CHAPTER 01Introduction to Report The report has been written as a result of internship work done at Bank AlBaraka Haripur during the period July-August 2014. The core objective of this report is to discuss the banking operations, organization behavior and to present the detailed analysis of financial performance of the bank. Along with this, the unique selling point of bank AlBaraka, The Islamic Banking will also be discussed in comparison with commercial banking system 1.1Background of the study The study has been carried as a requirement of the degree with CIIT, the internship is done to get the practical knowledge of business operations and business policies. And to learn how an organization behaves in today’s dynamic environment and how response to such turbulence affect the performance of the organization. 1.2Purpose of the study The purpose of the study is to give comprehensive review of the ABPL to analyze the operational procedure and financial aspects of banking organization. Besides that, the purpose of the study is To compare the Islamic mode of banking with commercial banking To study banking operations and customer care that a banking organization has To analyze the financial performance of the organization To recommend the suggestions or the improve 1.3 Data collection methodology Data has been recorded during the period of internship work at the bank. Data has revealed a lot about banking tactics, market scope, bank services to fill the market imperfections, and the implications of its current business policy on the financial performance of the bank 1.3.1 Primary data Personnel at AlBaraka were highly cooperative in providing data. Data is collected by means of Personal observations during the eight-week internship program. Interviews and Discussion with the Bank personnel. The primary data collected included use and tactics of financial instruments 1 reporting procedures 1.3.2 Secondary data Financial analysis has been done through the secondary data. that consist on the financial statements collected and the background of the organization through Websites Journals Pamphlets books 1.4 Limitations Though it was a great opportunity to learn the practical application of business theories and formulas the study has to be restricted due to 1.4.1 Available time In the period of 40 days the study couldn’t go behind the activities done in regular routine. This has lemmatized the learning on banking behavior on seasonal changes, its dealing with headquarter and financial adjustment s during the year. 1.4.2 Secrecy issues Due to the banking policies and commitments with its customers bankers do not reveal the information publicly so most of the times some of the information is kept secret. 1.5 Scheme of the study conducted Internship report is divided to reflect following aspects of study Chapter One Includes introduction to the report, objectives, limitations, merits, methodology Chapter two It includes background and history of banking services in Pakistan, Historical background of Al Baraka Pakistan Limited, Organizational Structure, roles, functions and branches. Chapter Three 2 Is about the Financial Position and Products and services provided by Al – Baraka Bank Pakistan Limited (ABPL) Chapter Four This chapter discusses the financial analysis, SWOT analysis and findings of the study. Chapter Five Gives feasible and constructive recommendations for different departments of AIB Branch, Haripur. 3 1Formulation of the bank Al Baraka Banking Group is a Bahrain Joint Stock Company. while total equity amounts to about US$1.1 Al Baraka today Al Baraka has started with Islamic Finance with a steady growth in beginning.5 billion. it is listed on Bahrain stock exchange and Nasdaq Dubai. In October 2010. The merger took place between the branch operations of Al Baraka 4 .C.CHAPTER 2 Introduction to AlBaraka Islamic Bank Limited 2.9% of the total asset in the banking industry as of June 2012 2. since 1991.3 International presence The global network of Al Baraka Banking Group is expanded in 12 countries. ABG offers wide range of services in the form of retail. corporate and investment banking and treasury services on the basis of the principles of the Shari'a in 12 countries. it offers retail. It is a JSC and is listed on the Bahrain Stock Exchange and NASDAQ Dubai.8 billion.S. Al Baraka Bank (Pakistan) Limited 29 branches of Al Baraka Islamic Bank B.and A3 respectively. corporate and investment banking and treasury services which are in accordance with the principles of the Islamic Sharia. 2. Bahrain. The authorized capital of ABG is US$1. 2. Islamic banking institutions (IBIs) have now captured around 9. 2. It is a leading international Islamic bank with Standard long term and short-term credit ratings of BBB.3% share in 2003. under the AlBaraka and other brand names. From a meager 0. It is now making a progress in the Pakistani banking sector.3.2 Background Al Baraka Banking Group was founded in 2002 in Manama.4 Al Baraka (Pakistan) Limited (ABPL) Al Baraka (Pakistan) Limited (ABPL) has been formed as a result of the first merger in the Islamic Banking sector of Pakistan. it acquired Emirates Global Islamic Bank to form Al Baraka Bank (Pakistan) Limited now present with a total of 110 branches. practicing the highest professional standards and sharing the mutual benefits with the customers..3 Mission Al Baraka underlying mission is to meet the financial needs of communities across the world by conducting business ethically in accordance with the Shariah. usury being Haram in Sharia as well as investing in activities that provide products or services considered against to Islamic principles (Haraam. 2. Further research and study is brought consistently to remove any loophole at the presnt banking practices of Islamic banks.Islamic Bank (AIB) Bahrain. and thus from 1 November 2010. the operations of the merged entity began in 2013.4. Neighbourly – they value and respect the communities we serve. hospitable welcome and accommodating service. Our doors are always open. While the modern/conventional principles of banking have been used for prospering the banking businesses but since then Muslim community is seeking its way out leading to Sharia compliance. Fees for renting money. . Islamic Banking to a system of banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics.4 Core values Partnership – their shared beliefs create strong bonds that form the basis of long term relationships with customers and staff. the bank effectively developed and sustained its identity as one of the pioneers in providing Shariah based banking products and services. 2.4. also called Riba. products and services of ABPL are approved by the bank's Shariah Advisory Committee headed by Justice (R) Khalil urRehman. 2. Al Baraka Islamic Bank Pakistan (AIBP) and Emirates Global Islamic Bank (Pakistan).1 Islamic banking Al Baraka Islamic Bank is one of the pioneers of Islamic Banking in Pakistan.4. All policies. our customers always experience a warm-hearted. the Bank has a national presence in Pakistan with a network of 94 branches in more than 42 cities across the country. It has been operating in the country since 1991 as branch operations of Al Baraka Islamic Bank Bahrain. During this period since its presence in the country. staff and shareholders who participate in our business success. procedures. 5 . forbidden).2 Vision Al Baraka says “We believe that society needs a fair and equitable financial system which rewards effort and contributes to the development of the community”.4. Driven – they have the energy and perseverance it will take to make an impact in our customer’s lives and for the greater good of the society. 2. 5 Strategic planning Bank alBaraka is highly committed with shariah compliance all the time. Bank AlBaraka does not provide full spectrum of banking products and services. With a vision for complying services. Al Baraka Bank (Pakistan) Limited is committed to the Banking Industry in Pakistan. In this race AlBARAKA Pakistan has not been the winner and is struggling in the market. it is rather committed to provide innovative products that are not contrary to the principles of Islam. Peace of Mind –customers are rest assured that their financial interests are being managed by us to the highest ethical standards. Karachi. a leading market rating agency has rated bank consistent at BB+. 6 . for long term and A+ for short term ratings.7 World ranking of the bank Capital intelligence. This rating shows high future growth perspective and strong support from principal shareholders. 2. and innovative product line. It focused on following key areas for Shariah governance and compliance framework for Islamic banking industry of Pakistan. dedication to Islamic principles of banking. Now a days it has become a major challenge for banks to provide ongoing services continuously to remain competitive in the market. increasing network in different countries. In Pakistan bank has been rated as A by JCR-VIS.6 Corporate profile Full name Al-Baraka Islamic Bank Pakistan (Al-Baraka Islamic Bank Pakistan) Headquarters 162 Bangalore Town. Main Shahrah-e-Faisal. 2008 Total Employees: 1. 2.400 2. Sindh Status: Non-Listed Legal Form: Public Limited Company Operational Status: Operational Financial Auditors: Ernst & Young Ford Rhodes Sidat Hyder (2010) Incorporation Date: April 28. 2.8 Organization hierarchy Board of Directors Chairman MahmudJameel Hassoubah Vice Chairrman Adnan Ahmed Yousif Directors Abdul Latif Abdul Rahim Janahi Moosa Abdulaziz Shehadah Othman Ahmed Suliman Abdul Hameed Mohideen Nazer Ashraf Al Ghamrawi Director Executive Committee Adel Saud Dehlawi Othman Ahmed Suliman Members Adnan Ahmed Yousif Abdul Latif Abdul Rahim Janahi Audit Committee Chairman Mohamed Isa Al Mutaweh Members Moosa Abdulaziz Shehadah Abdul Hameed Mohideen Nazer Ashraf Al Ghamrawi 7 . AlBaraka achievements include LARIBA Award for Excellence in Achievement” in 2012. “best Islamic financial institution 2014” by global finance magazine. ABPL offers customers Islamic mode of banking filling the gap in Pakistan banking market for Islamic mode of banking 2. its outstanding achievements in the field and for its regional as well as global standing.Source: self made 2. November.9 Bank AlBaraka unique selling preposition AlBaraka unique selling point are it consistency in compliance with shariah board.10 Bank AlBaraka prizes and contributions Al Baraka Banking Group won the first prize for its Implementation of and Compliance with Corporate Governance Principles at its Head office and subsidiary banks. 2010. The prize also recognized Al Baraka’s contribution to the development of Islamic banking. . Source Gulf Daily News. 1. they are payable on demand.2 Al Baraka Current Account Al Baraka current account has been designed so as to help its customers in with day to day business transactions and personal service needs conveniently There are no minimum balance charges There is no limit for deposits and withdrawals ATM card issue is free with unlimited access to all ATMs.1. 3. nationwide.e. so most of the people do not want worry of balance limits.1 Al Baraka Basic Banking Account As most of the banking accounts require minimum balance requirements and other restrictions. ABPL has a commitment invests customer funds with utmost care in Riba free business activities only. they are payable on demand. using this account the customer becomes the lender and the bank becomes the borrower.1. Special features It is a current account with no minimum balance requirements No profit / return will be paid to the depositor on the balance maintained in the account Can be opened with minimum of Rs. .1.1. Qarz is the basic Islamic principle on which The ABPL Basic Banking Account is based. This account is specifically designed to meet the requirements of individuals and business entities. with no addition or penalty. 100 No minimum balance requirement and no penalty for low balances Qarz is the basic Islamic principle on which The ABPL Basic Banking Account is based.1. income. ABPL has a commitment invests customer funds with utmost care in Riba free business activities only.3 Al Baraka Savings Account Al Baraka Savings Account is consist of all facilities of an investment i. security and growth. Salient features of this account are mentiond beloow.1 Deposit accounts 3.Chapter 3 Products and Services at AlBaraka Bank Haripur Branch 3. using this account the customer becomes the lender and the bank becomes the borrower. with no addition or penalty. This account does not requires such criteria. 3.1 Products 3.1. The profit/loss is shared on a pre determined ratios which are calculated each year. profitable and Shariah compliant. whereas profit distribution is made on the basis of weightages assigned to the investment of depositors and shareholders at the beginning of each month.5 years . Does not include charges for minimum balance Calculation of profits are made monthly average basis Profit can be acquired by the customer on monthly basis. 100. No limits for withdrawl as well as deposits Customers can earn high profit by keepin high deposits with the bank. ATM card issue is free of cost and can be accessed to ATM Network. As Fund Manager. Al Baraka Term Deposit Al Baraka Term Deposit is a perfect solution for customers seeking high profits in a Shariah compliant way which can secure future. nationwide Underlying concept of the saving account of Al Baraka is Islamic concept of Mudarabah. EURO & AED Available tenures: 1 month. Following this principle the customeris considederd to be Rab-ul-Maal (Investor) and the bank becomes Mudarib (Fund Manager).1.000/- Investment should be in PKR limitless deposits and withdrawals can be made Profit is assigned on monthly/quarterly basis and is calculated on a average monthly balance product basis Profits are higher as much as balance is high Underlying principle of Al Baraka Khazana Account is Mudarabah. 3. It is started with minimum investment of Rs.000/- Investment should be in PKR It can also be in Other currencies likeUSD. 6 months.1. Sales offices at AL Baraka happily assist in designing an investment plan their customers It is strated with minimum investment: Rs. 1. 3 months. the bank is entitled to a part of the profit as a service fee. 25. GBP.4 Al Baraka Khazana Account For those looking for higher profits on this account profit is calculated on average monthly balance product basis and distributed on a monthly/quarterly basis. It is made sure that customer deposits are being invested in business which are legal. Profit is calculated monthly Payment of profit is made monthly It can be open in Pak Rupee Time period is 1 Year to 5 Years Al Baraka Mahana Amadani is based on the Islamic concept of Mudarabah. Bi-Annually. Profit is calculated on monthly average balance. With a minimum investment/ savings of Rs.1.day banking transactions with convenience and confidence.1. 50. This account is suitable for senior citizens who wish to have healthy returns on . 100. you can enjoy monthly returns.6 Al Baraka Business Plus Al Baraka Business Plus’ account is mainly for the business customers.000/-.7 Al Baraka Senior Citizens Account Al Baraka Senior Citizens Account has been designed to enable senior citizens to independently carry out the day. Annually or Maturit Al Baraka Term Deposit is based on the Islamic concept of Mudarabah.000. Free Services: ATM Card Cheque Books Duplicate Bank Account Statements Pay Orders Online Banking Transactions Hold Mail Facility e-Statement. 3. Payment of profit: Quarterly.1.5 Al Baraka Mahana Amadani For those customers who are interested in continuous flow of incone Mahana Amadani which gives competitive profit earnings on savings. an account holder can avail free services of the Al Baraka Business Plus Account.1. 3. continuous Phone Banking & SMS Banking Al Baraka Business Plus is based on the Islamic concept of Mudarabah.1.1. 3.to. By maintaining Rs. Moreover there is a guiding team for a customer who give financial advice on benefits and use of this account. this is the savings account. below that normal weightages will be assigned.their savings. its effect is revealed on monthly basis in respective accounts. Higher returns will be allocated on having balance above RS 25000. In case of loss. The Bank will share the profit at the gross income level and will subsequently credit the proportionate profit in the customer’s account at the end of the month.8 Al Baraka Mahana Barkah Account For the people who are salaried. The Bank will announce weightings and profits sharing ratios 3 days before the beginning of the month. Latest profit sharing ratios and weightings are available on our website or can be obtained from any branch of Al Baraka Bank 3. First check book is made available to customer free of cost. Al Baraka Senior Citizens Account comes along with a wide range of free services and benefits. payorders and demand draft on discounted rates. There is no requirement of minimum or maximum balance. who is called Mudarib (Bank). Ideal for individuals who wish to: Place their savings in a Shariah compliant savings scheme.1. Unlimited withdrawals and deposits can be made. All other charges as per Bank’s schedule of charges. . the customer will bear the loss as per the ratio of his investment. These are mentioned below It is opened in Pakinstani currency Profit is calculated on the basis of weigtages assigned so that account of higher balance can receive higher profit. while the management and work is an exclusive responsibility of the other. Profit is calculated daily. The investment comes from the first partner who is called Rabb-ul-mal (Customer).1. self employed. Senior citizen account holders will be given annual lockers. Al Baraka Senior Citizens Account is offered on the basis of Mudarabah principles of Islamic Banking. Mudarabah is a special kind of partnership where one partner gives money to another for investing in Shariah compliant avenues. professional or even retired. The account provides multiple privileges to the account holder. Young Savers Account is being offered to youngsters to help them learn the importance of saving at an early age. The Bank will announce weightages and profits sharing ratios 3 days before the beginning of the month. Free e.1. ATM card replacement. Through the benefits of this account.1. All other charges as per bank’s Schedule of Charges.1.statement. cheque books. Have the liberty of having no limitation on cash withdrawals. the customer will bear the loss as per the ratio of his investment. Al Baraka Mahana Barkah Account is offered on the basis of Mudarabah principles of Islamic Banking. It allows to get a vehicle of choice with comfort and complete peace of mind.2 Consumer Finance 3.2. Profit calculation on daily balance and credited in the account on monthly basis.9 Tifl-Young Savers Account Tifl. Free Phone banking services through which pay orders can be places and. The Bank will share the profit at the gross income level and will subsequently credit the proportionate profit in the customer’s account at the end of the month. In case of loss.0 million is required to be maintained during that month otherwise normal savings account rate will be applicable. 3.000 and maximum of PKR 5. stop payments. Save on regular basis and expect good returns on daily balance. duplicate bank statements at an exceptional discount. Al Baraka Islamic Auto Finance is . It caters to the new generation’s future financial needs gradually and conveniently. 3. Free first Al Baraka Union Pay Debit Card. it is designed in such a way that it aims to become every youngster’s first bank account. Invest with an absolute peace of mind! 1 To qualify for Al Baraka Mahana Barkah Account profit rate minimum balance of PKR 10.1. youngsters are motivated to save more because of the returns they will get based on their savings. This product is ideal for individuals looking for car financing without compromising their beliefs and values.1 ABPL Auto Ijarah Al Baraka Islamic Auto Finance is one of the most distinctive Shariah compliant products offered by Al Baraka Bank (Pakistan) Limited. economy plus.3 Sarparast Family Takaful Plan Al Baraka Bank (Pakistan) Ltd.1. in association with Pak-Qatar Family Takaful Limited is offering an exclusive product “Sarparast – Family Takaful Plan”.2 Rahnuma Travel Services Rahnuma Travel Services has been designed to assist the travelers world wide. Thialand (for 9days and 7 days) 3. Dream Destinations for Dubai & Malaysia. Hajj. Umrah. accommodation and hotel reserving transfers and many other privilages to the customers. 3. This service enables the customers to enjoy the journey convinently and reliably Rahnuma Travel Services provides a solution for travelling through VISA processing. Dubai. Profit on finances is zero percent Easy installment plan of 6 & 12 months No Security Deposit There is no requirement of advance payments Documentation is easy and processing is faster.2. Benefits Rahnuma Hajj Packages – 2014 There are three packages provided by bank for Hajj 2014 17.designed to cater to all the needs regarding the purchase of a brand new.e. 25 and 40 days Rahnuma Umrah Packages – 2015 Rahnuma packages include different packages like Super Economy. Now you can steer yourself onto the right path effortlessly. Sarparast is a Shariah Compliant . premium and standard package for 2015 Rahnuma Dream Destinations – 2014 it provides packages for different destinations like Malaysia. economy. Complete travel service packages are available for various destinations i.2.1. used or an imported vehicle for your personal use. Al Baraka Bank Pakistan Limited has made agreements with leading and reliable travel agents to bring unmatched travel products for its customers that are interest-free as well as convenient and less costly. 1. Al Baraka’s account holder enjoys following benefits: There is no requirement of large documentations accounts are processed according on basis of copy of CNIC. retirement to vacations or pure savings in accordance with the Islamic principles. Al Baraka’s Sarparast.1.100. 3. Balance & Transaction Inquiry 3.1 Banking through telephone Al Baraka’sfacilitates its customers and answers queries through service of telephone. It helps you plan necessary events of your life from marriage to education.2. You can transfer up to Rs. There is no requirement of medical examination for account opening 3.1Financial Transactions (Local Currency Only) Bank Al Baraka issues Pay Order (PO)/ Demand Draft (DD) and request for a Pay Order or a Demand Draft can be made through telephone and can collect from any branc of Al Baraka in Pakistan 3.savings and investments plan exclusively designed to cater to your Takaful needs. Both accounts must be linked to our Business Relationship Number (BRN).2.2Funds Transfer Transfer funds from one account to another. safeguards your future.2.2.3Service Requests To make banking experience more convenient. This service makes it cost effective and convenient. while giving you the financial freedom you deserve.4Inquiry Following inquiry can be made on phone : . requests for the following can be placed over the phone: Duplicate Bank Statement Request for cheque Book 3.2 Services 3. Saving for long-term needs in the future.in a single day.000/. Bank is equipped with the latest tecknology and softwares to access the information readily.2. Al Baraka makes this service secure through various security measures.1.1. This service is available for all the rupee and foreign currency account holders. 3.PIN change request can be made On the spot transaction credit / debit alerts about your account on any mobile phone you carry. Al Baraka Bank (Pakistan) Limited (ABPL) provides eStatement that allows to access account(s) statements online. Cheque book request.2.2.2.2.1. Product (s) / Service (s) Monthly account related profit rates Currency exchange rates Branch & ATM location 3.5Complaints Our Phone Banking Officers are receives complaints from its customers. 3. Maximum of six accounts can be tagged to the same mobile number within the same Business Relationship. It enables immediate access to account(s) 24 hours a day.3 eStatements To enable the customers to access their accounts by thereselves.2. custoners have to register theirselves for SMS Banking and get complete control of your account.3. If for any reason customers are dissatisfied with the service. 3.2 Security ABPL’s eStatement has been made digitally secured through ‘VeriSign’.2 SMS Banking Al Baraka Bank (Pakistan) Limited provides a banking solution.2.4 Inter Bank Fund Transfers IBFT is a service for transferring funds instantly from one account to another account. ABPL values its customers so it identifies ways to help improve its service.avoiding any misuse of account. 7 days a week. a complaint can be registered on phone. The need for IBFT service has grown with growing businesses and awareness.SMS Banking is a smart way to access account(s) especially for people on the go.2. education. Mini statement (last five transactions Credit/Debit). 3. It has . 1.1 Use Al Baraka’s SMS Service for: Account balance inquiry. reduced the hassle of writing cheques.2 Levies Fees and charges will be levied according to the prevailing Schedule of Bank Charges.2. The funds can be transferred to any account of the member banks on 1-Link IBFT network. if you need to receive funds through IBFT.your unique 13 digit account number will be all that will be needed. Customers keep their valuables with Al Baraka for the trust Al Baraka maintains with its customers. at their convenience without fretting over parking space or bank timings. With this product line ABPL Haripur is serving the community .on IBFT transactions 3.2. However. it is also less costly There is no prior registration requirement to use IBFT on ATMs If you need to transfer Funds from your account. Multiple bills can paid through single account. Customers can make payments of utility bills not only on the counter but also through Al Baraka ATM for this customer needs to have AL Baraka Union Pay Debit Card.5 Utility Bill Payments through ATMs For utility bills payments .6 Safe Deposit Lockers The underlying concept of safety lockers are based on Islamic principle of Amanat. This service is freee of cost.2. Charges will be applicable according to Schedule of Charges (SOC). Al Baraka customers are able to pay their Utility Bills through ATMs. you will need an Al Baraka ATM Card to transfer funds through IBFT on ATMs. Al Baraka account holders can enjoy round the clock convenience of paying utility bills via any of the Al Baraka ATMs across the country.6.000/. making Payment Orders (or demand drafts etc. There is a daily limit of PKR 250. there is no need for an ATM card. hence providing with banking solutions. while taxes and Zakat will be applicable according to Government regulations and directives of State Bank of Pakistan. 3. Al Baraka is commited to put values foremost. 3.). . liability to total liabilities and stockholder equity to total stockholder equity .1 Financial statement analysis of ABPL Four year analysis of financial statements are made to acquire complete understanding on Bank Al-Baraka’s performance in the highly dynamic business environment. 4.1.1.1Vertical analysis Asset are compared to total assets. For the purpose of comparison two type of analysis have been done in the report Common size analysis Ratio analysis 4.CHAPTER 04 Analysis of Al Baraka Pakistan Limited Report evokes analysis of Al Baraka’s present position through its financial as well as SWOT analysis.1.1 Common size analysis Items on the balance sheet have been compared and analyzed to show the prevailing trends through vertical as well as horizontal analysis of balance sheet and income statement 4. 1.1.4.1Analysis of Assets Chart 4.1: ABPL Assets 2011 Assets 2011 Cash and balances with treasury banks Balances with other banks 4% 1% 3% 5% Due from financial institutions 10% Investments Islamic financing and related 40%assets Operating fixed assets 36% Deferred tax assets Other Assets Source: Self generated Chart 4.2: ABPL Assets 2012 Assets 2012 Cash and balances with treasury banks Balances with other banks 4% 2% 2% 6% Due from financial institutions 9% 1% Investments Islamic financing and related assets 39% Operating fixed assets 37% Deferred tax assets Source: Self generated Other Assets . e.3:ABPL Assets 2013 Asset 2013 Cash and balances with treasury banks Balances with other banks 2%2% 7% Due from financial institutions3% Investments 19% Islamic financing and related 42%assets Operating fixed assets 25% Deferred tax assets Other Assets Source: Self generated Interpretation Vertical analysis of balance sheet shows that the bank’s cash and reserve with the treasury bank has slightly increasing trend from 2011 to 2013 i. . from 5% to 13%.Chart 4. Similarly the bank’s lending to financial institutions has increased from 2011 to 2013(5% to 7%). The advances rate showed an increase in 2011 to 2013 (40% to 42%) and in 2012 it decreased by 1%. The bank’s balance with other banks also increased from 10% to 19% in three years (2011 to 2013) The net investments decreased from 36% in 2011 to 25% in 2013. 2 Analysis of liabilities and equity Chart 4.4: Liability and Equity 2011 Bills liability payable and equity 2011 Due to financial institutation Deposits and other accounts Sub-ordinated loans 1% 2% 1% 2% 11% Liabilities against assets subject to finance leases 3% Deferred tax liabilities Other liabilities Share capital Discount on issuance of shares 80% Reserves Accumulated loss Surplus/(Deficit) on revaluation of asssets-net of tax Source: Self generated .1.1.4.1. 5: Liability and Equity 2012 Bills liability payable and equity 2012 Due to financial institutation Deposits and other accounts Sub-ordinated loans 1% 3% 1% 3% 11% Liabilities against assets subject to finance leases 2% Deferred tax liabilities Other liabilities Share capital Discount on issuance of shares 80% Reserves Accumulated loss Surplus/(Deficit) on revaluation of asssets-net of tax Source: Self generated .Chart 4. 11% in 2011 and 2012.094% from 0. .6:Liability and Equity 2013 Source: Self generated Interpretation On the liability side the bills payable of the bank remained constant at 1%. Share capital of the Bank decreased in 2013 as compared to 2012-11 (12% to 10%) Reserves of the Bank Decreased to 0.Bills liability payable and equity 2013 Due to financial institutation Deposits and other accounts Sub-ordinated loans 1% 3% 1% 3% 9% Liabilities against assets subject to finance leases 2% 1% Deferred tax liabilities Other liabilities Share capital Discount on issuance of shares 80% Reserves Accumulated loss Surplus/(Deficit) on revaluation of asssets-net of tax Chart 4. The banks borrowings does not shows much fluctuation The Bank’s deposits ratio is considerably good and remained constant. It shows that in 2012 there is a noticeable reduction in equity holding of the bank and in 2013 deposits and accounts have shown an increase.7 Horizontal Analysis of Income Statement 140% 120% 100% 80% Deposits and other accounts 60% equity 40% 20% 0% 2011 2012 2013 Source: Self generated Figure 4. From chart below.4.1. it shows a highly declining net income from 2011 to 2012.2Horizontal analysis Three year trend in the some of the major liabilities of bank have been plotted here for comparison purpose. Figure 4. Net profit/loss 150% 100% 50% 0% 2011 -50% -100% -150% -200% Source: Self generated Net profit/loss 2012 2013 .8:Trends in Net Income Income statement has been analyzed horizontally for the comparison purpose. In 2013 loss have been covered.1. 4.58% 1039595 It tells the efficiency of assets utilized by generating income. 4. though this loss has been reduced in 2013 but it is still not showing a good performance. The results of the Bank shows that Except from 2011.1.2.3.44% -5.72% ratios -0.61% -2.1.2 Return on asset Table 4.1.97% 2.1:Net Profit Margin Description 2013 2011 410370 2010 -41231 2012 -644940 Net profit return on Islamic financing 6201186 12970318 16798188 18168220 -4.2:Return on Assets Description 2013 Net Profit -41231 Avg Total 87759404 assets Return on -0. ABPL is failing to generate profits from its assets.1.3.1.1 Net profit margin Table 4.1 Profitability ratio 4.66% Source: Self generated 1039595 ABPL is continuously showing loss from 2 years.04% asset Source: Self generated 2012 -644940 2011 410370 2010 73812558 66654364 40263057 -0.3 Return on equity Table 4.4.3:Return on Equity Description 2013 NP -41231 2012 -644940 2011 410370 2010 1039595 .87% 0.2Ratio analysis 4.1.2. 1 COST / INCOME RATIO Description Operating Expense Net Revenues.3.847.3.91:1 DEBT Leverage o.93:1 ratio Source: Self generated 54.587 0.3 Efficiency ratios 4.020.668 6.3.019.911.644.098 2011 66.3.460 6.2 Solvency ratio 4.1Leverage ratio Table 4.49% -21.396 2010 54.5: Debt/Equity Ratio Description Debt 2013 81.2.63% 2010 60.911.A 87759404 81.077 11.5.1 Debt/ Equity ratio Table 4.91:1 0.211 73812558 67. It has also increased the risk of ABPL 4.396 0.89:1 Bank is showing a high leverage ratio.587 Equity 5.020.193 6.763.2:1 10.273310 6. 2013 2012 2011 2247137 2105964 1926488 1791138 1545891 1697956 Cost 125% 136% 113% / Income .848.2. This shows assets of the bank are financed by its debt that includes upto 80% deposits from customer.664 4.644.098 72545064 66.3.119.321872 4806018 -10.4:Leverage Ratio Description 2013 2012 2011 T.3.847.1:1 8.211 2012 67.69% equity Source: Self generated 6.28% 6.935073 EQUITY Return on -0.93:1 Debt/ Equity 14:1 ratio Source: Self generated 4.524. 1Strengths 4.2. external opportunities and threats. Many they have a good knowledge and experience in the fields of management and practice. 4.2.1.1.2.1. 4.1.2 SWOT analysis SWOT is useful tool to make assessments in terms of internal and external environment of the organization and to formulate strategies by analyzing its internal strengths and weaknesses. Core philosophy of ABPL is the compliance with Shariah principles.2 Experienced and Qualified Staff During the research it has been observed that the staff/personnel of the organization is qualified and experienced.2. The Banks activities and operations are regularly monitored by its Shariah Advisory Board. 4. . ABPL makes a fair PR with its customers. 4. At this point ABPL has succeeded in implementing the corporate principles and guidelines from the experts like Religious scholars and monitor its performance.3 Good PR with Customers There is a good relationship among the workforce at all levels. 4.1 Commitment to Islamic Shariah ABPL is striving to develop and an integrated Islamic Financial System .2.4 Quick delivery of services Customers get highly satisfied with AlBaraka’s quick services and open heartedly guidance over their concerns relating to their financial decisions.Ratio Source: Self generated Cost to revenue ratio reveals high operating expenses while showing inefficiency in its performance. This is a great opportunity for AlBaraka to capture the market share.e. 4. People over here are very cooperative.2.4.2 Lack of Awareness Al Baraka has still not succeeded in the very basic stage of marketing i. not only with the customers but among themselves as well.their employees are satisfied with the work environment.2.2.2. So.4. Most often it fails in maintaining its market presence and recognition.4 Unavailability of ATM ATM now has been a major facility a bank can provide to its customers.3.2. Awareness of concept and benefits of its products. 4. Its products are considered to be the same as in conventional banking system and are known to be “so-called Islamic Banking”. there is a threat to the organization that their current employees may leave it.1 Good job opportunities outside. 4.2.1Growing business Due to growing business in the area.2. .3. Al-Baraka is far away in providing this facility to its customers.2. 4. The other organizations of similar nature are offering more salaries and benefit packages to their employees.2.6 Friendly environment The environment of the organization is very friendly.5 Job Satisfaction Job satisfaction is one of the important factors for the employees to retain the valuable employees.3 Weaknesses 4.3. potential customers are increasing these days.1.3 Weak top management Top management is very week in decision making. 4.1.2 Opportunities 4.2.2. Though it issues ATM cards but unavailability of its own ATM in many areas doesn’t allow many of its potential customers to opt for its services.4 Threats 4. 4. 4. which is a serious threat to the organization. leaves his job.3 Loss of customers AL-Baraka fails to retain its valuable customers and they leave away when a dissatisfied employees.2Uncertainty about future change An uncertainty about the future changes among the employees results in dissatisfaction and demotivation of the employees.4.4. .2.4. of whom they are clients.2. 1.1. 5.1. 5. it does not have its own ATM in many cities.1.7ATM ABPL is suffering from a huge threat i. After observing this ABPL following outcomes have been concluded.6 Discipline The marketing efforts at the branch level are less disciplined and there are no integrated efforts from all the staff members. These expenses are proven to be ineffective to generate profits for the bank 5. 5. 5. The interior and exteriors of the branch have been changed but the staff of the branch has been found less motivated towards the organizational objectives.Chapter 5 Conclusion and Recommendations The Al – Baraka Islamic Bank is a new emerging bank and it is trying to get market share in the presence of national and foreign banks operating in the country. 5.3Less employees ABPL should hire more competent staff to capture market share and generate business relations 5.e.5 Slow recruitment The recruitment process is very lengthy and leads to the short of working staff.1. .1 Conclusion and arguments 5.1.1 Centralized decision making The decision making is still centralized as recommendations from middle and low level employees are not considered.1.2 Huge expenses ABPL has huge operating expenses.1.4Low employee Retention Employee leaves whenever they are offered better salaries taking away the large deposits and competent abilities 5.8Less motivated staff The bank has been applying the modern concepts of management and marketing at both micro levels. 2. 5.7 Employees salaries To motivate the employees their remuneration/salaries should be made at par with top tier Banks. 5.2.4 New. hard work and such other factor must be considered. As the combination of Experienced and fresh can produce better results and it will improve the efficiency of management. 5.2.2 Recommendations During the period of internship at ABPL and observing its environment some of the strengths and weaknesses have been observed.5 Awareness program ABPL is going towards mobile banking but the problem is that a common client has no idea of its usage due to lack of marketing.2.2.2. Haripur Branch. experience. On the basis of this observation there are some recommendations particularly related to the ABPL.5. 5.2. While giving incentives qualification.2.3 Efficient management of assets Mismanagement of resources must be avoided as much as possible as it decreases profit but also discourage hard worker and honest employees. From the analysis of financial statement it has been analyzed that ABPL performance is not markably good.8 Publicity .2 Incentive for employees Bank should introduced incentive plans for employees on regular basis so that if employees may work whole heartedly for the welfare of their organization.1 Training programs Employees Training programs must be introduced on continuous basis so that Employees have understanding with the latest developments especially with the customers. qualified blood Fresh graduates must be recruited. and can be applicable to the ABPL whole as well. a proper marketing programe must be launched for client’s awareness. 5. ABPL is posing several loopholes and weaknesses mentioned 5. .6 Use of marketing tools Banks different schemes must be conveyed to the targeted customers so that to have a reasonable share in market. 5. work. 5. Aggressive publicity campaign must be introduced through press and Electronic media for new products and scheme by initiating vigorous marketing policy.2. After completion of higher education employees will be in a better position to attain the strategic objectives of the bank and increase the overall business and profitability portfolio of the bank. 5.11 Effective use of bank resources Misuse of telephone internet. pay more attention and good service to some of the customers may neglect a major portion of customers. pay-in-slip etc. Recruitment should be strictly on merit with no other favor given to any candidate. .10 Staff behavior The attitude of the bankers with all of their customers should be same. The AIB should get into contract with top foreign universities.13 Scholarship programs Scholarship programs should be designed for senior employees and branch managers. Selection should be on the basis of test and interview. .9 Customer awareness Bank should adopt such an induction plan that when a customer opens his account with the bank he should be supplied with a booklet which enables him to know the procedure of filing the cheques.2. 5. All the customers should be treated equally. Every year the bank should finance and send their senior managers for further education abroad. It will save a lot of time of the bank staff afterward during the conduct of the account of that customer.2. 5. fax machines and other facilities available to the employees of the bank must be handled properly.12 Recruitment criteria In ABPL mostly recruitments are done through recommendations or references of employees.2.2. 5. 5. S (2003). Banking and Finance: Kitab Markaz Brigham.J.F & Ehrhardt.E.albaraka.(2014).Theory & Practice 13e.F (2011).C.South-Western College Lewis.M. 2014).J.K. Van Horne. Fundamentals of Financial Management 13e : Financial Times Nasir. Money.M. Fundamentals of Financial Management 11e: South-Western Cengage Learning.M (2008). .References Brigham.E. Financial Management.M.com (Accessed: 10 Decemeber.J & Wachowicz.F & Houston. Handbook of Islamic Banking Products & Services www. 221.6 55 451.55 8 72.48 8 4.911.629.055 1. 963 37.324.9 89 0 0 1.812.269 1.892 49.858.712.4 48 2.736.187 60.39 6 54.201.38 1 6.030 1.60 9 2.030.09 8 66.763.651 1.029.431.728.9 45 75.020.589 27. 377 0 26.73 8 63.707.798.13 9 1.0 26 0 0 Other liabilities 0 0 2.664 LIABILITIES Bills payable Due to financial institutation Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance leases Deferred tax liabilities 725.155.600 2.209 19.647.303 .00 0 27.158.292.16 5 1.48 1 7.559.620 80000 15.030.644.18 6 Other Assets 0 22.269.583 Total Liabilities 81.727.161.587 Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Deferred tax assets 5.020.116.17 6 1.756.179. 644 2.945.577.47 6 Total 87.617.759.40 4 73.06 4 746.460.09 7 2.123 0 2.830.0 64 2.ALBARAKA BANK (PAKISTAN) LIMITED STATEMEND OF FINANCIAL POSITION AS ON 31 DECEMBER 2013 2013 2012 2011 2010 (Rupee s' 000) Restate d ASSETS Cash and balances with treasury banks 3.1 96 4.100.991.47 7 1.4 07 16.12 0 61.409.565. 097 1.7 53 1.85 2 1.545.421.687 3.725.21 1 67.4 76 2.484.127.652.05 4 5.278.5 71 427.257 7.177.4 16 29.4 61 28.847. 20 0 -767.935.024 5.074 2.524.06 4 6.759.848.935.021.119.200 -767.052.290 82.44 5 8.883.886 17.414 -1.433 138.290 82.869.193 87.20 0 -767.290 82.CAPITAL/OWNER'S EQUITY Share capital Discount on issuance of shares Reserves Accumulated loss 8.935.723.40 4 ALBARAKA BANK (PAKISTAN) LIMITED STATEMEND OF FINANCIAL POSITION AS ON 31 DECEMBER 2013 ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Deferred tax assets Other Assets Total 8.22 4 8.526.115.074 2.539 6.05 1 6.760 5.20 0 -767.54 3 -2.773 6.953 73.545.419.441 6.366.830.1 91 .935.290 Vertical Analysis 2013 7% 19% 0% 25% 42% 3% 2% 2% 2012 6% 9% 1% 37% 39% 4% 2% 2% 2011 5% 10% 0% 36% 40% 4% 1% 3% 1% 3% 86% 0% 1% 2% 85% 0% 100% LIABILITIES Bills payable Due to financial institutation Deposits and other accounts Sub-ordinated loans 1% 3% 86% 1% 3.077 Surplus/(Deficit) on revaluation of asssets-net of tax Total Total Liabilities & Owner's equity Equity 5.074 1.668 72. Liabilities against assets subject to finance leases Deferred tax liabilities Other liabilities Total Liabilities 0% 0% 2% 0% 0% 2% 0% 0% 3% 93% 92% 91% 10% -1% 0% -3% 7% 12% -1% 0% -3% 8% 12% -1% 0% -2% 9% 0% 0% 0% 7% 8% 9% CAPITAL/OWNER'S EQUITY Share capital Discount on issuance of shares Reserves Accumulated loss Surplus/(Deficit) on revaluation of asssets-net of tax Total Total Liabilities & Owner's equity Equity ALBARAKA BANK (PAKISTAN) LIMITED STATEMEND OF FINANCIAL POSITION AS ON 31 DECEMBER 2013 Vertical Analysis horizont al 2011 201200 % 2012 20130 0% 2013 Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Deferred tax assets Other Assets 100% 100% 107% 89% 145% 219% 100% 100% 100% 100% 100% Total 100% 105% 99% 94% 125% 92% 102% 85% 127% 97% 139% 114% 121% 100% 166% 161% ASSETS LIABILITIES Bills payable . Due to financial institutation Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance leases Deferred tax liabilities Other liabilities 100% 100% 115% 103% 127% 123% 100% 0% 0% 100% Total Liabilities 100% 81% 103% 96% 124% 100% 100% 100% 100% 100% 100% 100% 100% 137% 90% 100% 100% 100% 140% 89% 100% -7807% -983% 92% 102% 90% 121% CAPITAL/OWNER'S EQUITY Share capital Discount on issuance of shares Reserves Accumulated loss Surplus/(Deficit) on revaluation of asssets-net of tax Total Total Liabilities & Owner's equity Equity 100 % 100% .