alone. "Islamic finance is no longer a niche
market," says David Pace, CFO of Bahrain-based Unicorn Investment Bank (UIB), a
Shari'a-compliant house. "It is increasingly a mainstream component of the global
banking.

To be sure, while the world's first Islamic bank was founded back in 1975, it is
only in the last five years or so that Islamic finance has surged. Sniffing opportunity,
conventional banks are now scrambling to set up Shari'a-compliant operations; and there
has been a flurry of all-Islamic start-ups, from full-service investment banks to specialist
advisory firms. Products have moved beyond lending, insurance and investment funds to
include sukuk, hedge funds, currency swaps, and more.

Despite this boom largely concentrated in the Middle East and South-East Asia it's

9
plain the Islamic finance industry still lacks global scale. Professor Rodney Wilson of the
Institute for Middle Eastern and Islamic studies at Durham University in the UK
estimates Islamic banking assets speak for less than 0.5% of the world's total. And
worldwide sukuk debt outstanding amounts to perhaps USD 100 billion – just 0.1% of
the global bond market.

Still, the signs point to a continuing surge in Islamic finance. Take economic
growth: The Middle East and Asia are the two fastest-growing areas of the world. Kuwait
Finance House expects 2007 GDP to rise 6.1% in the GCC and 6.2% in South-East Asia
– in contrast to 2.4% in the EU and 2.2% in the US. Oil revenues lie behind the boom in
the GCC; and in South-East Asia it is "the financial rigour adopted in the wake of the
Asian currency crises," according to Douglas Clark Johnson, CEO of Calyx Financial, an
alternative investment adviser based in New York.

Continuing growth in the GCC states and South-East Asia is fast creating a
prosperous middle class among the regions' combined 410 m-strong Muslim population.
As the ranks of the regions' newly well-off snap up credit to buy homes and cars, and
invest in savings and retirement plans, demand for Sharia-compliant retail financial
services is set to accelerate. Behind such consumer products is a need for Islamic
institutional finance too.

Consider, too, the vast cash-flows into the GCC region and South-East Asia: The
IMF expects Indonesia and Malaysia alone to record a cumulative current account surplus
of USD 132 billion for the five-year period to end-2014, in contrast to a deficit of USD
32 billion for the same period a decade earlier. And in the GCC, the surplus should reach
USD 680 billion, versus a prior deficit of USD 8 billion.

Buoyed by this cash, regional governments are planning ambitious infrastructure

programmes Indonesia alone expects USD 110 billion of expenditure in the five years to
end-2016 and consulting firm McKinsey estimates the GCC will invest USD 200 billion
in the same period. Much of this spending is already being financed by sukuk and the
volume is set to balloon following its successful sukuk issue, SEWA hopes to raise
another USD 2.7 billion. And in neigh bouring Dubai, the electricity and water authority

10
 is eyeing a debut sukuk issue, with plans to raise USD 2.5 billion.

2.2 Modes of Islamic Financing

2.2.1 Musharakah

Musharakah is one of the two ideal modes of Islamic financing. The other one
being Mudarabah. Musharakah is a contractual relationship formed through mutual
consent of the parties for sharing of profits and losses in a joint venture. Assets in the
venture are jointly owned in proportion to each partner’s contribution. The profits are
shared in a pre-agreed ratio. Losses, however, are incurred in proportion to each partner’s
investment. Islamic Bank representing share of its depositors invests funds in the joint
venture alongside other investor(s).

2.2.2 Mudarabah

Like Musharakah, Mudarabah is also a form of partnership. Whereas all partners

in Musharakah contribute capital, under Mudarabah partnership is formed between
provider of capital and provider of expertise or human resource. Proportions for sharing
profit are decided upfront. Losses are incurred solely by the partner contributing capital.

2.2.3 Murabaha

Murabaha is a non-participatory mode of Islamic financing where the bank sells

the asset required by its client to the client on cost-plus basis. The asset is first purchased
by the bank and the bank incurs the risk of any loss or damage to the asset as long as the
asset remains under its ownership. Upon sale of the asset, the Islamic bank is obligated to
inform the client of the exact cost incurred in the purchase of the asset and the margin of
profit incorporated in the sale price. Payment by the client of the sale price may be
deferred in which case it would become Muajjal. The selling price once agreed cannot be
changed even when the client fails to pay on the agreed date.

2.2.4 Ijara

Under this facility a client may take on rent, property, vehicle or any other real
asset belonging to the bank. The bank transfers the right of use of the asset to the client,

11
while retaining the ownership of the asset. The client pays periodic rent to the bank for
the use of the asset. Basis for rentals can be fixed as well as floating. Any change is rental
may be made through mutual consent.

2.2.5 Salam

Salam is a contract of advanced payment against deferred delivery of goods.

Goods paid for in advance by the buyer are delivered by the seller after an interval of
time. The Seller receives in advance fully paid price of the goods at the time of contract
undertaking to deliver the goods specified by the buyer at a future date.

2.2.6 Istisna

Manufacture of a specific product against precise specifications by a manufacturer

for delivery to buyer. It is necessary that the price of the product and product
specifications are fully agreed upon by the manufacturer and the buyer, and that the
material required for manufacture is arranged by the manufacturer.

2.3 Role of Banking In The Economy

Banking principal roles in the Economy are as follows:

2.3.1 The Intermediation Role

Transforming savings received primarily from households into credit (Loans) for
business firms and others in order to make investments in new buildings, equipment, and
other goods.

2.3.2 The Payments Role

Carrying out payments for goods and services on behalf of their customers (such
as by issuing and clearing checks, wiring funds, providing a conduit for electronic
payments, and dispensing currency and coin).

2.3.3 The Guarantor Role

Standing behind their customers to pay off customer debts when those customer
are unable to pay (such as by issuing Latter of Credit).

2.3.4 The Risk Management Role

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 Assisting customers in preparing financially for the risk of loss to property and

person.

2.3.5 The Savings/Investment Advisor Role

Aiding customers in fulfilling their long-range goals for a better life by building,

managing and protecting savings.

2.3.6 The Policy Role

2.4 Nature of the Organization

Like all the banks of Pakistan Bank Alfalah is also a financial field to help the

customers. It provides loans on interest base and deposits the same. All the

activities and operations perform by the Alfalah is under the guideline of SBP. SBP

is main body of all the financial institutions working in Pakistan.

2.5 Business Volume Of Bank Alfalah

Serving as a conduit for government policy in attempting to regulate the growth

of the economy and pursue social goals.

2.6 Product Lines Of Bank Alfalah

BAL is a commercial bank, which transacts the business of banking in accordance with
the provisions of BCO, 1962. Section 7 of the Act authorizes banks to engage in the
prescribed form of business. In the light of this section BAL’s functions can be
categorized as under:

1) Agency services
2) Money gram service
3) Underwriting of loans raised by the Government or public bodies and trading by

13
 corporations etc.
4) Providing specialized services to customers,

2.7 Major Competitor

Being a financial institution. The BAL is facing the competition of many commercial banks
and DFI’s. However, the major competitors relating to product offering and distribution
channels are sharing business of BAL.

1 Habib Bank Limited

2 Muslim Commercial Bank Limited

3 Allied Bank Limited

4 Askari Commercial Bank Limited

5 Soneri Bank Limited

6 Khyber bank

7 Standard charter

8 Bank Al-Habib Limited

9 Bank of Punjab

10 Faysal bank

11 Meezan bank

2.8 Brief Introduction of BANK ALFALAH Peshawar

Bank Alfalah Islamic Charsadda Road Branch Peshawar started its operations on
21st Nov, 2004 and with a short span of time the bank’s performance grow day by day,
because of its high valuable clients. BAL-IDB Peshawar became one of the most
progressive and dynamic banks in a very short time and overtook several other well-
established competitor banks.

This branch is situated in very busy centers, which brings a great number of
deposits to the branch, from this in a short span of four years; the deposits grew higher
than all other banks functioning for last many decades or more. Beside the deposits, the

14
number of the transaction of other products of the branch i.e. Consumer finance products,
remittances, Foreign Exchange etc, also increases day by day. The branch performs all
the functions of a commercial bank. The BAL IDB Peshawar is headed by the Manager.
Several staff officers are delegated different responsibilities.

2.8.1 Objectives

The following are the main objectives of the BAL IDB Peshawar for which it is
structured:

 Active mobilization of saving and deposits of the valued clients of BAL IDB
Charsadda road Peshawar.

 Speedy transmission and payment of transfers

 Fast, competitively priced foreign exchange transaction

 Efficient and rapid services to clients and to the public

 Finding the niches in the financial markets for investment.

The branch tries to actively promoting their products in different areas. The
branch has also to ensure suitable training for improvements in staff skills and those to
the Islamic/corporate clients, technical and most importantly management skills that are
encouraged through the bank association with the client’s enterprises. Organizational
structure

15
 CHAPTER 3

ORGANIZATIONAL STRUCTURE
Like every successful organization BAL-IDB also requires an efficient organizational
structure for the successful operation of its activities. As it works on the principles
leading to its successful procedures.

The organizational structure of BAL-IDB is framed to achieve its objectives. The

organization structure is somehow flat with few hierarchical levels and greater
specialization of functions. All of these functions are aimed to improving efficiency,
reducing cost; improving decision making and assigning responsibilities. Another
significant policy of BAL-IDB is “Customer Convenience”. All of the structure
procedures and systems of BAL are designed to serve their customers in the best possible
way. The BAL organizational structure is developed to satisfy its customer in any
possible manner and till now they achieved excellence results from its customers.

BAL-IDB is one of the largest and complicated organizations of Pakistan and having 400
branches and administrative offices all over the country.

Like all the banks of Pakistan Bank Alfalah is also a financial field to help the customers.
It provides loans on interest base and deposits the same. All the activities and operations
perform by the Alfalah is under the guideline of SBP. SBP is main body of all the
financial institutions working in Pakistan.

The current BOD consists of the following members

Sheikh Hamdan Bin Mubarak Al Nahayan Chairman

Mr.Sirajuddin Aziz Vice Chairman Mr.Sirajuddin

Aziz Chief Executive

Mr. Abdullah Khalil Director

Mr. Khalid Mana Saeed Director

16
 Mr.Ikram Ullah-Majeed Sehgal Director

Mr. Abdullah Nasser Director

Mr.Sirajuddin Aziz Director

Mr.Nadeem Iqbal Sheikh Director

Mr.Khalid Mana Saeed Director

Mr. Abdullah Khalil Director

Mr.Shakil Sadiq Chief OperatinOfficer

Mr.Zahid Ali Chif Financial Officer

Chairman& President

Board of Directors
President’s Secretariat
Secretary Board of Directors

Credit Management
Corporate & Investment Banking Group Group
Audit & Inspection Group
Compliance Group

HRM & Administration Group

Operation Group Treasury
Commercial & Retail Banking Management Group
Group

Special Assets Management Group

Overseas Management Group I.T. Group

Figure 3.1 Organizational Hierarchy Chart

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Table 3.2 Number of Employees

Permanent 7500
Temporary/ Contractual Basis 355
Bank’s own staff strength at the end of the year 7855
Out sourced 2100
Total staff strength 9955
Source: Annual report BAL 2016

An employee may be defined as: "A person in the service of another under any
contract of hire, express or implied, oral or written, where the employer has the power or
right to control and direct the employee in the material details of how the work is to be
performed.” An employee contributes labor and expertise to an endeavor. Employees
perform the discrete activity of economic production. Of the three factors of production,
employees usually provide the labour.Specifically, an employee is any person hired by an
employer to do a specific "job".

In most modern economies, the term employee refers to a specific defined

relationship between an individual and a corporation, which differs from those of
customer, or client...There are differing classifications of workers within Alfalah Bank
Limited, these are: Permanent Temporary / On Contractual Outsourced,
3.3 Number of Branches

BAL-IDB has a large network of branches, which extends to the remotest areas of
the country. Alfalah was established in 1997 and its Islamic division started operations in
2004 and its yearend reflected a modest capital base of Rs. 100 million and deposits
totaling Rs 113.7m. By following yearend, BAL-IDB’s equity had risen more than 4
times to Rs 569m and the balance sheet footing had swelled to Rs 7,799 million.

During 2002 BL added 81 banks to their network of correspondents, bringing the

total number over 170. Of this relationships.Alfalah geographical coverage now extends
to over 100 countries, which is adequately compatible with our trade flows.

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 3.4 Head Office

The Head Office of BAL is situated on Chundrigar road in Karachi. All branches and
regional offices work according to the rules and regulations issued by Head Office from
time to time. The Head Office of BAL which is primarily responsible for making policies
and execution of policy decision includes. And BAL-IDB main branch is situated in
Lahore

3.5 Introduction of the Department

I have served in the BAL as an internee in the IBG Jamrud Road Branch Peshawar,
during my internship I worked in the operation department. Operation department is the
major department in the retail banking it includes all the other sub departments that are
Account opening, Remittances, Cheque clearance and Foreign exchange department.

If I couldn’t work in a department due to shortage of time my respected manager Kamran

Bangash great Deal to get information about the department.

ISLAMIC BANKING BRANCHES

Branch Name Address PABX FAX No

IBG- Charsadda Bakshi-pul , 091- 091-

Road Peshawar 5701384 5701392

3.6 Functions of the Department

3.6.1 Deposits Department
Deposits Department is known as the backbone of any bank, deposits department
shows the performance of a bank in a particular area. The first step towards the banker
customer relationship is the opening of a customer’s account. Bank Alfalah Peshawar.

3.6.2 types of deposit accounts at BAL IDB

1. Current Account
2. PLS Savings Account

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 3. Royal Profit
4. Basic Banking Account
5. Alfalah Kifayat
6. Alfalah Mahana Amdan
7. Alfalah Education
City Branch provides different types of deposits for various business segments
Bank Alfalah Islamic Banking Division (BAL-IBD) offers Current, Savings and
Term Deposit facilities to its customers seeking personal banking relationships with the

Facility MINIMUM PROFIT ZAKAT

BALANCE DEDUCTIONS
Current PKR Nil Not applicable
deposit 1000/=

Musharakah PKR Tiered Applicable

Savings 1000/= structure, 6
deposit monthly pay-
out

Musharakah PKR Tiered Applicable

Term 10000/= structure, 6
deposit monthly pay-
out
Mahana 100/= Nil Not applicable
Asan
Table 1
a.Procedure.

The officers of the bank open an account at the request of a customer. When a customer
visits the BAL Peshawar City Branch he is asked for two references, one person who is a
relative of him, in case of emergency or in case of any information required by the bank
the bank call that person for getting information about his customer i.e. Next of Kin.
Next, he is asked who introduced him to BAL Peshawar city branch as a customer. The
introducer must be an account holder of the bank or an official of the bank. After the
initial formalities, he is asked to fill the form in the officer’s presence. The following are
the important information in the account opening form which is filled by the customer
while opening an account:

20
1. Nature of Account i.e. individual, joint, business account etc.

2. The title of the account.

3. The name of the account opener along with his father’s in block letters.

4. His occupational information i.e. whether he is salaried or self employed.

5. In case he is serving somewhere the name of his organization otherwise the name
and nature of his business.

6. National Identity Card Number.

7. Complete postal/ mailing addresses are required to be filled in the form.

8. Currency of Account in which the account will be operated.

9. Next of Kin portion must be filled by the customer.

In case of a current account opened in the name of a business the customer is

asked to bring in an application on the letter pad of his business and he is requested affix
the business named stamp on the application. That stamp will be further used for deposits
and withdrawals from the business account.

B.Photocopy of National Identity Card

A copy of the customer’s original identity card must be attached to the account opening
form and the original shown to the officer.

D.CHEQUE BOOK REQUISITION SLIP

In order to operate a current and savings account a Cheque book is required that is
issued by the concerned officer the requisition slip is filled in and the number of leaves
that the customer feels he would need is mentioned. The charges for the Cheque book are
recovered by debiting his account.

E. WITHDRAWALS

The account holder makes withdrawals after he presents Cheque and other
payment instruments signed exactly in the fashion on the specimen card up to the limit of

the credit balance in his account.

21
 CHAPTER 4
CRITICAL ANALYSIS
These section efforts have been made to cover all relevant aspects of the financial
performance of BAL. Overtime comparison and Common Size analysis are carried out
with the view to extract concrete conclusion to describe financial standing and
performance of the bank.

4.1 Vision Statement

“To be the leading financial services provider, partnering with our customer for a more
prosperous and secure future”.
As a strategic aim, the Bank seeks greater diversification in its revenue base. We plan to
further consolidate our core business and competencies. We are seeking to diversify and
focus our energies towards consumer financing and retail banking so as to leverage our
capabilities towards greater corporate strength, synergy, and profitability.

We believe that a strong, powerful global capability is important in today’s inter-

connected world. Significant investment is planned in technology, premises and
infrastructure to improve customer service. We remain committed to have an outstanding
global capability to serve both our domestic and overseas clients.

The Bank takes cognizance of the importance of human resource development,

creativity and knowledge-acquisition in the new banking environment. We will improve
compensation, training and accountability for our staff in order to increase motivation
productivity and customer service. Thus, the attention is towards changing mindsets and
developing quality personnel with leadership attributes through provision of challenging
career and learning opportunities

4.2 Mission Statement

“To practice Islamic banking in its desired spirit that unfolds its true economic
potential resulting in prosperity to our customers and commercial rewards to our sponsors
and our employees.”

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4.2.1 Bank Alfalah Information

Great journeys begin with but a single step and mighty oaks are born out of
humble seedlings. Bank Alfalah – Islamic Banking Division (BAL-IBD) – presently a
division of Bank Alfalah Limited – is gearing up to become a separate, full-fledged
Islamic Banking entity. BAL-IBD offers to its customers a broad range of Islamic
products under personal, consumer and corporate banking modes. The array of Islamic
instruments at the disposal of BAL-IBD is equipped to provide efficient and satisfying
solutions to our customers’ needs. Our Islamic products are Shariah-compliant carrying
the seal of approval of the Centre of Islamic Economics, an institution vested with
powers to attest authenticity and legitimacy of Islamic banking products in Pakistan.

BAL-IBD has entered into a Shariah Consultancy agreement with the Centre of
Islamic Economics, Karachi, which is a noted and well-known seat of learning for
Shariah scholars and a prominent institution dealing in Shariah Advisory services.
Besides assisting in advancement of the Division’s product portfolio, the Centre also
stamps approval of the Division’s conduct of business following periodic audits. These
audits are in addition to those carried out by the State Bank of Pakistan and the internal
audits undertaken by the Division itself.

4.2.2 Performance

Bank Alfalah Islamic Banking Division (BAL-IBD) started operations in 2004

and at its yearend reflected a modest capital base of Rs 100 million and deposits totaling
Rs 113.7m. By following yearend, BAL-IDB’s equity had risen more than 4 times to Rs
569m and the balance sheet footing had swelled to Rs 7,799 million. Deposit size had
grown from less than Rs 114m to over Rs 7,229 million.

The pace of frenetic, triple digit growth was continued over the next twelve
months as equity more than doubled to Rs 1,278 million from Rs 569m. Assets also
recorded a more than 100% growth, climbing to Rs 15,634 million from Rs 7,799
million. Deposits alone failed to double – rising to Rs 12,476m from Rs 6,548 million yet
managing a healthy 90% increase.

23
 Financial results as of June 30, 2006, reflect growth but at more modest pace.
Total balance sheet size fell shy of Rs 18 billion – Rs 17,970m vs. Rs 15,634m – and
deposits climbed to Rs 14,111 million, rising Rs 1,635 million in six month’s period.
Income for the 6-month period was Rs 111.23 million.

4.2.3 Hilal Card

In our endeavor to provide you versatile banking options to fulfill your financial
needs, Bank Alfalah Limited presents the Alfalah Hilal Card, 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 Hilal Card 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 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 is complete.

4.2.4 Money Gram

Bank Alfalah limited, in collaboration with Money Gram, offers remittance

service to Pakistan. Money Gram is person to person money transfer service that allows
consumers to receive money in just a few minutes.

4.2.5 Secure And Reliable

An extensive network of quality agents, linked by computer, will transfer your

money safely and ensure that it is handled with care and without delay. Thousands of
people already use the Money Gram service all over the world. It is trusted for its
reliability and security.

24
4.2.6 Convenient And Fast

Money Gram is available in over 154 countries and in more than 40,000 locations
worldwide. With Money Gram your money is transferred immediately and usually arrives
at the receiving end within 10 minutes while other services can take days or weeks. There
are no complicated procedures and you do not need a bank account or a credit card.
What’s more, the receiver is handed the cash immediately.

4.2.7 Travelers Cheques

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

4.2.8 Features

1. Maximum security features Special embossed intaglio printing in the UK, Alfalah
security thread and Alfalah watermark. Just some of the advanced features that make TCs
secure

2. Fully Refundable

3. Transferable and endorsable

4. Unlimited validity

5. No account needed

6. Network of Branches

4.2.9 Online Banking

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

25
4.2.10 Foreign Trade & Correspondent Banking

Inspired by a challenging spirit and an unyielding desire to create a sound and

reliable network of correspondent relationships, the bank has placed great emphasis
towards it growth. Accomplishing something for the first time requires a special focus. It
demands foreseeing possibilities. In our endeavor to do so, we successfully surmounted
problems and difficulties arising out of issues relating to weak economic conditions of the
economy and a continuous deteriorating status of country risk.

The incertitude and skepticism of the international banking community towards

financial institutions from emerging markets remained intact. Our persistence during the
past four years allowed us to make significant inroads into the arena of correspondent
banking. Large international banks, after critically evaluating us, agreed to enter into
relationship.

During 2002 we added 81 banks to our network of correspondents, bringing the

total number over 170. Of these relationships, there are now several banks that rank
amongst, the top financial institutions in the world. Our geographical coverage now
extends to over 100 countries, which is adequately compatible with our trade flows.

Our correspondents, during the year extended us unqualified support, which

enabled us to undertake a healthy quantum of foreign trade business. There are many
challenges ahead for the bank, in the coming year, our bank will not only continue to
review its efforts on existing correspondents to make the relationship more beneficial, but
will also add more correspondents to establish a comprehensive international networking
to facilitate our customer’s transaction as well as the Bank’s proprietary needs.

We have provided against the list of correspondents their world and country
ranking. These ranking have been taken from The Bankers Almanac – July 2001 issue.

We would like to emphasize that correspondent arrangements do not necessarily

imply the existence of account relationship. We are in the process of rationalizing our
current nostro account relationships. We shall continue to open new accounts in various

26
currencies based on our trade flows and business requirements.

The correspondents are listed on a country-wise basis. The banks are listed
alphabetically.

4.2.11 Car Finance

Alfalah car scheme enables customers to own a car at easily affordable and
flexible installments with minimum down payment and insurance.

4.2.12 Locker Services

Locker services are offered at select branches. Lockers are available in three sizes
small, medium and large. Annual charges for the lockers are as follows:

60. Small Rs 3500/-

61. Medium Rs 4500/- + FED 15%

62. Large Rs 5500/-

Lockers are available to account holders and carry an insurance value of Rs.250,
000/-

4.3 Current strategies of Bank Alfalah

The current strategy of BAL is to provide financial solutions to major segments of its
customer base, namely retail and corporate. Separate business groups have been set up to
ensure a more focused approach in satisfying the diversified customer segments The plan
for future is to further realize the capacity of Islamic Financial Systems and to bring
Shariah compliant network parallel to current retail network of traditional banking.

4.4 Comparison between Current Strategies and Vision & Mission of BAL
After studying deeply the vision, mission and current strategies of BAL I realize
that the current strategies of BAL totally matched with its Vision and Mission
statement because as we can see in vision statement they talk about to provide
financial services and safe future of its customers so this is also mention in the
current strategies of BAL.
27
 In the Mission statement they talk about the long term relationships with
customer by providing them new and effective products and services so same is
mentioned in the current strategies.

4.5 Risk Management

The bank is primarily subject to interest rate, credit and currency risks. The bank has
designated and implemented a frame work of controls to identify, monitor and manage
these risks are as follow;

 Currency Risk Management

 Credit Risk Management

 Interest Rate Risk Management

4.6 Concentration Of Credit And Deposits

The major class of business for BAL related to advances is the textile and private sectors.
BALL is advancing 27.2% to textile and 74.5% to private sector. Majority of the
depositors fails in the category of individuals, contributing 65% of the total deposits.

4.7 Financial Analysis

Financial analysis of the organization involves the evaluation of the financial

performance as depicted in the financial statements of the organization. The BAL
provides this information in the shape of its annual report for every financial year
containing financial as well as non-financial information.

To improve the quality of decision making, proper analysis of these statements

helps a lot. Financial statements analysis helps in determining the financial conditions at
any particular point in time and effectiveness of operations of a firm during a specific
period (Horne,2012).

28
 The various stakeholders of business are all interested in the analysis of financial
statements. But the focus of interest of all is not the same. Financial statements are
prepared primarily for decision-making. They play a dominant role in setting the
framework of managerial decisions. But the information in the financial statements is not
an end in itself as no meaningful conclusions can be drawn from these statements alone.
However the information provided in the financial statements is of immense use in
making decisions through analysis and interpretation of financial statements.

Financial statement analysis is the process of identifying of financial strengths

and weaknesses of the firm by properly establishing relationship between the items of the
balance sheet and the profit and loss account.

4.7.1 Financial Highlights of BAL

Since 1997, the bank has made great strides towards growth and profitability.
Bank Alfalah has grown 51.84% in its total assets and 101.35% in its equity. The deposits
base moved from less than Rs.15 billion to over 76.6 billion and pretax profits from
Rs.6.7 million in 1997 to Rs.3.506 billion in year 2003. The Loans and advances figures
stood at Rs.50.37 billion, an increase of approximately 71% over the last financial year.
Being a bank that is focused on financing of foreign trade, Alfalah volume of foreign
trade business has growth from Rs.5.8 billion in 1997 to over Rs.91 Billion in year
2003.This portfolio has been supplemented keeping the Bank’s stringent and prudent
policies in view.

4.7.2 Financial Analysis

Ratio is defined as the quotient of two mathematical expressions and hence in
financial ratio analysis a ratio is used as benchmark for evaluating the financial position
and performance of a firm.
Financial Ratios are used to weigh and evaluate the operating performance of a
firm. They provide a meaningful comparison of a company to its industry. These ratios
can be used to measure profitability, asset utilization, liquidity and debt utilization.
The major analysis in this regard is Index Analysis & Common Size. In these
analyses, the performance of a firm is seen over a number of years, because analysis of
only a single year’s figures as it is done in case of Ratio Analysis may not present an
accurate picture of the firm.

29
30
Table 4.1 STATEMENT OF FINANCIAL POSTION (BALANCE SHEET)
For the year ending June 30
Statement of Financial Rupees in “000”
ASSETS June 30, June 30, June 30,
2016 2015 2014
Cash & Balances with treasury 2,904,139 1,542,102
5,079,720
Banks
Balances with other Banks 2,488,477 1,502,684 2,403,698
Lending’s to financial institutions 2,708,76 2,562,093 1,810,846
Investments 29,341,227 19,852,73 17,925,911
0
Advances 21,846,716 18,238,33 11,835,962
3
Operating Fixed assets 1,184,180 1,121,554 1,013,670
Deferred tax asset-net 311,306 443,320 456,420
Other assets 1,807,663 1,993,869 1,821,961
TOTAL ASSETS 60,154,58 50,794,30 38,810,57
4 3 0
LIABILITIES
Bills payable 249,648 280,665 223,973
Borrowings 2,581,884 2,894,759 5,147,036
Deposits & other accounts 45,384,411 36,981,35 26,285,794
1
Sub-ordinated loans - - -
Liabilities against assets subject - -
-
to finance lease
Deferred tax liabilities - - -
Other liabilities 2,025,450 1,237,155 1,185,470
TOTAL LIABILITIES 50,241,39 41,393,93 32,848,27
3 0 3
NET ASSETS REPRESENTED BY
Share Capital 5,004,001 5,004,001 5,004,001
Reserves 640,009 548,039 435,342
Unappropriated profit / 419,959 (398,710)
52,079
(accumulated loss)
Advance against shares 3,224,000 3,224,000 224,000
subscription
Surplus on revaluation of assets 625,222 572,254 697,664
TOTAL REPRESENTED 9,913,191 9,400,373 5,962,297
Source: BAL annual report 2014, 2015, 2016.

31
32
Table 4.2 PROFIT AND LOSS ACCOUNT (INCOME STATEMENT)
For the year ending June 30
PROFIT AND LOSS Rupees in ‘000’
June 30, June 30, June 30,
2016 2015 2014
Mark-up/return/interest earned 1,568,284 4,207,155 3,390,014
Mark-up/ return/ interest income 968,838 2,925,066 2,390,388
Net mark-up/ interest income 599,446 1,282,089 999,626
Reversal of provision against non- (15,411) 48,916 659,758
performing loans and advances-net
Provision for diminution in the value 27,610 (371,682)
of investments-net 602,061
Bad Debts written off directly - - -
12,199 (322,766) 1,261,81
Net mark-up/ interest income after 587,247 1,604,855 (262,193)
provisions
NON MARK-UP/ INTEREST
INCOME
Fee, Commission and brokerage 63,857
172,565 127,123
income
Dividend income 46,947 74,848 117,458
Income from dealing in foreign 11,061
30,761 3,371
currencies
Gain on sale of securities-net 8,548 (285,934) 67,148
Unrealized loss on revaluation of (15,666)
investments classified as held for
trading 1,431 (1,294)
Other income 21,845 66,006 69,896
Total non mark-up/ interest income 136,592 59,677 383,702
NET INCOME 723,839 1,664,532 121,509
NON MARK-UP/ INTEREST
EXPENSES
Administrative expenses 353,181 943,680 719,453
Other provisions/ write offs - (5,705) 185,500
Other charges 8,884 13,416 15,326
Total non mark-up/ interest 362,065
951,391 920,279
expenses
NET EXPENSES 361,774 713,141 (798,770)
PROFIT/ (LOSS) BEFORE 361,774
713,141 (798,770)
TAXATION
Taxation
Current (81,818) 89,631 75,292
Prior - 2,040 -
Deferred (100,266) 57,984 (236,879)
NET TAX
149,655 161,587
(182,084)
PROFIT/ LOSS) AFTER TAXATION 179,690 563,486 637,183
Earnings per share 0.36 1.13 (1.27)
Source: BAL annual report 2014, 2015, 2016.

33
4.8 RATIO ANALYSIS:
Financial ratio is an index that relates two according numbers and in obtain by dividing one
number by other.

4.9 TYPES OF RATIOS:

Following are the types of ratio

LIQUIDITY RATIO:

Ratio that measures a firm’s ability to meet short term obligation .liquidity ratios are current ratio
and quick ratio.

4.10 CURRENT RATIO:

“This ratio relates current assets to its current liabilities”. It shows that
how the organization has more assets and strength of the liquidity to pay its
debts. It is calculated as

 ( formula ) Current Ratio = Current Assets / Current Liabilities

Table 4.3 Current Ratio

Year 2016 2015 2014

35,004,719 28,997,227 23,682,557
Current Assets
48,215,943 40,156,775 31656803
Current
Liabilities
Current 0.72 0.72 0.74
Source:
Ratio BAL annual report 2014, 2015, 2016.

34
Interpretation:

An increase in the current ratio represents improvement in the liquidity

position of the bank while a decrease in the current ratio indicates that there
has been dis-improvement in the liquidity position of the bank. Current Ratio
in 2014 is increasing as compared to 2015 & 2016. In 2014 &2016 it is
stable.

4.11 TOTAL ASSET TURNOVER:

“This ratio relates sales to its total assets”. It is calculated as;

 ( formula ) Total asset turnover = Sales / Total Assets

Table 4.4 Total Asset Turnover

Year 2016 2015 2014

1,568,284 4,207,155 3,390,014
Sales
60,154,584 50,794,303 38,810,57
Total Assets
0
Total Asset 0.026 0.082 0.087
Source:
turnoverBAL annual report 2014, 2015, 2016.

35
Interpretation:

This ratio shows that how efficiently an organization use its assets.
High value of total asset turnover means that the company is using its assets
efficiently. This measure is probably of greatest interest to management,
because it indicates whether the efficient operation has been financially
efficient. Total asset turnover is increasing in 2014 as compared to 2015 &
2016 which needs to be improved.

4.12 GROSS PROFIT MARGIN RATIO:

Gross profit margin relates profit of the organization to its sales

(interest earned in case of Bank).This is calculated as.

 ( formula ) Gross Profit Margin Ratio = Gross Profit / Interest

Earned

Table 4.5 Gross Profit margin ratio

Year 2016 2015 2014

723,839 1,664,532 121,509
Gross Profit
587,247 1,604,855 (262,193)
Interest Earned
Gross Profit 1.23 1.03 0.46
Source:
Margin BAL annual report 2014, 2015, 2016.
Ratio

36
Interpretation:

This ratio indicates the profit that the firm earns on the interest. In
2011 the Gross profit margin ration is decreasing and in 2014 & 2015 this
ratio is increasing. It shows that the firm Gross profit is recovering.

4.13 NET PROFIT MARGIN:

“This ratio measures the firm’s profitability of sales/ interest earned

after taking account of all expenses and income taxes”.

This ratio can be calculated as:

 ( formula ) Net Profit Margin Ration = Net Profit after Taxes /

Interest Earned

Table 4.6 NET PROFIT MARGIN

Year 2016 2015 2014

179,690 563,486 637,183
Net Profit after
taxes Earned 587,247 1,604,855 (262,193)
Interest
Net Profit 0.305 0.351 (0.243)
Margin Ratio
Source: BAL annual report 2014, 2015, 2016.

37
Interpretation:

It indicates the firm’s profit with respect to interest earned. In 2011 it is

decreasing as compared to 2014 and in 2015 it is also decreasing as
compared to 2014. Increase in this value shows that the firm Net Profit after
taxes is higher and vice versa.

38
4.14 RETURN ON EQUITY:

ROE compares net profit after taxes to the Share holder’s Equity. This ratio is
calculated as:

 ( formula ) ROE=Profit after Taxes/Share Holder’s Equity

Table 4.7 Return on Equity

Year 2016 2015 2014

179,690 563,486 637,183
Profit after taxes
9,913,191 9,400,373 5,962,297
Shareholder’s
equity on equity
Return 0.018 0.059 0.106
Source: BAL annual report 2014, 2015, 2016.

Interpretation:

It indicates the Profit after taxes to the share holder’s equity. Increase
in this ratio means that profit after taxes is higher with respect to the share
holder’s equity and vice versa. In 2011 it is increasing as compared to 2014
& 2015. In 2014 it is also increasing as compared to 2015.

4.15 RETURN ON ASSETS:

This ratio shows the efficiency of organization that how efficiently

utilizes their assets. This ratio relates profits to assets. It is calculated as:

39
  ( formula ) ROA = Profit after Tax/Total Assets

Table 4.8 Return on Assets

Year 2016 2015 2014

179,690 563,486 637,183
Profit after tax
60,154,584 50,794,303 38,810,570
Total Assets
Return on Assets 0.002 0.011 0.016
Source: BAL annual report 2014, 2015, 2016..

Interpretation:

This ratio shows that how the firm efficiently utilizes their assets.
Increase in this ratio indicates that the firm profit after tax is higher as
compared to its total assets. In 2014 it is increasing as compared to 2015 &
2016. In 2014 it is decreasing as compared to 2015 & 2016.

4.16 INVESTMENT DEPOSIT RATIO:

This ratio shows the comparison of investments and deposits. It is

calculated as:

 ( formula ) Investment Deposit Ratio=Investments / Deposits

Table 4.9 Investment Deposit Ratio

40
 Year 2016 2015 2014
29,341,227 19,852,730 17,925,911
Investments
45,384,411 36,981,351 26,285,794
Deposits
Investment 0.646 0.536 0.681
DepositRatioRatio
Source: BAL annual report 2014, 2015, 2016..

Interpretation:

It indicates the firm’s investments as compared to its deposits.

Increase in this value shows that the firm’s investments are high as
compared to its deposits and vice versa. In 2011 it is increasing as compared
to 2014 and 2015. In 2016 it is increasing as compared to 2016.

4.17 DEBT RATIO:

It relates the firm’s use of debt to finance its assets. It is calculated

as:

 ( formula ) Debt Ratio = Total Debt / Total assets

 Table 4.10 Debt Ratio

Year 2016 2015 2014

50,241,393 41,393,930 32,848,273
Total Debt
Current Assets 35,004,719 28,997,227 23,682,557

41
 1.43 1.42 1.38
Debt Ratio
Source: BAL annual report 2014, 2015, 2016.

Interpretation:

The Debt ratio shows the percentage that how much out of total asset
has been borrowed. The greater the ratio the greater the amount of other
people’s money being used to generate profit. In 2014 it has been
decreasing as compared to 2014& 2015. In 2015 it has been decreasing as
compared to 2016.

4.18 SWOT ANALYSIS:

SWOT is an acronym for an organization’s strengths, weaknesses, opportunities

and threats. A SWOT analysis consists of sizing up a firm’s internal strengths and
weaknesses and its external opportunities and threats in order to get an overview of the
organizations strategies and its environment. The basic purpose of such an analysis is to
develop strategies along with exploiting opportunities and strengths and neutralizing
threats and removing weaknesses.

The SWOT Analysis of Bank Alfalah Limited is as follows

4.11 Strengths

1. BAL is one of the largest private banks of the country with a deposit base of

42
Rs.76698 million in the 2003.

2. Parties of financial repute and credit worthiness like the State Bank of Pakistan,
and the Abu Dhabi Consortium besides by the Government of Pakistan.

3. The management efficiency and effectiveness of the bank has improved greatly as
is evident from the income pattern and provisions for loan/ write off practices. The
Deposits are increased by 48.40%. The profit after Tax is increased by 376.40%. The
Total Assets of the Bank is increased 51.845 from the last year.

4. It has a well-connected and adequately equipped branch network of more than

300 branches nationally.

5. The introduction of Relationship Banking that involves assessing and

understanding customer needs, providing advice on the customers business needs and
helping them find viable financial solutions to their business problems.

6. It offers corporate and retail banking services to its clients.

7. It is very active in foreign trade transactions and the volume grew at a rate of
36.07% over the previous year.

8. Based on the Bank’s operations, it has been able to maintain its credit rating in
long term to AA- and short term to A1+.

9. BAL has long-term vision, which plays a very important role in organization’s
success.

10. Bank’s emphasis on consumer banking by providing them with innovative saving
schemes, products and services suiting best to their life style.

11. Extension and improvement in services to domestic as well as foreign customer.

12. Best and optional policies and attractive compensation packages, for employees,
which has really improved their commitment, dedication and hard work, towards the
accomplishment of banks objectives.

13. BAL instant financing products for customer wanting instant loan facility at BAL
branches.

14. 24 hours cash access through ATM.

43
15. Pioneer in introduction of BAL Credit Cards and RTC, which minimize the
degree of riskiness.

16. Attention and sensitivity to competition prevailing in the country.

17. Effective marketing campaigns.

18. Advances schemes to agriculture sector and small and medium enterprises.

4.12 Weaknesses

1. Increase in the non-performing loans due to political, economic and legal factors
has adversely affected the bank’s image.

2. Administrative expenses are increasing every year.

3. Promotions are carried out on annual basis ignoring the importance of capabilities
and performance outputs.

4. Lengthy Credit processing and documentation procedures are a weakness of the

bank.

5. It is only operating nationally.

6. Less branches as compared to other banks.

7. There is no separate prayer room and dinning hall in the bank.

8. The banking hours of the bank are maximum that is from 9 A.M to 6 P.M.

9. Customers having account, with small amounts are not given some services and
dealing to those with high accounts.

10. Political pressure from vested interest group selection.

11. No marketing of advances

4.13 Opportunities

1. Reconstruction of Afghanistan is a great opportunity for the bank to grow by

offering banking operations in the war-affected areas.

2. Financial sector friendly policies of the Government by encouraging

developmental activities such as construction of houses and making agricultural and

44
 small and medium businesses finances.

3. Home remittances of Pakistanis working abroad through the banking channels

have widely facilitated the banking operations.

4. The current trend of professional degrees offered by reputed institutions can

greatly help the bank achieve professionalism in its organizational culture by hiring
MBA students who major in Banking and Finance.

5. Expand its product line similar to other competitive banks by introducing various
other modes of consumer financing such as car and consumer durables micro finances.

6. Expansion of IT platform and internet based banking systems.

7. The introduction of ATM facility in the every branch will most certainly result in
a positive image and improve the services offered to its customers.

8. Expand the branch network in the different counties of the world.

9. Stronger position to recover bad debts.

10. Benefits from incoming expertise and competition.

4.14 Threats

1. Increase in competition due to the rapidly growing number of foreign and

domestic private banks offering highly specialized and attractive financial services.

2. Reduction in developmental activities and foreign direct investment due to the

shaken investors’ confidence has also lead to a fall in the bank’s expansion pace.

3. Extensive promotional campaigns run by the other banks are a major threat to
BAL in that they are able to attract more customers.

4. The American elections is going on which is big threat to the policies of the bank.

5. Un-consistency in government policies regarding to business and economic

sector.

6. Growing global technological advancement.

7. Strict regulations by the government over credit facilities to the customers as to

meet the prudential regulations.

45
 8. Loss of confidence of the customers due to freezing of accounts

9. Concentration risk is involved with the credit department.

CHAPTER 5
CONCLUSION AND RECOMMENDATIONS

5.1 Conclusion
BAL is one of those organizations who is efficiently operating on their set
procedures and making profit. BAL fallows the guidelines of SBP in other words State
Bank of Pakistan provides policies to the banks operating in Pakistan and BAL is one of
them.
I worked in The Charsadda road branch of BAL and during my internship I learn a lot
about banking sector and practically do different tasks e.g. Account opening, online funds
transfer and much more. Now I am quit capable to deal with customers.
By concluding this report I will say that ALFALAH is a very good organization for long
term carrier because the staff is very friendly with each other and respectful too.

5.2 Recommendations
After doing the internship in BAL and deeply studying all the information regarding BAL
I will give few recommendations.
5.2.1Simplification Of Procedure

The procedure of opening an account should be simplified. The account opening form
should be self-explanatory and include translations in Urdu for those customers who are
not well read, since the fact cannot be ignored that many people do not have a good
understanding of English.

5.2.2 Incentives For Depositors

Those who deposit large amounts of money or are old customers of the bank should be
given free credit lines up to a certain limit. Besides, financial advice should be provided
to customers in case there is a change in the market trend before they seek for it.

46
5.2.3 Integrated Marketing Approach

All the officers in Deposits Department should be involved in marketing and not just
opening accounts and maintaining their records. This can be done through improving
their personnel relations skills of visiting the potential customers at their offices and
homes.

5.2.4 Expansion of The Cash Counter

The Cash Department at the Branch needs special attention in the sense that the cash
counter is small and becomes crowded when there are more than 10 to 15 customers to
attend. Customers make online fund transfer, use the debit card, withdrawals and deposits
from the very same counter. Hence, if a new counter cannot be built due to certain
limitations, the management should try to make lines of the customers or give tokens to
them, to minimize the crowed.

5.2.5 Burden Of Work In The Clearing Department

The load of work on the Clearing officer is high as compared to the other staff members
of the branch. The Human Resource Department at Head Office should hire more
employees for this department.

5.2.6 Establishment Of Marketing Department

Nowadays no organization can survive in this tough competitive world without having
able to market itself and its products. Keeping this in mind a Marketing Department
should be introduced in all branches that would

5.2.7 Development Of Managerial Leadership

Good managerial skills make positive contribution towards higher effective results. BAL
should focus on the effective utilization of its human resource by applying the modern
style of management. This can only be possible if political interferences are discouraged
especially when hiring and placing personnel and the recruitment policies are changed to
give preference to M.B.A. and M. Com. Students.

47
 5.2.8 Increasing Employees Salaries
BAL have strong financial position and earning more profits day by day so
according to me the salaries of employees must be increased because currently
BAL didn’t provide good salaries to its employees.
REFERENCES

 Annual Report of Bank Al-Alfalah Islamic 2014-2015-2016.

 Brochures and manuals from the Bank Branch.

 Internship reports on Bank available in the Abasyn university Library.

 Journals, Newspaper, & Course Books.

 Main Branch of Bank Al-Alfalah (Sadder).

 http:/www.bankalfalah.com.pk

 Annual Report of BAL 2016

48