June 07 - 13, 2004



Since the privatization in 1997, Bank Alfalah has remained consistent in its mission to excel in providing innovative products and services to its customers. As a result of that, the year 2003 has been most favourable for your Bank inspite of varying market conditions. We recorded significant increase in our business volumes coupled with the broadening of our network and clientele base.

ECONOMIC LANDSCAPE: The democratization process was completed during the year and the country is now in the process of warming its relations with the neighbours. Consequently the political stability has translated into direct economic benefit for Pakistan. GDP growth has exceeded the target of 4.5% to 5.1%. The Foreign Exchange Reserves have been recorded in excess of US Dollar 12 billion and foreign investments have increased by almost 100%. The national export targets were exceeded by 20% and surpassed US Dollar 10 billion mark.

The economic package of US Dollar 3 billion extended by the United States will help alleviating the poverty, which has been hampering the economic revival. The capital market performance has been, once again, very impressive and KSE has performed at par with all other stock markets of the world.

FINANCIAL HIGHLIGHTS: Bank Alfalah has grown 51.84% in its total assets and 101.35% in its equity. The Bank netted record pre tax profit of Rs. 3.506 billion, a 291.85% increase over the corresponding period last year, which includes capital gains on Federal Government securities of Rs. 2.19 billion. The deposits of the Bank rose to Rs. 76.7 billion which is 48.4% higher than corresponding period last year and indicative of increasing customers' confidence in your Bank, because of its superior services and healthy practices. The Loans and Advances figure stood at Rs. 50.37 billion, an increase of approximately 71% over the last financial year. This portfolio has been supplemented keeping the Bank's stringent and prudent policies in view.



BRANCH NETWORK AND CONSUMER BANKING: The Bank is fully aware that the branch network has direct implications on the services that it provides to its customers. In the year 2003, nine (9) commercial banking branches and five (5) Islamic banking branches were added to the Bank Alfalah network extending our coverage to fifty-nine (59) branches in twenty-three (23) cities nationwide. We are confident that a well integrated branch network, offers greater potential for serving a larger client base through high value products.

Bank Alfalah continually endeavours to develop a wider spectrum of innovative financial products based on consumer needs. The Alfalah Visa Card has been recognized by the Visa International as the first credit card in South Asia to have crossed the 100,000th mark in the shortest timeframe.

Alfalah Car Finance is another market leader offering superior value and convenience to its clients. At the end of 2003, its portfolio crossed Rupee five billion mark.

Consumer Durable financing was launched in August 2003. This product too has also met a considerable success in the market. Similarly, the overwhelming response received to the Home Financing scheme launched by the Bank during the last quarter of 2003 offers great potential of becoming yet another important product of the Bank.

In the latter half of 2003 Phone Banking was launched with a view to establish a more direct contact with our clients. This support centre has greatly facilitated the overall sales efforts of the Bank.

CREDIT PORTFOLIO: A depressive interest rate environment has spurred the competition for scarce banking assets in local financial industry. While Bank Alfalah remains a key player in the market, however, it treads with caution so that the quality of its credit portfolio is not compromised.

The Bank has employed a proactive approach in the form of a well-designed and transparent credit approval process. This process benefits from an inherent system of checks and balances at each level.

FOREIGN TRADE, CORRESPONDENT BANKING AND TREASURY OPERATIONS: Bank Alfalah offers high quality service to its foreign trade clients. Customers are assured of efficiency and timeliness when dealing with their overseas counterparts. Our clients enjoy the benefit of our well-integrated global correspondent banking network giving them greater global reach. This comprises more than 200 financial institutions all over the world signifying the favourable reputation that Bank Alfalah enjoys globally as a stable and responsible banking institution.

During the year, the foreign trade volume of the Bank has recorded an impressive growth and it has reached to the level of 8% of total foreign trade of the country. The imports figure of Rs. 46.81 billion and exports figure of Rs. 44.27 billion represented an increase of 38% and 34% respectively over the last year figures.

The Bank has also been fairly active in the inter-bank market and enjoyed substantial lines of credit. The Treasury Division added significant profitability to the Bank through its intuitively priced transactions and proactive strategies for both investment and realization of capital gains.

CREDIT RATING: Despite the political and economic uncertainties, Bank Alfalah was able to maintain its impressive credit ratings of AA- and A1+ in the long and short term respectively. These ratings are indicative of a very high credit quality and low potential for credit risk. These ratings have been assigned by the PACRA, the leading credit rating agency of Pakistan. These ratings have been awarded on the basis of a steady improvement in organizational performance, augmentation in equity base and increased sponsor backing.

HUMAN RESOURCE DEVELOPMENT: Development of professional skills and knowledge of the employees is essential for the efficient functioning of any organisation. At Bank Alfalah appropriately designed policies and practices have been instituted to achieve this strategic objective.

Our state-of-the-art training centre at Karachi remains indispensable in imparting valuable training to all our team members. This has become especially important considering the pace of change that the banking industry is exposed to. Consequently training ensures that change is successfully navigated to discover potentially beneficial opportunities that can be transformed into direct gains for the Bank and its customers. This also positively impacts the confidence levels of our employees translating into better job performance and satisfaction. During the year 2004-2005 we aim to establish a similar training and development facility in Lahore, Pakistan.

FUTURE OUTLOOK: The future prospects for the local economy and the banking industry in particular looks bright. Key macro economic fundamentals have stabilized and are now on the road to recovery. Consequently the Bank would like to take advantage of these encouraging developments and continue its strategy of network expansion and business volume augmentation.