Acknowledgment In The Name of Allah, the Most Beneficent, the Most Merciful All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful and beneficent who gave us courage to undertake and complete this task. We are very much obliged to our ever caring and loving parents whose prayers have enabled us to reach this stage. We are grateful to almighty ALLAH who made us able to complete the work presented in this report. It is due to HIS unending mercy that this work moved towards success. We are highly indebted to our course instructor Ms.Syeda Habibah Hussain Rizvi for providing us an opportunity to learn about the Business communication and ethics and assign us to implement on “Bank Al-Falah" which is vital ingredient of BBA program. We are very great full to our teacher for providing us guideline for the completion of this report. We feel great pride and pleasure on the accomplishment of this report. - 1 -
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Transcript
Acknowledgment
In The Name of Allah, the Most Beneficent, the Most Merciful
All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful and
beneficent who gave us courage to undertake and complete this task. We are very much
obliged to our ever caring and loving parents whose prayers have enabled us to reach this
stage.
We are grateful to almighty ALLAH who made us able to complete the work presented in
this report. It is due to HIS unending mercy that this work moved towards success.
We are highly indebted to our course instructor Ms.Syeda Habibah Hussain Rizvi for
providing us an opportunity to learn about the Business communication and ethics and
assign us to implement on “Bank Al-Falah" which is vital ingredient of BBA program.
We are very great full to our teacher for providing us guideline for the completion of
this report.
We feel great pride and pleasure on the accomplishment of this report.
- 1 -
Preface
Banking sector owes a crucial importance in the economy of any country through its
vibrant functions. This is the deep motivation that geared up us to select the bank for our
project. Moreover, the practice and familiarity observed and learned during this time
period would also attest very helpful and alleviating in the awaiting proficient life.
This report is an upshot of our observations and the information collected from Bank Al-
Falah, Pakistan. Bank Al-Falah posses an imperative importance in the Banking sector of
Pakistan. It always remains the center of hustles in business activities. It always endows
with great covenant of rally round in terms of funds and services.
Although, such a small period of time is not enough to learn the complex operations of
Bank Al-Falah Limited yet we made tough efforts to discuss them comprehensively in
this report. We have view many Marketing and Management concepts to elaborate this
report with the material read, listened and observed.
We have strong belief that this report will guide and ease the readers to understand the
operations and communication of Banking system and more significantly have good
knowledge about Bank Al-Falah Limited, one of the most trusty and leading Bank in
Pakistan.
We hope that the readers will appreciate our report and sense that reading our report is
not the wastage of time in any opinion.
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EXECUTIVE SUMMERY
For successful market position, marketing, management, product and communication strategies are imperative in today’s rapidly moving high-tech market. Companies need to take a new technologies or ideas and efficient management to develop a complete product that addresses a customer needs and propagate these needs through communication effectively in valuable market as well as executive flawlessly on bringing it to market.
In this report we have tried to cover the marketing and management strategies by Bank Al Falah. Bank Al Falah was in corporate in June 21st, 1997 its banking operations started from November 1st, 1997. The bank engaged in commercial banking and related services. The bank is currently operating through 223 branches.
Bank Al Falah target market conceits of individual client as well as number of business organization. Bank Al Falah has segment the market on demographic, psychological and behavioral style to target maximum number of segments with different varieties of products suitable for each segment. In marketing terms this strategies in competitors is known as the “Flank Attack” &“Frontal Attack”.
In this report we have discussed the marketing plan, organizational culture and communication and financial analysis of Bank Al Falah Limited comprising of segmentation, product & services, competitors analysis, positioning marketing mix, means of communication, HR and other departments carried by the Bank Al Falah. We have also briefly discussed the integrated marketing communication (IMC) being used by the Bank Al Falah to address its customers.
We have tried our best to cater all of these aspects being followed by Bank Al Falah and hope that this report will help you explain your concepts about these strategies to a greater extent.
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COMMERCIAL BANKING SCENARIO IN PAKISTAN
At the time of independence in 1947, there were 38 scheduled banks with 195 offices in
“Pakistan” but by December 31, 1973, there were 14 scheduled Pakistani commercial
banks with 3,233 offices all over Pakistan and 74 offices in foreign countries.
Nationalization of Banks was not done 1st January 1974 under the Nationalization act
1974 due to certain objectives. But it had negative effects on efficiency of the banking
sector afterwards a privatization Commission was set up on January 22, 1991 and the
commission transferred many banks to the private sector i.e., MCB & ABL. The
government approved & permitted the establishment of 10 new private banks in 1991.
Hence many new private banks have incorporated. Since then, BANK ALFALAH is one
of the namely established private banks in Pakistan.
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History
Bank of Credit & Commerce International (BCCI) was a Pakistan based bank established
by Mr. Agha Hassan Abdi from UBL in association with U.A.E and Europe. BCCI has its
branches in 74 different countries of the world. It had its 3 branches in Pakistan. In 1991,
the BCCI was banned when is was accused by European countries that the bank was
involved in some illegal operations with Gulf countries. The major reason behind
European accusation was that BCCI was of Islamic mode. There for the bank was closed
due to international pressure. Then its 3 Pakistani branches were taken over by the
Government of Pakistan which were named as Habib Credit and Exchange Bank (HCEB)
and these were working as subsidiary of Habib Bank Limited.
Following the privatization in July 1997, Habib credit and Exchange Band assumed the
new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based bank as
the family of Sheikh Nahayan Mubarik Al-Nahayan purchased 70% of its shares and
30% shares remained with Habib Bank on behalf of Government of Pakistan. It has its
18 branches in 8 cities of Pakistan at that time.
Charged with the strength of Abu Dhabi group and under the leadership of Sheikh
Nahayan Mabarak Al-Nahayan, Minister of Higher Education and Scientific Research,
Government of Abu Dhabi and a prominent member of Royal Family, the bank is
energized with the vision, envisaging the development of various sectors in Pakistan.
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INTRODUCTION
Bank Al Falah Limited was incorporated in June 21st, 1997 as a public limited
company under the Companies Ordinance 1984. Its banking operations began from
November 1st, 1997. The bank is engaged in commercial banking and related services as
defined in the Banking companies ordinance 1962. The Bank is currently operating
through 223 branches in Pakistan with the registered office at B.A. Building, I.I.
Chundrigar, Karachi.
Since, its inception as the new identity of H.C.E.B after the privatization in 1997, the
management of the bank has implemented strategies and policies to carve a distinct
position for the bank in the market place. Strengthened with the banking of the Abu
Dhabi Group and driven by the strategic goals set out by its board of management, the
Bank has invested in revolutionary technology to have an extensive range of products and
services. This facilitates their commitment to a culture of innovation and seeks out
synergies with clients and service providers to ensure uninterrupted services to its
customers.
The bank perceived the requirements of customers and matches them with quality
products and service solutions. During the past five years, bank has emerged as one of the
foremost financial institution in the region endeavoring to meet the needs of tomorrow as
well as today. To continually upgrade the quality of service to the customers, training of
team members in all the integral aspects of banking, customer service and IT was
specially focused.
The portfolio concentrates on all aspects of conventional banking as well as the financial
needs of corporate sector. Dynamic and high value product includes Car Financing,
Home Financing, Rupee Travelers Cheques, Credits Cards, Debit Cards, On line
Banking, ATM and consumer Durables. In addition to this, Islamic Banking Division is a
recent initiative which operates as separate branch. It offers Shariah Compliant products
through a network of five branches, which will increase to 50 by the year 2007. The bank
is committed to combine all it s energies and resources to bring high value, security and
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satisfaction to its customers, employees and shareholder. The Bank has invested in
revolutionary technology to have an extensive range of products and services. This
facilitates commitment to a culture of innovation and seeks out synergies with client and
service providers to ensure uninterrupted services to its customers.
mission statementVision:
" To be the premier organization operating locally & internationality that provides
the complete range of financial services to all segments under one roof. "
Mission :
" To develop & deliver the most innovative products, manage customer
experience, deliver quality services that contributes to brand strength, establishes a
competitive advantage and enhances profitability, thus providing value to the
stakeholders of the bank."
Slogan:“ THE CARING BANK ”
" Let’s Look Ahead Towards a Brighter Future Together "
analysis tools to enable the bank to realize the full value of its system data whilst
monitoring key performance indicators in a timely and accurate manner.
MARKETING MIX (4P’S)
The marketing analysis of the bank focus the promotional complain the 4 P’s of
marketing are also vision of the bank that it uses for its marketing (called 4 P’s) i.e.
names of 4 P’s.
Product:
The product of Bank Al Falah are its various banking services which are following
PLS & Non PLS Account(Profit loss saving accounts and nonprofit loss saving
accounts)
ATM Cards
VISA Cards
LOCKERS
Credit Extension.
Price:
The price for various services of bank is
given in the booklet “The schedule of
bank charges”. The prices at the bank are
quite competitive with those of other
bank working vertically. The Bank Al
Falah try to that they give loan at low
interest.
Placement:
The distribution channels are its employees who deal with customers. The bank has over
223 branches through which it offers services to its clients in different sectors like as:
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Industrial sector
Agriculture sector
Commercial Areas
Small Towns
Public Organizations
Promotion:
Various promotional techniques as
advertising, personal selling etc. are used the promotional strategies of the bank vary
according to the market condition. However the following techniques are mostly used.
Sponsorships
Sports Sponsor:
Bank Alfalah beleief in the providing the quality service through the idea of "Where there is Sports, there is Al Falah"
In the arena of sports, Bank Alfalah is actively involved in sponsoring events. Sports
today not only represent healthy and clean way of life, it is big business in its own right.
The sponsoring events Sponsored by the Bank Al Falah Limited in Pakistan range from
Cricket Golf, Squash, Polo, and Volley ball, to Hockey. BAL uses attractive slogans to
prominent. Some famous Events are :
Al Falah Cup Cricket
Bank al Falah Pakistan Squash Open
Bank al Falah Polo
AL Falah Cricket Triangular Series
Event Sponsor
Social Events
BAL encourages extra-curricular activities and social events that
allows employee to have a social exchange outside the working
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environment. In this employee are encouraged to bring their family members along,
giving them a chance to fell a part of BAL family network social events like;
Picnics
Barbeques
Sports
Cultural Tours
Actually they are creating a reference group (a group to which attached persons feel
internal recognition by telling others about that group) and doing the marketing in terms
of Word of mouth (The marketing that spread from one person to others in the circle of
its family, friends, relatives, neighbors etc). Some famous events are:
Whaga Border Trip
Lahore Basant Trip
Integrated Marketing Communications
Advertising
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It is a non personal presentation in paid form to introduce a product or service idea Bank
Alfalah use the following tools for advertising.
TVC
BAL uses more TVC as compared to its competitors. They choose those channels for
advertisement where its target customers exist. They mostly choose those spots for TVC
at peak hours in between the News. And special in the cricket matches. The TV channels
it chooses for advertise are Sports channels like Ten Sports, and others like PTV, GEO,
ATV, ARY, etc.
News Paper
BAL uses leading newspapers that are read by the business class and the family heads.
They mostly gave there advertisement mostly on Jung, Dawn, The News, The Nation,
etc.
Journals
BAL used these journals to promote their name DAWN, STAR SPORTS etc.
Magazines
BAL used these magazines to promote their activities.
Flyers
Mostly these are using when there open a new branch in a new city or a new a scheme or
product/service is introduced. Then these are used at a large scale at the chowks, squares;
outside the shopping malls, Liberty, Pace, Super Jinnah, Blue Area, Karachi company
stop, Tariq road etc.
Billboards
This is an important source of advertisement. BAL uses this only those places that have
great importance for the business class or where mostly multinationals companies have
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offices and the traffic spots like Mall road, DHA, Lahore Cantt, Barkat Market, Davis
Road, LDA Plaza, and Peshawar Morr.
Hooding
These are like billboards but large in size than billboards same they are using in few
places in the big cities at important places like near big flyovers, squares, big buildings,
etc
Source of Brand Equity:
Brand equity is willingness for someone to continue to purchase your brand about my
product of Bank Alfalah. We discuss how our products attained the sources of brand
Equity.
Authenticity
BAL is providing best services to its customers. It is there service of quality that within nine years of there working they become the largest branch holder with in private banks and it represents their progress.
Consistency
BAL improving its products/services with the passage of time. They provide all the
customized products/services that are needed by the low/medium level income. All types
of banking are available in all the branches. They did not give any chance to his
competitor to overcome their weakness.
Reassurance
BAL always created a true faith among their customers by giving different fatalities to
their customers (WOL, WARID post paid connections) and making good relationship by
sponsoring different events (Basant Mela, Jashan-e-Baharian) social gathering, fairs on
different occasions collection for earth quake victims, etc
Differentiation
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The unique point that make different BAL from other banks is that they use penetrating
marketing strategy instead of skimming, they focused on that segment which is mostly
ignored by others banks. They provide all the banking facilities (car, credit cards, debit
cards, ATM cards, Home loans, Agriculture loans, study loans, etc) to a normal income
person now layman can enjoy all the facilities that he only desires. They become so
popular in banking sector that the really proof there slogan “Caring Bank”. The most
prominent point is that there name is spreading through word of mouth. So they needed
less advertisement as compared to other banks.
Identification:
BAL attained this level by recognition through his Slogan “Caring Bank”. It focused on
the layman needs and fulfill it by presenting approachable schemes of products/services.
Brand meaning:
BAL created his meaning by presenting its valuable Products/services and covers the
customer perception.
Customer responses:
Customer’s response about the BAL is resulted in increased the no of branches rapidly so
that feelings of people about BAL become strong and strong with his efficiency.
Loyalty relationship:
BAL created a strong relationship with the customers. So Al Falah becomes the largest
banks that have maximum branches (177) in limited time (1997-2009) and increases this
span consciously. Positioning of Brand with respect to Competitors :
All banks positioned themselves at different unique edges to positioned in target
customer mind following are the positioning edges of various banks
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ABN Bank:
They positioned themselves as for high level business and social class. They use the
skimming strategy for their growth.
Standard Charted Bank:
They positioned themselves as foreign bank there staff and environment is totally
different from the others banks. They also skimmed the market.
United Bank Limited:
They recently merged with bank Alfalah limited.
Allied Bank Limited
They got the award of bank of the year. They positioned as old trusty bank and it use a
penetration strategy to get its goals.
Bank Alfalah Limited
They positioned as fast growing bank. They used intensive penetration strategy to
position them.
HUMAN RESOURCE MANAGEMENT
Human Resource Planning
At Bank Alfalah Limited, Human Resource Planning involves a decision making in three
areas of combined activities:
Step-I The bank identifies its organizational needs and then acquires a
right king of human resource accordingly.
Step-II Bank motivates them to achieve excellent performance by giving
them different sorts of targets according to their job requirements.
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Step-III It also creates an interactive link between the employee goals and
the organizational goals.
Recruitment and Selection
Bank Alfalah Limited recruits three kinds of employees:
1. Top Level Management
2. Trainee Officers
3. Contractual Basis Employees
Training and Development
In Bank Alfalah Ltd. the process of Training and Development consists of various other
activities like:
Training:
i. The appraisal form of an employee indicates the areas in which the
employee should be trained and developed. It also elaborates the
abilities of an employee.
ii. Management and Organization Development Division of each region
timely reviews the employees and recommends them for training
during the operations it they note any discrepancy between the desired
and actual performance. This review is performed after every quarter.
iii. Upon the request of GM (Operation), indicates which sort of training
is needed in a particular region regarding the Operation Support and
Service.
Development:
Management Skill Training
Special Training for Foreign Transferred Employees
Performance Appraisal:
It is a structured discussion between employee and supervisor. It provides an opportunity
for the supervisor to recognize an employee’s achievement, offer suggestions for
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improvement when needed, discuss job responsibilities, define objectives, counsel for
career advancement, and justify a pay adjustment. Regarding the performance appraisal,
bank adopts both type of approaches.
Traditional Approach:
The traditional approach is primarily concerned with the overall
organization and its past performance. In Bank Alfalah, overall
performance is reviews at branch level. Each branch is liable to show its
performance in a positive direction according to set goals.
Development Approach:
This approach viewed the employees as individuals and has been forward
looking through the use of goal setting. All the employees in the each of
the branches are given a performa. Every employee working in the bank is
assigned targets, usually their target are in the form of amount. The
performances of all the branches are reviewed in the end of December.
Till yet Bank Alfalah, has no computerized system to assess the
performance of employees
Performance Appraisal Process:
The performance appraisal process in the Bank Alfalah Ltd. consists of four inter-related
steps:
i. Establish a common understanding between the manager (evaluator) and
employee (evaluate) regarding work expectations, mainly the work to be
accomplished and how those work are to be evaluated.
ii. Establish ongoing assessment of performance and the progress against
work expectation.
iii. Formal documentation of performance through the completion of a
performance and development appraisal form appropriate to the job
family.
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iv. The formal performance and development appraisal discussion, based on
the completed appraisal form and ending in the construction of a
development plan.
Reward Management
Reward Management elaborates how people are rewarded in accordance with their value
to an organization. It is concerned with both financial and non-financial rewards. A
reward system of an organization consist of integrated policies, processes and practices
for rewarding its employees in accordance with contribution, skill and competence and
their market worth.
In Bank Alfalah the elements of reward management system are consists of Basic Pay;
the fixed salary or wage which constitutes the rates for the job. This rate is varied in a
skill based or competence based system according to the individual’s skill or competence.
The rates are fixed by managerial judgement of what is required to recruit and retain the
employee.
In Bank Alfalah there is no any concept of individual performance related pay except to
the Business Development Officer. Business Development Officers are those who are
hired at contractual basis. They are assigned different targets. If they exceed to the targets
they can enjoy the individual performance related pay otherwise they are fied.
There is no concept of bonuses, commission or over time related pay. The official timing
of bank is 09.00 AM to 06.00 PM but almost all of the employees have to work till near
08.00 PM. However, for this additional work they are not getting any additional bonuses /
over time.
Aggressive Banking
Bank alfalah expanding their network of Islamic Banking. Bank Al Baraka has been
serving the Islamic banking sector since 10 years and they have only 5 branches in
Pakistan. On the other hand bank Alfalah has established 20 branches in a year.
Motivation
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Bank Alfalah motivating their employees by giving them comprehensive benefits and
professional environment within the organization, which enhances the performance of the
employees. Bank motivates their employees by giving 3 bonuses in a year.
BENEFITS
Monitory BenefitsMonitory benefits are given to the employees on the basis of their
performance like salary rise, cash prize.
Grade PromotionBank also provides benefit to their employees in the form of grade
promotion. Grade promotion motivates the employee to do their work
efficiently and effectively.
Abroad PostingBank benefit their employees by sending them on overseas posting where
they can enhance their professional skills and get handsome financial
benefits in terms of salary or fridge benefits.
TARGET MARKET :
Bank Alfalah target market consists of individual clients as well as a number of business
organizations. Due to different market segments, BAL’s different branches have their
target markets. To capture the import business in Pakistan, the targeted segments is valid
markets known as business & commercial hub of Pakistan. Due to specialized services
provided by BAL, and its highly competitive foreign exchange rates, most of the major
importers in this area deal with BAL. Examples include; Mughal Steel and International,
New Shalimar Steel, Vellcone International, Rana Brothers etc.
As far as the individual clients are concerned, the targeted segment is posh areas like
DHA.
BRANCH NETWORK
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An efficient branch network is essential for achieving its target. Its plan to open 25
more branches in the year 2009, at different location in the country increasing its
network to 215 branches covering over 22 cities. Bank follows a strategy of
optimum financial and quality human resource location in order to enhance the
performance potential of all its branches.
Conventional Branches
Islamic Banking Branches
Overseas Branches
FUTURE OUTLOOK
The economic future for the country seems brighter with many key indicators
moving in a favorable direction. Investor’s confidence is recovering and
entrepreneurial activity has gained momentum. They will continue to follow
strategy based on business and deposit enhancement and network expansion
POSITIONING:
The distinguish place of product/service in target customer mind.
BAL positioned itself as caring bank and customized banking. When
customer thinks about Alfalah bank the following points come in his mind.
Consumer banking
Easy approach to all departments
Felling of self respect
Fulfill of their dreams like (build own home, buy personal cars, etc).
Guaranteed profit.
Security.
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All these thinks are in the customer mind. Due to Alfalah aggressive growth when ever
customer think about banking sector the first bank comes in mind that would be Bank
Alfalah. Bank Alfalah bank positioned also as a fast growing. Where there is a new town
there would be the a branch of Alfalah provide maximum products/services under one
roof .
Unique Positing:Positing mean image of service/Product in customer mind it can be created by
various attributes or qualities of product /service. BAL positioned itself by a
unique way that It is in the customer mind that
BAL is aggressive growing bank
New town opened Alfalah reach their first
BAL Spreads its branches at Teasel Level in Pakistan
SWOT Analysis of Bank Alfalah
Strengths
Strengths are the core competencies of any organization & as far as BAL is concerned the
core competencies of this organization are:
Target Achievement
Policies & Procedures
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Controlling Standards
Priorities
Rewards & Benefits
Job Security for the Employees.
Favorable, friendly & Healthy Working Environment.
Documentation System is so much accurate.
Accounting & Banking System is Accurate & Reliable one.
Weaknesses
Weaknesses are the lacking points which every organization must avoid in order to make
its operational effectiveness.
Hectic Working Environment.
Work load.
Lack of Self Marketing Department.
Low Training & Coaching.
Low incentives like bonuses overtime pay etc.
Human Resource Department is not so much effective.
Appraisal is not done frequently.
Low salary packages as compared to other banks.
Opportunities
In fact, when we study all our weaknesses critically & deeply than we come to know that
we can convert our weaknesses into strengths. So basically these are our opportunities.
The opportunities for BAL are:
On the job training & coaching sessions can be conducted.
Work sharing activities should be started so that a person who is working
continuously for 9 hours can get relax.
Marketing department should be started in order to promote the name of
BAL.
Appraisal should be conducted frequently so that employees get motivated
& do their work as a loyal employee.
Attractive salary packages should be awarded.
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Threats
Though Bank Alfalah has a strong footing and maintain a good number of loyal
customer, still bank has threats in various sectors. When we see the possible
threats for BAL, the threats are prevailing such as:
o The conventional banks those having high growth rate and high market share
are always being a threat.
o There is an average not low turnover rate, mainly because of low incentives as
compared to the other banks.
o Large business parties have fewer attractions in being a client of BAL-IBD,
mainly because of excessive amount of documentation.
PEST Of Bank Alfalah
Political : Analysis of Political environment is very critical and this
environment has a strong influence upon the activities of any
organization in a society. Political environment strongly affects the
marketing decisions. The political stability of a country has its
impact on the consistency of policies of local government. Pakistan
has always been struggling for political stability since its creation.
Government has been changing in Pakistan many times due to
multiple reasons and most of the times Military has taken the
charge of the government. So, there are significant political risks in Pakistan. But the
positive aspect is that State bank of Pakistan has been given sovereignty and it is now an
autonomous body in making its decisions. From this perspective environment becomes
suitable and favorable for Islamic banking. BAL-IBD can make their strategies
accordingly as there is no chance for any major Change of policies in near future.
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Economical :
Pakistani economy is good for foreign investments and it is also good for Islamic banking
sector of Pakistan. GDP rate of Pakistan is showing a consistency in upward direction
and per capita income has increased as compared to past. FDI is increasing every year.
Home economy is in recovery phase but it is showing good indicators for banking sector.
Some transactions of Islamic banking like modaraba have been promoted by giving
incentives. As Pakistani economy is showing some level of stability and consistency from
last couple of years, so it’s good sign for BAL Islamic banking as well.
Socio-CulturePakistan is situated at very important geographically location and it has a diverse culture.
Islam is the religion of majority of the population and Islam has deep and ever lasting
influences upon the culture of the people of the area. So, the life style of people and
attitudes of consumers is favorable for Islamic banking as people are religious and they
want to deal in Islamic finances. Pakistani people have a respect for their religious and
cultural celebrations. BAL Islamic banking is taking an advantage of this socio-cultural
environment of Pakistan.
Technological :
There is lack of proper infrastructure in Pakistan, for that reason different sectors are not
becoming able to cope with the technology. Banking sector has introduced a lot of
innovative services with the help of technology. Islamic banking is also on its way but it
is expanding slowly as compared with potential demand of Islamic banking.
Comparison with Competitors
Boston Consultant Group Matrix (BCG) ModelMarket share
High Low
- 50 -
Grow
th ra
te
High
Car Financing
Home Financing
Online Banking
Islamic Banking
ATM
Debit Card
Low
Deposit
Investment
Credit Cards
Rupee Traveler
Cheque
Star:
In the star, we have Car Financing Home Financing Online Banking which show the high
growth rate and high market share.
Cash Cow:
In the cash cow, we have Deposits Investments Credit Cards which show the low growth
rate and high market share.
Question Mark:
In the Question Mark, we have Islamic Banking ATM Debit Card which show the high
growth rate and low market share.
Dog:
In the Dog, we have Rupee Travelers Cheque which shows the low market share and low
growth rate.
Comparison (Car Finance)
Alfalah Bank Citi Bank
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1-Alfalah Car installments remain same linked with KIBOR.
2-In case of booking of vehicle Alfalah bank charge installment with insurance.
3-The mark up rate of Alfalah Car is 15.50%.
1-Citi Bank Car finance installments flu-charts annually linked with KIBOR.
2-Installments start right from the first month regardless of delivery of vehicle.
3-The mark up rate of Citi Bank Car finance is 16%.
Alfalah Bank MCB Bank1-Alfalah Car installments remain same linked with KIBOR.
2-In case of booking of vehicle Alfalah bank charge installment with insurance.
3-The mark up rate of Alfalah Car is 15.50%.
1-MCB Car 4 U installments flu-charts annually linked with KIBOR.
2-Installments start right from the first month regardless of delivery of vehicle.
3-The mark up rate of MCB Car 4 U is 14.25%.
Financial Analysis/ source of finance1. Investments
Bank has classified its investments under three titles and that are:
Hold for trading: These investments are short term investments which bank has
kept for generating profit by the fluctuations in price of securities and interest rate
etc.
Held to maturity: These are the investments which have fixed or determinable
payments and bank has intention to keep them till maturity.
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Available for sale: These are the investments which do not fall under the title of
‘Hold for trading’ and ‘Held for maturity’.
2. Advances
Loans and Advances: Bank states Loans, advances and lease investments net of
provisions against non performing advances. Provisions of specific and general
nature for operations in Pakistan are made in accordance to the rules and
regulations which have been defined by the State Bank of Pakistan. The
advances to overseas customers are handled under the prevailing rules of the
customer’s country.
Finance Lease Receivables: In lease, Bank transfers the entire risks and rewards
incidental to the owner of the assets. Bank recognizes the present value of the
lease payments under a receivable and shows them under the title of advances to
customers in the balance sheet.
3. Fixed Assets:
Fixed assets are categorized into two classes. Accounting Policies regarding these classes
have been discussed below:
Tangible Assets:
Fixed assets except office premises are recorded at cost less accumulated
depreciation and accumulated impairment losses, if any. Office premises are
recorded at revalued amount less accumulated depreciation.
Depreciation on the fixed assets is charged on straight line method.
Depreciation is estimated while keeping the amount of residual value of the
assets (if any) in the mind.
Maintenance cost and repair charges are charged to the income and
subsequent costs are stated as carrying value of the asset or under separate
head whichever is appropriate, if their period of benefits extends more than
one accounting period.
Office premises are revalued by the professionals so as to eliminate the effect
immateriality from the fair value of the assets.
Surplus from the revaluation is stated as “surplus on revaluation of the fixed
assets” and deficit is deducted from the previous value of the surplus on
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revaluation of fixed assets. The value which exceeds from the incremental
depreciation charged to the assets is transferred to the inappropriate profits.
Gain and losses are transferred to income except those which are related to
surplus. Those are directly transferred to inappropriate profits.
Intangible Assets
Intangible assets which have finite life are stated on the balance sheet on the
cost less accumulated amortization and impairment losses, if any.
Amortization on the intangible assets is charged on straight line method on a
rate which is reviewed on the balance sheet in order to eliminate the factor of
immateriality.
The other intangible assets which have infinite life are stated on the cost less
impairment losses if any.
Financial statement analysis Operational results
All figures are in millions2008 2009 2010
Operational resultsTotal Income 31,822 35,789 40,743Operating Expenses 8,289 9,957 11,002Profit before income tax and provisions 6,906 3,831 4,711Profit before income tax 4,536 1,795 1,016Profit after tax 3,130 1,301 897
EPSBasic earnings per share (Rs.) 3.92 1.41 0.71Source: Bank Alfalah Annual report
Total income was 31,822 million in year 2008 and it has increased in the last two years.
Operating expenses has been increasing in last three years. Following the year 2008
operating expense was 8289 million, year 2009 it was 9957 million and in year 2010 it
was 11002 million. Basic earnings per share have decreased so far with 0.71 till 2010.
Profit before taxProfit before tax as you can see above, It has been decreasing in last three years. This
shows that year 2009 profit is much lower as compared to year 2008 and in year 2010
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profit is less than year 2008. The reason being this decline is higher operating expenses
which lead its profit to cut down.
Balance Sheet
Table below shows the advances and deposits comparison as well as last three year
change.
The source of the finance or investment to the Bank Alfalah are shown in the table below:
Earning for the Bank Alfalah gets from the mark-up or the interest earned and they are the
one of the source for the Bank.
The earning for the holding of the securities also increase and increase the source of the
finance.
From the table one of the problem seen that interest earned or return from the customer for
the Bank in 2010 is lower as compare to the 2009.
But the interest from the financial institutions increase in 2010 as compare to the 2009.
CONCLUSION & SUGGESTIONS
BANK ALFALAH under
the leadership of Sheikh
Nahayan Mabarak Al-
Nahayan has made
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All figures are in millions2008 2009 2010
Balance SheetShareholders’ Equity 13,767 14,609 19,770Total Assets 328,895 348,991 389,070Advances - net of provision 171,99 191,790 188,042Investment - net of provision 88,492 75,973 99,160Deposits and other accounts 273,174 300,733 324,760
significant in building of strengthening both the corporate and retail banking sectors in
Pakistan.
BANK ALFALAH views specialization and service excellence as the cornerstone of its
strategy. The people of bank innovation, creativity, reliability, customized services and
their execution are the key ingredients for their future growth. Based on this approach,
their Treasury Division and the Structured Finance Unit have been geared to provide
specialized services to the Corporate customers. Revenues from these activities have
started yielding dividends and they expect significant growth in these areas in the coming
years. While building on their in-depth familiarity with their customers’ needs and
anticipated developments in the banking industry, the Retail and Corporate areas of their
operations will continue to provide a strong and stable base to the business of the Bank.
They are aware that they have stepped into the 21st century and they must meet its
challenges by acquiring the highest levels of Technology. They will thus be accelerating
their enable them distribute their products and services through most efficient and high-
tech means. They say that they will invest in the modern tools and substantial allocation
of resources will be made to achieve this objective during the current year. Their
programme to launch real time – on line Banking Services and introduction of ATMs at
strategic locations have been firmed up and it will be fully operational during the year
2001.
Their focus would be to constantly seek out growth opportunities through increased
quality assets and by offering a wider range of products and services to their esteemed
customers. There are significant growth opportunities for BANK ALFALAH and they are
confident in their ability to grasp them. They are committed to enhancing the
shareholder’s value and look forward with greater optimism to a prosperous future for
BANK ALFALAH
The bank maintained its position as the fifth largest bank of Pakistan in terms of total
deposit mobilization. The growth was above the industry further strengthening BAL’s
system share. However the bank’s share in the industry’s deposit base experienced a
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marginal squeeze, attributable to its cautious approach towards deposit mobilization to
achieve a favorable deposit mix for augmenting spreads. In addition, BAL continued
expanding its consumer base with main focus on credit cards, followed by mortgage
business. Bank Alfalah Limited is a well-known and successful financial institution in the
banking sector, it is said, nothing is perfect in the world, and there is always space for
deficiencies.
Although the bank has a vast network of nationwide branches but it should spread
its branch network throughout the world especially in the countries involved in
international trade with Pakistan.
In order to compete with the other banks. ATM services should be excellent as we
can see the growing competition among the banks.
The bank should acquire the services of the highly qualified people accompanied
by lucrative incentives to promote its status as desirable in the next millennium.
In order to market its products it should accentuate to give advertisements on both
print and electronic media.
The quality of human resource lies at the center of every organization’s success
and no doubt, Bank Alfalah Limited is fully aware of the importance of a satisfied
and well-trained work force that gives completive advantage but the problem,
which I have observed, is that employees of Gulberg Branch do not have enough
knowledge about their products. Therefore, the policy of the bank should be to
continually encourage its employees for their knowledge enhancement about their
products. The state of the art training and development center at Bank Alfalah
should arrange workshops and seminars for employees at every level to empower
them professionally.
Bank Alfalah Limited operates as progressive and adaptive organization
maintaining dynamism and flexibility in all facets of its operations but in this era
of stiff competition it should consider to launch new products to attract the
customers.
Their aim should remain to provide customers with value pricing and to ensure that
quality of their portfolio is never compromised despite market pressures.
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Going forward, the bank intends to maintain the growth trend. While preserving
diversification in the credit portfolio, the management intends to deploy additional funds
in risk free avenues including direct/indirect sovereign lending. Growth in consumer
financing is expected to be fuelled mainly by the credit card business. Meanwhile, BAL
plans to add 49 new branches to its network in the near-term with primary focus to build
low cost deposit base. Though BAL’s profitability is likely to improve, it is expected to
remain under pressure on account of rapid network expansion. Meanwhile, the bank, in
addition to exploring prospects of entry into other regional countries, intends to fortify its
existing overseas operations with expansion in branch network and deployment of
complete suite of all financial products.
BAL is undergoing a revamping of its organizational structure with an aim to improving
the efficiency of decision making at all levels and enhancing the quality and timeliness of
its services. Besides, instilling a risk conscious culture is also a key objective. BAL’s
Risk Management Division (RMD) has developed Credit Initiation and Internal Rating
System (CIIRS) in accordance with Basel II for generating obligor internal ratings. CIIRS
provides technological platform for assessing credit worthiness of new and existing
customers and enables structured analysis of customer data for decision-making. The
system is currently in validation phase. Moreover, the bank is implementing Economic
Capital Framework (ECF) across the bank, which is expected to enable BAL to quantify
and attribute cost to various material risks besides facilitating in calculating the risk-
adjusted profitability of each business line.
The Bank is now over staff the building under operation is in adequate for such a large
staff as new branches opening in different part of city should be availed.
Under no circumstances cheque book should be given if the account formalities should be complete.
There are two officer involved in Cash Deposit process which is time consuming. Cashier should be given certain powers to receive cash of US$ and DM to provide prompt services.
Cheque which are drawn on Bank Alfalah Branch and returned unclear in clearing are not reflected in the statement of account of the customer. These cheques must be reflected in the account so that credibility of the customers may be assessed.
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The bank should try to give more loans to the small borrowers as the past history shows that most of the loans given to corporate borrowers have converted into bad debt