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1
ALLAMA IQBAL OPEN UNIVERSITY
Department of Business Administration
INTERNSHIP REPORT
ASKARI COMMERCIAL BANK LIMITED
Specialization: MBA Banking & Finance Submitted to: Chairman Department of Business Administration
Submitted by:
Name: Abdul Razzaq Roll #. W581438 Registration #. Addres. ………………….. Contact #. 0321-4033614 Date of submission:
2
Acknowledgment
In the Name of
ALLAH The Most Gracious, The Most Merciful But His command, when He intendeth a thing, is only that he
saith unto it: Be! and it is. (Ya-seen Verse 086) All praise to ALMIGHTY ALLAH alone, the Omnipresent and the most
Merciful and compassionate. The words are bound, knowledge is limited
and time is short to express His dignity.
I am varying thankful to ALLAH who created me and gave countless
blessing. He is the only Master of the universe and the Day of Judgment.
First I thank my parents for their continuous support in MBA Programme. I
also would like to thank all my teachers who guide me in the right
direction, they taught me how to ask questions and express my ideas. I am
also thankful to Sir Muhammad Azeem.
I am very thankful to the branch Manager of Askari Bank (Qurtaba Chowk
Branch) Mr. Shahid Mehmood Alvi who provided me the opportunity to
learn.
3
Table of Contents
1. Objective of studying the organization ……………………………………….6 2. Over view of the Bank………………………………………………………...8 3. Brief history of the Bank ……………………………………………………..10 4. Nature of the organization ……………………………………………………12 5. Business volume ……………………………………………………………...14
(i) Investment…………………………………………………………….15 (ii) Deposits ………………………………………………………………15 (iii) Advances……………………………………………………………...16 (iv) Revenue ………………………………………………………………16
6. Organizational Structure………………………………………………………17 7. Number of employees ………………………………………………………...18 8. Products & Services …………………………………………………………..19
( I ).Corporate & Investment banking…………………………………………19 (a) Corporate Banking Division ………………………………………………20 (b) Investment Banking Division………………………………………………20
(II) Agriculture Finance ……………………………………………………….21 Services ……………………………………………………………………….22
(a) Consumer Banking Services ………………………………………………22 (b) Islamic Banking Services ……………………………………………….....22 (c) Investment Products Services……………………………………………...23
9. Structure of the Organization in term of reporting line………………………..24 (I) Management (a) Board of Director ………………………………………………………….24 (b) Audit Committee…………………………………………………………..24 (c) Country Head & Inspection Division ……………………………………..25 (d) Risk management ………………………………………………………….25 (II) Credit Administration Division & Information Security Division ………..26 (a) Special Assets management…………………………………………. …....26 (b) Credit Division……………………………………………………………..26
(III) Human Resource Division ……………………………………………….26 (IV) Commercial Banking Group ……………………………………………..27 (V) Information & Technology Department…………………………………. .27 (VI) Islamic Banking Division…………………………………………........ 28 (VII) Finance Department……………………………………………………..28 (VIII) Operation Division ……………………………………………………..28 (IX) Legal Affairs Division ………………………………………………….29 (X) Market & Strategic planning …………………………………………...29 (XI) Compliance & Data Division …………………………………………..30 (XII) Consumer Banking Services ……………………………………………30 (XIII) Corporate & Investment Banking ……………………………………...30 10. Branch Structure ………………………………………………………………31 11. Review Of the various Department……………………………………………33
(I) General Banking ………………………………………………………33 (a) Account Opening Department…………………………………………….34 (b) Function of Account Opening Department………………………………..34 (c) Importance of Introduction for Account Opening ………………………...35 (d) Inquiry about customer ……………………………………………………35 (e) Account Opening Procedure ……………………………………………...36
4
(II) Types of Accounts …………………………………………………...37 (III) Remittances Department……………………………………………..38 (IV) Cash Department……………………………………………………..41 (V) Clearing Department………………....................................................44 (VI) Account Department ………………………………………………...48 (VII) Credit Department…………………………………………………...49
12. How Information generated, Recorded and Used……………………………50 13. The Role of a Manager ………………………………………………………52 14. Software used by the Bank…………………………………………………...54 15. Different Types of Reports Being produced…………………………………55
(a) Statement of Condition Report……………………………………. …….55 (b) Daily Non Financial Report ……………………………………………...56
16. Generations and Sources of Funds…………………………………………...58 17. Allocation of funds…………………………………………………………...61 18. Five Years of Balance Sheets ………………………………………………..62 19. Five Years of Income Statements …………………………………………..63 20. Ratio Analysis………………………………………………………………..64
(a) Profitability Ratio ………………………………………………………..64 (b) Loan Deposits Ratio……………………………………………………...68 (c) Activity Ratio ……………………………………………………………69 (d) Market Ratio ……………………………………………………………..71 (e) Leverage Ratio …………………………………………………………..74 (f) Interest Coverage Ratio …………………………………………. ……...76
21. Horizontal Analysis of Five Year Balance Sheet…………………………...78 22. Horizontal Analysis of Five Year of Profit And Loss Account ……………..82 23. Vertical Analysis of Five Year Balance Sheet…………………………….....85 24. Vertical Analysis of Five Year Income Statement ………………………….88 25. Organizational Analysis……………………………………………………..92 26. Future Prospects of the Organization ………………………………………94 27. Short Falls/ Weakness ……………………………………………………...95 28. Conclusion…………………………………………………………………..96 29. References…………………………………………………………………..97 30. Annexure……………………………………………………………… …...98
5
OBJECTIVES OF STUDYING THE
ORGANIZATION
� Being a student of banking & Finance (MBA) need to know how a
bank works and how theoretical knowledge relates the practical in
the banking sector. As theoretical knowledge is not enough to run a
bank or business therefore practical has its important not for only
experience it also disclose the answers of the questions remain in the
theoretical study.
� Understanding of Financial Operation is another objective to study
the organization. How working take place in the bank to handle
financial matters. Without understanding the real picture of financial
matter could not find the solution of the problems related to finance.
� In order to understand the correct position of the bank financial
analysis is also my objective. Financial analysis can be done by
using various tools like Ratio analysis, Horizontal and vertical
analysis of the financial statements.
� There is importance of Finance Management in the banking sector
because bank is a financial Institution how to manage the finance to
know is my objective.
� What kinds of software are being used in the bank for accounting
and operational activities?
6
� How Information generated and recoded and its use for decision
making purpose. What kind of reports are producing in the bank for
various purposes.
� To understand the organizational structure in term of reporting line:
who is report to whom and know how develop what are
responsibilities & authorities of different designations.
� To identify how bank’s working divide in to various departments to
monitor all activities in the bank.
� What are products lines of the bank offers to the customers…….
7
OVERVIEW OF THE BANK
Askari Bank Limited Formerly known as Askari Commercial Bank
Limited. Askari Bank LTD was incorporated in Pakistan on October 9,
1999 as a Public Limited Company and listed on the Karachi, Lahore, and
Islamabad stocks exchanges. The registered office of the Bank is located at
AWT Plaza, The Mall Rawalpindi. The Bank has 200 branches (2007: 150
branches); 199 in Pakistan and Azad Jammu and Kashmir, including 18
Islamic Banking Branches, 11 sub-branches and a wholesale bank branch
in the Kingdom of Bahrain.
Banks, s principal activities are to provide lending, depository and
related financial services. Financial services include credit risk
management, foreign trade, treasury, corporate and merchant banking,
retail banking, electronic banking, credit cards, marketing and customer
services.
Bank is playing a leading role in the Banking sector with broad
product lines & customer need based services. Bank is operating with 200
branches in conventional banking as well as Islamic banking moods of
financing. Bank is leading the way to the most modern and dynamic
banking in the country.
8
The Vision
To be the bank of first choice in the region
The mission
To be the leading private sector Bank in Pakistan with an
international presence, delivering quality services through innovative
technology and effective human source management, in a modern and
progressive organizational culture of meritocracy, maintaining high
ethical and professional standards, while providing enhance value to all
our stakeholders and contributing to society.
9
BRIEF HISTORY OF THE BANK
Askari Bank incorporated in October 1991, Bank commenced its
operations in April 1992, and has since expanded into nation wide with
modern technology in the banking sector. Bank connected online customers
supported with network of ATMs. Over the years, Askari Bank has proven
its strength as leading banking sector entity with ever-increasing
commitments to its customers, through strategic investment in electronic
technology. Askari Bank achieved the following firsts in Pakistani
Banking.
� The first Pakistani Bank to offer online real-time banking on
country wide basis
� The first Pakistani bank with nation-wide network of ATMs
� The first bank in Pakistan, foreign or local, to introduce internet
banking in the country
� The first bank in Pakistan, together with ABN-Amro bank, to develop
inter-bank switch for the ATMs
Askari Bank is an important in Pakistan’s financial service
industries, Bank is now leading the way to the most modern and
dynamic banking in the Pakistan.
Bank is continues success in competition. Best Retail Bank in Pakistan
award is given by the Asian banker. Bank has also received the Corporate
Excellence Award for the financial sector from the Management
Association of Pakistan (MAP) for the years 2002 and 2003. Bank has been
given “The Best Bank in Pakistan” award by Global Finance Magazine
10
twice i.e. for the years 2001 and 2002. Best consumer Internet Bank
award by Global Finance Magazine for the 2002 and 2003.
Bank has A1+, the highest possible credit rating, for short-term
obligations, and log-term rating stand at AA+. Bank won the prestigious
“Best Presented Annual Accounts” awards from the Institute of Charter
Accountant in Pakistan (ICAP), and the institute of Cost and management
Account in Pakistan.
11
NATURE OF THE ORGNIZATION
Banks, s principal activities are to provide lending, depository and
related financial services. Financial services include credit risk
management, foreign trade, treasury, corporate and merchant banking,
retail banking, electronic banking, credit cards, marketing and customer
services. Askari bank offers the following retail products to serve the
needs of the consumer market.
� Askari Bank’s personal Finance-Loans schemes
� ASKAR –Auto loans
� Askari i-Net Banking- internet banking solutions
� Askari MasterCard-credit card facility
� Askari Bank’s value plus-rupee Deposit Accounts
� Askari Travelers Cheques-Rupees Travelers Cheques
� ASKCARD-Debt Card
� ASKPOWER-Prepaid Card
� Askari Bank’s Mortgage Finance-Home Loans
� Askari Bank’s Business Finance-Business Loans
� Smart Cash-Running Finance Facility for consumer
� Askari Kissan-Agri Finance Programme
Askari Bank Limited provides corporate, retail, and commercial
banking products and services primarily in Pakistan. The company’s
12
corporate financing solutions include corporate and investment banking
activities, such as services in the areas of mergers and acquisition,
underwriting, privatization, securitization, IPOs and related activities, and
secondary private placements. Its retail banking solutions include services
to small borrowers, including loans, deposits, and other transactions with
retail customers, as well as credit card business. The company’s
commercial banking activities comprise services related to project finance,
export finance, trade finance, leasing, lending, guarantees, bills of
exchange, and deposits from corporate customers. It also offers treasury
and money market services; payment and settlement services, such as
payments and collections, funds transfer, clearing, and settlement; and
locker service. The company also offers agricultural banking products and
services, including various finance products that comprise tractor finance,
live stock development finance, mechanization finance, and farm transport
finance; and a range of Islamic banking products and services. As of
December 31, 2008, it operated 200 branches, including 18 Islamic
Banking branches, 11 sub-branches, and 1 wholesale bank branch in the
Kingdom of Bahrain. The company was incorporated in 1991 and is
headquartered in Rawalpindi, Pakistan.
A shared network of 2,991 online ATMs covering all major cities in
Pakistan supports the delivery channels for customer service. As at
December 31, 2008, the Bank had equity of Rs. 12.97 billion and total
assets of Rs. 206.19 billion, with 816,629 banking customers, serviced by
our 6,496 employees. Askari Investment Management Limited and Askari
Securities Limited are subsidiaries of Askari Bank engaged in managing
Mutual funds and shares brokerage, respectively
13
BUSINESS VOLUME
Business volume in terms of revenue, deposits, advances, and
investments depict the Bank performance. Bank’s activities can be
evaluated with the help of business volume.
Introduction of Investment
Banks according to State Bank’s circulars (10, 20, and 14) can be
investing in various securities for profit motives. Askari Bank’s investment
securities classified as follow:
(a) Securities Held for Trading
(b) Securities Held for Maturities
(c) Securities Available for Sails.
Askari Bank Securities acquire to hold for trading with the intention
to trade by taking advantages of short-term market/interest rate
movements’ i.e. Securities Held for trading. Securities acquired and hold
up to maturities and third are present securities which don’t fall under
“Held for trading and held for maturities” falling in available for sail
categories.
In Billion Rs.
Business Volume 2004 2005 2006 2007 2008
Deposits 83.3 118.8 131.8 143 167.7
Advances 70 86 99.2 100.8 128.8
Investment 17.2 25.7 28.6 39.4 35.7
Revenues 4.7 5.5 6.6 7.1 6.4
14
Investments:
Investment from year 2004 to 2007 showing
increase trend and in 2008 investment decrease.
Because of 28 billions advances increases from
07 to 08. While growing trend from 04 to 07 is
healthy singe for organization.
Deposits:
Current, Savings and Other Deposits
Deposits increased by 17 percent to Rs. 167.68
billion as at December 31, 2008 as against Rs.
143.04 billion last year. Analysis of deposits
show a healthy growth of 52 percent in current
accounts over last Year and 32 percent in fixed
deposits, while saving deposits remained
almost unchanged. The aggregate number of
deposit accounts
Reached 611,323 at end 2008. By the end of
2008, deposits reached Rs. 167.68 billion from Rs. 143.04 billion at end
2007, an increase of 17 percent during the year. The increase in local
currency deposits was 15 percent to Rs. 141.89 billion as of December 31,
2008 from Rs. 123.51
billion as of December 31, 2007, while the foreign currency deposits
surged to Rs. 25.79 billion, increased by 32 percent over last year.
0
5
10
15
20
25
30
35
40
45
2004 2005 2006 2007 2008
0
20
40
60
80
100
120
140
160
180
2004 2005 2006 2007 2008
15
Advances:
Advances are also showing increasing
trend by 2004 to 2008 adding up 16 billions by
2005, 13 billions by 2006, 11.2 billions by 2007
and 24.7 billions by 2008. It is show the business
growth of the bank.
Revenues:
Mark up / Interest on advances and return
on investments are recognized on accrual basis the
pattern of growth revenues from year 2004 to 2007
is showing good pictures. While in year 2008
revenue decrease as compared to last four year
having reason of banking sector turmoil and fee
commission & earning from in dealing foreign
currencies decreases. Mark-up income on
investments, however, recorded an increase of 25 percent over last year -
the aggregate increase of 21 percent in total mark up income reduced
marginally to 20 percent in terms of net interest income, as the aggregate
increases in mark-up income and cost of deposits and borrowings were
almost in reciprocity.
0
1
2
3
4
5
6
7
8
2004 2005 2006 2007 2008
0
20
40
60
80
100
120
140
2004 2005 2006 2007 2008
16
ORGANIZATIONAL STRUCTURE
17
NUMBER OF EMPLOYEES
Staff strength 2005 2006 2007 2008 2009
Permanent _____ 2754 3241 3,834 4,252
Temporary /on contractual basis ____ 519 687 1,273 1,703
Daily wagers ____ _____ _____ ____ ____
Commission base ____ 679 657 789 541
Bank’s own staff strength at the en1950d of
year
____ 3952 4585 5,896 6,496
Out sourced ____ 581 641 1,064 912
Total staff strength at end of year 2118 4533 5226 7,560 6,808
Sr.No Designation Numbers
1 Area Manager 10
2 Branch Manager 200
3 Operational Manager 200
4 Operational In charge 200
5 CD In charge 200
6 Account In charge 200
7 It In charge 200
8 Credit In charge 250
9 BDO 200
10 Accounts Opening officers 1950
11 Cashier & remittances officers 2800
12 Supporting staff 398
18
PRODUCT AND SERVICES
CORPORATE AND INVESTMENT BANKING
Corporate and investment banking comprises of two divisions as
follows:
• Corporate Banking Division
• Investment Banking Division
Askari Bank offers Corporate and investment banking to full fill
business requirements through one window problems solution. Continuous
business need analysis for new products augmentation is taking place under
corporate and investment banking. Mr. Tahir Aziz, Group Head, Corporate
and investment banking. Corporate and investment banking products are as
follows:
Corporate Banking Division
CBD is long-term business partner that is geared to help in meeting
business growth objectives. The business is managed by a team of
professional who understand requirements and can firmly stand by side.
Dedicated relationship managers for each of corporate clients ensure
satisfaction, which is our top priority. Relationship oriented outlook
focuses upon providing a complete array of tailored financing solutions,
that are practical and cost effective, some of which include:
• Working Capital Facilities
• Term Loans
• Structured Trade Finance Facilities
19
• Letters of Guarantee
• Letters of Credit
• Fund Transfers / Remittances
• Bill Discounting
• Export Financing
• Receivable Discounting
Investment Banking Division
IBD provides value-added, specialist services and products through a
dedicated team of professionals, with world-class skills, to provide
customized solutions to help clients meet their strategic objectives. IBD is
responsible for seamlessly originating, executing and distributing all forms
of investment banking transactions ranging from syndicated loans to
complex structured and project financing transactions. Some examples of
products offered by IBD include:
• Strategic Advisory
• Privatization Advisory
• M & A Advisory
• Balance Sheet Restructuring
• Syndications
• Project Finance
• Structured Finance
• Islamic Finance
• Private Placements of Debt and Equity
• Issuance and distribution of Term Finance Certificates, Sukuk
Bonds, and Commercial Paper
• Underwritings
• Capital Market Hybrid Products
20
Agriculture Finance Solutions
The role of agriculture in Pakistan economy is of pivotal nature. Due to
diverse geographical and climatic conditions the country has tremendous
potential for growth and development in agriculture. However, adequate
and timely financial assistance to the farmers will improve production
potential of agriculture sector in the country. The modern concept of
agricultural credit envisages establishment of an efficient institutional
credit system to serve as a package of credit, supplies and knowledge for
the overall strength of the farmers who at present suffer from low
productivity and financial insecurity. A successful credit evaluation system,
therefore, should have the basic ingredients to provide adequate amount at
the right time and in the right form to help farmers in making a productive
use of loan funds
• Kissan Ever Green Finance
• Kissan Tractor Finance
• Kissan Abpashi Finance
• Kissan Livestock Development Finance
• Kissan Farm Mechanization Finance
• Kissan Farm Transport Finance
• Agriculture Banking network
21
SERVICES
Bank provides services as follows:
A) Consumer Banking Services
B) Islamic Banking services
Consumer Banking Services: Under consumer banking services
following are products.
• Askari Finance
• Smart Cash
• Personal Finance
• Mortgage Finance
• Business Finance
• Travelers Cheques
• Askari Card
• Value plus Deposit
Islamic Banking services
Islamic Banking was launched under the brand 'Askari Islamic
Banking', by opening 6 dedicated Islamic Banking branches in major cities
of the country. Further expansion is planned with improved capabilities for
offering products conforming to the Shariah principles.
Askari Islamic Banking opens the doors for Halal banking solutions.
Objective is to put in place an efficient banking system supportive to
economic justice and welfare of society in line with Shariah standards.
22
A comprehensive range of Islamic Banking products and services is
being offered, in order to meet customer's demand of Shariah Compliant
Banking, in the following areas:
• Islamic corporate Banking
• Islamic Investment Banking
• Islamic Trade Finance
• Islamic General Banking
• Islamic Consumer Banking
Investment Products
• Roshan Mustaqbil Deposit
• Deposit Multiplier Account
• Value Plus Deposits
• Rupee Traveler Cheques
• ASKCARD (Askari Debit Card)
• Internet Banking Service
• Electronic Bill Payment Services
• Cash Management Services
• Investment Certificates
23
STRUCTURE OF THE ORGANIZATION
IN TERM OF
REPORTING LINE
In a Bank management play a vital role to achieve the predefine
goals in a systematic manner. Reporting can be horizontal or vertical in
organization depend on culture or nature of organization. In Askari Bank
Board of Director comprises Chairman and directors which lead the
Executive Committees and presidential authorities. Secretary assists the
Board of Director
BORD
Board of director comprises of chairman and board members as follows:
� Executive Committee
� Audit Committee
� President and Chief executive
AUDIT COMMITTEE
Audit Committee is responsible for internal control, produce annual
reports and report to the Executive committee. During audit finding of
any concern Committee will put reference to board and suggest compliance
rules & regulations.
24
Country Head & Inspection Division
Country Head & Inspection division responsible for internal control
from inspection division internal auditor visit branch and make sure that
rules & regulations follow.
eg. For account opening what documents are essential if any document
miss then directed to the concern person. In similar fashion other
departments can be check.
Country head and inspection division report to audit committee which
report to executive committee and finally report to board of director.
RISK MANAGEMENT
Risk management comprise of Chief Risk officer which monitor all
activities of three departments as follows:
• Risk Management Division
• Credit Administration division
• Information Security Division
Risk Management Division is leading by Country Head and he
responsible for risk management before loan approve risk measure and
bestow to the chief Risk officer.
25
Compliance & Data Division
Country Head of this Department is responsible to lead and Report to
the President and Chief Executive
Consumer Banking Services
Country Head of Consumer Banking Services is responsible to
monitor and mentoring to the consumer Services department and report to
the President and Chief Executive regarding the performance of the
department.
Corporate & Investment Banking
Corporate & Investment Banking is divided in to two divisions as
follows:
• Corporate Banking Division
• Investment Banking Division
Country Heads of both division are responsible their respective
division and report to the Group Head of Corporate & Investment Banking
which report to the President and Chief executive.
26
BRANCH STRUCTURE IN TERM OF
REPORTING LINE
The Branch commence on 2008 is situated at:
Qurtaba chowk Lahore (Askari Commercial Bank) Branch having staffed
as follows:
• Branch Manager (Mr. Shahid Mehmood Alvi)
• Operational Manager (Rizwan Jameel )
Operation Department
• Incharge (Furrkh Hussain Bajwa)
• CD inchareg (Rizwan Khan)
• Account opening (Saima Aslam)
• Clearing officer (Kh.Qaiser Usman)
Credit Department
• O.G.I (Taufique Ahmad )
Foreign Trade Department
• AMG (Faiza Qamar)
Cash Department
• C.S.G.III. (Aslam)
• C.S.G.III. ( Sulman Shazad)
Account Department
• O.G.II. (Asjad Humayun Butt)
27
Computer Department
• O.G.I. (Mr. Shamsi)
Marketing Department
• B.D.O. (Muhammad Waqar)
General
• Secretary (Muhammad Riaz)
Operation In charge
Operation in charge responsible for general banking which includes
Remittance, Clearing, Cash, Account opening, and general information.
Supervision
Operation in charge supervise a certain limit (25 thousand) all kind of
Chaques. Cash in hand and in accounts various currency i.e. US $, Euro,
Yen PKR etc maintenance daily record. Operation in charge is also
responsible for all kind of matter concerning to the general Banking.
28
REVIEW OF THE VARIOUS DEPARTMENTS
Working of the Bank divided between various departments. Different
departments do their jobs in occurrence with the bank policies. In AKBL
each branch is divided into various departments. Head of department
manages each department & officials of the branch follow procedures.
The working of the Department within branch is as:
GENERAL BANKING DEPARTMENT
� Account opening department
� Remittances department
� Cash department
� Clearing department
PRIVILEGE BANKING DEPARTMENT
� Online banking
� Lockers
CREDIT DEPARTMENT
FOREIGN TRADE DEPARTMENT
� Import department
� Export department
� Foreign currency department
ACCOUNTS DEPARTMENT
IT- DEPARTMENT
29
ACCOUNT OPENING DEPARTMENT
Functions of Account Opening Department
• Providing account opening form according to the customer's
requirements,
• Guide the customer about the requirements of the account opening
and form filling,
• Check the forms whether they are correctly completed or not,
• Preparing checklist,
• Stamping on the form,
• Maintaining account opening register,
• Pasting of forms in register after release from general banking in
charge,
• Issuance of cheque books,
• Issuance of accounts maintenance certificate,
• Closure of account
• Verification of signature in case of cheque presented before releasing
of account opening from SS card is not yet scanned
30
IMPORTANCE OF INTRODUCTION
FOR A\C OPENING
Introductory references As soon as a person opens an account with the
bank, the banker customer relationship is established. In such situation this
is advisable the banker should not open new accounts of unknown persons
unless references regarding the integrity and responsibility of the purposed
persons are obtained from respectable parties.
Failure to exercise this care may result in serious consequences not only for
the banker concerned but also for the other bankers and general public. It is
not sufficient to obtain the reference but its genuineness must also be
verified. Omission of this may have serious consequences.
In practice we see that there is tough competition among bankers for
procurement of deposits, so to press a prospective new customer to find the
desired reference may offend him, yet he is to be welcomed by the banker
as a source of fresh deposits. But these practical difficulties have to be
handled tactfully because the risk involved carrying out this requirement
partially or wholly may lead to undesirable results.
INQURIES ABOUT CUSTOMERS
Have all necessary information with him regarding his generally a banker is
asked by another banker to give his opinion about his customer’s financial
position. Therefore, it is beneficial for the both that the banker should
customers. Now a practice that Bank officer visit to customer and inquire
about his business nature then writes a report.
31
ACCOUNT OPENING PROCEDURE &PRECAUTIONS:-
KNOW YOUR CUSTOMERS (KYC Form I & II)
The objective of knowing a customer is to have a fair idea about the
identity, financial resources, and general information about the customer at
the time when the relationship is established. A banker must have following
information about the customer:
� Customer name:
Enter complete name as mentioned in original ID card /other
business documents.
Nature of business /profession: if customer is of salaried class enter his
employer name. If the customer is a businessman, traders, sole proprietor,
enter the business name, for example “Zahid autos Traders” etc.also enters
the customer’s title/position and address of the business/employer. “Private
Service”, “business” are not acceptable, rather specify what type of
company/business the customer is associated with for example Manager
Philips Electrical Company.
� Address:
Enter the complete business/residential address. With in the brackets you
may also provide prominent address identification marks for ease of
physically locating the address.
� Contact Numbers:
Enter home, official, mobile, fax number and e-mail address (if available).
Banker can verify the number by giving the customer a courtesy call or by
sending him an e-mail.
� Change Contact Numbers
32
After Opening A/C contact can be change by receiving an application from
customer with specify new contact.
� Other/ secondary/ mailing address:
Some customer may volunteer their parents or siblings’ addressor second
home address or a mailing address other than a permanent address.
� Special instructions:
Clear-cut special instructions must be obtained from customers. If the
customer has not given any special instruction specified column must be
cancelled by drawing a line, as this column must not be left blank in any
circumstance.
33
TYPES OF ACCOUNTS
1) ACCOUNTS OF GENERAL CUSTOMERS
• Minor account
• Illiterate person account/Photo Account
• Joint account
• ASK Mahana Bchat Account
• Value Plus Saving Accounts
• Current accounts
• PLS Income Accounts
• ASDA Accounts
• Value Plus Current Accounts
• Dollar Accounts
• Euro Accounts
• Sterling Pond Accounts
2) ACCOUNT OF SPECIAL PERSONS
• Proprietorship account
• Partnership account
• Limited company’s account
• Accounts of club societies and associations
• Agent’s accounts
• Trust account/NGO
• Liquidator’s account executer’s and administrator’s account
34
REMITTANCE DEPARTMENT
Functions of remittances department
The functions of remittance departments are to handle with the following
instruments:
• Pay Order
• Demand Draft
• Foreign Demand Draft
• Pay slip
• Telegraphic Transfer
• Foreign Telegraphic Transfer
• Payment of Remittances
• Cancellation of pay order & demand draft
The remittance department deals with the transfer of money from one place
to another.
Remittance can be made through:
• Instrument transfer
• Electronic transfer
• Mail transfer
Instruments of the Remittances Departments
35
PAY ORDER
Pay order issued from one branch only be payable from the same branch. It
is normally issued for payment in the same city. It is normally referred as
banker's cheque
� Get the application form.
� Issue pay order after recovering Chaques/ Cash
� Do necessary vouchering.
� Make entry in PO issue register.
� All pay order shall be crossed" payees account only".
Duplicate Pay Order:
� Check the record to insure that payment has not been effected.
� Get application for issuing of duplicate PO.
� Recover charges.
� Issue duplicate pay order.
DEMAND DRAFT
It is an instrument on demand for which value has been received,
issued by the branch of the bank drawn i.e. payable at some other
place (branch) of the same bank. Demand draft can also be issued by
one branch of the bank payable to other branch of the other bank e.g.
DD issued by AKBL payable by MCB.
36
TELEGRAPHIC TRANSFER OR TELEX TRANSFER
Telegraphic Transfer OR Telex Transfer is swift way for remittances
from place or to place. Simply a request received from a customer to make
TT either account debit or Cash received. TT sends to the beneficiary Bank.
Incase of branch is not present then other Bank or financial institution make
payment to the beneficiary.
F.D.D AND F.T.T (Online Transfer)
DD and TT exercise within country incase of overseas remittances FDD
and FTT use (Foreign Demand Draft & Foreign Telegraphic Transfer).The
foreign remittances department at Askari Bank is fully equipped to meet
the growing needs of the customers for a safe and fast funds transfer
system. Bank offer the customers several ways to conduct foreign
remittances through a network of thousands of correspondent banks around
the world.
CASH DEPARTMENT
All physical movement of cash in the bank is made through the cash
department. Normally cash department performs following functions
� Receipt
� Payments
� Act according to any standing instructions
� Transfer of funds from one account to another
� Handling of ATM
37
� Verification of signatures
� Posting
� Handling of prize bond
38
Cash receipt section
In this section the cashier in following manner receives cash:
Process of deposits
Fill- up deposit slips Deposited on Receipt Customer
Handover the deposit slip to Cashier counts the amounts the customer with receiving and fulfills other requirement Stamp
39
Cash payment section
In this section honoring the cheque through following process makes
payment.
Process of Payment
Chaque is presented at two signatures on the back
Token counter of Chaque get from customer
Cashier count the amount Chaque is recorded &
& payment is made token is allowed
Posting is made competent officer cancel
the Chaque after Supervision
40
CLEARING DEPARTMENT
MEANING OF CLEARING
The word clearing has been derived from the word “Clear” and is defined
as “ a system by which banks exchange cheques and other negotiable
instruments drawn on each other within a specific area and thereby secure
payment for their clients through the Clearing At specified time” in an
efficient way”.
1. Since clearing does not involve any cash etc. and the entire
transaction take place through book entries, the number of
transaction can be unlimited.
2. No cash is needed as such the risk of robbery, embezzlements and
pilferages are totally eliminated.
3. As major payments are made through clearing, the banks came
manage cash payments at the counters with a minimum amount of
cash in vaults.
4. A lot of time, cost and labor are saved.
5. Since it provides an extra service to the customer of banks without
any service charges or costs, more and more people are inclined and
attracted towards banking.
Through NIFT clearing is made either Intercity or within city clearing lets
understand what NIFT is and how it is working:
41
NIFT - National Institutional Facilitation Technologies
NIFT - National Institutional Facilitation Technologies (Pvt.). Ltd. was
incorporated in September 1995 as joint venture between a consortium of
six banks and entrepreneurs from the private sector. All commercial banks
and all of their branches in major cities avail NIFT’s services. As of May
2009, 40 commercial banks and their 5571 branches in 185 major cities,
20 data centers utilize NIFT’s services.
NIFT has setup elaborate data centers geared to provide automated services
for document processing particularly in the payment arena. Modern image
based facilities have been established at Karachi, Lahore, Islamabad,
Peshawar, Rawalpindi, Hyderabad, Multan, Faisalabad, Quetta,
D.I.Khan, Sialkot, Gujranwala, Sukkur, Bahawalpur, Muzaffarabad,
Jhelum, Abottabad, Mirpur, Sahiwal and Sargodha. The services
include cheques clearing, reconciliation, ‘return’ (unpaid) cheques
processing, same day clearing (express – 2 hrs. clearing service), intercity
clearing and inter branch & inter bank settlement. Services are provided at
individual branch level to over 5571 branches in 184 major cities and
smaller cities.
NIFT Rider
NIFT riders come in a bank (Branch) twice in a day for inward and out
ward clearing Chaques & instruments for collection and delivery at
specified time.
42
OUTWARD CLEARING AT THE BRANCH:
The following points are to be taken into consideration while an instrument
is accepted at the counter to be presented in outward clearing:
� The name of the branch appears on its face where it is drawn.
� It should be stale or post dated or without date.
� Amount in words and figures does not differ.
� Signature of the drawer appears on the face of the instrument.
� Instrument is not mutilated.
� There should be no material alteration, if so, it should be properly
authenticated.
� If order instrument suitably indorsed and the last endorsee’s
account being credited.
� Endorsement is in accordance with the crossing if any.
� The amount of the instrument is same as mentioned on the
paying-in-slip and counterfoil.
� The title of the account on the paying-in-slip is that of payee or
endorsee (with the exception of bearer cheque).
If an instrument is in order than our bank special crossing stamp is affixed
across the face of the instrument. Clearing stamp is affixed on the face of
the instruments, paying-in-slip and counterfoil (The stamp is affixed in
such a manner that half appears on counterfoil and paying-in-slip). The
instrument is suitably discharged, where a bearer cheque does not require
any discharge and also an instrument in favor a bank not need be
discharged.
The instrument along with pay-in-slip is retained while the counterfoil is
given to the customer duly signed. Then the following steps are to be taken:
43
1. The particulars of the instrument and the pay-in-slip entered in the
outward clearing register.
2. Serial no. Is given to each instrument.
3. The register is balanced; a regular report is generated after entering
clearing instruments in the software (Inward outward clearing
system. Balance of report compare with manual register balance to
avoid omission.
4. Then a particular voucher is filled with total amount of Clearing.
5. All instruments with grand sum voucher put into a bag.
6. NIFT rider come and takes bag for out ward clearing.
7. For inward clearing bag reached at morning in the branch.
However the amount is kept in float till final status of various instruments
is known from respective paying banks in second dealing.
The entry of the instrument returned unpaid is made in Cheques returned
Register. If the instrument is not to be presented again in clearing then a
covering memo is prepared. The covering memo along with returned
instrument and objection memo is sent to the customer who sent the same
to his account.
INWARD CLEARING OF THE BRANCH:
1. The particulars of the instruments are compared with the list.
2. The instruments are detached and check the corresponding account if
balance is available then Debit the account.
3. Floating status is now realized at corresponding branch which send
instrument for clearing.
44
INWARD CHEQUES RETURNED UNPAID:
These are the cheque returned unpaid by us in inward clearing due to some
objections.
OUT WARD CHEQUES RETAINED UNPAID:
These are the cheques retained unpaid to us which were lodged by other
Bank because of some objection eg. Insufficient balance.
ONLINE BANKING
Online banking means that the customer of AKBL can deposit / withdraw
funds in / from other branches of AKBL. Askari bank provides online
facility to all its branches.
Just fill the online slip and submit at counter along with Check or Cash for
online transfer. AKBL provide the facility to customer to transfer funds to
any account through ATM.
45
ACCOUNT DEPARTMENT
Account department is known as backbone of an organization all
financial matters deals and monitors in the account department. I worked
three days in accounts department but as it has confidential information so
they did not give me enough information regarding their working. First day
I sorted out the cheques of AKBL with the help of the serial number and
the nature of the account and arrange them in sequence. After that i
checked the activity which contains the title of the cheque, amount, date
etc. Accounts department maintains the record of expenses of all the
departments, it also maintain the record of all the employees regarding their
basic salary, increment, benefits etc. It is the backbone of AKBL
CREDIT DEPARTMENT
Credit department provides credit to the customer according to theirs needs
therefore credit divided into various categories majors are given as follows
� SME Credit
� Corporate Credit
� Commercial Credit
� Consumer Credit
46
ADVANCES & LOANS
Credit can be divided into two main categories advances and loans which
further categories as follows:
FUNDED
Credits in which funds provides called as funded credit.
NON FUNDED
Credits in which funds are not providing to the customer called non funded
credits e.g. LC (Letter of Credits) LG (Letter of Guarantee) etc.
47
HOW INFORMATION
GENERATED RECORED
AND USED
For every transaction information is generated in the form of Voucher and
then in the computer systems.
PRACTICAL ILLUSTRATION
A customer presented a Chaque for cash after all process completion
(Verification & cancellation) Chaque became a Debit Voucher and then in
charge officer make customer account Debit ( The same amount on chaque
) in the computer system. Automatically a report will be generated at the
day end which use as recoded and for any inquiry.
In a similarly fashion a customer deposited Cash with deposit receipt
officer in charge make credit entry in the customer account and deposit
receipt became a credit voucher.
Information of various departments are recorded in the main server (IT
Department) then recoded on the Tap and also preserve at head office on
daily basis.
48
Main Server
Remittanc
es
Account
Opening
Accounts
Credit
Head office server
ATM
49
THE ROLE OF MANAGER
The Branch Manager is responsible for the administration and
efficient daily operation of a full service branch office, including
operations, lending, product sales, customer service, and security and safety
in accordance with the Bank's objectives. Develops new deposit and loan
business; provides a superior level of customer relations and promotes the
sales and service culture through coaching, guidance and staff motivation;
achieves individual and branch sales goals through new business sales,
referrals and retention of account relationships.
Provides leadership, training and supervision; delegates day to day
operations to the Operations Officer or other branch personnel.
Responsible for attaining established Bank and branch goals through active
participation in sales management and officer call programs. Participates
in community affairs to increase the Bank's visibility and to enhance new
and existing business opportunities.
RESPONSIBLITIES
Branch Manager having following responsibilities:
� To ensure the punctuality and regular attendance of the staff.
� To appraise the performance of the Branch staff in a timely and fair
manner and ensure safekeeping of the filled Appraisal forms
� To ensure that the branch assets are in a proper condition including
vehicles ensuring control over movement of same through log books
and it being used for official purposes only.
50
� To correspond with the Head Office, Government and other
networking agencies, as per the guidance of the SBP.
� To ensure that the Branch programmes are planned as per the Bank’s
Strategic Plan.
� To ensure that the Accounts Officer is maintaining proper books of
accounts including basic accounting controls like daily verification
of cash in hand, daily entry of cash & bank vouchers, Bank
Reconciliation statements, accounting of Receipts / Payments
correctly.
51
SOFTWARE USED BY THE BANK
Bank used different types of software for various purposes some of which
are given bellow:
� UNI-Bank
� I Fax
� MS Word, Excel
� MS Window
CORE BANKING
For core banking UNI-bank software is being used for operational activities
in general banking. This software having all features which are mostly used
in the bank. UNI-Bank having various applications for each department
having various modules.
52
DIFFERENT TYPES OF REPORTS BEING
PRODUCED
Various reports are being produced at the day end automatically some of
which are given bellow:
� Daily Non Financial Transcation Reports
� General Ladger Reports
� Subsidary Ladger Reports
� Statement of Secured Over Drafts Allowed Reports
� Reports of Pricing Calculation
� Daily Securety Transction Reports
� Transfer Register Reports
� Statement of Condition
Above mention reports having different information for management use
some of which are mention as follows:
STATEMENT OF CONDITION REPORT
This report having information of liabilities & Assets along with G/L Head
and update. e.g.
Liabilities items:
� Current deposits
� Unique Deposits
� Value Plus Current Deposit
� Call Deposits
� PLS Term Deposit
� Value Plus Saving Deposit etc
53
At the end total of liabilities figures…. Assets items:
� Foreign Currency on Hand
� Cash on Hand (PKR)
� Cash In ATM
� MO Account Head Office
� Expenditure Account
� PLS Profit Paid Account
This report is important for management in the decision making which
dipict the actual picture of the branch. Deposits are important to increase
the branch profit.
DAILY NON FINANCIAL TRANSCTION REPORT
Both financial & non financial transctions are important therefor reports
are being produced. In the non financial report following information are
recoreded.
� Account Open / Name & Open date
� Adress
� Fixed Date
� Interst information
� Loan Interst information
� Loan disbursmnet / Repayment Cash
� Account Status
� Chaque Book issue
� Cancel Chaque
� Stop Chaque
54
� Block Amount
� Release Amount
� Claim Limit etc
Such inforation included in the non financial reports which are important
for the recored and customer inquary . Every report has its important for
management.
55
GENERATION AND SOURCES OF FUND
Funds are important for a bank survival more funds more
business the rule is apply. Askari Bank having follwing kind
of sources of funds.
A) . Owner Equity
B) . Deposits
C) . Bowrrowing
Owner Equity
Owner Equity is the main source of fund for a bank without personal
investment a bank can not establish. SBP has set the rules regarding owner
equity.
56
Deposits
Key source of funds for a Bank are deposits Askari Bank having different
types of deposits.
� Current Deposits
� Unique Deposits
� Value Plus Currents Deposits
� Call Deposits
� CD New Scheme Foreign Currency Deposits
� PLS Term Deposits
� ASK Mahan Bachat Deposits
� Value plus Saving Deposits etc.
2005 2006 2007 2008 2009
83,318,795
118,794,690 131,839,283 143,036,707 167,676,572
2005 2006 2007 2008 2009
Graph of Deposit
57
Comments:
Deposits increases from 2004 to 2008 which show the growth of
bank in term of network and customer increase. Currents saving and other
deposits is the major portion of the deposits. Rs.167.68 billions at
December 31, 2008 as against Rs. 143.04billion last year. Analysis of
deposits show a healthy growth of 52 percent in current accounts over last
year and 32 percent in fixed deposits, while saving deposits remained
almost unchanged. The aggregate number of deposits accounts reached
611,323 at the end 2008.
Borrowing
Borrowing is an other source of fund when bank need funds borrowing are
quick option to generate funds. Last five years borrowing figures are given
as follows:
(Rupees in 000)
2005 2006 2007 2008 2009
Graph of Borrowing
2005 2006 2007 2008 2009
13,781,555 10,562,338 14,964,087 17,553,525 15,190,148
58
Comments:
Analysis show that borrowing decrease in 2005 as contrast to 2004 , while
in 2007 borrowing 17.55 billion against 15.19 billions in 2008. Borrowing
rate increase is the reason for borrowing fluctuation.
59
ALLOCATION OF FUNDS
Bank allocates funds in to different sector which are given as follow:
� Corporate Sector
� SMEs Sector
� Consumer sector
� Agriculture Sector
� Commodity Finance
� Staff loans
Funds are allocated in Corporate Sector 67%, SMEs 11.15%, Consumer
10.2%, agriculture 4.4%, and Commodity Finance 4.4%, and Staff loans
2.3%. Major portion of funds distributed in the corporate sector and
agriculture, commodity finance have same portion that is 4.4%.
60
FIVE LAST YEAR BALANCE SHEET
Assets 2009 2008 2007 2006 2005
Cash and balances with treasury banks 16029635 13,356,055 14879230 11766925 8762866
Balances with other banks 3954814 3,497,054 7333002 5550148 4847899
Lendings to financial institutions 4,479,754 14,444,143 8392950 10172242 2324839
Investments 35677755 39,431,005 28625915 25708194 17239156
Advances 128818242 100780162 99179372 85976895 69838392
Operating fixed assets 8,266,458 5,128,428 3810331 3192862 2,595,023
Deferred tax assets - - - - -
Other assets 8964480 5,535,038 3812788 2732641 1,559,365
206191138 182171885 166033588 145099905 107167540
Liabilities
Bills payable 2584828 2,627,051 1839077 1315580 1,227,093
Borrowings 15,190,148 17,553,525 14964087 10562338 13,781,555
Deposits and other accounts 167676572 143036707 131839283 118794690 83,318,795
Sub-ordinated loans 2,996,100 2,997,300 2998500 2999700 1,000,000
Liabilities against assets subject to finance lease - - - - 14,159
Deferred tax liabilities 12,987 471,519 736298 1459 526,866
Other liabilities 4,759,140 3,219,796 2603113 567217 1,282,980
193219775 169905898 154980358 2045340 101,151,448
Net assets 12,971,363 12,265,987 11053230 8813483 6,016,092
Presented By
Share Capital 4058774 3,006,499 2004333 1,507,018 1,255,848
Reserve 7,667,141 6,948,336 5,814,754 4,470,530 4,317,301
Unappropriated Profit 308,980 2,144,810 1,799,979 1,617,597
12,034,895 12,099,645 9,619,066 7,595,145 5,573,149
Surplus on revaluation of assets -net of tax 936,468 166,342 1,434,164 1,218,338 442,943
12,971,363 12,265,987 11,053,230 8,813,483 6,016,092
Data Collected from Annual Report
61
FIVE LAST YEARS INCOME STATEMENT
Data Collected from Annual Report
2009 2008 2007 2006 2005
Mark-up / return / interest earned 18393313 15143241 12596921 8780698 4,487,206
Mark-up / return / interest expensed 10650719 8,685,624 6977313 4278374 1,117,206
Net mark-up / interest income 7,742,594 6,457,617 5619608 4502324 3,370,000
Provision against non-performing loans and advances 3,824,778 3,920,240 1128137 638547 277,398
Provision for impairment in the value of investments 508 1,501 376 36555 38,066
Bad debts written off directly 247,311 - 7
4,072,597 3,921,741 1128531 601992 315,471
Net mark-up / interest income after provisions 3,669,997 2,535,876 4491095 3900332 3,054,529
Non mark-up / interest income
Fee, commission and brokerage income 1,257,584 1,072,868 1013660 838561 708,377
Dividend income 173,621 137,079 109326 51143 26,318
Income from dealing in foreign currencies 873,512 655,761 584344 356218 180,992
Gain on sale of securities - net 36,743 2,361,251 112474 100407 540,193
Unrealised gain on revaluation of investments
classified as held for trading - net 22,384 1,728 2308 582
Other income 343,156 336,809 321758 206819 177,648
Total non-markup / interest income 2,707,000 4,565,496 2139254 1552566 1,633,528
6,376,997 7,101,372 6630349 5452898 4,688,057
Non mark-up / interest expenses
Administrative expenses 5,904,169 4,789,536 3277353 2591985 1,845,179
Other provisions / write-offs 459 -
Other charges 10,987 12,051 6141 1832 138
Total non-markup / interest expenses 5,915,615 4,801,587 3283494 2593817 1,845,317
461,382 2,299,785 3346855 2859081 2,842,740
Extra ordinary / unusual items -
Profit before taxation 461,382 2,299,785 3346855 2859081 2,842,740
Taxation – current year 17,363 98,535 983875 828774 876,089
prior years’ 50,000 233950 188247
– deferred 107,794 245,812 113006 196558 43,611
75,157 381,227 1096881 837085 919,700
Profit after taxation 386,225 2,681,012 2249974 2021996 1,923,040
Unappropriated profit brought forward 2,144,810 1,799,979 1617597 1538432
Profit available for appropriation 2,531,035 4,480,991 3867571 3560428 1,923,040
Basic / diluted earnings per share - Rupees 0.95 7 11.23 10.09 12.76
62
RATIO ANALYSIS
Why we need ratio analysis ansewer of this quastion is simple as
doctor check the patient to know correct condition of the patient in simillar
fassion a financial analysit need ration anlaysis to know the correct
financial condition of an organization. Ratio can be obtaine by dividing one
data by othre.
Profitability Ratio
Net Profit After Tax Ratio = Earning after tax /Interest earned
Formula 2005 2006 2007 2008 2009
EAT/IE 2842740 2859081 3346855 2299785 461382
1,923,040 2021996 2249974 2,681,012 386,225
% 147.82 141.39 148.7 85.78 119.4
0
20
40
60
80
100
120
140
160
2005 2006 2007 2008 2009
Net Profit After Tax Ratio Graph
63
Interpretation :
These ratios use margin analysis and show the return on sales and capital
employed.
Net profit after tax measure profit remaining after deducting all expenses
including tax. When we compare ratio of 2005 and 2004 it vary because
Interest earn increase by 5.14 % as a result ratio decrease in 2005. Earning
after tax by 31 % decrease in 2007 which result net profit after tax
decrease.
Gross Spread Ratio = Net Mark-up Income / Gross Mark-up Income
Formula 2005 2006 2007 2008 2009
NMI/GMI 3,370,000 4502324 5619608 6,457,617 7,742,594
4,487,206 8780698 12596921 15143241 18393313
% 75.1 51.27 44.61 42.64 42.09
0
10
20
30
40
50
60
70
80
2005 2006 2007 2008 2009
GS. Ratio Graph
64
Interpretation :
Gross Spread ratio measure profit after deducting cost of goods sold. We
analyzed the data of 2004 and 2005 come to know that net mark-up income
33 % increase in 2005 but more than 80 % increase of gross mark-up
income in 2005 which decreases the gross spread ratio in 2005 so we can
say that profit after deduction cost of goods sold decrease in 2005. Gross
mark-up income increase by 43% in 2005 result is gross spread ratio
decrease in 2005 while remaining two years having same trend.
Return on Equity Ratio (ROE) =Earning After Tax /Total Share Holder Equity
Formula 2005 2006 2007 2008 2009
EAT/TSE 1923040 2021996 2249974 2681012 386225
5573149 7595145 9619066 12099645 12034895
% 34.5 26.62 23.39 22.15 3.2
0
5
10
15
20
25
30
35
2005 2006 2007 2008 2009
Graph of ROE
65
Interpretation:
ROE measure the return on owner’s total investment into the
business. Data showed ROE decrease in 2005 contrast to 2004 due to
increase in Total Share holder equity. In 2008 showed out standing
decrease of ROE because of negative growth in earning after tax.
Return on Assets Ratio (ROA) = Earning After Tax / Total Assets
Interpretation:
ROA measure the return of total investment of business. It should be
maximum as owners have wish. Growth trend present in EAT by 2004 to
2008. But Total assets also increases which became the factor to decrease
ROA value of total assets increase 35 % in 2005 contrast to 2004 while
next two years don’t have great variation in 2008 ROA ratio decrease
because of 13 % increase of Total assets as compare to 2007.
Formula 2005 2006 2007 2008 2009
EAT/TA 1923040 2021996 2249974 2681012 386225
107167540 145099905 166033588 182,171,885 206,191,138
% 1.79 1.39 1.35 1.47 0.187
66
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2005 2006 2007 2008 2009
Graph of ROA
Loan Deposit Ratio:
Formula 2005 2006 2007 2008 2009
Loans/Deposits 69838392 85976895 99179372 100780162 128818242
83,318,795 118794690 131839283 143036707 167676572
% 83.82 72.37 75.22 70.45 76.82
Interpretation: The amount of a bank’s loans divided by the amount of its deposits at any
given time. The higher the ratio the more the bank is relying on borrowed
finds which are generally more costly than types of deposits. Increase of 42
% deposits in 2005 contrast to 2004 is the factor to decline loan deposit
ratio of 2005. Loans increase in 2008 as compare to 2007 which result the
loan deposit ratio increases as compare to previous year.
67
60
65
70
75
80
85
2005 2006 2007 2008 2009
Loan Deposit Ratio Graph
68
Activity Ratio
Total Assets Turn over = Net Sale / Total Assets
Formula 2005 2006 2007 2008 2009
N.S/T.A 4,487,206 8780698 12596921 15143241 18393313
107167540 145099905 166033588 182171885 206191138
% 4.18 6.05 7.58 8.31 8.92
Interpretation:
These ratios (Activity ratio) also known as efficiency or turnover
ratios, measure how effectively the organization is using its assets. Total
asset turnover shows that by investment of Rupee One in average total
assets, of the entity how much sale is generated. There is increase trend in
total assets turn over ratio from 2004 to 2008 due to growth in mark-up/
return / interest earn.
0
1
2
3
4
5
6
7
8
9
2005 2006 2007 2008 2009
Assets turn over ratio graph
69
Fixed Assets Turn over = Net Sale / Fixed Assets
Formula 2005 2006 2007 2008 2009
N.S/F.A 4,487,206 8780698 12596921 15143241 18393313
2,595,023 3192862 3810331 5,128,428 8,266,458
1.7 2.75 3.30 2.95 2.22
Interpretation:
Fixed assets turnover shows that by investment of fixed assets how much
(revenue) sale is generated in other way we can say that how effectively
used fixed assets. Data analysis showed that growth of net sale (revenue) is
taking place from 2004 to 2006 and as result fixed assets turnover ratio are
increases. Ratio decline in 2007 and 2008 due to fixed assets increase even
net sale increases (increase in fixed assets is more than N.S.)
0
0.5
1
1.5
2
2.5
3
3.5
2005 2006 2007 2008 2009
Fixed Assets Turnover Ratio Graph
70
Market Ratio
Earning per share = Earning after Tax / Total Outstanding Share
Formula 2005 2006 2007 2008 2009
EAT/TOS 1,923,040 2021996 2249974 2,681,012 386,225
1,255,848 1,507,018 2004333 3,006,499 4058774
1.53 1.34 1.12 0.89 0.09
Interpretation:
Market ratio showed the position of an organization in the market
with respect to earning. Ratio increase showed that profit of the company is
increasing. When we analyze the data come to know that EPS is decreasing
from 2004 to 2008. The reason behind is increase of numbers out standing
share even earning after taxis also increase. Total outstanding share
increase more than 200 % in 2008 as compare to 2004 therefore negative
growth trend is found in the five years data.
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2005 2006 2007 2008 2009
Graph of EPS
71
Book Value per Share = Total Share Holder Equity / Total Outstanding Share
Formula 2005 2006 2007 2008 2009
TSE/TOS 5,573,149 7,595,145 9,619,066 12,099,645 12,034,895
1,255,848 1,507,018 2004333 3,006,499 4058774
4.4 5.03 4.79 4.02 2.96
Interpretation:
Book value per share somewhat similar to earning per share
but it relates to share holder equity. Book value per share increase in 2005
as compare to 2004 because of 36% increase of Total share holder equity
even 20 % increase happened of total outstanding share but it is less than
TSE. Decline observed in book value per share from 2006 to 2008 due to
increase of total outstanding share about 35 to 45 % from 2006 to 2008.
0
1
2
3
4
5
6
2005 2006 2007 2008 2009
Graph of BV
Revaluation per Share = Surplus on Revaluation / Total Outstanding Share
72
Interpretation:
Revaluation per Share fluctuates from 2004 to 2008 because of increase /
decrease in the total outstanding shares. Unusual change of revaluation per
share in 2007 due to 88 % negative growth in surplus on revaluation and 49
% growth in total outstanding share. In 2008 ratio 17 % growth as
compared to previous years.
0
10
20
30
40
50
60
70
80
90
2005 2006 2007 2008 2009
RVPS Graph
Formula 2005 2006 2007 2008 2009
SOR/TOS 442,943 1,218,338 1,434,164 166,342 936,468
1,255,848 1,507,018 2004333 3,006,499 4058774
35.27 80.84 71.55 5.53 23.07
73
Leverage Ratio
Debt-To-Equity Ratio = Total Debt / Total Equity
Formula 2005 2006 2007 2008 2009
T.D/T.E 13,781,555 10,562,338 14,964,087 17,553,525 15,190,148
5,573,149 7,595,145 9,619,066 12,099,645 12,034,895
2.47 1.39 1.55 1.45 1.26
Interpretation: Any ratio used to calculate the financial leverage of a company to get an
idea of the company's methods of financing or to measure its ability to meet
financial obligations. There are several different ratios, but the main factors
looked at include debt, equity, assets and interest expenses. Debit to equity
ratio shows how much portion of long term funds was financed through
long term debt, maximum ratio 60:40 Debts to equity. When we analyze
the data come to know that debt-to-equity ratio drop in 2005 as compare to
previous year. Reason behind is negative growth 23 % of Debt taking place
and growth factor of equity is also included. Next two year has same
condition but in 2008 drop happened because of debt decrease.
0
0.5
1
1.5
2
2.5
2005 2006 2007 2008 2009
Graph of Debt to Equity Ratio
74
Debt to Assets Ratio = Total Debt / Total Assets
Formula 2005 2006 2007 2008 2009
T.D/T.A 13,781,555 10562338 14964087 17,553,525 15,190,148
107167540 145099905 166033588 182171885 206191138
12.85 7.27 9.01 9.63 7.36
Interpretation:
Debt to total assets or debt ratio serves a similar purpose to the debt
to equity ratio. It highlights the relative importance of debt financing to the
firm by showing the percentage of the organization’s assets that is
supported by debt financing. Ratio decrease in 2005 contrast to 2004
because of debt decrease and assets increase. Next two year has same ratio
and in 2008 ratio again drop due to Debt decrease and assets increase.
0
2
4
6
8
10
12
14
2005 2006 2007 2008 2009
Graph of Debt to Assets Ratio
75
Interest Coverage Ratio
Interest Coverage Ratio = Earning Before Interest Tax / Interest Expense
Formula 2005 2006 2007 2008 2009
EBIT/IE 4,688,057 5452898 6630349 7,101,372 6,376,997
1,845,317 2593817 3283494 4,801,587 5,915,615
2.54 2.1 2.01 1.47 1.077
Interpretation:
A ratio used to determine how easily a company can pay interest on
outstanding debt. The interest coverage ratio is calculated by dividing a
company's earnings before interest and taxes (EBIT) of one period by the
company's interest expenses of the same period:
Ratio show decrease from 2004 to 2008 which reflect earning before
interest tax growth is slow down and interest expense increasing more that
is why interest coverage ratio decreases.
0
0.5
1
1.5
2
2.5
3
2005 2006 2007 2008 2009
Graph of Interest Coverage Ratio
76
HORIZONTAL ANALYSIS
OF FIVE YEAR BALACE SHEET
Assets 2005 2006 2007 2008 2009
Cash and balances with treasury banks 100% 134.2817 169.7986709 152.4165 182.9269
Balances with other banks 100% 114.48564 151.2614434 72.13545 81.5779
Lendings to financial institutions 100% 437.54608 361.0120959 621.2965 192.6909
Investments 100% 149.12676 166.0517197 228.7293 206.9577
Advances 100% 123.10835 142.0126798 144.3048 184.4519
Operating fixed assets 100% 123.03791 146.8322631 197.6255 318.5505
Deferred tax assets 100% 100% 100% 100% 100%
Other assets 100% 175.24063 244.5090149 354.9546 574.8802
Total Assets 100% 135.39539 154.9289906 169.9879 192.4007
Liabilities
Bills payable 100% 107.21926 149.8726665 214.0874 210.6465
Borrowings 100% 76.641119 108.5805412 127.3697 110.2209
Deposits and other accounts 100% 142.5785 158.2347452 171.674 201.247
Sub-ordinated loans 100% 299.97 299.85 299.73 299.61
Liabilities against assets subject to finance lease 100% 10.3044 100% 100% 100%
Deferred tax liabilities 100% 44.210865 57.38962619 0.003675 1.012252
Other liabilities 100% 388.2095 494.0759018 611.1235 903.294
Total Liabilities 100% 134.73502 153.2161537 167.9718 191.0203
100% 146.49847 183.7277422 203.8863 215.6111
Presented By
Share Capital 100% 120.00003 159.5999675 239.3999 323.1899
Reserve 100% 103.54919 134.6849339 160.9417 177.5911
Unappropriated Profit 100% 100% 100% 100% 100%
Surplus on revaluation of assets -net of tax 100% 136.28103 172.5966056 217.1061 215.9443
total liabilities+total share holder equity 100% 275.05526 323.7807122 37.55382 211.4195
77
COMMENTS:
Now we will discuss the assets side of the bank. The liquidity
position is fundamentally important for the bank, as it must have all the
time sufficient funds to meet the demands for the money that may be made
on it. It is the protection against the risk that losses may develop if banks
are forced to sell or liquidate creditworthy assets in an adverse market. The
current liquidity position of the bank has improved as indicated by the
percentages shown.
The property plant and equipment is the kind of asset, which is required by
the service business only to increase its network therefore the ratio of the
bank’s plant and equipments as compared with the other important
particulars of the assets is high. But here one thing should be mentioned
that it is the policy of the bank not to start the business on the rented
premises. The bank has mostly started business on its own premises. The
other assets of the bank are also showing a good amount that means that
bank is in position to earn money from every available source.
Total assets of Askari Bank growing from 2005 to 2008 as we compared
with 2004. Technically we can say that Cash and balances with treasury
banks increase from 2005 to 2008. A balance with others banks is
increasing & landing to the financial institutions is also growing
outstandingly so it is another reason to increase the assets and become
major contributors in the assets.
Investment also increases in the last five years large input by the
investment in 2007 & 2008. Advances in 2005 increases as compared to
2004 and 19% increase in 06 found contrast to 05 in 07 just 2% & in 08
about 40% increase compared to previous year.
78
Total assets increase trend observed from 04 to 08. Assets 14% increase in
06 & 9% in 07 compared to previous years and 13 % in 08 as compared to
07.
Liabilities & Share Holder Equity:
New if we analyze the liability side of the bank we see that the bank’s
deposits are going on increasing since 2004 which is a very healthy sign for
the bank as the bank’s basic business is to deal in money. The increase in
deposits shows that the people have interest in the bank and deposit their
fund in the bank without any hesitation. However it has not been
mentioned here that how many of the deposit are current and how many of
them have fixed nature but we can say that it is a very important source of
the bank to earn profit. As the banks usually earn through interest or mark
ups imposed on the deposits they keep with themselves.
Liabilities 191% increase in 08 as compared to 04 growing trend is found
from 04 to 08 & 143% increase of liabilities in 05 contrasts to 04. Bills
payable & borrowing increase 107%, 76% respectively in 05 compared to
04, Deposits and others accounts increase significantly 142% in 05
compared to 04, Subordinated loans & liabilities against assets also
increase. 388% increases of others liabilities are found in 05 contrasts to
04 that is hwy liabilities side of the bank increase show in 05. And 19%
increase noticed of liabilities in 06 compare to 05, due to bills payable,
borrowing, deposits and others liabilities increase. In the year 2006
liabilities increase 14% as compared to year 2005 and 9 % increased in
year 2007 compared to 2008 similarly in 2008 it increased 13 % contrast to
07. The increase in the total liabilities because of increase in the deposits
79
and borrowing from various sources so in the year 2006 13% borrowing
increased compared to the 05 and 9% of borrowing increased in 07
compared to 06 similarly in the year 2008 borrowing 13 % increased as
compared to last year hence total liabilities showing increasing trend.
As compare to 2004:
In year 05 share capital is increased by 120% as compared to 04 reserves
are also increase by 103 % compared to 04. In year 06 share capital
increased by 159 % and 143 % reserve contrast to 04.Similarly 239 % &
323 % increased found in 07 and 08 respectively compared to 04. Reserves
160 % & 177 % grow in 07 & 08 respectively compared to 04.
80
HORIZONTAL ANALYSIS FIVE YEAR
OF
PROFIT AND LOSS ACCOUNT
2005 2006 2007 2008 2009 Mark-up / return / interest earned 100% 195.683 280.7297 337.4759 409.9057
Mark-up / return / interest expensed 100% 382.953 624.5324 777.4416 953.3353
Net mark-up / interest income 100% 133.6001 166.7539 191.6207 229.7506
Provision against non-performing loans and
advances 100% 230.1916 406.6853 1413.219 1378.805
Provision for impairment in the value of
investments 100% 96.03058 0.987758 3.943151 1.334524
Bad debts written off directly 100% 100% 100% 100% 100%
100% 190.8232 357.7289 1243.138 1290.958
Net mark-up / interest income after
provisions 100% 127.6901 147.0307 83.0202 120.1494
Non mark-up / interest income 100% 100% 100% 100% 100%
Fee, commission and brokerage income 100% 118.3778 143.0961 151.4544 177.5303
Dividend income 100% 194.3271 415.4039 520.8564 659.7044
Income from dealing in foreign currencies 100% 196.8142 322.8563 362.3149 482.6246
Gain on sale of securities - net 100% 18.58725 20.82108 437.1125 6.801828
Unrealised gain on revaluation of investments
classified as held for trading - net 100% 100% 100% 100% 100%
Other income 100% 116.4207 181.1211 189.5935 193.1663
Total non-markup / interest income 100% 95.04373 130.9591 279.4869 165.7149
100% 116.3147 141.4306 151.4779 136.0264
Non mark-up / interest expenses
Administrative expenses 100% 140.4734 177.6171 259.5703 319.9781
Other provisions / write-offs 100% 100% 100% 100% 100%
Other charges 100% 1327.536 4450 8732.609 7961.594
Total non-markup / interest expenses 100% 140.5621 177.9366 260.2039 320.5745
100% 100.5748 117.7334 80.90029 16.23019
Extra ordinary / unusual items 100% 100% 100% 100% 100%
Profit before taxation 100% 100.5748 117.7334 80.90029 16.23019
Taxation – current year 100% 94.59929 112.3031 11.24714 1.981876
prior years’ 100% 100% 100% 100% 100%
– deferred 100% 450.7074 259.1227 563.6468 247.1716
100% 91.01718 119.2651 41.45123 8.171904
Profit after taxation 100% 105.1458 117.0009 139.4153 20.08409
Unappropriated profit brought forward 100% 100 100 100 100
Profit available for appropriation 100% 185.1458 201.1176 233.016 131.6163
Basic / diluted earnings per share – 100% 79.07524 88.0094 51.80251 7.445141
81
COMMENTS:
The most important component of any profit and loss account of a banking
concern is its mark up expenses it has to pay for servicing the depositors.
Now we will analyze profit and loss account. Profit 185 % increase
observed in 05 as compared to 04 this is due to:
Mark-up / Interest earned
On loans and advances to:
I) Customer
II) Financial Institution
ON investments, on deposits with financial institution, on securities
purchased under released agreement. Mark-up/Interest earned increase 195
% in 05 compared to 04. Non-mark-up / Interest income 95 % increased
as compared to 04 profits before tax is also increase 100 %.
In year 2006 profit increase 88% compared to 04 this is because of:
Mark-up / interest earned 280 % increase in 06 compared to 04 net mark-up
interest income is also increase by 166 % in the same year. Fee,
Commission, and brokerage income 143% Dividend income 415 % income
from dealing in foreign currencies 322 % other income 130 % show growth
as compared to year 2004.
In year 2007 profit 233 % increase as compared to 04 major contributors as
follow:
Mark-up / interest earned 337 % net mark –up / Interest income 191 % , fee
commission, brokerage income 155 % increased as compared to 04.Dealing
in foreign currencies 362 % income earned and dividend income 520 %
increased as compared to 04.profot before tax 80 % increased show.
82
In year 2008 profit remain 131% compared to 04 but decrease found
contrast to last three years it is because of:
Interest expense 953 % in 08 as compared to 04, Provision against non-
performing loans and advances 1378 % as compared to 04.
Non mark-up/ interest expenses:
Administrative expenses 320 % increased as compared to 04 as result
profit after tax decreased and effect the earning per share from 79 to 7 Rs.
per share decline observed. Country economic condition is also contributed
in the decline of profit as well as banking sector facing term oil.
Non Mark-up / Interest Income
The non-mark-up / interest income, showed an increase of 11 percent,
which was attributable mainly to income derived from dealing in foreign
currencies that registered significant growth of 33 percent. The fee,
commission and brokerage income also increased by 17 percent over last
year. Gain on sale of investment declined considerably due to downturn of
the bourses.
83
VERTICAL ANALYSIS
OF FIVE YEAR BALACE SHEET
Assets 2005 2006 2007 2008 2009
Cash and balances with treasury banks 8.176791 8.1095332 8.961578304 7.331568 7.774163
Balances with other banks 4.523664 3.8250528 4.416577446 1.919645 1.918033
Lendings to financial institutions 2.16935 7.0105091 5.054971166 7.928854 2.172622
Investments 16.08617 17.717582 17.2410386 21.64495 17.30324
Advances 65.16749 59.253585 59.73452311 55.32147 62.47516
Operating fixed assets 2.421464 2.2004577 2.294915773 2.815159 4.009124
Deferred tax assets
Other assets 1.455072 1.8832824 2.296395594 3.03836 4.347655
Total Assets 100% 100% 100% 100% 100%
Liabilities
Bills payable 1.145023 0.9067408 1.107653591 1.442073 1.253608
Borrowings 12.85982 7.2793555 9.012686638 9.635694 7.367023
Deposits and other accounts 77.7463 81.870962 79.40518818 78.51744 81.32094
Sub-ordinated loans 0.933118 2.0673342 1.805959888 1.645314 1.453069
Liabilities against assets subject to finance
lease 0.013212 0.0010055
Deferred tax liabilities 1.197173 0.3909148 0.443463283 0.258832 0.006299
Other liabilities 0.491627 1.4096081 1.567823132 1.767449 2.308121
Total Liabilities 94.38627 93.925921 93.34277472 91.62149 93.70906
Presented By
Share Capital 1.171855 1.0386071 1.207185259 1.650364 1.968452
Reserve 4.028553 3.0810013 3.502155239 3.814165 3.718463
Unappropriated Profit 0 1.114816 1.084105344 1.177355 0.149851
Surplus on revaluation of assets -net of tax 0.863779442 0.09131 0.454175
total liabilities+total share holder equity 100% 100% 100% 100% 100%
84
COMMENTS:
An analysis of percentage financial statements where all balance sheet
items are divided by total assets and all income statements items are
divided by net sales or revenues.
In addition to other financial ratios over time, it is often useful to express
balance sheet items and income statement items as percentages. Common –
size Analysis, also called Vertical Analysis, or Component Percentage, or
100 percent Statements as each statement is reduced to the total of 100 and
each individual item is stated as a percentage of the total of 100.
Cash and balances with treasury banks are 8.17 % and balances with
others banks are 4.5 % of the total assets. Investment is 16 % & major
portion of assets in the form of advances which are 65 % on other hand
operating fixed assets and other assets are 2.4 %, 1.45 % respectively. So
we can say that current assets are in a large portion compare to fixed assets.
In year 2005 cash and balances with treasury banks are remain same as
previous year and balances with other banks are 3.8 %. Lending to the
financial institution and investment increase in 05 compared to 04 is
significant change. Year 2006 having same proportion of assets as in year
2005. Cash and balances with banks & balances with other banks remain
same compared to previous year but lending to the financial institution
decrease contrast to 07. Advances and others assets show increase as
compared to previous year advances are 62 % and other asset are 4 % of
the total assets.
85
Liabilities:
Borrowings, deposits and others accounts make significant contributions in
liabilities side year 2004 show that borrowing 12 % & deposits and other
accounts are 77% of the total liabilities plus share holder equity. Borrowing
acquired from Pakistan as well as out of Pakistan in the form of local
currency and foreign currency, from State Bank of Pakistan borrowing in
local currency. Deposits and others accounts generated funds Under
categories of Fixed Deposits, Saving Deposit , Current accounts ,Special
exporter Accounts and Margin Accounts etc. in year 2005 deposits 81%
and others accounts stand to the total assets and share holder equity which
is increase about 4% compared to last year . In 2006 79 % deposit and other
counts of the total assets stand which is decline compared to last year but 2
% borrowing increase as compared to 05 and in year 2007 condition remain
intact. In 2008 again increase founds in the form deposits and others
accounts which stand 81 % of the total assets and other accounts.
Shareholders’ Funds Shareholders’ funds increased to Rs. 12.97 billion at December 31, 2008
from Rs. 12.27 billion, registering an increase of 6 percent. During the
year, Bank owned land was revalued and resulting surplus of Rs. 1.86
billion was recognized as part of equity. Also, revaluation deficit on
Available for Sale investments was recognized as reduction from equity,
due to adverse movement of bourses.
86
VERTICAL ANALYSIS
OF FIVE YEAR OF PROFIT AND LOSS
ACCOUNTS
2005 2006 2007 2008 2009 Mark-up / interest earned+ non-markup /
interest income 100% 100% 100% 100% 100%
Mark-up / return / interest expensed 18.25 41.40 47.34 44.06 50.47
Net mark-up / interest income 55.05 43.57 38.13 32.76 36.69
Provision against non-performing loans and
advances 4.53 6.17 7.65 19.89 18.126
Provision for impairment in the value of
investments 0.621 0.35 0.0025 0.007 0.0024
Bad debts written off directly 0.0001
5.15 5.82 7.65 19.89 19.30
Net mark-up / interest income after provisions 49.90 37.74 30.47 12.86 17.39
Non mark-up / interest income
Fee, commission and brokerage income 11.57 8.11 6.87 5.443 5.96
Dividend income 0.42 0.49 0.741 0.695 0.82
Income from dealing in foreign currencies 2.95 3.44 3.96 3.32 4.13
Gain on sale of securities - net 8.82 0.97 0.76 11.98 0.17
Unrealised gain on revaluation of investments
classified as held for trading - net
Other income 2.90 2.001 2.183 1.708 1.62
76.59 52.77 44.99 36.03 30.22
Non mark-up / interest expenses
Administrative expenses 30.1 25.083 22.24 24.30 27.98
Other provisions / write-offs
Other charges 0.0022 0.0177 0.041 0.061 0.052
Total non-markup / interest expenses 30.14 25.101 22.281 24.36 28.035
46.44 27.66 22.71 11.66 2.18
Extra ordinary / unusual items
Profit before taxation 46.44 27.6687 22.71 11.66 2.18
Taxation – current year 14.31 8.020 6.67 0.499 0.082
prior years’ 0 1.821 0 1.187 0.236
– deferred 0.712 1.90 0.76 1.24 0.510
15.025 8.10 7.44 1.93 0.356
Profit after taxation 31.41 19.56 15.26 13.60 1.83
Unappropriated profit brought forward 10.16
Profit available for appropriation 31.41 34.45 26.24 22.73 11.99
Basic / diluted earnings per share - Rupees 0.00020 9.76 7.620 22.73 4.50
87
COMMENTS:
Comparing figures from 2004 to 2008
PROFIT AVAILABLE FOR APPROPRIATION
Profit for appropriation having decreasing trend from 04 to 08 therefore we
have to discuss yearly figures. We have taken interest income plus non
interest income as 100 %.
In 2004 profits for appropriation is 31 % of the sum of interest and non
interest income having reasons as follow:
Mark-up / return / interest expense 18 % and net mark-up interest income
55 % stand for 05. Non mark-up interest income is better as compared to
year 05 that is because of brokerage income and fee commission is 11.5 %,
gain on sale of securities is stand at about 9 % of the sum of interest and
non interest income which is healthy singe for profit.
In year 2005 profit available for appropriation is 34 % which show slight
increase as compared to 04 having following reasons:
Income from dealing in foreign currencies is 3.44 % which is increase as
compared to previous year more over total non mar-up / interest expenses
25 % stand which is decrease as compared to last year these reasons
creating combining effect on profit available for appropriation.
In 2006 profit available for appropriation 26 % which is decrease from last
two year (31%, 34% in 04 and 05 respectively) having reasons as follows:
Mark-up /return /interest expenses in 06 increased from last two year which
is 47. 34 % (18 %, 41 % in 04 and 05 respectively) and net mark-up interest
income decrease which is 38 % as compared to two last year. Provision
against non performing loans & advances increase that is 7.65 % (4 %, 6 %
88
in 04 and 06 respectively). Fee commission and brokerage income
decreases in 06 as compared to last two year that is 6.87 % (11.57 %,
8.11% in 04and 05 respectively).
In year 2007 profit available for appropriation is 22 % showing decreasing
trend because of following reasons:
Net mark-up interest income decrease in 07 compared to last years which is
32 % (55 % 43 %, 38 in 04, 05 and 06 respectively) because of provision
against non performing loans an advances increased about 20 % of the sum
of interest an non interest incomes. Fee commission brokerage income
decrease in 07 stands at 5 % (11%, 8 %, 6 %, in 04, 05 and 06
respectively). In year 2008 profit for appropriation stand at 12 % which is
the part of decreasing trend from 05 to 08.
Operating Expenses Administrative expenses have increased by 23 percent over last year. This
rise is mainly due to 33 percent increase in number of branches/ sub-
branches from 150 to 200 and general rise in inflation. Cost to income ratio
(CIR) registered negative trend, as on the other hand revenues remain under
pressure due to rising on performing loans.
Return on Average Assets: Return on average assets at the close of 2008 was 0.20 percent as against
1.54 percent last year (0.32 percent excluding one-off gain), registering a
decrease of 134 bps (12 bps on comparable basis) due to decrease in profit
for the year as against increase in total assets.
89
Earnings per Share:
Earning per share (EPS) decreased from Rs 6.61 per share to Rs. 0.95 per
share – restated for bonus shares issued during 2008. The decrease is
mainly due to high provisions and writes off. The last year’s EPS excluding
One-off gain works out to be Rs. 1.39 per share, thus on a comparable
basis, the decline In EPS is 31 percent
90
ORGANIZATIONAL ANALYSIS
For organizational analysis we have choose three banks which will use for
comparative analysis. The information of the banks is given bellow:
In (000)
• NBP (National Bank of Pakistan)
• MCB (Muslim Commercial Bank)
• BAFL (Bank Alflah Limited)
• AKBL (Askari Bank Limited)
When we compare AKBL with NBP come to know that NBP having assets
greater than AKBL similarly liability is also greater & profitability is more
of NBP than AKBL.
Reason:
As NBP is oldest bank in Pakistan having vast branch network with 1276
branches. It means that NBP having more access to the customer as
compared to AKBL. Field of activity is also greater with accessibility.
While AKBL is just of 14 year old as compared to NBP which is 60 years
old. There is difference of assets is (611567188) because of large banking
Bank Assets Liability Profitability Branches
NBP 817,758,326 715,299,108 23,000,998 1276
MCB 443,615,904 385,179,850 21,867,566 1040
BAFL 348,990,764 331,946,025 1,794,720 195
AKBL 206,191,138 193,219,775 461,382 200
91
network in the country. And profit ability difference is (22539616) because
of with 1276 branches all over the Pakistan of NBP as compared to AKBL.
MCB having assets 817,758,326 while AKBL 206,191,138 showing large
difference between two banks in the country. Reason is that MCB
providing diversityfied products to the customer along with 1040 branches
in the country. Profitability is about 46 % greater of MCB than AKBL
which reflect the customer share captured in the market. While on other
hand AKBL stands with only 200 branches in the country.
When we compared BAFL with AKBL having almost same branch
network but there is difference in the assets and profitability this is because
of BAFL having strong background with good market share in term of
customer and product line. Diversified customer products provide by the
BAFL as compared to AKBL. But AKBL stand in a competitive
environment having huge potential to capture more market share by
enhancing products with new options for customers.
92
FUTURE PROSPECTS OF THE
ORGANIZATION
Askari commercial bank is the leading private sector bank in the banking
network in Pakistan with many of them online branches in major cities of
the country
The operations performed by the bank are highly automated that result in
assurance for the customers that their transactions are completed reliably,
efficiently and securely.
The bank has the largest ATM Network cross the country. The customers
of AKBL withdraw access their funds any time at all the ATM Sites with
ASKCASH Logo.
The management of the bank believes in customer focused banking rather
than the product oriented banking. The products and services designed by
the bank are specifically tailored to the individual needs of its customers.
The priority banking centre’s of the bank offer an unmatched where the
customer receives highly privileged services in a highly elegant
environment. It gives the chance of experiencing new standards in banking.
Designed specially for those who appreciate only the finest things in life,
Priority Banking offers the very highest levels of personalized banking to
match customer’s unique status.
AKBL management is quite prepared to adopt the latest advancements in
technology resulting in revolution in the banking operations such as check
clearing process, computer based teller equipment, automatic teller
machines, and electronic funds transfers among the others.
The organizations showing concern for the people, ethics, and environment
enjoy good public reputation and are able to reap the benefits in the long
run. AKBL management is quite sensitive to this issue.
93
SHORT FALLS/ WEAKNESSES
In my opinion there are some points might be short falls of the bank which
are given bellow:
� Understanding and the effective management of the human resources
is the most difficult challenge faced not only by the bank but by all
the organizations. Even though the people have been sacrificed in the
new organizational developments, it is becoming clear that the true
lasting competitive advantage comes through human resources and
how they are managed. AKBL seems to not focusing on this highly
critical issue as the job satisfaction level of the employees working at
AKBL, was quite low.
� This famous and useful concept given by Adam Smith in 1776 seems
to be missing in the bank. The employees are constantly rotated from
one job to another job of totally different characteristic in the view of
giving them the know-how of the working in all the departments. But
I think this is not a very good tactics used by the management.
Otherwise the situation might be like this ‘Jack of all and master of
none.’
� There is a high degree of centralization in the bank. Almost all the
decision-making is in the hands of the upper management. But
centralization is effective up to a certain level otherwise it becomes
inefficient and at times costly too. I personally observed that delay
occurred in the operations of the employees only due to the fact that
they had not got any instructions from the head office.
94
CONCLUSION
In the Askari Bank I have spend six week for internship programme and try
to understand the working of different departments. I come up with some
areas to improve like customer facilitation, recruitment, rotation of staff
between the branches. To capture more market share bank has to be
introducing new facilitation plan for the customer satisfaction. There are
some flaws in the recruitment policy and need to be hire staff with banking
related qualification which will give the better out come.
Over all bank performance is good as we look its age because it has to
cover long distance to become first choice for customer in the banking
sector. During policy formation must keep in mind that how customer will
involve with the policy and what kind of benefits and problems have to be
faced by the customer through this policy.
New products & Services will have to be introduce in the bank by
analyzing the customer needs and market demands which will build the
image and prestigious among the customers. Bank has lot of potential to
become a leader in the banking sector.
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REFERENCES
For the preparation of this report I have used sources are given bellow:
� Annual reports of the Askari Commercial Bank Limited
� http://www.askaribank.com.pk/financialstatement.php
� http://www.bankalfalah.com/about/financial_performance.asp
� http://www.nbp.com.pk/Publications/index.aspx
� http://www.mcb.com.pk/ir/fin_data_rep.asp
Books
� Fundamentals Of Financial Management
Twelfth Edition by: James C. Van Horne & John M. Wachowicz, JR
� Principles Of Corporate Finance
Eighth Edition by: Richard A. Brealey, Stewart C. Myers and
Franklin Allen.
� Teacher consultation (Mr. Muhammad Azeem)
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