CHAPTER ONE

INTRODUCTION

1
1.1 Background of the Study
As a student of Bachelor of Business Administration (BBA) everyone has to conduct a
practical orientation in any organization for fulfilling the requirements of the 12 weeks
Internship Program. The main purpose of the program is to expose the students to the
real world situation. This report is done as a partial requirement of the internship
program for the BBA students. This report is prepared for the internship program
consisting of a major in depth study of the total banking business of Al-Arafah Islami
Bank Ltd. Practical knowledge is fundamental for the application of theoretical
intelligence. Bearing this in mind and internship program was being included in the BBA
curriculum. The goal of this analysis is to expose the student in the organizational work
situation and also to provide an opportunity for applying classroom learning in practice.
There are some difference between theories and practice.

1.2 Objectives of the Study

1.2.1 Broad objectives
The broad objective of this study is- Investment Analysis of Al-Arafah Islami Bank
Ltd.
1.2.2 The specific objectives of the study are given as:
To describe the Investment scenario of Mirpur-1 Branch of AIBL.
To measure the current performance of investment of AIBL, Mirpur-1 Branch.
To forecast investment income and net profit of AIBL, Mirpur-1 Branch, Dhaka.

1.3 Company Profile

1.3.1 Brief Profile of the Company
Islamic ideology encourages AIBL to succeed in life here & hereafter. To achieve this
success they try to follow the way dictated by the Holy Quran and the path shown by
Rasul (SM). For achieving this goal Al-Arafah Islami Bank Ltd was established
(registered) as a public limited company on 18 June, 1995. The inaugural ceremony took
place on 27 September 1995.The authorized capital of the bank is Tk.2500.00 million
and the paid up capital Tk.9469.58 million. Some very renowned Islamic personalities
and pious businessmen of the country are the sponsors of the bank. 100% paid up capital
is being owned by indigenous shareholder.
The bank is committed to contribute significantly in the national economy. It has made a
positive contribution towards the towards the socio economic development of the
country by opening 94 branches on which 31 authorized dealer (AD) throughout the

2
country. The equity of the bank stood at Tk.1923.61crore as 31 December 2015, the
manpower is 2978 and number of shareholders is 41053 based on 2016th information.
The bank conducts its business on the principles of Mudaraba, hire purchase transactions
approved by Bangladesh Bank. Naturally, its modes and operations are substantially
different from those of other conventional commercial bank. There is a Shariah council
in the banks who maintains constant vigilance to ensure that the activities of the bank are
being conducted on the precepts of Islam. The Sharia council consists of prominent
Ulema, reputed bankers, renowned lawyers and eminent economist. AIBL includes 140
branches all over the country.

VISION
The vision of AIBL is to be a pioneer in Islamic Banking in Bangladesh and contribute
significantly to the growth of the national economy.
MISSION
Achieving the satisfaction of Almighty Allah both here & hereafter.
Proliferation of Shariah Based Banking Practices.
Quality financial services adopting the latest technology
Fast and efficient customer service
Maintaining high standard of business ethics
Balanced growth
Steady & competitive return on shareholders equity
Innovative banking at a competitive price
Attract and retain quality human resources
Extending competitive compensation packages to the employees
Firm commitment to the growth of national economy
Involving more in Micro and SME financing

COMMITMENTS
AIBL is a customer focused modern Islamic Bank, making sound and steady
growth in both mobilizing deposit and making quality Investment to keep their
position as a leading Islami Bank in Bangladesh.
AIBL delivers financial services with the touch of their heart to retail, small and
medium scale enterprises, as well as corporate clients through their branches
across the country.

3
 AIBLs business initiatives are designed to match the changing trade & industrial
needs of the clients

Al-Arafah Islami Bank at A Glance

Name of the Bank: Al-Arafah Islami Bank Limited.
Legal Identity: A public limited company registered in Bangladesh on
18thJune1995, under thecompaniesAct1994and enlisted in
Dhaka Stock Exchange Ltd &Chittagong Stock Exchange
Ltd.
Official Logo

Nature of Business: Commercial Banking based on Al-Quran & Sunnah.

Registered Office: Head Office:
36, Dilkusha (6-9 Floor) C/A,
Dhaka-1000, Bangladesh
SWIFT ALARBDDH
E-Mail: info@al-arafahbank.com
Website: www.al-arafahbank.com
Date of Registration 18 June, 1995
1st Branch Motijheel Branch, Dhaka
Opening Ceremony 27 September, 1995

Authorized Capital 15,000.00 Million

Paid-up Capital 9,469.58 Million

Local Partnership of 100 %

Capital
Equity 19,236.07 Million
Deposit 169,887.08 Million
Number of 55,427
Shareholders
Number of Branch 176
Table: 1.1: Company Profile

4
AIBL: MIRPUR-1 BRANCH AT A GLANCE
Particulars Information
Location Apan Angina, 3 / 4 Darus -Salam Road,
Mirpur-1, Dhaka-1216
Date of Incorporation 01.02.1997
Number of Division (at beginning) Two; General banking and Investment
Period of first investment 01.04.1997
Number of Division (at present) Four; General banking, Investment,
Foreign exchange and Cash.
Number of employee (at present) 28
Total asset (up to 2016) BDT. 1,11,11,49,351.08
Total deposit (up to 2016) BDT. 2,83,03,44,419.03
Total investment (up to 2016) BDT. 99,66,82,892.15
Net profit (up to 2016) BDT. 4,23,62,299.76
Table 1.2 AIBL: Mirpur-1 Branch at a glance

5
ORGANOGRAM OF AIBL: MIRPUR-1 BRANCH

Figure: 1.1 Organogram of AIBL: Mirpur-1 Branch

6
1.3.2 Description of Section
For my internship purpose I worked in section of AIBL, Mirpur-1 Branch. It was my fast
experience to work any organization. I opened customer accounts and also writing the
deposit slips and credit voucher of customers and Saving Account opening of this
Branch. I also take the cheque book requisition and provided the cheque book to the
customers. I also worked how to create Pay Order and how to create locker account. I
also work at opening in FDR account.

1.4 Major difficulties faced for accomplishing internship

This study is prepared based on published data (annual report) and consequent formal
documents given by the investment officials. I faced some problems during internship
and preparing report which I am mentioning below:
Lack of time
The time period of this study is very short. I had only12 weeks in my hand to complete
this report, which was not enough. So I could not go in depth of the study. I was also
busy in my assigned jobs in my bank.
Lack of Supervision by the bank officers
As the officials have to complete their task within office time 10am -5pm, so they can do
little supervision on me.
Restricted Information
There were various types of informations that the bank officers cannot disclose due to
the security and other corporate obligations. Some official people are reluctant to
disclose actual scenario.
Secondary Information
There was a lack of proper secondary information for Al- Arafah Islami Bank Limited
and its Product. Annual report, policy guidelines, website and other related documents do
not cover full and sufficient information.
Other limitations
During internship, I have realized that some field practices are different from standard
practices. There was also lack of experience in collecting information, doing analysis and
taking assessment of the related topics. However as time passed by many of these
limitations faded.

7
 CHAPTER TWO
DESCRIPTION OF THE TOPIC

8
2.1 Internship Topic
Investment Analysis of Al-Arafah Islami Bank Limited
Investment has different meanings in finance and economics. Finance investment is
putting money into something with the expectation of gain that upon thorough analysis
has a high degree of security for the principal amount, as well as security of return,
within an expected period of time. The making of loans and advances has always been
prominent profitable function of the Bank. The objective of the investment management
is to maximize the performing asset and the minimization of the non-performing asset as
well as ensuring the optimal point of loans and advances and their efficient management.
Investment management is a dynamic field where a certain standard of long-range
planning is needed to allocate the fund in diverse field and to minimize the risk and
maximizing the return on the invested fund. Continuous supervision, monitoring and
follow-up are highly required for ensuring the timely repayment and minimizing the
default. Actually the Investment portfolio is not only constituted the banks asset
structure but also a vital factor of the banks success. The overall success in Investment
management depends on the banks investment policy, portfolio of investment,
monitoring, supervision and follow-up of the loan and advance. Therefore, while
analyzing the Investment Management it is required to analyze its investment policy,
Investment procedure and quality of Investment portfolio.
PROCESS OF INVESTMENT

Figure: 2.1 Process of investment

9
2.2 Theoretical Framework
Definition of Investment
Investment has different meanings in finance and economics. Finance investment is
putting money into something with the expectation of gain that upon thorough analysis
has a high degree of security for the principal amount, as well as security of return,
within an expected period of time. The making of loans and advances has always been
prominent profitable function of the Bank. The objective of the investment management
is to maximize the performing asset and the minimization of the non-performing asset as
well as ensuring the optimal point of loans and advances and their efficient management.

Introduction of Investment
Risk
Time
Interest Rate
Security or Collateral
Operating Expense
Legal Considerations
Inflation
Finance Charge

Importance of Investment
Investment plays a vital role in national economy in the following ways-
It provides working capital for industrialization
It helps to create employment opportunities
Investment controls almost all kinds of production activities of the country
It brings social equity
Cash generation occurs for its successful performance
Business cycle can run well only by the help of lending system
Economic stabilization
Raise standard of living.

Investment Management & Principles

Investment management is a dynamic field where a certain standard of long-range
planning is needed to allocate the fund in diverse field and to minimize the risk and
maximizing the return on the invested fund. Continuous supervision, monitoring and
follow-up are highly required for ensuring the timely repayment and minimizing the

10
default. Actually the Investment portfolio is not only constituted the banks asset
structure but also a vital factor of the banks success. The overall success in Investment
management depends on the banks investment policy, portfolio of investment,
monitoring, supervision and follow-up of the loan and advance. Therefore, while
analyzing the Investment Management it is required to analyze its investment policy,
Investment procedure and quality of Investment portfolio.

Investment Principles
In the feature, Investment principles include the general guidelines of providing credit by
branch manager or Investment officer. In follow the following guideline while giving
loan and advance to the client.
I. Investment advancement shall focus on the development and enhancement of
customer relationship. All credit extension must comply with the requirements of
Banks Memorandum and Article of Association, Banking Companys Act,
Bangladesh Banks instructions, other rules and regulation as amended from
time to time.
II. Loans and advances shall normally be financed from customers deposit and not
out of temporary funds or borrowing from other banks.
III. The bank shall provide suitable credit services for the markets in which it
operates.
IV. It should be provided to those customers who can make best use of them.
V. The conduct and administration of the loan portfolio should contribute within
defined risk limitation for achievement of profitable growth and superior return
on bank capital. Interest rates of various lending categories will depend on the
level of risk and types of security offered.

Principles of Sound Lending

It should be clearly understood that the criteria/principles are not inflexible laws & are
given as guidelines for protecting Investment. In a practical competitive world, risks are
defined, accepted and Investment is often granted even though a proposal does not
strictly with some of the criteria described below:
The basic lending criteria can be considered as eight main headings, as follows:
1. Principle of Safety
2. Principle of Liquidity
3. Principle of Purpose
4. Character and ability of the borrower

11
 5. Principle of Security
6. Principle of profitability
7. Source of repayment
8. Principle of National Interest
Each of the headings will now be discussed further in the following paragraph:

Principle of Safety
The first lending Principle of sound lending is safety. The very existence of a bank
depends upon the safety of its advances. Safety should not be sacrificed for profitability.
So utmost care should be exercised to ensure that the funds go to the right type of
borrower, are utilized in such a way that they remain safe and the repayment comes in
the normal course.

Principle of Liquidity
Liquidity means the availability of Bank funds on short notice. The liquidity of an
advance means it repayment on demand on due date or after a short notice. Therefore,
the banks must have to maintain sufficient liquidity to repay its depositors and trade off
between the liquidity and profitability is must.

Principle of Purpose
The bank should not lend money for any purposes for which a borrower may be free
from all risks but if the funds borrower are employed for unproductive. Purpose like
marriage ceremony, pleasure trip etc or speculative activities, the repayment in the
normal course will become uncertain. Banks therefore discourage advances from
boarding stocks and refuse advances for speculative activities.

Character and ability of the borrower

The primary responsibility of the leading banker is know your customer and his
business. While considering the character and ability of a borrower, the following point
must be kept in mind.
Do know your customer already?
Was he respectively introduced?
Have you made the account opening inquiries required by the bank?
What are the business its ownership?
What is the customers background and financial track record?
Customers honesty & integrity and personal stability?

12
 How has the customer managed his financial circumstances in the past?
The branch manger should have the answer of the above queries and should be to judge
his ability to use the credit facilities to his advantage. Advance should be granted only to
those borrowers in whom the branch manager has full confidence. Integrity of the
borrower and his ability to conduct business are of paramount importance and take
precedence over the value of securities offered.

Principle of Security
The security offered by a borrower for an advance is insurance to the banker. It serves as
the safety value for an unforeseen emergency. So another principle of sound lending is
the security of lending. The security accepted by a banker to cover a bank advance must
be adequate, readily marketable, easy to handle and free from any encumbrance.

Principle of Profitability
Banking is essentially a business, which aims at earning of a good profit. The working
funds of a bank are collected mainly by means of deposit from the public and interest has
to be paid on those deposits. Banks have also to meet their establishment charges and
other expenses. Interest earned by a bank on its advance is the main source of its income.
The different between the interest received on advances and the interest paid on deposits
constitute a major portion of the bankers income. Besides foreign exchange business is
also highly remunerative. The bank will not enter into a transaction unless a fair return
form it is assured.

Source of Repayment
After the branch manager has ensured that the Investment will be a profitable
propositioning for the bank, he should then turn his attention to the cash flow situation of
the borrower. The banks Investment can be classified into three main categories, as
follows:
A very short-term advance will be liquidated by funds received in the very near
future, such as advances against foreign or local bills or bridge functioning where
evidence of Investment sanction from another financial institution is available.
Provision for current assets; this type facility is needed for trading and /or
manufacturing activities.
Long term loans, generally over 5 years; example of such facilities as investment in
plant and machinery, a farm or a shop, generally, a long term is repaid out profits
generated by the business.

13
 Principle of National Interest
The development of banking has reached a stage where a banker is required to identify
his business with national policies. Banking Industry has significant role to play in the
economic development of a country. So, the savings of the people which are mobilized
by banks must be distributed to those sectors which require development in the countrys
Planning Program.

2.3 Study framework

Attend seminar for internship program

Collect the format for report writing

Taking lecture from the supervisor

Fill up the internship registration form

Understand the report format

Select the internship topic

Collect data using by annual report, website, and guideline of investment

Taking idea to complete the data processing

Advice from supervisor for complete final internship report

Finally submit internship report

Figure: 2.2 Study framework

14
 CHAPTER THREE
DATA COLLECTION AND
PROCESSING

15
3.1 Data Description
The report is descriptive in nature. To prepare a report gathering data is very important.
The information was collected from both primary and secondary sources of data.

3.2 Source of Data collection

In order to make the report more meaningful and presentable, two sources of data and
information have been used widely.

SOURCE OF DATA

PRIMARY SECONDARY
DATA DATA

Figure 3.1: Sources of data

Primary Source
1. Practical desk work.
2. Face to face conversation with the respective officers and clients.
Secondary Source
1. Mirpur-1 branch investment data (monthly and yearly balances)
2. Annual Report of AIBL
3. Investment Manual of AIBL
4. AIBLs records
5. Official website of the AIBL

3.3 Data processing methods

Line Chart:
The line chart is especially effective in displaying trends. In a line diagram, the vertical
axis always displays numeric values and the horizontal axis displays time or other
category.
Pie chart:
A pie chart is a circular statistical graphic, which is divided into slice to illustrate
numerical proportion. In a pie chart, the arc length of each slice is proportional to the
quantity it represents.

16
Bar chart:
A bar chart is a chart that presents grouped data with rectangular bars with lengths
proportional to the values that they present.

Data Processing & Analysis:

Collected information have then processed & compiled with the aid of MS Word, Excel
& other related computer software. Necessary tables have been prepared on the basis of
collected data and various statistical techniques have been applied to analyses on the
basis of classified information. Detail explanation and analysis have also been
incorporated in the report.

Sampling procedure:
I collected primary data by random .Collected information is processed by the use of
computer system. Detailed analysis, working variables and working definitions are
embodied in the report. By using Microsoft Excel analyzed bank data. Data are collected
randomly sequentially and regular interval process.

17
 CHAPTER FOUR
RESULTS AND DISCUSSIONS

18
4.1 Describe the Investment scenario of Mirpur-1 Branch of AIBL.
In order to analyze the investment activities of Al-Arafah Islami Bank, trend analysis is
used. Trend of deposit, investment, sector wise investment and trend of other investment
related aspects are analyzed in this study.

4.1.1 Year wise investment of Al-Arafah Islami Bank Ltd. (Mirpur-1 Branch)
Table: 4.1 Year wise investment of Al-Arafah Islami Bank Ltd. (Mirpur-1 Branch)
Amount (BDT Million)
Year Investment amount Outstanding Return
2012 1334.43 533.77 60%
2013 2245.54 0 100%
2014 2855.67 0 100%
2015 3567.48 0 100%
2016 4214.07 0 100%
Source: Annual report of Al-Arafah Islami Bank Ltd. (Mirpur-1 Branch)

100% 0 0 0 0
90%
533.77
80%
70%
60%
50% 2245.54 2855.67 3567.48 4214.07 Outstanding
40% Amount
1334.43
30%
20%
10%
0%
2008 2009 2010 2011 2012

Figure 4.1: Year wise investment (Mirpur-1 Branch)

Interpretation:
The above table shows the trend of total investment of Al-Arafah Islami Bank Limited-
Mirpur-1 Branch 2012 to 2016. From 2012 to 2016 the total investment of has increased
from Tk 1334.43 million to Tk 4214.07 million. All the year return is 100%, only 2012
return 60%.

19
4.1.2 Mode wise Investment of Al-Arafah Islami Bank Limited (Mirpur-1 Branch)
Al-Arafah Islami Bank Limited uses different mode to make its investments. The
different modes used by the Al-Arafah Islami Bank Limited to make its investment
are shown below.
Table 4.2 : Mode wise Investment of Al-Arafah Islami Bank Limited (2016)
Year: 2016 Amount (BDT Million)
SL Mode of Investment Taka in Percentage of
Millions Investment

1 Bai- Muazzal 1389.39 33%

2 Mudaraba 214.26 5%
3 Bai-Salam 58.40 1.38%
4 Izara Bil Baia 2104.08 50%
5 Pastdue Investment 447.93 10.62%
Total 14616.63 100%
Source: Annual report of Al-Arafah Islami Bank Limited (Mirpur-1 Branch)

Investment
10.62%
Bai-Muazzal
33% Mudaraba
Bai- Salam
50.00% Izara Bil Baia
5.00% Pastdue Investment
1.38%

Figure 4.2 Mode wise Investment of Al-Arafah Islami Bank Limited (2016)

Interpretation:
The above pie diagram shows the mode wise investment portfolio in 2016 Al-Arafah
Islami Bank Limited. The highest percentage of investment was made in Izara Bil Baia
mode which is 50% of total investment and 33% of total investment in Bai Muazzal
mode. Past due Investment, Murabaha and Bai salam in Scheme modes respectively
represent 10.62%, 5% and 1,38% of total investment.

20
4.2 Measure the current performance of investment of AIBL, Mirpur-1
Branch.
4.2.1 Deposit Analysis

Year 2013 2014 2015 2016

Deposit 23009.13 29690.12 38335.50 52973.97
(Figure in millions)
Growth Rate 37% 29.03% 29.11% 38.19%

Trend of Deposit
Deposit

52973.97

38335.5
29690.12
23009.13

Figure 4.3- Trend of deposit (Figure in Million)

Growth Rate of Deposit

6000

4000

2000 3456.34 4004.54

1701.4 2243.15
0
2009 2010 2011 2012

Figure 4.3- Growth rate of deposit

Interpretation-

The graph shows that the total deposit of Al-Arafah Islami Bank increases gradually. But
here also the growth rate varies over time. In 2013, it was 37% which decreased in the
next year 2014 to 29.03% and then it slightly increases to 29.11% in 2015 and finally
38.19% in 2016. If the amount of deposit increases in this way then the Bank can use
more proportion of deposit for loan & advance.

21
Investment Deposit ratio-
Year Total Investment Total Deposits Investment as a percentage
(Figure in Million) (Figure in Million) of Total Deposits
2012 17423.19 16775.34 103.86%
2013 222906.37 23009.13 99.56%
2014 27742.57 29690.12 93.44%
2015 36134.08 38355.50 94.21%
2016 53528.96 52973.97 101.15%
Table: 4.3: Investment Deposit ratio-
Figure- Total Investment & Deposit (Figure in Million)

Total Investment and Deposit

5000
4000
3000
4143.3 Total Investment and Deposit
2000 3456.34 4004.54
1000 1701.4 2243.15
0
2008 2009 2010 2011 2012

Investment Deposite Ratio

6000

4000
Investment Deposite Ratio
2000 3456.34 4004.54 4143.3
1701.4 2243.15
0
2008 2009 2010 2011 2012

Figure 4.4- Investment as a percent of Deposit

Interpretation-

The chart demonstrate that the investment deposit ratio tediously change from 2012 to
2016. In 2012 investment deposits ratio was higher than other year that is 103.86% and
lower amount is 93.44% in 2012 and later it increase to 101.15% in 2014. All scheduled
banks are required to maintain a minimum reserve with the Bangladesh Bank. The SLR
requirement for Islami Bank is 10% and they are to keep 4% of this reserve as CRR.

22
Growth rate of Investment

Year 2013 2014 2015 2016

Investment 22906.37 27742.57 36134.08 53582.96
(Figure in millions)
Growth Rate 31.47% 21.11% 30.25% 48.29%

Growth Rate of Investment

5000

4000

3000

2000 4004.54
3456.34
2243.15
1000 31.47%

0
2009 2010 2011 2012

Figure 4.5- Growth rate of Investment

Interpretation-
The supplied illustration provides information that the amount of investment of the bank
was progressively increase. On the contrary, the growth rate of investment of the AIBL
actually varies. From 2013 it is 31.47% and lastly it increase in 2016 and the amount is
48.29%. The bank should be careful in deployment of the fund

23
Investment Scheme

Industry Investment Scheme-

Year 2012 2013 2014 2015 2016

Amount 3238.46 1690.72 9667.39 10277.03 14277.03
(Figure in
Million )

Industry Investment Scheme

4500
4000
3500
3000
2500
4004.54 4143.3 Industry Investment Scheme
2000
3456.34
1500
2243.15
1000 1701.4
500
0
2008 2009 2010 2011 2012

Figure 4.6- Industry Investment Scheme (Figure in Million)

Interpretation-

It has been that industry investment scheme in 2016 is highest and 2012 it was lowest
among the year (2012-2016). In addition, the amount is 4143.3 in 2016. There has been
gradual increase in the industry investment scheme.

24
Transport Investment Scheme-

Year 2012 2013 2014 2015 2016

Amount 523.63 887.24 1050.76 1235.76 1535.76
(Figure in
Million )

Transport Investment Scheme

4500
4000
3500
3000
2500 Transport Investment
4004.54 4143.3 Scheme
2000
3456.34
1500
2243.15
1000 1701.4
500
0
2008 2009 2010 2011 2012

Figure- 4.7 Transport Investment Scheme (Figure in Million)

Interpretation-

The line graph presents the transport investment scheme was downward trend in 2012
and the amount is 523.63 million. After 2013 it starts swiftly change in each year and it
also seen that the year 2016 the investment amount was 1535.76 million and which is
rise by 19.53% from 2014.

25
Small enterprise investment Scheme-

Year 2012 2013 2014 2015 2016

Amount 0.09 0.10 0.107 1.01 2.74
(Figure in
Million )

Samll enterprise Investment Scheme

4500
4000
3500
3000
2500 Small enterprise investment
4004.54 4143.3 scheme
2000
3456.34
1500
2243.15
1000 1701.4
500
0
2008 2009 2010 2011 2012

Figure 4.8: Small enterprise Investment Scheme (Figure in Million)

Interpretation-
From the above year it is found that the investment was increasing so slowly between the
year 2012 and 2016. However, the year 2012 the investment increases so sharply and in
2016. In 2013 the investment was 0.10 million and this increase to 2.74 million in year
2016.

26
4.2.2 Debt ratio

Debt ratio= Total Liabilities/ Total assets

Year Total Liabilities Total assets Debt ratio

2013 28144824936 30182323406 93.2%
2014 36452697089 39158437848 93%
2015 44951061918 48515787384 92.7%
2016 64357558031 74005006188 87%

Debt Ratio
94.00%

92.00%

90.00%

88.00% 93.20%
93% Debt ratio
92.70%
86.00%
84.00%
87%
82.00%

Figure 4.9- Debt ratio

Interpretation-
Debt ratio indicates the proportion of debt or leverage in total capital structure. The
higher this ratio, the greater the amount of clients money binge used to generate profit.
In the above graph, in year 2013 the ratio was 93.2%, in year 2014 it decrease 93% and
in 2016 it was 87%.

27
Mode wise Investment-

Sl. No Modes of Taka (Figure in Million) investment (%)

Investment

1 Murabaha 143.42 38.53

2 Mudaraba 0.29 0.008

3 Musharaka 0.18 0.005

4 Bai- Muazzal 1, 248.88 33.55

5 Hire Purchase 819.03 22

6 Other 220.06 5.91

Total 3, 722.79 100%

Table: 4.4: Mode wise Investment

Mode of investment
Murabaha 38.53 Mudaraba 0.008 Musharaka 0.005
Bai- Muazzal 33.55 Hire Purchase 22 Other 5.91

6%

22% 38%

34%
0%
0%

Figure 4.10: Mode wise Investment

Illustration-

From the graph it is found that the AIBL distribute its investment schemes according to
different modes. Among the different modes AIBL invest higher in 2016 than 2013 and
its also clearly seen that among the different modes AIBL highly concentrate at Bai-
Murabaha that is 38.53%.

28
Sector wise Classification of Investment-

Sector Taka (Figure in Composition

Million)
Agriculture, Fishing and 685.4 1.21%
Forestry
Industry 14277.03 25.18%
Construction 512.86 4.43%
Water works & Sanitary 102.27 0.18%
Service
Transport 1535.76 2.71%
Storage 17.99 0.03%
Trade Finance 32786.47 57.82%
Miscellaneous 4786.02 8.44%
Total 56703.80 100.00%
Table: 4.5: Sector wise Classification of Investment

Source: AIBL Annual Report -2016

Sector wise Investment

Agriculture, Fishing and Forestry Industry
Construction Water works & Sanitary Service
Transport Storage
Trade Finance Miscellaneous
4786.02 685.4 14277.03

512.86
32786.47 17.99 1535.76 102.27

Figure 4.11- Sector-wise Investment (Figure in Million)

Illustration-

The chart demonstrates that AIBL distribute its investment facilities according to
different sector. Among those sectors the bank more invested in the trade finance,
industrial and construction sector more than other sector in 2015. Moreover, the lowest
investment had made in storage and sanitary service.

29
Provision for Unclassified Investment

Year 2012 2013 2014 2015 2016

Amount 172.78 220.48 298.09 409.19 666.95
(Figure in
Millions)

Unclassified Investment
4500
4000
3500
3000
2500
4004.54 4143.3 Unclassfied investment
2000 3456.34
1500
2243.15
1000 1701.4
500
0
2008 2009 2010 2011 2012

Figure 4.12: Provision for Unclassified Investments (Figure in Million)

Interpretation-
It is found from graph that the unclassified investment was fluctuating from the year
2012 to 2016. In 2012 the investment as lower than the other year and it was 172.78
million. In the year 2016 the investment amount was 666.95 million and which is the
higher among this five year.

30
Investment income
Year 2012 2013 2014 2015 2016
Amount 1701.40 2243.15 3456.34 4004.54 4143.30
(Figure in
Millions)

Investment Income
4500
4000
3500
3000
2500
4004.54 4143.3 Investment Income
2000 3456.34
1500
2243.15
1000 1701.4
500
0
2008 2009 2010 2011 2012

Figure 4.13: Investments income (Figure in Million)

Interpretation-
The data exhibits that each year their income was increasing as much as their
investments increase. The amount of income from investment was 1, 701.4 million in
2012 and finally 2016 it increase more than double and the amount is 4143.3 million.
Moreover, there had been a moderate growth over the five year.

31
4.3 Forecast investment income and net profit of AIBL, Mirpur-1
Branch, Dhaka.

Particulars Time Investment Investment Income Net profit

(Million BDT) (Million BDT) (Million BDT)

2012 1 57.84 6.24 65.62

2013 2 73.97 6.23 69.66
2014 3 91.1 5.63 78.97
2015 4 95.86 5.16 67.35
2016 5 99.67 5.23 42.36

4.3.1 Trend Analysis of Investment Income

Figure 4.14 Trend Analysis of Investment income

Investment income is the income AIBL earns from investment without deducting expenses.
Here we can see ups and downs in the line chart in 2012 to 2016. Investment income has
decreased in 2013, 2014 and 2015. Income is increasing in 2016.
Coefficient

Dependent variable: Investment income

Independent variable: Time

32
Forecasting for Investment Income:
We know, Y= a+ bx
For 2017, Y= 5.53- 0.14*3 =5.11
For 2021, Y= 5.53- 0.14*7=4.55
For 2025, Y= 5.53- 0.14*11=3.99
Interpretation: Above analysis stated that a= 5.53 and b= -0.14; means whether time
changes or not the value of investment income will be 5.53 million taka and as the slope is
negative, investment income will decrease with time. Investment income is decreasing
because of the ups and downs of the trends and AIBL mirpur-1 branch has 1/3 bad loan.

4.3.2 Trend Analysis of Net profit

Figure 4.15 Trend Analysis of Net Profit

Here we can see that amount of net profit changes indistinctive way. Net profit increases
in 2014 but decreases in 2013, 2015 and in 2016. From last 2 years it is downward
sloping.

Dependent variable: Net profit

Independent variable: Time

33
Forecasting for Net Profit:
We know, Y= a+ bx
For 2017, Y= 66.49-6.58*3 =46.75
For 2021, Y= = 66.49-6.58*7=20.43
For 2025, Y= = 66.49-6.58*11=-5.89

Interpretation: Above analysis stated that a= 66.49 and b= -6.58; means whether time
changes or not the amount of net profit will be 66.49 million taka and as the slope is
negative, net profit will decrease with time. Net profit is decreasing because of the ups
and downs of the trends and AIBL mirpur-1 branch has 1/3 bad loan.

34
 CHAPTER FIVE
FINDINGS, RECOMMENDATIONS AND
CONCLUSION

35
5.1 Findings

After analyzing the Investment Analysis of Al Arafah Islami Bank Limited, I have found
some important things regarding the bank as well as Mirpur-1 Branch, Dhaka these are
given below:
1. In every year the deposit amount and the investment amount increases gradually in
AIBL.
2. Growth rate of deposit 38.19% in the last year of 2016.
3. Total deposit 52973.97 million & total investment is 53528.96 million.
4. It is seen that AIBL is providing more investment facilities in urban areas than
rural areas.
5. Among the different modes AIBL highly concentrate in Bai-Muazzal and
Murabaha.
6. The growth rate of investment of Al-Arafah Islami Bank is increasing year by
year.
7. The investment amount Storage sector and water works & sanitary services were
decrease year by year.
8. The return of investment in security of AIBL through varies with year but it is
seen that recent year the bank is trying its best to keep it up.
9. The classified investment against take total investment of Al-Arafah Islami Bank
is increasing year by year.
10. Income from investment of Al-Arafah Islami Bank is increasing year by year but
the growth rate here also varies from 3.47% to 54.09% from the year 2012 to 2016
and it also increasing.
11. The debt ratio of AIBL is escalating year by year.
12. There are limited scopes to deal women entrepreneurs and professionals for
making investment by women interpreters.

36
5.2 Recommendations
Through this study I myself gained some practical knowledge. I want to put some
suggestion here which I think if followed would definitely help Al-Arafah islami Bank
Ltd. to Improve their performance and there-by its contribution in the whole economy.

1. They should give more attention in increasing their deposits in different accounts.
2. As It has seen that AIBL Investment income were more than double by last 4 years,
it convey very good sign. They should try to retaining their position.
3. In 2012 investment deposits ratio was higher than other year that is 103.86% and
lower amount is 93.44% in 2012 and later it increase to 101.15% in 2014.
4. A depth evaluation of projects and use effective monitoring of investment portfolios
are need to improve the high productivity for the bank.
5. Al-Afafah Islami Bank Limited can diffuse its scope of investment through focusing
shariah concept regarding investment among the Bank officers; employer and the
Clients by strong training, workshops and Clients get - together.
6. In the above graph, in year 2013 the ratio was 93.2%, in year 2014 it decrease 93%
and in 2015 it was 87%.
7. The Banks investment for construction purpose shall continue to be made within
the ceiling prescribed in the plan.
8. In 2012, it was 37% which decreased in the next year 2012 to 29.03% and then it

slightly increases to 29.11% in 2013 and finally 38.19% in 2014.

9. Accor ding to Islamic Shariah call rate money system should be started.

10. The banks investment against agriculture, fishery, forestry and working capital
investment are not significant compared to other private commercial banks. As such,
the Bank shall make attempt for extension of investment in these sectors.

37
5.3 Conclusion
Al-Arafah Islami Bank limited is a leading Private Islami bank in Bangladesh with
superior customer bases that are loyal, faithful, worthy towards the bank. The service
provided by the young energetic officials of the Al-Arafah Islami Bank Limited is very
satisfactory. As an Islami bank AIBL has to follow the rules of Bangladesh bank despite
the fact that these rules sometime restrict the foreign business to some extent. During my
internship in this branch I have found the investment department to be very efficient;
therefore this department plays a major role in the overall profitability of the branch and
to the Bank as a whole. Al-Arafah Islami Bank Ltd is one of the most potential Islami
banks in the Islami banking sector. It has a large portfolio with huge assets to meet up its
liabilities and the management of this bank is equipped with the expert bankers and
managers in all level of management. I would rather feel like producing my personal
opinion about the ongoing practices in Mirpur-1 Branch. The Bank's drive towards
market leadership as well as quality in choosing business will continue in the coming
years although competition is intensified with the opening of more financial institutions.
The Bank is optimistic that the volume of business will increase in future through
pragmatic and market friendly policies. The Bank shall continue to explore new fields of
investment and take steps to open new Branches for Banking. We shall endeavor to
adopt customer-oriented policies and introduce new techniques that will help to earn
profit and increase greater confidence of the existing prospective customers.

38
 CHAPTER SIX
INTERNSHIP EXPERIENCE

39
6.1 Internship Position
I was given the opportunity to work in Al-Arafah Islami Bank Ltd. for three months it
was part of my academic program. In the internship period I have no specific position.
So I have no fixed duties in the organization. I work under a manager and observed his
different types of activities. I prepared this report on the basis of that three months
observation. I have got various kind of experience of export procedure, AIBL. systems,
operations procedure, customer relationship etc.

6.2 My Job Responsibilities

File documentation: File documentation is one of the main responsibility regarding
my internship in this organization. I had to collect, and arrange, various types of
official document according to their importance. For this purpose I had to coordinate
with different department of Al-Arafah Islami Bank Limited.

Data collection: I had to go to the field for collecting various types of task related
information, which are very much essential for successful arrangement of a product.
Through field visit I had determine the total output regarding the expectation of a Al-
Arafah Islami Bank Ltd. products.

Coordination among department: I had to coordinate with different department of

the organization.

Arraigning material for the in house meeting: There were a huge number if
meeting during my internship in my organization. I had to collect different types of
materials for those meetings.

Entry of information in office document and soft copy: I had to input office
documents and update the office document. Data entry and database management is
remarkable of them.

40
6.3 Linkage between work-Internship topic
There few specific responsibilities I have performed. These are:
Back to Back L/C opening: Sometimes to complete export exporters have to buy raw
material and accessories from another supplier by opening Back to back L/C which is
back to back L/C. It is new credit in favor of another beneficiary. Sometimes beneficiary
seller of a credit himself is unable to supply goods specified in the L/C and required to
purchase from another supplier by opening second credit.

Working at Al-Arafah Islami bank Limited was a great experience for me. I have learnt
many things from them. From my little knowledge what I have observed and some
recommendations are as follows:

Boss and subordinates relationship: I observed that between boss and subordinate has
friendly relationship for some cases. But there are also some traditional boss exist whose
only need order and work. They just dont much talk with subordinate without any
works. But there are more leaders whose have power to control their subordinate with
motivation and caring.
Organizational culture and behavior: Organizational culture and behavior is well
maintained. In any organization there much more need ethical culture and behavior than
paper rules and regulation in Al-Arafah Islami Bank Ltd. I saw that it is very good.
Every employee have positive attitude about their office culture and behavior.

Centralized structure: Al-Arafah Islami Bank Ltd. follows centralized official

structure. In every important decisions comes from top level and also every important
have to pass from top level. I think it is not good idea. Decentralized is best idea to work
efficient end effectively.

41
 REFERENCES
Books
1. Arif, M. (1982). Introduction of Monetary and Fiscal Economics in Islam.
Published by Jeddah International Center for Research in Islamic Economics.4 th
edition, 2001.page-143-157.
1. Balance sheet and income statement of Al-Arafah Islami Bank Limited (Mirpur-1
branch)
2. Manuals of Bai- Murabaha, Bai- Muajjal, Bai-Salam, Musharaka, Hire purchase
under shiked melk of Al=Arafah Islami Bank Limited
3. Andley.K.K & Motto,V.J., Investment principles and practice, Suitan Chand &
Sons ,New Delhi,1997
4. Balachandran, Dr.,Trade Payment: Commentary, Cases & Text, Academy of
Business Studies, New Delhi 1996
5. Khan, M, Y and Jain, P.k.(2014), Financial Management, 6th Edition, Tata
McGraw Hill Education Private Limited, New Delhi.
6. Islam, M.N.(2011), Research Methods, 2nd Edition, Mullick & Brothers, Dhaka
New Market, Dhaka-1205.

Prospectors
Annual report, Al-Arafah Islami Bank limited (2012-2016)
Bangladesh Bank, Guideline to fill in the Banking, Statistic Department.
Bangladesh Bank (Baking Supervision and Regulation Department).

Websites
www.al-arafahbank.com
www.wikikipidia.com
www.bangladesh-bank.org.bd

42
Appendix

43
44