Executive Summary- As a part of our curriculum we have to prepare reports in each semester for each subject. In this way, my course teacher has assigned me to prepare the report. And the topic of my report is “Managerial Finance”: A Case Study on financial statement of “Al-Arafah Islami Bank Ltd”. He took a lecture on preparation of this report and serving us necessary documents. As we have selected a service organization, my prime objective was to collect necessary documents along with the Annual Report of the Bank. Again we had to visit the website of the Bank.
My report involves the typical Managerial Finance practices such as Balance sheet, Profit and Loss accounts, cash flow statement etc.
1.1 Back ground of the study- As we are the student of Financial Management course of school of business studies we have studied several terms of finance. Our course instructor wants from us to get practical knowledge of her course. So she has directed us to analysis the annual statements of Al-Arafah Islami Bank Ltd. When our miss directed us for completing analysis from that time we are trying to solve out it at our level best. And our group member gave their most support to pepper and reached our altimeter goal.
1.2 Objective of the study
- To get practical knowledge about financial aspects.
- To introduce us with the financial terms needs of the bank to stand corporate decision.
- Also to justify the exact condition of this bank by several analysis whether they are getting established or facing loss.
- How they give financial support to the consumer and what rate
- And interpret the condition of last 4 years which shows difference between rise and falls of bank.
1.3 Methodology of the study
Mainly we have collected the data from secondary sources that are annual reports of bank 2007, 2008, and 2009. On the other hand much information has taken from internet. Ratio has completed by ours based on the information of Annual report 2007, 2008, 2009.
- As we are completing the preliminary course of finance so we do not know many terms of finance is needed to make a complete analysis.
- This business finance course is only of three month duration and it is very short time to get learn and analysis three annual reports.
- Only the annual report is not sufficient for making term paper so many important information’s has taken from internet.
- The bank authorized didn’t adjust the financial statement clearly so we had to make its ratio analysis hardly.
2. Review of Literature
Financial ratios are a system of find out measuring banks financial position, profit and loss. The financial institute included many interested parties, like the owners, management, personnel, customers, suppliers, competitors, cash management, balance inquiry, downloading transaction, investment, regulatory agencies, and academics, each having their views in applying financial statement analysis in their evaluations. Exploring of financial ratios help to organization which promotes innovation, encourages improvement, values sense of urgency and develops people who accept challenges and turns them into opportunities.
- All activities of the bank are conducted according to Islamic Shariah where profit is the legal alternative to interest.
- The bank’s investment policy follows modes approved by Islamic shariah based on the Qur’an & Sunnah.
- The bank is committed towards establishing welfare oriented banking system, economic enlistment of the low-income group of people, create employment opportunities.
- According to the need and demand of the society and the country as a whole the bank invests money to different ‘Halal’ business. The bank participates in different activities aiming at creating jobs, implementing development projects of the government and creating infrastructure.
- The bank is committed to establish an economic system resulting in social justice and equitable distribution of wealth. It is committed to bring about changes in the underdeveloped rural areas for ensuring balanced socio economic development of the country through micro
- According to Mudaraba system, the depositors are the partners of the investment income of the bank. About 70% of the investment income is distributed among the Mudaraba depositors.
- To render improved services to the clients imbued with islamic spirit of brotherhood, peace and fraternity and by developing an institutional cohesion.
- The bank is contributing to economic and philanthropic activities. AIBL English Medium Madrasah and AIBL library patronize by the Bank are two such examples.
The employees express its gratitude to the Almighty Allah for enabling us to achieve remarkable progress in all this opportunity to thank the Shariah and Board Members of the Bank for their relentless whole hearted support. Their collective wisdom contributed extensively to acquiring of strength. The Board of Directors thanks the management and the staff for their loyalty, support and untiring efforts which has resulted in improved performance. They expresses its thanks to respected shareholders, valued customers, patrons well wishers, Government of Bangladesh, Bangladesh Bank, Registrar of Joint Stock Companies & Firms, Securities and Exchange Commission, Auditors, Legal advisers and all others concerned for giving us the benefit of their support and co-operation.
3. Company Profile
With the objective of achieving success here & hereafter by pursuing the way directed by Allah and the path shown by His Rasul (SM), Al Arafah Islami Bank Ltd was established (registered) as a private limited company on 18 June 1995. The inaugural ceremony took place on 27 September 1995. The authorized capital of the Bank is Tk.2500.00 million and the paid up capital is Tk. 1153.18 million as on 31.12.2007. Renowned Islamic Scholars and pious businessmen of the country are the sponsors of the Bank. 100% of paid up capital is being owned by indigenous shareholders.
The equity of the bank stood at Tk. 2037.50 million as on 31 December 2007, the manpower was 1033 and the number of shareholders was 12013. It has achieved a continuous profit and declared a good dividend over the years. High quality customer service through the integration of modern technology and new products is the tool of the bank to achieve success. The bank has a diverse array of carefully tailored products and services to satisfy customer needs.
The Bank is committed to contribute significantly to the national economy. It has made a positive contribution towards the socio economic development of the country with 47 branches of which 17 is AD.
3.1 Vision and Mission:
- To be a pioneer in Islam Banking in Bangladesh and contribute significantly to Growth of the national economy.
- Achieving the satisfaction of Almighty Allah both here & hereafter.
- Proliferation of Shariah Based Banking practices.
- Quality financial services adopting the latest technology.
- Fast and efficient customer service.
- Maintaining high standard of business ethics.
- Balanced growth.
- Steady & competitive return on shareholders equity.
- Innovative banking at a competitive price.
- Attract and retain quality human resources.
- Extending competitive compensation packages to the employees.
- Firm commitment to the growth of national economy.
- Involving more in Micro and SME financing.
3.2 Organ gram:
Managing Director Muhammed Nadim,ACA
M.A.Samad Sheikh Md.Abdur Rahim Duary
Muhammad Mahmoodul Haque
Hadi Ferdous Ahmed
Additional Managing Director Md.Abul Hossain
A.T.M.Harun-ur-Rashid Chowdhury Md.Sahmsul Alam
Syed Masodul Bari
Deputy Managing Director Md.Nazamus Saadat
Ihsanaul Aziz Md.Abdur Rahaman
Executive Vice President Assistant Vice President
Md.Abdul Jalil Miah (sus.) Mohd. Ziaul Karim Chowdhury
A.S.M.Monzurul Alam Muhammad Abu Taher
Rafiul Alam Hasan Mahmud
Md.Mofazzal Hossain Md.Mahbub Alam
Md.Aminul Islam Bhuiyan
Senior Vice President Md. Habib Ullah
A.N.M.Abdus Shahid Iqbal Hossain Ahmed
Md.Emdadul Haque S.M.Jamal Uddin
Yakub Muhammad Faruque Harun-ur- Rashid
Md.Mominul Haque Bhuiyan Md.Husain Ahmed Faruqi
Md.Rezaur Rahman Md.Abdul Quasem
Vice President S.M.Nazibul Islam
Kh.Enayet Hossain Kazi Md.Selim
M.Atiqur Rahman Md.Mujibur Rahman
Manir Ahmad Md.Fazlur Rahman
Nasrul Huq Chowdhury Md.Abdur Rashid
A.W.Shamsuzzuha Md.Showkat Islam
Mohammad Ali Abed Ahmed Khan
A.N.M.Mofidul Islam Md.Shamsul Huda
3.3 Financial Information
Islam provides us a complete lifestyle. Main objective of Islamic lifestyle is to be successful both in our mortal and immortal life. Therefore in every aspect of our life we should follow the doctrine of Al-Qur’an and lifestyle of Hazrat Muhammad (Sm.) for our supreme success. Al-Arafah Islami Bank started its journey in 1995 with the said principles in mind and to introduce a modern banking system based on Al-Qur’an and Sunnah.
A group of established, dedicated and pious personalities of Bangladesh are the architects and directors of the Bank. Among them a noted Islamic scholar, economist, writer and ex-bureaucrat of Bangladesh government Mr. A.Z.M Shamsul Alam is the founder chairman of the bank. His progressive leadership and continuous inspiration provided a boost for the bank in getting a foothold in the financial market of Bangladesh
A group of 13 dedicated and noted Islamic personalities of Bangladesh are the member of Board of Directors of the bank. They are also noted for their business acumen. Al-Arafah Islami Bank Ltd. has 53 braches and a total of 1080 employees (upto December 2008). Its authorized capital is Taka 2500 millions and the paid-up capital is Taka 1153.18 millions.
Wisdom of the directors, Islamic bankers and the wish of Almighty Allah make Al-Arafah Islami Bank Ltd. most modern and a leading bank in Bangladesh.
3.4 We present some data on the bank below:
|Paid up Capital|
|Profit before Tax|
|Profit after Tax55|
|Earning per share (Taka)|
|Profit Earning Ratio|
|Dividend per share|
|No. of Shareholders|
|Number of Employees|
|Number of Branches|
|Manpower per Branch|
3.5 Financial Performance of the Bank:
With the objective of achieving success in life here & hereafter following the way directed by the Holy Quran and the path shown by Rasul (SM) AI Arafah Islami Bank Ltd was established (registered) as a public limited company on 18 June 1995. The inaugural ceremony took place on 27 September 1995. The authorised capital of the Bank is Tk. 2,500.00 million and the paid up capital is Tk. 1,383.81 million as on 31.12.2008. Renowned Islamic Scholars and pious businessmen of the country are the sponsors of the Bank. 100% of paid up capital is being owned by local shareholders.
The equity of the bank has stood at TK. 2,705.74 million as on 31 December 2008, the manpower was 1080 and the number of shareholders was l0664.It has achieved a continuous profit and declared a good dividend over the years. High quality customer service through the integration of modern technology and new products is the tool of the bank to achieve success. The bank has a encourages Improvement, values sense of urgency and develops people who accept challenges and turns them into opportunities.
Al-Arafah Islami Bank Limited went online with Ababil, an Islamic Shariah compliant and centralized banking solutions, developed by Millennium Information Solution Ltd recently. A total of 22 branches out of 46 have been brought under software by the implementation team. Some of the branches of the bank have already started online operation successfully. The bank expects to bring its all branches under online operation with Ababil within next few months. Through the system a number of real-time delivery channels including ATM, POS, SMS banking, phone banking and internet banking will be made available for clients of the bank. The Shariah-based centralized and online operation of a bank with any locally-developed software is the first of its kind in the country.
Although I do not understand what is meant by a banking software solution which is ‘Shariah compliant’, hats off to Al-Arafah to have shown trust on a local IT services provider. Al Arafah has shown by partnering with Millennium that local IT companies have the necessary grey matter to implement a full fledged banking system for a large banking organization.
Actually al arafah islami bank Ltd follows on shariah system of banking but it become more shariah compliant. They have taken to next steps increasing the profit to reduce the non performine assets below 2%. Rising capital and resurve fund to TK 4000 million to company basel-II, up-gradation of online banking, icreases foreign inward remittance, openinig on 10 new branches, openinig of SME service center development skill manpower through imparting training as part of CSR activities. They express gratitude to the almighty Allah enabling us to achive more remarkable progress in all aspects of during the next year. It also helps to make our economy strong by providing various type of banking facilities at a reasonable price. The pace of change in financial services of Bangladesh produces new challenges daily.