This document is a semester project report analyzing the financial performance of Bank Alfalah over five years. It begins with a dedication to the nation and teachers for their support. The report then contains an executive summary, introduction to the bank, and analysis of key financial ratios to assess efficiency, returns, asset quality, and capital/leverage. Ratios examined include net interest margin, return on assets/equity, non-interest income, interest paid, and non-performing loans. The analysis finds some ratios have improved in recent years while others have remained steady.

1. General Banking
Semester Project Report
Financial analysis of Bank Alfalah
Foundation University Rawalpindi Campus
Presented to : Sir. Shoaib
Presented by: Rehab Butt
Hassan Tariq
Osman Ahmed
Flahta Bin Rashid
Syeda Kanwal Noreen
Muhammad Umair Tariq
Date : 16th December, 2014

2. 2
Dedication
This report is dedicated to our nation, who has given us multiple resources and platform to lavish
our skills and work for its prosperity. Furthermore we would like to dedicate this to our teachers,
without their consultancy we would not be able to finish this report.

3. 3
Acknowledgement
We would like to thank Mr. Usman for providing us this wonderful opportunity of visiting the
bank. Giving us the necessary information and data which was required for the completion of our
report. Answering our questions and queries to his fullest capabilities although some questions
were not answered due to privacy issues. None the less we are thank full to him for the wonderful
hospitality he provided us while on our visit. Also we would like to thank the Foundation
University Islamabad and its professor Shoaib (general banking and procedures teacher) for giving
us this wonderful opportunity to visit these banks. This report and visit has helped us a lot and will
prove even more fruitful in our future business life and endeavor’s. Last but not least I would thank
my group members because without their efforts the completion of this report would have been
close to impossible.

4. 4
Contents
Dedication......................................................................................................................................2
Acknowledgement ..........................................................................................................................3
Executive summary.........................................................................................................................5
1. Introduction ................................................................................................................................6
2. Ratio Analysis.............................................................................................................................6
1. Efficiency Ratio ..........................................................................................................................6
1.1. Net interest margin ratio........................................................................................................6
1.9. Administrative Expense to non-interest income.....................................................................10
1.10. Earnings per share.............................................................................................................10
2.1. Cash and balances with banks to total assets .........................................................................12
2.4. Advances and total assets ....................................................................................................13
2.6. Gross advances to deposits ..................................................................................................15
2.8. Long term total investment to total assets .............................................................................16
2.3. Asset Quality Ratio: ...............................................................................................................16
3.1. Non-Performing Loans (NPLs) to gross Advances ................................................................16
3.2. Provision against NPLs and Gross Advances........................................................................17
3.3. NPLs to equity Ratio...........................................................................................................17
3.4. NPLs write off to NPLS Provision Ratio ..............................................................................18
3.5. NPLS Provision to NPLs Ratio............................................................................................18
2.4. Capital/leverage ratio..............................................................................................................19
4.1. Capital Ratio ......................................................................................................................19
4.2. Contingent Liabilities and commitment to shareholder's Equity..............................................19
4.3. Breakup Value per Share.....................................................................................................20
4.4. Deposit to Equity Ratio .......................................................................................................21
3. Conclusion ...............................................................................................................................22
4. Appendix..................................................................................................................................23

5. 5
Executive summary
Simply, the study unfolds the financial reports of the past five years of Bank Alfalah. This report
is a brief overlook on the main aspects and features that enhances the financial position of the bank
as well as it clicks the issues.
Any new ideas that can be implemented to make its financial standing better are explained in this
report. No issues has been missed or overlooked. Although it took us a bit of time to calculate all
the ratios necessary for making suggestions and justifications we are satisfied that we have done
our work to the finest of our abilities.

6. 6
1. Introduction
Incorporated on June 1, 1997 as a private company owned by renowned group Abu Dhabi under
the conditions set by the company’s ordnance in 1984. It started its banking practices from
November 1st, four months after its incorporation. The bank deals in commercial banking and
related services as stated in the Banking companies audience of 1962.
Bank Alfalah consists of 546 branches across the Middle East and Asia. There are many main
branches in each major city of Islamic republic of Pakistan. Including Pakistan it has head offices
in Afghanistan, Bahrain and Bangladesh. It has Head office located in Karachi as well. Most of
its branches are located in Pakistan.
In 2003, seeing the potential of Islamic rules and regulations, Bank Alfalah started its own
Islamic banking division. All of its products being offered are made according to the sharia
compliant by hiring an experienced official who knows about it from top to bottom. The
official’s main job is to advise and calculate new solutions according to the Islamic laws of
banking and finance.
2. Ratio Analysis
1. Efficiency Ratio
1.1. Net interest margin ratio
net interest margin ratio = interest earned - interest expense / assets * 100
Net Interest Margin Ratio
Year total interest income total income expense total asset
Calculated
Result
2009 35561312 24654180 389070055 2.803385113
2010 37530256 23855448 411483839 3.323291635
2011 414298178 25687485 468173802 83.00564691
2012 46079918 27500056 536466694 3.46337661
2013 43961060 27066229.00 610614291 2.766858105

7. 7
A performance metric that examines how fruitful a firm's investment decisions are compared to
its debt situations. Higher ratio is better and it is preferred over lower income.
FOR BANK AL FALAH
We see that, this company has net interest margin ratio 83.00 times in 2011, 3.46 times in 2012
and 2.76 times in 2013. It means they haven’t improved much in the past years.
1.2. Return on investment
Net profit after tax / total assets * 100
Ratio for companies deciding whether or not to initiate a new project. If ROA is above the rate
that the business borrows at then the project should be accepted, if not then it is rejected.
FOR BANK AL FALAH
We see that, this company has ROA 0.41 times in 2011, 0.41 times in 2012 and 0.76 times in
2013. It means they have been constant and are improving in year 2013.
1.3. Return on equity
net profit after tax / shareholders equity * 100
The return on equity ratio (ROE) processes how much the shareholders earned for their
investment in the company.
FOR BANK AL FALAH
Return on Asset
Year Net Profit after Tax
total
assets
calculated
result
2009 897035 389070055 0.230558736
2010 968452 411483839 0.235356023
2011 1930588 468173802 0.412365662
2012 2227081 536466694 0.415138726
2013 4675950 610614291 0.765778016
Return on Equity
Year Net Profit after Tax Total Shareholder's equity calculated results
2009 897035 22133420 4.052853106
2010 968452 22305544 4.341754678
2011 1930588 25777038 7.489564938
2012 2227081 30247402 7.362883596
2013 4675950 31901744 14.65734914

8. 8
We see that, this company has ROE 7.48 times in 2011, 7.36 times in 2012 and 14.6 times in
2013. ROE is increasing gradually throughout the years, they have been constant and are
improving in year 2013.
1.4. Non-interest income to total assets ratio
total non-markup income / total assets * 100
Non-Interest income to total Assets Ratio
Year Total non-markup income Total assets calculated results
2009 5182253 389070055 1.331958842
2010 4708161 411483839 1.144190987
2011 5367713 468173802 1.146521436
2012 7281340 536466694 1.357277177
2013 24119877 610614291 3.95010031
Bank and creditor income consequent primarily from fees. The higher it is the better it is for the
bank and vice versa.
FOR BANK AL FALAH
Analysis shows company has non-interest income to total assets ratio 1.14 in 2011, 1.35 in 2012
and 3.95 in 2013. It has been almost constant in 2011, 2012 and is improving in year 2013.
1.5. Interest ratio
interest paid /interest earned * 100
Interest Ratio
Year Interest Paid Interest earned calculated results
2009 24564180 35561312 69.07557291
2010 23855448 37530256 63.56324348
2011 25687485 44298172 57.98768626
2012 27500056 46079918 59.67904717
2013 27066229 43961060 61.56864507
This ratio states the payment of interest mainly to depositors. Lower the ratio better it is for
company.
FOR BANK AL FALAH
Analysis shows company has interest ratio 57.9 in 2011, 59.6 in 2012 and 61.5 in 2013. It has
been gradually increasing throughout the years.
1.6. Administrative expenses to profit before tax

9. 9
administrative expenses / profit before tax * 100
Administrative Expense
Year Administrative Expenses profit before Tax calculated results
2009 10923507 1016316 1074.814034
2010 12578080 1368745 918.9498409
2011 13832096 5433718 254.5604317
2012 15204036 2227081 682.6889547
2013 17288779 6807211 253.9774219
Ratio that expresses the relationship between administrative expenses and profit before tax.
FOR BANK AL FALAH
Analysis Shows Company has administrative expenses 254.5 in 2011 and with a major increase
in expenses at 682.6 in 2012 and finally at 253.9 in 2013 which is back to what it was in 2011.
1.7. Net interest income after provision to total assets
net interest income after provision / total assets * 100
net interest income after provision to Total asset
Year Net interest income after provision Total Assets calculated results
2009 6835605 389070055 1.756908534
2010 9414425 411483839 2.28792096
2011 14281193 468173802 3.050404132
2012 15021330 536466694 2.800048944
2013 15841183 610614291 2.594302694
This is the relation between interests earned less provision to total assets. It is very useful for
banks.
FOR BANK AL FALAH
Analysis shows company has net interest income after provision to total assets is 3.05 in 2011,
2.80 in 2012 and 2.59 in 2013. It has increased in 2011 and with a drop in 2012 it has further
dropped to 2.59 in the year 2013.
1.8. Non-interest expenses to total income
non-interest expenses / total income * 100

10. 10
Non-interest expense to total income
Year Non-interest expenses total income calculated results
2009 11001542 10907132 100.8655804
2010 1368745 13674808 10.00924474
2011 14215188 19648906 72.34595147
2012 15519468 22302670 69.58569534
2013 17312666 168911831 10.24952835
1.9. Administrative Expense to non-interest income
=Administrative Expense / non-interest income*100
Administrative Expenses to non-interest income
Year Administrative Expenses non-interest income calculated results
2009 10923507 5182253 210.7868334
2010 12578080 4708161 267.1548403
2011 13832096 5367713 257.6906776
2012 15204036 7281340 208.8082139
2013 17288779 8278694 208.8346181
The ratio expresses total admin expense to non-interest income.
FOR BANK AL FALAH
Analysis shows company has admin expense to non-interest income 257.6 in 2011, 208.8 in
2012 and 208.8 in 2013. It has decreased and remained constant in 2012, 2013 however it was
higher in year 2011.
1.10. Earnings per share
=net profit after tax / no of ordinary shares
Earnings per share (EPS)

11. 11
Year net profit after tax Par value share capital calculated results
2009 897035 10 13491563 66.48858994
2010 968452 10 13491563 71.78204631
2011 1930588 10 1349156.3 1430.959482
2012 4556121 10 13491563 337.7014954
2013 4675950 10 13491563 346.5832684
EPS is the ratio between net profits after tax to no of ordinary shares at the end of the year as
presented in balance sheet.
FOR BANK AL FALAH
Analysis shows company has EPS 1430 in 2011, 337 in 2012 and 346 in 2013. It has been
considerately higher in 2011 and with an exceptional decrease in 2012 it has been constant in
2013 in comparison to 2012.
1.11. Operating expense ratio
operating expense / net income * 100
Operating Expense Ratio
Year Operating Expense Net income calculated results
2009 10923507 12017858 90.89395964
2010 12578080 14122586 89.06357518
2011 13832096 19648906 70.39626532
2012 15204036 4556121 333.7057115
2013 17288779 24119877 71.67855375
It is a measure of operating efficiency.
FOR BANK AL FALAH
Analysis shows company has operating expense ratio 70.3 in 2011 and with an increase of 333.7
in 2012. However it’s again back to 71.6 in 2013 as comparison to 2011.
1.12. Gain ratio
total gains / total income * 100
Gain Ratio
Year Total Gain Total income calculated results

12. 12
2009 1019732 12017858 8.485139365
2010 1211153 14122586 8.576000174
2011 1255510 19648906 6.389719611
2012 2637703 22302670 11.82684853
2013 6724703 24119877 27.88033703
A total gain consist of gain on sales of securities, gain on re-measurement, gain on long term
deal etc.
FOR BANK AL FALAH
Analysis shows company has gain ratio 6.38 in 2011, 11.8 in 2012 and 27.8 in 2013. It has been
gradually increasing in 2011, 2012 and has taken a jump to 27.8 in year 2013.
2. Liquidity ratios
2.1. Cash and balances with banks to total assets
=cash and balances with banks / total assets * 100
Cash and Balance with Banks to total assets
Year Cash and Balance with Banks Total Assets calculated results
2009 57778651 389070055 14.85044923
2010 57377096 411483839 13.94394884
2011 50882662 468173802 10.86832748
2012 58044054 536466694 10.81969387
2013 61204697 610614291 10.02346291
The ratio states the percent of total assets present in the form of highly liquid assets.
FOR BANK AL FALAH
Analysis shows company cash and balance with banks to total assets at 10.8 in 2011, 10.8 in
2012 and 10.2 in 2013. It has been constant in 2011, 2012 and is improving in year 2013.
2.2. Total deposit and other accounts to total assets
total deposit and other accounts / total assets * 100
Total Deposit and other Accounts to total assets
Year Total Deposit and other Accounts total assets calculated results
2009 324759752 389070055 83.47076518
2010 354015311 411483839 86.03383109

13. 13
2011 401247886 468173802 85.7048994
2012 457118723 536466694 85.20915243
2013 525525770 610614291 86.06509506
The relation shows what percent of total assets includes total deposits and other accounts.
FOR BANK AL FALAH
Analysis shows company’s total deposit and other accounts to total assets at 85.7 in 2011, 85.2 in
2012 and 86.0 in 2013. It has been constant in 2011, 2012 and is increasing in 2013.
2.3. Investment and total assets
=total investment / total assets * 100
Investment and Total Assets
Year Total Investment Total Assets calculated results
2009 99159957 389070055 25.48640167
2010 113425861 411483839 27.56508282
2011 166531768 468173802 35.57050123
2012 189486762 536466694 35.3212537
2013 219690369 610614291 35.97858292
The relationship between investment and total assets shows investment activity with position to
its total assets.
FOR BANK AL FALAH
Analysis shows company’s investment and total assets at 35.5 in 2011, 35.3 in 2012 and 35.9 in
2013. It has remained constant in years 2011, 2012 and 2013 respectively.
2.4. Advances and total assets
advances net / total assets * 100
Advances and Total assets
Year Advances total assets calculated results
2009 188042438 389070055 48.33125438
2010 207152546 411483839 50.34281456
2011 198468512 468173802 42.39205849
2012 233933358 536466694 43.60631529
2013 260779850 610614291 42.70778687

14. 14
fThe relation of advances to total assets. Is valuable for banks and DFIs.
FOR BANK AL FALAH
Analysis shows company’s advances and total assets at 42.3 times in 2011, 43.6 times in 2012
and 42.7 times in 2013. It has been constant in 2011 and 2013 but it increased by a percent in
year 2012.
2.5. Total liabilities to total assets
=total liabilities / total assets * 100
Total Liability to Total assets
Year Total liability Total assets calculated results
2009 366936635 389070055 94.3111993
2010 389178295 411483839 94.57924179
2011 25777038 468173802 5.505869378
2012 30247402 536466694 5.638262792
2013 31901744 610614291 5.224532814
Shows the proportion of banks assets which are financed through debt instruments.
FOR BANK AL FALAH
Analysis shows company’s total liability to total assets at 5.5 in 2011, 5.6 in 2012 and 5.2 in
2013. It has decreased in year 2011 with a slight increase in 2012 and has again decreased in
year 2013.

15. 15
2.6. Gross advances to deposits
=gross advances / deposits * 100
Gross Advances to Deposits
Year Gross Advances Deposits calculated results
2009 188042438 324759752 57.90201429
2010 207152546 354015311 58.5151375
2011 198468512 401247886 49.4628181
2012 233933358 457118723 51.1756238
2013 26077850 525525770 4.962240006
The relation states the percent of gross advances to deposits and expresses the use of deposits in
the core business of a bank.
FOR BANK AL FALAH
Analysis shows company’s gross advances to deposits at 49.4 in 2011, 51.1 in 2012 and 4.96 in
2013. It has slightly increased from 2011 to 2012 but has declined in the year 2013.
2.7. Gross advances to borrowing and deposits
=gross advances / borrowing + deposits * 100
Gross advances to Borrowing and deposits
Year Gross advance Borrowing deposits calculated results
2009 188042438 20653921 324759752 54.43977836
2010 207152546 13700124 354015311 56.33501515
2011 198468512 18168978 401247886 47.32010776
2012 233933358 15519468 457118723 49.49522964
2013 26077850 23115102 525525770 4.753173037
The ratio shows activity of a banking business as it echoes that advances are being made
more/less than deposits.
FOR BANK AL FALAH
Analysis shows company’s gross advances to borrowing and deposits at 47.3 in 2011, 49.4 in
2012 and 4.75 in 2013. It has increased slightly from 2011 to, 2012 and has decreased in year
2013.

16. 16
2.8. Long term total investment to total assets
=long term total investment / total assets * 100
Long term investment to total assets
Year Long term investment total assets calculated results
2009 99159957 389070055 25.48640167
2010 113425861 411483839 27.56508282
2011 166531768 468173802 35.57050123
2012 189486762 536466694 35.3212537
2013 219690369 610614291 35.97858292
The relation between long term investments to total assets shows investment activity with
position to its total assets.
FOR BANK AL FALAH
We see that company’s long term investment to total assets at 35.5 times in 2011, 35.3 times in
2012 and 35.9 in 2013. It has remained constant in years 2011, 2012 and 2013.
3. Asset Quality Ratio:
3.1. Non-Performing Loans (NPLs) to gross Advances
= NPLs / gross advances * 100
Non-Performing Loans (NPLs) to gross Advances
Year NPLs Gross advances calculated results
2009 59817 188042438 0.031810373
2010 25504 207152546 0.0123117
2011 5696 198468512 0.002869977
2012 5696 233933358 0.002434881
2013 4288 260779850 0.001644299
Relation states the quality of loan portfolio of a bank.
FOR BANK AL FALAH
The analysis of bank shows non-performing loans to gross advances at 0.002 in 2011, 0.002
2012 and 0.001 in year 2013. It means that it remained constant for the first two years and then
saw a decrease in year 2013.

17. 17
3.2. Provision against NPLs and Gross Advances
= provision against NPLs / gross advances * 100
Ratio reflects the quality of advances of banks and DFIs.
FOR BANK AL FALAH
The analysis of bank shows provision against NPLs and gross advances at 0.93 in 2011, 0.79
2012 and 0.36 in year 2013. It means that it was high for year 2011 and then gradually decrease
in the next two years i.e 2012 - 2013.
3.3. NPLs to equity Ratio
= NPLs / total shareholders’ equity * 100
NPLs to equity Ratio
Year NPLs
Total shareholder's
equity calculated results
2009 59817 22133420 0.270256472
2010 25504 22305544 0.114339287
2011 5696 25777038 0.022097186
2012 5696 30247402 0.018831369
2013 4288 31901744 0.013441271
Relationship that indicates the exposure of equity holders to non-performing loans.
FOR BANK AL FALAH
Provision against NPLs and Gross Advances
Year
Provision against
NPLs Gross Advances calculated results
2009 3694546 188042438 1.964740534
2010 2243687 207152546 1.08310858
2011 1864510 198468512 0.939448773
2012 1848535 233933358 0.790197266
2013 954563 260779850 0.366041701

18. 18
The analysis of bank shows NPLs to equity ratio at 0.02 in 2011, 0.01 2012 and 0.01 in year
2013. It means that it was increased in year 2011 but remained constant for the next two years i.e
2012 - 2013
3.4. NPLs write off to NPLS Provision Ratio
= NPLs write off / NPLs provision * 100
NPLs write off to NPLS Provision Ratio
Year NPLs write off NPLS Provision calculated results
2009 59817 3694546 1.619062261
2010 25504 2243687 1.13670044
2011 5696 1864510 0.305495814
2012 5696 1848535 0.308135902
2013 4288 954563 0.449210791
Ratio that expresses the percent of NPLs to the provision maintained for NPLs.
FOR BANK AL FALAH
The analysis of bank shows NPLs write off to NPLs provision ratio at 0.30 in 2011, 0.30 2012
and 0.44 in year 2013. It means that it remained constant for year 2011 and 2012 however it
increased in the year 2013.
3.5. NPLS Provision to NPLs Ratio
= NPLs provision / NPLs * 100
NPLS Provision to NPLs Ratio
Year NPLS Provision NPLs calculated results
2009 3694546 59817 6176.414732
2010 2243687 25504 8797.392566
2011 1864510 5696 32733.67275
2012 1848535 5696 32453.21278
2013 954563 4288 22261.26399
The ratio portrays what percent of provision has been made against NPLs.

19. 19
FOR BANK AL FALAH
The analysis of bank shows NPLs provision to NPLs ratio at 32733.6 in 2011, 32453.2 2012 and
22261.2 in year 2013. It means that it remained almost constant with a slight change for year
2011 and 2012 however it saw a decrease in the year 2013.
4. Capital/leverage ratio
4.1. Capital Ratio
= total shareholders’ equity / total assets * 100
Capital Ratio
Year
Total
shareholder's
equity Total assets calculated results
2009 22133420 389070055 5.688800697
2010 22305544 411483839 5.420758214
2011 25777038 468173802 5.505869378
2012 30247402 536466694 5.638262792
2013 31901744 610614291 5.224532814
Ratio shows the shareholders’ investment as a percent of total assets.
FOR BANK AL FALAH
The analysis of bank shows capital ratio 5.5 in 2011, 5.6 2012 and 5.2 in year 2013. It shows that
it remained almost constant with a slight change of a 0.1% for year 2012 and also it saw a
downfall in the year 2013.
4.2. Contingent Liabilities and commitment to shareholder's Equity
= Contingent liabilities and commitment / shareholders’ equity
Contingent Liabilities and commitment to shareholder's Equity

20. 20
Year
Contingent
Liabilities and
commitment shareholder's Equity calculated results
2009 3117529 22133420 14.08516623
2010 4738505 22305544 21.24361997
2011 6791219 25777038 26.34600221
2012 6016548 30247402 19.89112321
2013 7996863 31901744 25.06716561
Ratio that Expresses exposure of contingent liabilities and commitments by banks.
FOR BANK AL FALAH
The analysis of bank shows Contingent liabilities and commitment to shareholders equity 26.3 in
2011, 19.8 2012 and 25.0 in year 2013. It shows that it remained 26.3 times in 2011 and
decreased to 19.8 in 2012 however it also saw a rise in the year 2013.
4.3. Breakup Value per Share
= total shareholders’ equity / no of ordinary shares
Is the net worth per share and is essential to measure financial soundness of a firm.
FOR BANK AL FALAH
The analysis of bank shows breakup value per share at 191.0 in 2011 and a downfall to 22.4
times in 2012 with a further rise to 23.6 in the year 2013.
Breakup Value per share
Year
Total
shareholders’
equity par value capital share calculated results
2009 22133420 10 13491563 16.40537868
2010 22305544 10 1349563 165.2797535
2011 25777038 10 1349156.3 191.0604279
2012 30247402 10 13491563 22.41949432
2013 31901744 10 13491563 23.64569917

21. 21
4.4. Deposit to Equity Ratio
= total deposits / total shareholders’ equity
Deposit to Equity Ratio
Year
Total
Deposit Total shareholder's equity calculated results
2009 324759752 22133420 14.67282291
2010 354015311 22305544 15.87118032
2011 401247886 25777038 15.56609747
2012 457118723 30247402 15.11266068
2013 525525770 31901744 16.47326146
Ratio states the relation between total deposits in a bank to the shareholders equity.
FOR BANK AL FALAH
The analysis of bank shows deposits to equity ratio at 15.5 in 2011, 15.1 in 2012 and 16.4 in year
2013. It means that it remained constant for the year 2011 and 2012 however it increased in the
year 2013.

22. 22
5. Conclusion
Carefully analyzing the current business situation of bank Alfalah, we observed many key
aspects that could bring great revenue’s and success to the organization. The bank has great
potential and if it just focuses on some of the reasons we are about to list its economy can boom.
Its liquidity ratio analysis shows that bank is not up to the average level. Having greater numbers
in liquidity ratio means that bank would be able to pay its debt if needed. Bank Alfalah needs to
stable its leverage ratio because if its fixed cost remains the same then in the long run it generates
more revenue as compared to variable cost where profit may become less due to fluctuation in
prices. Although inflation may still have an effect, the problem can still be minimized to some
extent. The greater the financial standing of the bank, the higher will be its share acquiring
amount. So that when the bank floods shares in the market, it can sell for higher amount.

23. 23
4. Appendix
1. Year 2009, 2010
Balance sheet
Income statement
2. Year 2011, 2010
Balance sheet
Income statement
3. Year 2012, 2013
Balance sheet
Income statement