INTERNSHIP REPORT

Submitted To:
Mrs Javeria Abbas

Submitted By:

Organization:
Bank Alfalah Limited, Bosan Road Branch, Multan

Internship Period:
June 1???, 2009 to July ???, 2009

INSTITUTE OF MANAGEMENT SCIENCES

BAHAUDDIN ZAKARIYA UNIVERSITY
MULTAN
 ACKNOWLEDGEMENTS

Up and above every thing, I am grateful to Almighty ALLAH, the

Beneficent, the Merciful, and His Holly Prophet (Peace be upon Him)
Who is forever a true torch of guidance for whole humanity. I am
greatly obliged to “Allah” Who enabled me to complete this report
successfully.

This report was conducted under the guidance of Mrs Javeria Abbas
whose deep devotion, dedication to her profession, her technical
guidance, her unworldly and ambitious nature and her kind behavior
towards students are worth mentioning. She has guided me in all
problems that I have faced not only during report period but also
through out the internship.

I also pay thanks to the my supervisors at Bank Alfalah, especially Mr.

Taimur Arif, for kind help, best cooperation, and valuable suggestions
throughout the duration of internship.

Moreover, I am grateful to my loving parents for providing me all sort

of moral and social support in life. Their prayers have enabled me to
reach this stage. I can’t express my feelings in words for them.
 TABLE OF CONTENTS

Introduction to Bank Alfalah Limited 6

Account Opening Department And it’s Products 7
Facilities offered by Credits Marketing Department 12
Remittances Department 14
Credit Administration Department (CAD) 17
My Activities in Different Departments 20
Application of Class Room Concepts 21
SWOT Analysis 22
PEST Analysis 25
Suggestions and Recommendations 26
FINANCIAL ANALYSIS 27
 Preface

Early this year, I asked the Internship Coordinator

of IMS to guide me in selecting my organization
for internship. He suggested one of the leading
banks of Pakistan - Bank Alfalaht Ltd. Upon my
father’s approval, I applied and got selected in
time.

In previous semester, I made a term report on

Mergers and Acquisitions of Banks of Pakistan, in
the course of HRM, which introduced me to
numerous branches of banks of my city. The
orientation to banks in that term report proved
very useful to me in my internship.

My internship in Bank Alfalah was an interesting

learning experience for me. Although the timings
were short, yet the learning was abundant. I
gained a lot of practical knowledge about banking
instruments, professional culture, and
management in general. The fortnightly reports
helped me in keeping a record of my assignments
and helped me a lot in compiling my report.

The credit goes to the Institute of Management

Sciences, for making internship mandatory for
me. This Internship program has proved to be a
fruitful way to gain practical view of business life,
management and a style of on-Job-training.
 Introduction to Bank Alfalah Limited

“Bank is a pipeline through which currency moves into and out

of circulation.”
1. Bank Alfalah Limited was incorporated on June 21st, 1997 as a
public limited company under the Companies Ordinance 1984. It is
Abu Dhabi based bank.
2. Its banking operations commenced from November 1st, 1997.
3. It is engaged in commercial banking and related services as defined
in the Banking Company’s ordinance, 1962.
4. It is currently operating through 282 branches in 57 cities in
Pakistan, with the registered office at B.A.Building, I.I.Chundrigar,
Karachi.
5. It has also branches in Bangladesh, Afghanistan and Bahrain.

The Vision
Their vision is to be a leading financial institution, with a niche in areas
where they have a competitive advantage with complete banking
solutions. Their focus is on improving performance in each of their
businesses to achieve consistent and superior returns for their highly
valued clients and stakeholders.

The Mission
Their mission is to maintain a competitive edge in quality banking,
customer service and profit performance. Their activities are geared
towards making Bank Alfalah a responsible corporate citizen. The
emphasis on “Quality & Innovation” will remain their key mission
statement. They will continue to strengthen their position as the
leading provider of quality financial services in Pakistan.

The Philosophy
6. Excellence in service
7. Quality performance
8. Product innovations

The Slogan
“THE CARING BANK”
 Account Opening Department And it’s Products

PROCEDURE TO OPEN AN ACCOUNT

The procedure to open an account in Bank Alfalah is explained below:

9. The very first step is that when customer comes to open his/her
account, take introduction from customer and ask about address,
type of business, income. ID cards (see expiry date). Account type
and about initial deposit.
10.The very next step is that when the customer comes to open his/her
account then he/she is given a complete set of an account opening
form. Customer is guided to fill all columns of AOF (Account Opening
Form).
11.The customer submits that form duly filled and signed with other
necessary requirements (ID card, business card, salary slip, joining
letter).
12.The form along with the specimen signature card (known as S.S
Card) and the Cheque book requisition after being received from the
customer is checked for any errors.
13.If a person cannot write then his / her hand thumb impression is
affixed in front of an officer of the bank along with that three
passport size photo graphs are also attached.
14.If customer’s signatures are not mature enough then to facilitate
the proper recognition of the customer a picture account is opened
and three pictures are taken from the client; one is affixed on the
account opening form and the other two are affixed on the S.S.
card.
15.Then stamping and signature of operation officer on the form is
done.
16.Account is opened by putting all the particulars of the customer in
the system.
17.S.S. cards are handed over to in charge of operations department
for record and verification. This card contains account number, title
of the account and the specimen signatures of the account holder,
contact number.
18.Finally the manager of bank signs the AOF and these forms are filed
in a sequence.
19.The new client is allotted a new account number after entering the
entire particular such as nature of account, opening date, initial
deposit, title of accounts into the information system of the Bank
Alfalah limited.

PROCEDURE TO CLOSE AN ACCOUNT ON THE REQUEST

OF CUSTOMER
The procedure followed in order to close an account is as follows:
20.The client who wishes to close his account has to give an
application duly signed.
21. Then it has to be made sure that the balance in the account to be
closed should be zero. But only in case of current account there
should be a balance of Rs. 150 in the account because bank charges
Rs. 150 for closing current account.
22.It is also checked that the client has no liabilities and he does not
owe any money to bank.
23.In the computer all the entries and record related to that particular
account are permanently deleted by using “close account” option.

WHEN BANK ITSELF CLOSES THE ACCOUNT

The bank reserves the right to close the account without assigning any
reason by giving 14 days notice. On closure of the account the
customer shall return to the bank, the unused cheque, relationship
card, ATM card and credit card for cancellation.

MAJOR CATEGORIES OF ACCOUNTS

Two major categories of accounts are;
24.Personal Accounts
25.Business Accounts

1. Personal accounts:
There can be single accounts or joined accounts operated singly or
jointly. Single account is opened in the name of one person and S.S.
card carries the signatures of that person only. Joint account is the
account of two or more persons who are neither partner nor trustee.
The names of all the persons are written on the title of A/C and on S.S.
card. When such an account is opened the banker obtains clear
directions to whether one or more of them shall operate the account.
In the absence of such directions the bank allows the operation under
the signature of all the joint account holders.

2. Business Accounts:
These are the accounts used for business purpose transactions. In
business accounts there comes:
26.Partnership accounts
27.Sole proprietorship accounts
28.Public limited company accounts
29.Private limited company accounts
 30.Club, Society and Association accounts etc. All have different
account opening requirements.

Types of Accounts in Bank Alfalah

Two major classifications of accounts are general and special accounts.

The general accounts are classified as,
31.Current Account PKR
32.PLS Saving Account
33.Royal Profit
The Special accounts are classified as,
34.Kifayat account
35.Mahana Amdan
36.Alfalah Mahana Amdan Plus
37.Alfalah Kamyab Karobar

GENERAL ACCOUNTS

1. Current accounts:
Current accounts are non-profit bearing accounts. It is general account
for business purpose. There exists no interest and no other charges
only service charges are deducted. The service charges for current
account are Rs. 50/- per month. It can be opened with a minimum
balance of Rs.10,000. There is no Zakat deduction in current account.

2. Saving accounts:
These are profit-bearing accounts. Profit is credited to customer’s
account. Saving accounts can be opened with a minimum balance of
Rs. 5000. The service charges for saving account are Rs. 50/- per
month. There is zakat deduction at the rate of 2.5%. If someone
doesn’t want zakat deduction (e.g. non-Muslim) then has to make
application for that. He is also required to provide affidavit or CZ 50.

Term deposit:
It is a type of saving account. This is an account where an amount of
money is deposited for a fixed period of time. Previously it was 7days
to 5 year but now 1month to 5 years. There is certain %age of profit
that increases with the amount deposited and the duration of deposit.
The money can be withdrawn before completion of the term. But in
such case bank does not pay full interest as was promised. For
example, if the time period of term deposit is 1 year at the rate of 12%
(say) and the customer withdraws money before the maturity then the
bank will give the profit at the rate of 6%. In term deposit for profit
separate account is maintained that means the profit is not credited to
the same account.

3. Royal profit:
It is just like saving account. But in it bank gives a higher rate of return
than that of saving accounts. It can be opened with 5000 and zakat is
also deducted. Now bank is offering 5% profit, it is expected to
increase in the new policy. Below 1lac profit is 5% formally but on
amount of 1 million or above profit increase. The profit is credited to
the same customer account there is no need to maintain separate
account for that as was the case in term deposit. Ever month profit is
added in the account.

SPECIAL ACCOUNTS

1. Kifayat Account:
This account is only for single or joint account. It is kind of saving
account with greater profit. This account can be opened with a balance
of Rs. 10,000/- at the minimum and Rs. 1000,000/- at the maximum.
7% profit is calculated on quarterly basis and credited to the customer
account semi annually. If at any day in a month the balance is less
than Rs. 10,000/- then there would be no profit for that month.
Customer can withdraw amount from account only for 3 times in a
month.

2. Alfalah Mahana Amdan:

It is kind of term deposit in it the amount is deposited for three years.
It can be opened with Rs. 100, 000/- at the minimum and Rs.
15,000,000/- at the maximum. The profit is calculated at the rate of
10% p.a. and is credited to the customer account every month on the
first business day of the month.

3. Alfalah Mahana Amdan Plus:

It’s a non-checking account. The accidental insurance is given free.
Minimum placement limit is Rs.50,000 with no maximum placement
limit. The Alfalah Mahana Amdan Plus term deposit receipts will be
issued for 1 year tenor with auto-renewal facility. Profit will be credited
monthly after deducting applicable withholding tax and zakat(if
applicable).

4. Alfalah Kamyab Karobar:

To fulfill your business requirements, it’s a kind of current account. It
can be opened with 25,000. In this account three kinds of are available
gold, silver and platinum.
Alfalah Hilal Card: Bank Alfalah Limited is also offering ATM
facility with the name Alfalah Hilal Card. It can be availed against
general or special both kind of accounts. This facility carries no
transaction charges in Alfalah however; other banks charge Rs. 300 to
Rs. 315 per year.

DORMANT ACCOUNTS:
If an account is not operated and no transaction is passed for 6
months’ period then the account is called dormant account. It is the
temporary closure of the customer account. The accountholder is
served a notice informing that his account has become dormant. Now
if the customer wants to get his account active again then he is
required to make an application for that and his account is activated
on his request. There are no charges for getting a dormant account
activated. If the dormant account has zero balance and the
accountholder does not make request for activation of account for 3
months then the bank has the authority to close the account. But if the
dormant account carries some balance then bank can not close the
account. In this case the customer is required to make a request for
activation of dormant account before a time period of 10 years. But if
the customer does not make a request for activation of account in this
time period then the account is referred to SBP. Now this account is
converted to unclaimed account that means the customer can not
make any claim for the balance of account from bank. But if some
customer comes for his funds then he is referred to SBP. The customer
can get his funds back from SBP but after fulfilling a lot of formalities.

Accounts Department Functions

In accounts department, major tasks performed are:

Sorting:
Debit and credit vouchers and cheques that are posted during one day
are sent to accounts department the next day and then they are sorted
under different account heads and then arranged in a sequence. The
vouchers are arranged in the form of bunches under different titles.

Ticking:
The transactions with small denominations are checked during ticking
process. If there comes some discrepancies in the debit and credit
sides of the accounts the instructions for their rectification are given
immediately. Online activity is also checked during ticking process.

Budgeting:
It is also performed by the Accounts officer. The complete format is
given by the head office and then they do the budgeting. At the end of
the budgeting period the projected results are compared with the
realized results.

Billing:
Salary bills and the other branch expenditure bills are prepared by the
accounts officers that are approved by the branch manager.

Reporting:
A complete report of the banking activities is prepared each day by the
banking software ''Bank Smart'' according to the data that is entered in
the system.
That report consists of following major heads,

Transfer Register:
It is basically a complete record of multiple transactions. Individual
transactions are shown in the form of vouchers while transfer register
shows multiple transactions.

GL Statement:
It shows the opening and ending values of local balance.
The head of the accounts department checks the major transactions in
the GL Statement that is further divided under following 4 heads,

• Assets
• Liabilities
• Income
• Expenses

Customer Activity:
It shows the daily debit and credit transaction done by the customers.
Other reports prepared by the accounts department are:
38.Daily Account Activity
39.Account Activity Summary
40.General Ledger Account balance
41.Currency wise Branch Position (In it profits, advances and
deposits are shown)
42.Income and Expense report
43.Daily Advances and deposits report
Other tasks performed by Accounts Incharge are keeping the record of
depreciation, renovation, and purchases of any asset for the bank etc.
 Facilities offered by Credits Marketing Department

Credit means belief or trust. In other words we can define credit as:
“Trust in one’s integrity in money matters and ones ability to
meet payment when due”.
Credit department is the real revenue-generating department of the
bank. They make money in millions. They extend loans and advances
against securities and pledges and earn markups against money
advanced. They present cases of customers in front of authorities like
Area Office and Head Office for approval. They have to think not only
from customer’s point of view but also they have to see their banking
policies and SBP’s policies. They have to convince customers plus
authorities at the same time.

The credit officials’ task is to identify and attract the new customer.
They arrange meetings with them and make discussion over their
business needs. They also make discussion that how the customer runs
his business and that what is their business cycle. After making
complete discussion regarding their business credit officials make an
estimate that what facility can be extended to the customer and they
prepare Credit Line Proposal that is send to higher authorities for
approval. The Credit Line Proposal gives complete detail of the
business of the customer and that since when he is in business, what is
the nature of business, what is the financial position etc. then this CLP
is send to the higher authorities for approval. Then after approval
securities are taken from customer after proper assessment.
Periodically reviews are conducted and reports are prepared to
minimize the risk exposure.

TYPES OF BORROWERS
Credit facilities are extended by the BAL, to the following borrowing
parties, but their branch only deals with SMEs:
44.SME (Small and medium enterprises) up to 75 Million.
45.Commercial loans up to Rs. 150 Million.
46.Corporate loans more then Rs. 150 Million.
47.Personal Loans up to Rs. 500,000

CREDIT FACILITIES BEING OFFERED

Bank Alfalah is offering both funded and non funded facilities.

Current Finance CF:

CF facilities are allowed primarily for working capital requirements. The
customers pay markup in current finance on monthly basis. On the
expiry date of limit he will just pay principal amount. This facility is a
revolving advance and mark-up is charged only on the utilized part of
the facility.

Term Finance (TF):

Term Finance is usually granted for specific purposes. TF is granted at
a fixed rate for the tenor of the facility. In TF whether the customer
utilizes the whole sanctioned limit or not the markup will be charged
on the whole amount. Such a loan can be liquidated either by a single
repayment of principal and mark-up.

AKF (Alfalah Karobar Finance):

Bank Alfalah also offers facility to the customer to help flourish their
businesses. It is particularly for SMEs. It is a kind of running finance
and it is extended for a time period of 1 year. However renewals can
be done. But before renewal the customer is required to make
adjustment of 25% of the outstanding amount. Markups are recovered
on quarterly basis. The markup charged is only on the amount
extended not on the whole limit amount. The minimum limit amount is
Rs. 1M and the maximum is Rs. 10M.

Alfalah Quick Finance:

The customer can avail himself of Alfalah Quick Finance to meet his or
her families, personal and household needs. Customer can obtain loan
against his deposit or government securities and can avail himself of
financing starting from Rs 50,000- 2500,000. He can obtain upto 90 %
of the encashment value of his security.

CREDIT LINE PROPOSAL

The CLP is prepared by the credit officials and this is very important
document that is presented to the authorities for approval. It must be
attractive enough for getting a credit line approved. There is a check
list of documents used in preparation of CLP. But not necessarily all the
documents are used in each case. It depends upon the complexity of
the case for approval. For corporate customers documentation is more
complex as compared to partnership and sole proprietorship. CLP is
sent to authorities for approval and they may send some queries that
are replied by credit officials and when facility is approved the
authorities send a “Sanction Advice”. The CLP should provide following
information:
i) Proposition: It states clearly and concisely the limits that are
being requested.
 ii) Purpose: Specific reasons for granting facilities (particularly
for new facilities/ increase in existing facilities) are described
here.
iii) Background: It describes full information on the customer's
constitution and business when applying for establishment of
facilities.
iv) Management: Names of Directors/Partners/Owners/Key
persons and an assessment of their capacity to manage the
business are also mentioned in CLP.
v) Market/ Competitors: An idea of the market in which the
business of the client and his competitors is functioning also
helps in making decision regarding credit facility.
vi) Conduct of Account: Here the conduct of customer account
is analyzed like; previously if customer has availed credit
facilities then it is checked that whether he met his liabilities
properly. It is also checked here that whether there were any
over dues or not.
vii) Profitability to Bank: Estimated profitability to bank
explains that how the customer is profitable to bank.
viii) ECIB Report (Electronic Credit Information Bureau
Report): This report is basically a complete credit record of
the customer. All the credit facilities taken from Alfalah and
other banks are mentioned here. It also gives detail of over
dues if any.
ix) Security: The details of the security, its valuation method,
and safety method and margin requirements are elaborated
here.
x) Recommendation: On the basis of the strengths and
weaknesses of the account recommendations are made by
the credit officials.

Sanction Advice: When a credit facility is approved the Credit

Division prepares the sanction advice that is sent to the concerned
branch, which upon receipt is filed in the respective customer file and
disbursement of the facility is made after fulfilling all documentary
formalities.

Remittances Department

The need of remittances is commonly felt in today’s business. The

main function of remittance department in a bank is the transfer of
funds.

Mr. salman in Bank Alfalah is the officer for Remittances Department.

In remittances, following banking instruments are used:
• Pay order
• Demand draft

The procedure for dealing with all these under local in BAF is as under.

PAY ORDER
A pay order is a written order issued by a bank, drawn upon & payable
by itself, to pay a specified sum of money to or to the order of a
specified person.

Procedure for Pay Order

Application form is given to the customer to fill. Two signatures are
taken on the form one for request and other for receiving the
instrument. All the particulars of application form are checked and
bank commission charges and withholding tax is written on the top of
the application form. If the customer is maintaining his account with
the branch, he can give cheque for total amount of instrument plus
bank charges. Cheque and application from is then given to the officer
Cash Department for the payment of cheque. After proper scrutiny,
Officer Cash Department posts the cheque and signs the application
form in token of payment received. If the customer wants to pay cash,
then cash is deposited by the customer along with the bank charges
and withholding tax.

Application form is then given to the Remittances Incharge for issuance

of instrument. He enters all the particulars of the application form in
the system and computer gives an Auto Control Number to the
instrument. Printout is taken on the block of payment Order. Two
authorized officers of the branch then sign it. Instrument is then
protectographed, and given to the customer.

When instrument is presented for payment, it is posted in the system

and canceled by the Remittances Incharge after proper scrutiny.

DEMAND DRAFT
A Demand Draft (DD) is an instrument, which is drawn by one bank
upon another bank for a specific sum of money payable on demand. It
is made by the bank, given to the purchaser against cash or cheque.

Parties Involved in DD:

• Purchaser
• Issuing Branch
• Drawee Branch
 • Payee

Procedure for Issuing DD

Issuance procedure of Demand Draft is same as of pay Order.

Procedure For Demand Draft Payable

When DD advice is received, signatures of both signatory on the DD
are verified. All the particulars of the DD payable are entered in the
system. Prints out of vouchers (DD payable) are taken. When
instrument is presented for payment, signatures of the attorneys are
verified on DD and after proper scrutiny, it is posted in the system and
canceled by the Remittances Incharge.

ONLINE TRANSFER
In this mode of remittances, there are two types of transactions:
48.Online Cash Tranaction
49.Online Transfer Transaction

Online transaction is done only within a bank, within the branches of a

bank. It can not hit the account of another bank. For these
transactions, it is not necessary that all parties to have account in
bank. In online cash transaction, there are further two transactions
involved:
50.Online Cash Deposit Transaction
51.Online Cash Withdrawal Transaction

Online Cash Deposit Transaction

If the customer wants to deposit cash in his account or of any other’s
account, having account in any branch of bank Alfalah, he will go to
any branch of same bank, fill online deposit slip and deposit cash. In
return, he will receive deposit receipt.

Online Cash Withdrawal Transaction

In this transaction, if any person receives cheque of Bank Alfalah from
any other person, he will visit any branch of Bank Alfalah, fill cash
online slip, and get the proceeds from account of the person online.

Transfer Transaction From Account To Account:

In this type of transaction, account of both the parties must be there in
bank. E.g: Mr A received a cheque from Mr B, both are having account
in Bank Alfalah. Mr A will deposit his cheque by filling online deposit
slip. He will get proceeds into his account

Necessaries For Online Cash Transaction

Following are the requirements:
52.Rs 50,000 and NIC Copy are necessary.
53.For Rs 50,000 – Rs 200,000: NIC Copy and Verification system
(Verisys)
54.For Rs 200,000 – Rs 500,000: NIC Copy and Verisys and
inward/outward diligence form
55.For Rs 500,000 and above: KYC form and all above mentioned

Necessaries For Transfer Transaction

If any person comes with cheque, NIC copy is not required, bank
requires only two signatures.
However, if the person is unknown, then NIC Copy is required.

COLLECTION
All the cheques under collection are called cheques under Collection in
Bank Alfalah Limited.

There are two types of bills for collection:

56.Outward Bills for Collection
57.Inward Bills for collection

Outwards Bills For Collection

Al the cheques are received on one counter along with the paying slips
duly filled in properly containing particulars of cheques and account
holder. Counter folio of paying slip is handed over to the customer by
putting stamp for “cheque received for collection for Bank Alfalah” on
it duly signed by officer. These cheques are scrutinized and cheques
for local clearing are separated from OBCs. Cheques for local clearing
are entered in Clearing Register, whereas cheques for collection are
entered in OBC register and handed over to the Bills Department for
collection. OBC number is allotted to the cheque from OBC register.
Special crossing and bank endorsement stamps are affixed on the
cheque.

OBC schedule is attached with the cheque and dispatched to the main
branch of that city for collection. If they do not have any branch in
that city, then cheque will be sent to the Collecting Agent of Bank
Alfalah for that city, and if they do not have any collecting agent even,
then cheque can be sent directly to the drawing branch. Instructions
are given on the OBC schedule for the payment of that cheque.
Contra-liability vouchers are also posted in the system. When OBC is
realized, collection bank pays the amount through IBCA if it is the
same bank or through DD if it is another bank. If DD is received against
OBC, it is presented in the clearing for collection. If IBCA is received
from the branch for the payment of OBC, certain vouchers are posted
in the system.

Inward Bills For Collection

If any other bank sends a cheque of Bank Alfalah Limited, it is Inward
Bill for Collection. Bank Alfalah remits money after checking the
balance of the customer account.

The process of collection starts when the cheques of Bank Alfalah Ltd.
Are received from other banks. Then these cheques are sent to the
Head Office Karachi, which sends the cheques to SBP for clearing and
get the confirmation of cheque and credit advice. Main activity of
clearing is performed by Head Office, which contacts other banks
through SBP.

Credit Administration Department (CAD)

The main objective of the credit department is to provide

assurance to Branch Manager and Head office Credit Monitoring
Division that lending activities are properly controlled and monitored.
The role of CAD begins when sanction Advice comes after approval of
CLP. CAD officials receive the sanction advice from credit manager and
then they obtain security as per sanction advice. They check all facility
documents. They complete registration of bank charge over security
with SECP. They feed limits in the system and release the facilities.

Calculation of Drawing Power:

CAD officials calculate the drawing power of the borrower. As the
borrower gives goods or stock as pledge then the amount that he can
draw is calculated as:
Drawing Power = Stock * Unit Price – margin

Securities against Facilities Extended

Advancing of credit involves a great risk for the bank. Therefore, to
cover this risk, the bank keeps different tangible and non-tangible
securities, before sanctioning the credit facility to a customer. The
basic security is the business cash flows. Credit officials ensure that
the business for which loan has been extended is profitable enough
and generating cash flows and the customer will be able to pay back
the loan. In case a customer wants to start an entirely new business
then bank doesn’t extend loan to him because a lot of uncertainty is
there. The bankers prefer such securities that carry less risk of
depreciation due to market fluctuations and are easily saleable.
Common securities against banker advances are as under:
 58.Pledge which confer physical possession of movables but not
ownership. In case of pledge bank appoints a muccadam for the
security of goods pledged. Margin requirements are also
considered by the bank officials.
59.Hypothecation is another security for debt in which the
possession of the asset remains with the borrower.
60.Mortgage is a claim against real estate or Fixed Asset. The
deposit of title deeds without documentation can create a
mortgage.
61.In addition to the above mentioned securities following
collaterals may also be considered as securities like, Letter of
Credit, Bank Guarantees, Guarantees of parent company and
Cross Guarantees of group of companies and personnel

Guidelines for Credit Facilities’ Documentation

There is a little difference in the credit facility documentation for
Current Finance Hypothecation, Term Finance, FATR, FIM, FAPC, FAFB,
LBP/LBD etc. However along with the board resolution other general
documentation is,

Accepted Facility offer Letter:

When sanction advice comes after approval from the higher authorities
then bank writes a facility offer letter to the customer. In it bank
explains that what facility has been approved at what cost and against
what securities. If the client accepts that facility letter then he sends
accepted facility offer letter to the bank.

Demand Promissory Note:

In promissory not the customer promises that on demand he will pay
back to Bank Alfalah the required sum of money. He promises to be
liable regarding making payment jointly or severally. Promissory note
remains as security with the bank.

Letter of Hypothecation:
Letter of hypothecation is usually made in case of moveable assets. In
it customer agrees to hypothecate his stocks/ goods as a security to
ensure that all the sale proceeds would be used to make payments to
bank and to discharge all liabilities incurred. Here customer also
agrees to pay all the rentals, taxes, payment to muccadam, and all
other charges in respect of godowns and premises where the
hypothecated goods are kept.

Letter of pledge:
In letter of pledge the name of the customer and the facility amount in
Rs. is mentioned. Here the customer promises to pay the amount plus
service charges and expenses along with prescribed margin as
liquidation damages. If any loss occurs in pledged stock due to any
natural disaster then the borrower promises to pay for it. The borrower
also promises to pay all the markups and principal amount. It is also
prescribed in the letter that if borrower fails to fulfill his liabilities then
bank has the right to sell all the pledged goods to cover its losses.

Letter of authority to Debit Markup:

In it customer authorizes to bank that bank can debit markups as they
come due. Customer maintains account with the bank from where
bank can debit the markup amount.

ECIB Report:
State Bank of Pakistan’s Prudential Regulation requires banks to obtain
detailed information from Electronic Central Information Bureau, while
considering proposals (both funded and non-funded based facilities) of
over 0.5 million to any borrower. If ECIB Report indicates customer
default in meeting obligations etc. the accommodation to the
concerned borrower is denied. It is therefore essential that ECIB
Reports should be obtained at the time of considering the proposal and
at the time of renewal of facility.

Property Visit Report:

Credit officers conduct visits of the property. After having a thorough
visit, Property Visit Report is prepared. It describes the nature of
property and associated threats. It also carries other important details
about property.

Valuation Survey Report:

For the proper valuation of securities offered against credit facilities,
bank renders the services of valuators (like Harvester Services Pvt.
Ltd.). These companies after conducting a proper survey prepare
Valuation Survey Report. Both the resale and forced sale values of
securities are mentioned on the report, in detail.

Search Report:
All Public and Private limited companies are required to register bank’s
charge over its current and fixed assets with SECP. Search Report is
prepared from the records of SECP showing the ranking of charges
over the borrower’s assets to different banks. Search Report is
obtained at the time of considering fresh facility to the borrower and
also in case of renewal of facility to the borrower subsequent to the
registration of charge over assets of the company by the bank and as
when it is deemed necessary by the bank.

CREDIT MONITORING

In order to monitor the loans extended and facilities offered the credit
administration department has different post-disbursement
accountabilities e.g. CAD officials ensure that facility reviews are under
taken on a timely basis. Stock reports are also prepared by the CAD
officials. They inspect the stock on periodic basis and prepare the stock
reports. Where the stock/ goods are hypothecated it is implied that
stock/ goods reports are obtained to monitor its movement and to
comply with the margin requirements prescribed by the Bank and SBP.
It is ensured that description, value of goods and complete address
where goods have been stored etc. are in conformity with the details of
Sanction Advice and Insurance Policy. CAD officials calculate markups
accrued and they check that whether markups are timely paid or not.
They conduct pledge site visits. They also inform regarding the expiries
of extended limits and credit facilities to credit marketing department
so that they can do renewal if customer asks for that. Early warning
indicators of risk are identified, follow-up actions are taken where
necessary and reports are made to appropriate approving authorities.

CLASSIFICATION OF CUSTOMERS
SBP has given guidelines in the matter of classification and
provisioning for assets. On the basis of the customer conduct
customers are classified into flowing categories,

62.Substandard: Where markup/ interest or principal is overdue

by 90 days or more from the due date the customer is regarded
as substandard. In such case bank is allowed to do the
provisioning of 25% of the total amount outstanding.
63.Doubtful: Where markup/ interest or principal is overdue by
180 days or more from the due date the customer is regarded as
doubtful customer. In such case bank is allowed to do the
provisioning of 50% of the total outstanding balance.
64.Loss: Where markup/ interest or principal is overdue beyond
365 days or 1 year or more from the due date the customer is
regarded as total loss. In such case bank is allowed to do the
provisioning of 100% of the total outstanding balance.
 My Activities In Different Departments

ACCOUNT OPENING DEPARTMENT:

I performed the following activities in the account opening department:

65.I have filled account opening forms of few customers and also
entered that information in the system to generate the
respective account numbers.

66.I used to check the daily status of cheque books and also
maintained the daily cheque book issuance register while I was
working in that department.

67.After filling account opening forms, the specimen cards are filled
and information of account holders is verified..

68.On the basis of the risk of the customer I assign the review date
to each customer's account.

69.I have learnt how the new account is opened & information
provided by the customers is verified.

CLEARING DEPARTMENT:

I performed the following activities in the clearing department:

70.Preparation of cheques for clearing:

71.I prepare the cheques for sending them in clearing. It performed

the following activities on the clearing cheques:

72.Pasting the cross bank stamp on clearing cheques as well as on

deposit slips.

73.Pasting the clearing stamp on the deposit slips & the cheques

74.Pasting the disbursement confirmed stamp on the back of the

cheque

75.Sending the cheques for the signature of manager

76.Once again checking all the cheques for stamps & signature
REMITTANCES DEPARTMENT:

I performed the following activities in remittance department:

77.Filling of application form for online transfer/DD/ PO

78.Preparation of IBCA & IBDA

79.Filling of debit & credit vouchers

80.Preparation of CC (Collection Cheques)

 Application Of Class Room Concepts

There were lots of applications of class room concepts during working

in the bank. I found following applications of these concepts in the
bank during my internship program. A few of the classroom concepts
were applied in various departments. They are mentioned below:

Managerial Finance
81.The concept of “interest” charge was applied in charging
consumers for loans and advances.
82.Ratio analysis was involved in the credit department. The class
room learning concepts are used in the analysis of financial reports.
It includes horizontal analysis, vertical analysis and ratio analysis.

Accounting
83.The concept of accounting is applied in making daily transactions
and entries of the account. I was having the idea of credit and debit.
It has much importance in daily transactions.
84.It helped me while reviewing balance sheet & income statements of
bank in financial reports.

Management
85.Bank’s policies for employees implemented some of the
Management concepts. Issues related to the employee satisfaction
and motivation, were clearly reflected in their policies.
86.I learnt how managers make daily decisions and how the handle
uncertain conditions.
87.I also learnt the concept of stress management while working in a
bank. During first week of every month there was a great crowd of
the people because they have account there for salary. So during
those rush hours staff members deal with customer with care.

Marketing
88.Marketing concepts were also implemented as the management
primarily focuses on caring for the customers.
89.These concepts were used to greet the customers in order to
promote their good experience.
90.On every brouchers, prominently written the slogan “The Caring
Bank”

IT in Business
91.Basics of Microsoft Excel learnt in class in the course of “IT in
 Business” were frequently applied in accounts department for
making weekly and daily reports.
92.In Remittance department it was used frequently.

Financial Accounting
93.Concepts of Financial Accounting were prevailing in banking
procedures such as the concepts of debit and credit transactions,
depreciation charges(by straight line method) , types of businesses
(individual, partnerships & corporation), bank reconciliations etc

Economics
94.Concepts from Economics were also frequently used, e.g. the issues
related to economy and the effect on investments, Federal Excise
duties which are to be paid to Government, Tax impositions on
transactions, business cycle etc.

SWOT Analysis

It is quite difficult to analyze the performance of the structure of the

bank or any organization, while working in its small unit. I tried my best
to understand the strengths and weaknesses in internal environment
and opportunities and threats in external environment of BAL.

STRENGTHS:
The major strengths of Bank Alfalah that I have observed are discussed
below:
95.The major strength of the Bank Alfalah Limited is its strong brand
name. This brand strength is the major competitive advantage of
the bank.

96.Alfalah has rapidly expanded its branch network in order to

reach greater no. of customer and to increase its deposit base
and profitable advances by offering wide variety of products and
services. It has its branches in Afghanistan and Bangladesh,
Bahrain etc.

97.BAL has strong positive culture with friendly environment. Bank

has professional staff in the form of young, energetic,
enthusiastic and educated people who have a sense of
commitment. The staff is very cooperative and helpful to each
other.

98.One more thing that I liked much there is the behavior of the
 officials with the client that was friendly enough. Bank officials
have friendly interaction and clients discuss their problems as if
they were discussing with their friends.

99.Alfalah is one of those banks who are very flexible and adaptive
to new technologies. Alfalah has modern banking system that is
highly integrated with information system. Every official has
his/her personal computer system and the branches have
integrated circuits between them. Bank is using technologies like
Bank Smart a banking software n looking forward to get it
replaced with Teminos more advanced banking software.

100.Alfalah tries to be the first in offering innovative products to

have competitive edge over other banks. For example Alfalah
credit cards came first in market and later on other banks start
issuing credit cards.

101.Alfalah has strong security system. Security cameras are

installed all over the bank and security guards are available all
the time.

102.BAL also provides entertainment facility to the bank staff and

customers in the form of cold drinks, tea, coffee, cookies, snakes
etc. more over different parties (like birthday parties) are also
arranged and other recreational trips are also arranged for the
bank staff.

WEAKNESSES:

Bank Alfalah has some shortcomings also that need to be mentioned

these shortcomings or weaknesses are:
103.Alfalah is offering a wide variety of products and services. It
keeps on offering new schemes. But the problem is that there is
very little awareness about these products and services. Many
schemes face failure because of no or little advertisement.

104.The bank claims to do the banking according to Islamic rules

but full implementation of Islamic rules is not seen.

105.Mismanagement of time is another problem in BAL, the bank

official time of closing is 6:00pm but usual observation is that
they have to leave there offices at 8:00pm and even sometimes
at 9:00pm because they have to answer some queries from area
office or head office. This really becomes hectic and reduces
employee efficiency.
 106.I have visited some branches like Vehari road branch and Shah
Rukn-e Alam branch and I felt that there is no reception for the
proper guidance of the customers and customers feel a little
disorientation.

107.I have also observed a little dissatisfaction among employees.

Bank officials were little dissatisfied with the bonuses and the
increments as they were not as per their expectations.

108.I have also observed that some employees were over burdened
with work. Like in accounts department there is a lot of manual
work of sorting, slips arrangement, ticking etc. that is required to
be done by one official that is really tiresome. Similarly some
other officials also have over burdened with work. On the other
hand in some departments I’ve observed over staffing as well.

OPPORTUNITIES:

There are some opportunities that are needed to be grabbed by Bank

Alfalah:
109.Bank Alfalah Limited has the opportunity to expand the no. of
its foreign as well as local branches in order to capture greater
market share.

110.Alfalah is offering credit facilities to all segments and there are

greater opportunities in providing credit facilities to SMEs
because SMEs are flourishing in Pakistan at higher rate. So
Alfalah has the opportunity to attract the customers by giving
them attractive schemes.

111.Alfalah has the opportunity to do aggressive marketing to

create greater awareness of Alfalah products and thus to grab
greater market share and to increase its business.

112.Another opportunity is to be more and more adaptive to the

new technologies before the others adapt them.

113.There is an opportunity to start E-banking and full online

banking transaction system to better cater the needs of the
customers.

THREATS:
Some threats faced by the Bank Alfalah Limited are:
114.New emerging banks pose threat to the BAL.
115.Privatization of the banks is another threat for Alfalah.

116.Competitors can come up with innovative products in market.

117.A bank coming up with the claim of complete Islamic banking is

a bigger threat for Alfalah Islamic banking branches. For example
Meezan bank.

118.Bank Alfalah has many competitors that are doing

advertisement of their products and services using all mediums
and thus creating more customer awareness. This aggressive
advertisement done by other private commercial banks is a
bigger threat to the bank.

119.Economic and political instability is problematic as well. Political

interference and certain government policies
can cause problem. Increased lending rates and withholding
taxes imposed by the government also cause decreased no. of
customers.

120.Increasing rate of inflation is problem as well because it

reduces purchasing power and thus reduced savings. When there
are reduced savings then of course deposits also reduce and
bank has less money to extend loans and hence the bank’s
profitability reduces as well.

121.Low entry and exit barriers pose threat to the bank.

122.There is not only local competition but also global competition

faced by the bank. Local and foreign banks coming up with new
technologies pose threat to bank.

123.E-banking online services offered by banks like Meezan and

Allied bank are threats for BAL.
 PEST Analysis

POLITICAL:

Political conditions of any country do have an impact on its major

industries so no exception to the banking industry. For example due to
the recent political problems there were curfew imposed and the
branches that were fully operative have to be closed in Swat, Mangola
and Banu. More over when there was Benazir murder case again
political situation was much disturbed then some of the branches of
Bank Alfalah were set on fire by some protestors.
When I asked to the manager that what the impact of political situation
is on the bank’s profitability then he told that despite the fact that
Pakistan’s Political situation was not much stable as we look at history
but still the banking industry kept on thriving. Reason being the SBP’s
policies remained much supportive to expand the branch network and
to flourish the commercial banks.

ECONOMIC:

One thing that came under observation was that when there arise
greater economic problems whether caused by political instability or
the overall economic trend then the foreign investors extract there
monies from the banks and sell there shares and result in greater
losses. The situation could be avoided by keeping upper lock and the
mower lock by the stock exchange controlling committee to control the
trading volumes. Increasing rate of inflation is problem as well because
it reduces purchasing power and thus reduced savings. When there are
reduced savings then of course deposits also reduce and bank has less
money to extend loans and hence the bank’s profitability reduces as
well. When Inflation rises then both the markups and the return
increases.
After 9 11 incident there came a lot of foreign money in the form of
remittances. This resulted in increase in money supply and liquidity of
the bank increased. The bank was extending commercial as well as
consumer loans at cheaper rates. The bank also started new schemes
like home finance and car finance etc. These schemes resulted in the
debt-burdened economy. Then there came decrease in remittances
then markup rates increased. The oil prices are rising causing a trade
deficit. More over input costs (like costs of laborers’ wages, raw
materials, electricity costs etc.) has been increased and they are also
facing food crisis.
The decreased remittances, increased oil prices, increased input costs
and the food crisis all these factors put pressures on the economy. Due
to this the bank is facing problems in extending loans recovering
monies extended and the default rate has increased.

SOCIAL:
The Bank Alfalah has its prominent social character as well. It is doing
much for the society’s welfare. For example it keeps on giving
donations to different hospitals like Shaukat khan Memorial and Edhi to
center. Moreover it has sponsored an institute of banking and finance
which is under construction in the Bahauddin Zakriya University. The
bank has also sponsored national and international cricket matches.
Recently it has sponsored a cricket match of blind people and now
looking forward to arrange a women’s hockey tournament at national
level.
Bank Alfalah donated Rs.10 million when there was an earth quake for
the rehabilitation program. The bank keeps some provisions in its
budget against natural disasters.

TECHNOLOGICAL:

The bank Alfalah is among the top 3 banks that are ahead other banks
in the field of technology. Allied bank, UBL and Alfalah are more
adaptive to new technologies and the latest technologies are being
used in these banks. It is expected that the Bank Alfalah would be at
the top in case of technology in the near future as the management is
going to going to replace its current banking software “Bank Smart”
with a new software “T-Mos” short of Teminos. This new banking
software is expected to reduce the manual reporting system and the
physical paper work will be reduced.
CREAM (Credit Risk Management System) is also being used by the
bank. Basically all the details regarding advances are recorded in it
and the documentation and the facility structure is added in it. LMS
(Lease Management System) is also being used. It do the auto-posting
and auto-accrual and keeps the track that when payments come due
and that when the Kibor is to be adjusted.
The banking is adopting the scanning system of all the necessary
documents for example vouchers are being scanned currently and the
bank is looking forward to do the scanning of all the documents
because when some of the branches were set on fire then all the
record was destroyed. Now the bank is going to maintain a separate
CD of the record of each customer.

Suggestions and Recommendations

Finally based on my observations, there are some suggestions and
recommendations from our side to the management of the Bank
Alfalah limited. These recommendations and suggestions are:
124.The Bank Alfalah must focus on doing advertisement. Majority
of people are not well aware of Alfalah’s products so it should
advertise its products using print media, electronic media etc.

125.There should be proper time management so that employees

need not stay beyond the official closing timings. Management
should try to rectify it.

126.There should be reception for the proper guidance of the

customers to avoid inconvenience.
127.Employee motivation programs should be started and proper
incentives should be given to deal with problem of low job
satisfaction. Individual differences should be recognized and they
should be awarded with bonuses and increments and promotions
on merit basis.

128.The management should do the proper placement of the

employees to solve the problem of over staffing and over burden
of work on some officials.

129.Bank Alfalah Limited should be more aggressive in opening

foreign branches so that it can increase its deposit base and thus
the profitability.

130.As the bank’s credit department focuses on corporate and

commercial customers more then SMEs so there I’ll suggest that
in order to boost the small and medium enterprises bank should
also focus on this segment.
131.The bank should keep on coming up with new schemes and
products after analyzing customer needs. This can give a
competitive edge to the bank.
132.Bank should start E- banking and online banking to compete
with other banks who are offering such facilities like Allied bank.

133.The bank should do the proper Islamic banking in order to

satisfy the needs of those customers who are greatly dissatisfied
with the present banking system and who want full
implementation of Islamic rules.
Recommendations to the government are that:
134.Government should try to keep the economic and political
situation stable so that they may not affect the banking
 system.
135.Government should try to have a control over inflation so that
savings can be mobilized.
136.Government should not allow free entry and exit system in
banking industry.
 FINANCIAL ANALYSIS

LIQUIDITY RATIOS

137.Current Ratio = Current Assets

Current Liabilities

2007 2008
=51269175 = 57583878
25368940 17142253
2.02 3.36
Explanation:
The current ratio shows the ability of bank to meet its short term
obligations. Current ratio of BAF is increased in 2008 as compared
to 2007 which is due to increase in current assets & decrease in
current liabilities. This ratio is increased in 2008 which shows an
improvement in the ability of BAF to meet its short term
obligations which is due to the decrease in current liabilities.

2. Cash Ratio = Cash + Cash Equivalent

Current Liabilities

2007 2008
= 47817116 = 54268378
25368940 17142253
1.89 3.16

Explanation:
This ratio shows the ability of the bank to meet short term
obligations with sufficient cash. This ratio is decreased in 2007
which is due to the increase in current liabilities & increased
borrowings. Where as in 2008 it has shown an increase which is
due to the decrease in bank's borrowings & hence its current
liabilities.

3. Net Working Capital = Current Assets _

Current Liabilities

2007 2008
= 51269175- = 57583878-
 25368940 17142253
25900235 40441625
Explanation:
It shows ability of the bank to meet their current liability with their
current assets. it is increased in 2008 which is due to the decrease
in current liabilities & increase in its assets as compared to 2007.

4. Net Worth = Total Assets - Total

Liabilities

2007 2008
= 328895152- = 348990764-
16219844 17044739
312675308 331946025
Explanation:
It is showing increasing trend from year 2007 to 2008. This shows
that bank’s total assets are increasing at greater rate as compared
to liabilities. So, bank’s overall business increased from 2007 to
2008.

5. Total Asset Turnover = Mark-up earned

Total assets

2007 2008
= 25783871 = 31046583
328895152 348990764
0.078 0.088
Explanation:
It indicates the efficiency with which the bank used its assets to
generate more interest/ mark up income. There is a little bit
decrease in it in 2007 as compared to 2008 which shows the
decrease in efficiency where as in 2008 asset's turnover is
increased which also shows the increase in efficiency.

DEBT / LEVERAGE RATIOS

6. Debt Ratio = Total liabilities

Total assets

2007 2008
 = 16219844 = 17044739
328895152 348990764
0.049 0.048

Explanation:
This ratio indicates the ability of bank to pay its liabilities. This
ratio shows very small variations. It shows that the ability of bank
to pay its debts is decreased slightly in 2008 due to more increase
in total liabilities as compared to total assets, where as in 2007
this ability is increased due to more increase in total assets as
compared to total liabilities.

7. Debt To Equity Ratio = Total Liabilities

Share Holders Equity

2007 2008
16219844 = 17044739
8914833 11161056
1.82 1.53

Explanation:

ratio shows how much liabilities are being maintained with respect
to share holder’s equity. It is decreased in 2008 as compared to
2007 because the increase in SHE is more as compared to
increase in liabilities. Where as it is decreased slightly in 2008 due
to more decrease in liabilities as compared to SHE. It shows that
indebt ness of shareholder's money is increased in 2007 but it is
again decreased in 2008.

PROFITABILITY RATIOS

8. Gross Profit Margin = Net Interest income

* 100
Mark-up earned

2007 2008
= 9162908 = 10715389
25783871 31046583
35.5% 34.5%

Explanation:
ratio shows a decreasing trend from 2007 to 2008. Because mark
up earned increased from 2007 to 2008 and net interest income
does not increased in proportion to mark up earned.

9. Operating Profit Margin = Profit before

taxation * 100
Mark-up earned
2007 2008
= 4535552 = 1794720
25783871 31046583
17.5% 5.78%

Explanation:
This ratio shows decreasing trend. It decreased from 2006 to
2007, 71.769% to 67.03% this is because that mark up earned
was more in 2007 as compared to 2006. But this ratio decreased a
lot from 2007 to 2008 because the mark up earned is increased to
much greater extent as compared to profit before taxation which
is slightly increased. This decreasing trend is not a good indication
for the bank's financial health.

10. Net Profit Margin = Profit after taxation

* 100
Mark-up earned
2007 2008
= 3130229 = 1301301
25783871 31046583
12.1% 4.19%
Explanation:

ratio also shows a decreasing trend from 2006 to 2008. The

reasons are same as in operating profit margin.

11. Return On Total Assets = Profit after

taxation
Total Assets

2007 2008
= 3130229 = 1301301
328895152 348990764
0.0095 0.0037

Explanation:

This ratio shows that how effectively the bank's assets are used to
generate profits. This ratio is slightly increased in 2007 which
shows improved efficiency but it is decreased in 2008 which shows
a decrease in efficiency. This trend is due to the reason that in
2007 profit after taxation is increased in greater proportion as
compared to total assets where as in 2008 there is only slight
increase in profit after taxation but a larger increase in total
assets.

12. Return On Equity = Profit after taxation

Share Holders Equity

2007 2008
= 3130229 = 1301301
8914833 11161056
0.35 0.12

Explanation:
It shows return earned on SHE. This ratio also shows a decreasing
trend from 2007 to 2008 because shareholder's equity is
increased from 2007 to 2008.

MARKETABILITY RATIOS

13. Earning Per Share = Profit after taxation

Outstanding Common Stock

2007 2008
= 3130229 = 1301301
798527 798344
3.92 1.63

Explanation:

EPS is decreasing from 2007 to 2008. in 2008 this is due to the

reason that profit after taxation is decreased to lesser extent as
compared to no of outstanding common stock. Where as in 2007
although the no of outstanding common stock remains constant
but the profit after taxation is increased which causes an increase
in EPS.
14. Book Value Per Share = Share Holders Equity
Outstanding Common
Stock

2007 2008
= 8914833 = 11161056
628,212 798344
87.74 13.9

Explanation:

Bank’s book value per share increased from 2006 to 2008 because
stock holders equity increased & in 2007 the no of common stocks
outstanding is increased in less proportion where as it is constant
in 2008.
VERTICAL ANALYSIS OF BALANCE SHEET

2007 % 2008 %
Cash & Balances with 8.95% 9.37%
treasury banks
Balances with other 5.59% 6.18%
banks
Lending to Financial 1.05% 0.95%
Institutions
Investments 26.90% 21.77%
Advances 52.05% 55.20%
Operating Fixed 3.62% 3.94%
Assets
Deferred tax assets _ _
Other assets 1.83% 2.58%
Total Assets 100% 100%

Liabilities 2007 % 2008 %

Bills payable 1.26% 0.98%
borrowings 6.46% 3.92%
Deposits and other 78.29% 86.17%
accounts
Subordinated loan 0.98% 0.74%
Liabilities against _ _
asset
subject to Finance
lease
Deferred tax 0.42% 0.059%
liabilities
Other liabilities 2.89% 3.24%
Total liabilities 90.3% 95.10%
Net Assets 4.92% 4.87%

Share capital 1.97% 2.29%

Reserves 0.73% 0.91%
Inappropriate profits 1.47% 0.98%
Surplus and 0.75% 0.69%
revaluation of
assets
Total equity 4.92% 4.87%
Net assets are taken as base
 VERTICAL ANALYSIS OF INCOME
STATEMENT

2007 2008
Mark up earned 100% 100%
Mark up expensed 64.46% 65.49%
Net mark up before provision 75.26% 71.13%
Provision for diminution in value of _ 6.70%
investment
Provision against loans & advances 9.19% 3.33%
Bad debts written off directly 0.02% _
Net mark up after provision+ 65.61% 61.09%
Non mark up interest income
Fee/commission/ brokerage income 9.42% 7.16%
Dividend income 0.25% 1.54%
Income from dealing in foreign 1.84% 1.82%
currencies
Gain on sales of securities- net 7.99% 1.85%
Unrealized gain on the reevaluation _ -0.26%
of investments
Classified as held for trading -0.08% 2.35%
Total non mark up/ interest 18.91% 14.46%
income+
++ 84.52% 75.56%
Non mark up / interest expenses
Administration expenses 32.08% 18.85%
Other provisions 0.027% 0.025%
Other charges 0.037% 2.07%
20.95%
Extra ordinary expenses _ 0%
Profit before taxation 12.14% 54.61%
Taxation
Current year 6.69% 18.33%
Prior year _ -2.16%
Deffered -1.25% 0.04%
Profit after taxes 48.02% 38.39%
Unappropriated profit brought 10.95% 12.81%
forward
Transfer from surplus on reevaluation _ 0.05%
of fixed assets – net of tax
Profit available for appropriation 0.095% 51.26%

Mark up earned is taken as base.