Askari Bank Report Final VU

INTERNSHIP REPORT

ON

ASKARI BANK LIMITED

Bosan Road Branch, Multan

Branch Code = 021

Submitted By:

NARGIS NAGINA

VU ID = MC060402149

Session = Fall 2006- Fall 2009

Specialization in = MIS

Final report submitted on = 09-01-2013

VIRTUAL UNIVERSITY OF PAKISTAN

Internship Report on Askari Bank

Letter of Undertaking

i


Internship Certificate

ii


Dedication

I dedicate this thesis to my parents. Without their patience, understanding, support

and most of all love, the completion of this work would not have been possible.

The Holy Quran

The Holy Prophet (PBUH) Said! If oceans are contrived into ink to write

qualities of my creator. Then the whole oceans would be consumed in writing

before his qualities, comes to an end.

[AL- KAIF]

The Holy Prophet (PBUH) Said

“Shell I tell you a thing, by which you can attain good in this world and here

after ? Remember it is the company of those, who remember and glorify

ALLAH, day and night.”

[AL- SUNNAT]

iii


Acknowledgment

Praise to Almighty Allah, who bestowed upon me the potential and ability to

accomplish the task of the work.

I wish to express deep sense of gratitude toDirector Placement & Internship, who

provided me this opportunity to achieve the practical experience and for his valuable

supervision and helpful suggestions in the completion of this report.

I also wish to acknowledge Branch Manager, for their cooperation and proper

guidance given to me from time to time to complete this assignment.

Special thanks are due to Askari Bank Limited

Credit officer Sir Kashif

CSO Miss Saba safdar malik

Clearing Officer Sir Shehzad Raza

Operation Manager Sir Abdullah

Remittance officer Sir Usman Khan

For their commendable guidance, suggestions and patronage time to time.

Virtual University of Pakistan 1


Executive Summary

The Department of Business Administration of VU offers Master’s Degree in

Business Administration. They are giving the best education and are offering Virtual

Learning program. An important program is two months internship with any

recognized institution.

I decided to take up Askari Bank Limited for my internship because it is a competing

Bank nowadays and gives a good training to the internees. So in order to learn more

this was my choice.

This report is about my internship that I have undergone at Askari Bank Limited

Multan Branch from 30th April 2009 to 10th June 2009. During my internship I am able

to learn practical aspect of business, and get good working experience.

On the very first day of my internship I reported to Officer HR, Miss Saba Safdar

Malik. A complete orientation was arranged for internees (3 more internees were also

worked there in different departments I was originally appointed to work in MIS dept.

of the Askari bank. But also due to enhance my learning to get familiar with banking

system and learn in better way the information system, I was obliged by my branch

manager to spend 3 days to get to know about all departments in the Bank. This

placement was done in order to have general concept regarding Bank’s functions,

operations and policies. I have learned more about the Basic Banking, Credits and

Foreign Trade depts.

During my internship I found that Askari Bank is a best Bank in Multan because most

of the Exports and Imports in Multan are done through this Bank. Multan is one of the

cotton growing cities of Pakistan. Most of the businesses in Multan are directly or

indirectly linked to cotton that is also the case with Askari Bank’s clients. Because

Multan is an Agricultural City, and its major export is Cotton and Mango. So its

export is done on seasonal basis. In the season of cotton and Mango export Askari

Bank get its target easily but difficult for it to get its target in the off season.



Low profit rates used to be one of the major reasons for not meeting the deposit

targets. The profit rates on Askari deposit schemes were quite low when compared

with other Banks especially with the National Saving Centers, but now Askari Bank is

giving a comparatively high profit rates to its customers. In today’s every customer is

a rational customer, he knows the value of money and wants a best return on his

money.

As I was deputed in MIS dept. It gave me a fruitful learning about information

systems and their importance in organizations. Askari bank uses a number of

information systems like decision support system used by top management to devise

any policy. Also different TPS (transaction support systems) are used by Askari bank

to cope with the needs of each dept.



Table of Contents

INTERNSHIP REPORT

LETTER OF UNDERTAKING i

INTERNSHIP CERTIFICATE ii

DEDICATION iii

ACKNOWLEDGMENT 1

EXECUTIVE SUMMARY 2

OVERVIEW OF THE ORGANIZATION 7

Banks History 7

Nature Of The Organization 8

Mission Statement 8

Business Volume: 8

Product Lines: 9

Agriculture banking: 9

Investment certificates: 10

Consumer banking: 10

Competitors: 11

Askari Bank Limited Multan 12

ORGANIZATIONAL STRUCTURE 13

Hierarchy Structure 13

Number of Employees 14

Main Offices 14

Departments 14

Account Opening Department 14

Types Of Accounts 14

Account Opening Procedure 14

Other Activities 14

Clearing Department 14

Remittance Department 14

Demand Draft 14

Pay Order 14



Outward Bills for Collection 14

Inward Bills for Collection 14

Foreign Trade Department 14

Foreign Currency Account 14

Export 14

Import 14

Organizational Management Analysis (OMA): 14

INTERNSHIP PLAN 14

Detail Description Of The Task Assigned 14

MIS Dept. of the Multan Branch: 14

MIS DEPARTMENT STRUCTURE AND FUNCTIONS 14

Number of employees in MIS Dept. 14

Responsibilities and Functions of MIS dept.: 14

Hardware and Software: 14

Support of Transaction Processing System (TPS) to other depts.: 14

Payroll TPS: 14

ATM & EBS TPS: 14

RTGS TPS: 14

NEFT: 14

Electronic Clearing Service (ECS): 14

Mobile Banking: 14

CRITICAL ANALYSIS 14

Ratio Analysis 14

Earning Asset to Total Assets 14

Return On Earning Asset 14

Loan Loss Coverage Ratio 14

Loan To Deposit 14

Current Ratio 14

Debt Ratio 14

Operating Profit Margin 14

Gross Profit Margin 14

Horizontal & Vertical Analysis 14

Findings On The Basis Of Analysis 14

Applications of Class Room Concept 14



SWOT ANALYSIS 14

Strengths 14

Weaknesses 14

Opportunities 14

Threats: 14

INTERNAL FACTOR EVALUATION MATRIX 14

EXTERNAL FACTORS EVALUATION MATRIX 14

THREATS OPPORTUNITIES WEAKNESSES STRENGTHS MATRIX 14

COMPETITIVE PROFILE MATRIX 14

BOSTON CONSULTING GROUP MATRIX (BCG) 14

PORTER’S FIVE FORCES ANALYSIS 14

Value Chain Analysis 14

ANSOFF GROWTH ANALYSIS 14

CONCLUSION 14

RECOMMENDATIONS 14

References 14



Overview of the Organization

Banks History

Askari Bank Limited was incorporated on October 9, 1991, as a Public Limited

Company, and is listed on Karachi, Lahore and Islamabad Stock Exchanges. The

Bank obtained business commencement certificate on February 26, 1992 and started

operations from April 1, 1992. Askari Bank is scheduled Commercial Bank and is

principally engaged in the business of Banking as defined in the Banking Companies

Ordinance 1962.

Askari Bank Limited continues to scale new heights in all areas of its operations. The

safety and security of depositor’s funds, high productivity and optimum use of

technology are the hallmarks of its corporate strength.

In 1994, AKBL earned international recognition as Asia Money Award and the title of

“Best Commercial Bank of Pakistan” for the year 1994, while Euro money declared

the Bank as best domestic Bank of Pakistan for the year 1995.

Askari Bank Limited has expanded into a nationwide presence of over a 100

branches, comprising commercial and Islamic banking branches, connected online

and supported by a network of Automated Teller Machines (ATMs). It also enjoys an

offshore banking unit in Bahrain. Over the years, Askari Bank Limited has proven its

strength as a leading banking sector entity with ever increasing commitment to its

clients, through a strategic investment in electronic technology. It has A1+, the

highest possible credit rating, for short-term obligation, and AA+ for long-term rating.

Beside day-by-day banking solutions, Askari Bank Limited has a wide range of

Corporate, Consumer, and Islamic Banking products.



Nature of the Organization

Askari Bank Ltd is a commercial bank by its nature. Commercial Banks are set up

with the primary objective of earning and maximizing profits. They received cash

deposits from the people in different accounts and give loans to different business

enterprises and thereby create credit money.

Mission Statement

To be the leading private sector bank in Pakistan with an international presence,

delivering quality service through innovative technology and effective human

resource management in a modern and progressive organizational culture of metro

racy, maintaining high ethical and professional standards while providing enhanced

value to our stake holders and contributing to society.

Business Volume:

The business volume of bank can be better analyzed by the following table of Banks

Last Five Years Performance;

(Rs. In Millions)

2007 2008 2009

Assets 182,171 206,191 254,327

Liabilities 165,905 193,219 239,378

Advances 100,780 128,818 135,034

Deposits 143,306 167,676 205,970



Capital 3,006 4,058 5,073

Profit 2,681 386 1,098



Product Lines:

Agriculture banking:

Kissan ever green finance:

Features Details

Product Type: Profit Earning Account

Profit Amount: Profit on credit balances will be paid on half yearly basis as

declared by the bank on PLS savings accounts.

Kissan aabpashi finance:

Features Details

Product Type: To finance installation of Tube-Wells (electric, diesel and solar

energy units) water management equipments and water channel

development etc.

Eligibility: Pakistani Resident (owner of farmers).

Kissan tractor finance:

Features Details

Product Type: Profit Earning Account

Eligibility: Pakistani Resident (Owner as well as non-owner farmers.)

Kissan livestock development finance:

Features Details

Product Type: To purchase Milk Animals, Goats, Sheep, Poultry and Fisheries

without incurring extra expenditure because of availability at

his farm.

Eligibility: Pakistani Resident (Owner Farmers).



Deposit multiplier account:

Features Details

Product Type: Term Deposit

Eligibility: Pakistani Resident (Individuals Only)

Balance Requirement: Minimum Rs. 50,000/- & Maximum Upto

Rs. 10,000,000/-

Investment certificates:

Features Details

Facility: Investment Certificates

Important Features: 1. Free issuance and free encashment

2. Account relationship with Askari Bank is not mandatory

3. No penalty on pre-mature encashment

Consumer banking:

Visa debit card:

Features Details

Product Type: Debit Card

Classic: Cash withdrawal Limit is 50,000, Shopping Limit

200,000 & Funds Transfer Limit 250,000.



Personal loan:

Features Details

Applicant/ Borrower: Pakistani Resident (SEB/SEP cases are not entertained

currently)

Age (Salaried): 21-61 years (maturity of loan at 61 yrs.)

1. Ijarah Car Financing

Ijarah is a rental agreement, under which the usufructs of an asset is transferred to the

client on pre-agreed terms and conditions. It is a Shariah Compliant mode of finance,

adopted by Askari Islamic Banking to meet the Car Financing needs of its valued

customers.

2. Musharika Home Finance:

Joint ownership is created in the property between Bank & Customer on the basis of

the Musharika

Agreement: (This is bases on the principles of Shirkat ul Mulk)

Bank’s share is divided into units and is given to the client on rent Client promises to

purchase Bank’s share (units) over the tenure of transaction.

Competitors:

1. National Bank of Pakistan

2. Meezan Bank Limited

3. Allied Bank Limited

4. MCB Bank Limited

5. NIB Bank Limited United

6. United Bank Limited

7. Habib Bank Limited

8. House Building Finance Corporation

9. Khushhali Bank Limited



Askari Bank Limited Multan

Askari Bank Limited Multan is located on Bosan Road. The location is connected to

all the main trade centers in Multan. It is a prosperous branch streaming towards great

achievements.

At the time of its establishment the factors that were considered are as follows

1. Multan is zone covering a large population.

2. Multan City is linked to many big cities.

3. Agro based area constituting growers and gainers

4. Army Offices & Fort Colony

5. Educational

6. Institution



Organizational Structure

Hierarchy Structure


PRESIDENT

SENIOR EXECTIVE VICE PRESIDENT

EXCUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICER GRADE I

OFFICER GRADE 2

OFFICER GRADE 3

JUNIOR OFFICER

BR

AN

CH

HIE

RA

RC

HY


Number of Employees

Askari Commercial Bank Ltdis a promising and an equal opportunity employer with

employee strength of over 10,000.

Main Offices

Askari Commercial Bank Ltd has its branch network all over Pakistan in almost all of

the cities. It has distributed the areas in three regions i.e.

Central Region containing cities of Punjab

1. South Region containing cities of Sindh and Baluchistan

2. North Region containing areas of Khyber Pakhtunkhwa and Azad Jammu &

Kashmir

Its head office is located in Rawalpindi.

Departments

The bank has following department:

Account Opening department

ATM Department

Credit Card Department

Account Department

Credit Department

Remittance Department

Foreign Trade Department

Cash Department



Account Opening Department

Borrowing funds from different sources has become an essential feature of today's

business enterprises. But in the case of a bank borrowing funds from outside parties is

al l the more vital because the entire banking system is based on it. The borrowed

capital of a bank is much greater their own capital. Banks borrowing is mostly in the

form of deposits. These deposits are lent out to different parties. Such deposit creation

is done through opening an account in the Bank.

Types of Accounts

In AKBL, there are the following types of accounts:

Current account.

Saving Account.

Askari Special Deposit Account.(ASDA)

Basic Banking account

Term Deposit.

Current Account

In current account there is no interest on it. It is for only transaction purposes. They

are paid on demand. When a banker accepts a demand deposit, he incurs the

obligation of the paying all cheques drawn against him to the extended of the balance

in the account. As there is no profit paid on this account it is also called chequing

account because cheques can be drawn on it. Current account is mostly opened for

business.

Saving Account

The purpose of this account is to induce the habit of saving individuals in the

neighborhood. The minimum deposit for opening the account is Rs.1050/- (as obvious

in the Annexure).



Though individuals open such accounts for saving purpose, persons belonging to

Armed forces and different military institutions are free to use this account on current

basis.

Askari Special Deposit Account

ASDA account is an interest bearing current account interest is paid. The payment of

return is monthly, where as the rate of return with aspect to the amount of minimum

deposit clear. It is also cheqing account because cheques can be drawn on it. It is

necessary for this account that the client must maintain a minimum balance of Rs.

50,000 at the end of the month. That’s why it is similar to current account. It is mostly

opened by Business but individuals to open this account.

Tax of 0.3% would be deducted on ASDA if withdrawals are more than Rs.25, 000.

Term Deposits

A term deposit is a deposit that is made for a certain periods of time at the end of the

specific period. Thecustomer is allowed to with draw the principle amount.

AKBLs Term deposits are of types clear in the deposit scheme. One of them is

"Askari" Advantage one month. The rate of return on this account is set by head

office. The term deposit accounts vary one month to 1 year for all following accounts.

The amount of profit is given to depositors in three ways:

By cash

By sending a bank Draft to depositors Home address or Officers or whichever

is specified as mailing Address.

The amount is credited in any one of the checking Accounts of the depositor.

Account Opening Procedure

For the cheque accounts (C/A, ASDA, SAVING), there are different types of account

holders are required for all these types of account holders. The operation /procedure

requirement that is needed for “Individual Account " differ greatly from " Joint



account " proprietorship "Partnership “, "Limited Company"and "Club society or

Association " as explained below.

Individual's Account

When a single man or women opens an account in his/her own name and has the right

to operate it is called individual Account.

Joint Account

When two or more persons, neither partners, nor trustees, open an in their name is

called joint Account. Husband and wife or two persons of same sex can open joint

account.

Proprietorship Account

When an owner of a firm operating singly, opens an account in his firm name, this

account is called a proprietorship Account the proper himself liable for all his acts.

Partner Ship Account

The account is opened in the firm name and all partner designate one two persons to

act on behalf of the partnership firmer all acts on behalf of firm. The partners in the

partnership firm are liable for the acts of the firm jointly and severely. Every partner

has in a firm has an implied authority bind his co. partners by drawing and enclosed

cheques.

Accounting Department

Accounts department is a department which deals and checks all the activity of all the

department .It also deals in expression of finance of the bank. Salary payment is also

one function of the bank.

Checking Bank’s Daily Activity

Accounts department deals and checks the entire working of the Branch; all the

vouchers that have been posted at the computer are scrutinized in accounts

department. The “End of Day” i.e. computer print is also received from the computer.

The next day the activity is separated some statements from the “End of Day”. Then



next day activity separated some statements from the “End of Day”. The vouchers are

sorted out head wise. The vouchers are matched with the entries in the statements.

Any abnormality if occurs, is immediately dealt with. All the vouchers and instruction

are checked individually against the computer printouts. After checking they are

signed by authorized signatories.

Other Activities

Preparation of daily bank positions statement

Payment of salaries

Preparation of the statements

Depreciation calculation

Lockers Issuance

Clearing Department

There is no obligation on a banker to collect cheques drawn upon other banks for a

customer, however it is function of every modern bank of collection of cheques and

bills on the behalf of customers DD,s pay and other negotiable instruments .Now a

days NIFT is providing services of collecting cheques and bills etc

Remittance Department

The need of remittance is commonly felt is commercial life particularly and in

everyday life generally. The main function of the remittance department is to transmit

money from one place to another. By providing this service to the customer, Bank

earns a lot of income. Also customer is able to meet its day to day financial

requirements.

Demand Draft

It is an instrument payable 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. If two Banks are involved then the DD is sent to other Bank but in other case it

is handed over to the applicant.

Pay Order

It is an instrument issued for payment in same city. Pay order issued from one branch

can only be payable from the same branch. It is normally referred to as Banker’s

cheque. It is also called confirmed cheque, because Bank issues this on it own

guarantee.

Outward Bills for Collection

The bills, which are received by the Bank and sent to other cities (branches) for the

local clearing in that city, are called Outward Bills for Collection.

Inward Bills for Collection

The bills, which are received by the Bank from other branches out of the city for local

clearing are called Inward Bills for Collection.

Foreign Trade Department

Foreign trade department deals in:

Foreign currency account

Exports

Imports

Foreign Currency Account

This account deals with the accounts having foreign deposits and remittances. This

account provides following facilities:

Traveling quota

Out ward remittances

In ward remittances receiving

To make remittances procedure flexible



Export

Mainly export deals in:

Negotiation of documents

Sending the documents for collection

Pre-shipment financing

Post-shipment financing

Remittance against agent commission

Forward covered booking

Handling the documents for negotiation according to the UCP 500 (uniform

custom and practices)

Handling the documents for collection according to URR (uniform rules for

collection)

Submission of monthly returns to SBP regarding the export on form A-2/O-2.

Import

Opening the letter of credit .Scrutinize the documents receive from flowing

bank under letter of credit. Account to UCP 500 and extending the credit

facility to the importer informs FIM (finance against imported merchandise)

FATR (finance against trust receipt).Arrange forward cover booking regarding

import payments .Also arrange forward cover booking for letter of credit open

other then AKBL

Submission of monthly returns to SBP regarding the import on form I



Organizational Management Analysis (OMA):

OMA is a unique process adopted by organizations to assess the efficiency and

performance of their management. This tool not only helps executives with an

overview of manager’s strengths but also identify the area needs to be improved.

Organizational culture also plays an important role in the analysis of management

practice.

In Askri Bank, the organizational culture is seemed to be very strong. The

Decentralized management approach is used with the cultural values like

empowerment, recognition, affiliation and so on. OMA model checkpoint 360

individual feedback is used to generate and report about management groups in

Askari bank. Each report identifies manager’s strength and area requiring further

improvement.

The leadership skills of manages are typically rated through three groups: their boss,

their direct reports d their Peers. OMA model contains summarized information about

the strengths and development areas of the managers and direction for the necessary

skills training needed to improve their performance. Askari bank OMA’s model

contains 18 skills sets on the basis of which the management strengths are assessed:

1) Facilitates team success 2) Achieve results

3) Communicates effectively 4) motivates successfully

5) Provides direction 6) provides direction

7) Thinks creativity 8) instills trust

9) Works efficiently 10) delegates responsibility

11) Listen to others 12) works competently

13) Takes action 14) cultivates individual talents

15) Displays commitment 16) seeks improvement

17) Builds personal relationships 18) process information

The above skills sets process the OMA information and organizational development

strategy is devised on the basis of this.



Internship Plan

Sr. No.

Starting Date Ending Date Name of Department Duration (Days)

1. 30-04-2009 10.06.2009MIS Dept.

Six weeks

Detail Description of The Task Assigned

1. Responsible for generation of computerized reports of all the depts. in Summit

FT

2. Responsible to upload reports to HQ via FTP(file transfer protocol)

3. Help MIS officers in performing of their duties especially in hardware repairs

or updating antivirus patches.

4. Maintaining daily transactions records

5. Sorting and finalization of bank customer files

6. Maintenance of reports on month end closing

7. Performed all those tasks which are assigned by my supervisor.

MIS Dept. of the Multan Branch:

As Askari bank Multan branch is the city’s largest branch with extended number of

departments. To cope with the needs of each dept. and to facilitate the operation of the

automated system of the bank, a complete MIS dept. works for the smooth working of

the branch. The Hierarchy of the MIS dept. is shown below in a chart.


Assistant MIS Manager

MIS Manager

MIS Officer (Hardware) MIS Officer (Software)


MIS Department Structure and Functions

Number of employees in MIS Dept.

MIS dept. in Multan branch is consisted of four staff members. The control of the said

dept. is with MIS manager. MIS manager works under kind control of vice president/

Branch manager of Multan branch. MIS manager also assumes in-charge of all Askari

bank branches in Multan city and responsible to report to Regional MIS manager at

Askari regional office.

Assistant Manager MIS is responsible for supervision of MIS officers who further

deals with hardware and software issues in the branch.

Responsibilities and Functions of MIS dept.:

Management information system helps in data collection and processing of raw data

into useful and meaningful information and to disseminate to the other users when

and where required. In fact, MIS is blood bone in now a days business culture that all

decisions are made on the basis of information generated through MIS systems.

Significant cost effective and time saving benefits are associated with the use of MIS

in organizations.

Acknowledging the need of MIS system, Askari bank also invested lots of its funds to

its MIS system to generate information in much fruitful way. In Askari bank, each

level of management use variety of information systems according to their needs and

requirements. Typically following information systems are very important to make

best use of information:

Executive Support Systems (ESS)

Decision Support Systems (DSS)

Knowledge Work Systems (KWS)

Transaction Processing Systems (TPS)



The first two systems are used by the top management of the bank for decision

making and devising strategies. The later systems are used by project management

dept. of the bank at head office level to look after the processing of its current and

future projects.

The last system (TPS) is very important in every organization because specially it

becomes the basis of a business transaction. And on the top of these business

transactions, reports are generated and modeled according to organizations needs like

for forecasting, market attractiveness and potential in the market.

MIS dept. at the Askari bank Multan, mostly deals with the administration of this TPS

system at the bank. Also reports on the basis of these TPS are forwarded to HQ.

The major responsibilities of this department include:

Security of data and equipment under jurisdiction

Responsible for dealing with networking and its related issues

To manage installation of ORACLE 9i and other related software and their

maintenance on different machines (Server and clients)

Responsible for all administrative functions at operating systems and Database

level like user’s management, profile creation, policy implementation and role

management.

Responsible for taking backups of database at each day end.

Creation of computerized reports of all depts. In the bank and upload them to

HQ via FTP

Responsible for checking all malfunctioned equipments

Help data warehousing team for data storage and data processing through

creation of right reports

Responsible for daily, monthly and year end closing in the system and verify it

with the manual records if any.

Sort out all discrepancies found in system-manual reliance.

Train employees on new software or on new technology

Responsible for maintenance of daily attendance register through figure

recognition check in system.

Liaison with all depts. in the bank to support their day to day activities and

help them if needed.

Updating of anti-virus patches on regular basis.



Responsible for arranging video conferencing system in the bank to arrange

meetings of VP with senior level management.

Hardware and Software:

Following software are used by Askari Bank to function their banking:

Application Software

MS Office

NOD32 anti-virus Patch level 47

Adobe Reader

System Software

Following system software’s are used in Askari Bank:

Summit FT

EBS

Operating system (Window 7 and Linux) for clients

Windows 2003 server for mainframes (Server machines)

Hardware resources are used by the bank aligned to system requirements:

HP Personal computers

Dell Laptops (for Management only)

HP Printers

Canon Document Scanner

Networking Cards

Currency counter

Coin counter

Dell mainframes

Information LED’s

At Askari bank Multan, the local systems are connected to the server machine with

the help of intranet. Each user in the bank is issued a unique user ID comprising of

his/her payroll number. This helps in finding out the record of specific employee to

maintain system logs. Client server architecture is used to manage the office for

smooth functioning of the system in the bank which is secure and reliable worldly

now days. The information is easily available when needed by the top management.



Support of Transaction Processing System (TPS) to other depts.:TPS is a type of information system which facilitates the collection, storage,

modification and retrieval of the information gathered through business transactions.

Askari bank has got contracts with several TPS vendors according to their business

area or functional needs. Functional areas are like customers who visit banks and

other who use online banking system, both systems are different and for each system

Askari bank need different vendor’s TPS to meet different customer’s needs. So, to

remain competitive in the market, Askari bank has make available plenty of

information systems to facilitate its processing and dedicated MIS dept. staff is

responsible for creating a data warehousing to generate the information on the basis of

these TPS. Data warehousing technique is used to gather the information at one place

and to make its access to concerned when required.

Payroll TPS:

This TPS system is used to record the employee master data. This application is

mostly managed at HQ level or regional HQ levels but also access to the VP and AVP

is provided by the Askari bank management to oversee any employee master record.

This TPS also helps to log the attendance of the employees and at the end of the day,

report generated by this system is forwarded to the headquarter by MIS dept. This

system also helps in calculating bonus, incentives of employees on the basis of their

performances.

VERISIS TPS:

Askari bank is responsible to deal with the regulatory laws in Pakistan. So this makes

it necessary to investigate the record of each of their customer. This information

system is connected the NADRA customer verification system. Each customer record

is first verified to open a new account. The account opening dept. mostly use this TPS

to open new account or to modify the details of any customer on the basis of Verisys.

At Askari bank, the Account opening TPS is automatically linked with Verisys, as if

banker wants to add record of any new employee, when he wants to save it and new

window will appear to pass this information to Verisys. So the functioning of the

process becomes automated.



ATM & EBS TPS:

Electronic billing solution is a unique feature of banking introduced several years ago.

This information system is used by customers directly by paying their bills on ATM

machines. ATM machines also work on the root of Information system linked to the

Summit FT customer master record.

RTGS TPS:

Real time gross settlement TPS also used by Askari bank to minimize the credit risk

involved in bank clearing system. RTGS helps to settle near real time basis across

banks in different locations. RTGS facility is available at all Askari bank branches

throughout the country.

NEFT:

To establish electronic fund transfer, this system is widely used by all banks in

Pakistan to facilitate efficient and reliable transfer of funds.

Electronic Clearing Service (ECS):

ECS credit is an electronic clearing system that facilitates paperless transaction

through an offline system. ECS credit facility is only available in few banks in

Pakistan including Askari bank.

Mobile Banking:

Askari bank is pioneer in Pakistan to introduce mobile banking. Whenever a customer

purchase any products through its debit or credit card, an automatic text will be

forwarded to the customer to verify the transaction. Askari Bank’s dispute team deals

with this issue if any theft or unauthorized transaction is done on customer’s debit or

credit cards.

So, in short, Askari bank deals with number of information systems in the country.

And all the above services are available at Askari bank Multan and are supervised by

a dedicated MIS team.



Critical Analysis

Ratio AnalysisThe information contained in the four basic financial statements is of major

significance to various interested parties who regularly need to have relative measures

of the company’s operating efficiency. Relative is the key word here, because the

analysis of financial statements is based on the use of ratios or relative values. Ratio

analysis involves methods of calculating and interpreting financial ratios to analyze

and monitor the firm’s performance. The basic inputs to ratio analysis are the firm’s

income statement and balance sheet.

Ratios 2009 2008

Current ratio 1.03 1.04

Total asst turnover 0.11 0.09

Debt ratio 0.93 0.93

Gross Profit margin 0.11 0.22

Operating profit margin 0.21 0.12

Net profit margin 0.22 0.26

ROA 0.02 0.02


RATIO ANALYSIS


Earning Asset to Total Assets

Earning assets are the assets which are very important for any company for the bank

earning assets are the assets on which bank can earn its profit which may includes

loans, advances, operating fixed assets and other assets on the loans and advances

bank can make profit by giving or investing in somewhere so Askari Bank has

increased its earning assets in the year 2009 as compared to the previous year that

show the good trend in the profitability of the Askari bank and the customer believe

on the Bank.

Ratio tells that on what percentage earning assets contribute the total assets. Well

bank also has increased its earning assets ratio shows the more profitability of the

bank as it can be shown by the profit and loss account of the 2009 that shows the net

mark up income more for the year as compared to the previous year so bank is going

gradually to the more profitability by giving more advances and loans.

Return On Earning Asset

This ratio indicates the how much of earning assets take part in making of the profit

before taxation. This ratio is decreased during the year. Why is it so it has different

reasons these are as follows

Profit before taxation was more in the previous year as compared to the year 2007

because bank has low expenses and less provision for the bad debts and also bank has

small investments and limited loans and advances but in 2009 situation has changed

and bank increased its loans and advances.

Earning assets were also low in the previous year as compared to the 2009 so overall

ratio has been decreased but shows the good trend for the making of long term

planning

Formula:

Profit after tax / earning assets

= 2,681,012 / 176636847

= .015



Loan Loss Coverage Ratio

This important figure is a reserve account to cover unexpected defaults on loans by

borrowers. These are generally referred to as no performing loans. The higher the no

performing loan and charge-off percentages, the higher the provision for loan losses

should probably be. Consequently, this would reduce net income and earnings per

share.

Well in the year 2009 bank’s this ratio has been increased to a great extent due to

different reasons theses are as follows.

Profit before taxation is low for the 2009 due to more expenses because bank is in

expanding mode that’s why its expenses are increasing day by day.

Provisions and bad debts also increased in the year 2009 because bank also has

invested more in this year and ad more also granted more loans.

Loan To Deposit

Well there is a concept that bank’s loans are its assets while its deposits are liabilities.

But if a bank has low deposits then obviously it will give low loans because bank

gives its loans by the deposits and earn on the loans then pay mark up on the deposits

to the customers.

Well bank has increased its loans to deposits ratio in the year 2009 showing its more

deposits as well more loans and that is good for the bank to remain in the market and

to penetrate in the market.

1. But profit has not increased with the same ratio because

2. Bank has low mark up rates

3. Bank has more capacity for provisions

Current Ratio

This ratio indicates the liquidity of the bank. Well this ratio has been decreased but nt

much decreased during the year to a small extent due to

1. Bank has increased its deposits so liabilities have been increased.

2. Bank has increased its assets as well to overcome the liabilities.

3. So overall we can say bank is the liquid enough to pay its liabilities



Debt Ratio

Debt ratio remained the same in previous year it was .93 and in 2007 its again 0.93.

Bank has not decreased its debt ratio in 2009.

Operating Profit Margin

Net profit margin of a bank has been increased from 0.12 to 0.21.

Gross Profit Margin

The company’s gross profit margin was 0.22 in 2008 but decreased to 0.11 in 2009. It

tells us that the company incurred more expenses in 2009 than in 2008 so its gross

profit margin went down also.

Horizontal & Vertical Analysis

Comparing analytical data for a current period with similar computations for prior

years affords some basis for judging whether the condition of the business is

improving or worsening. This comparison of data over time is called as horizontal or

trend analysis, to express the idea of reviewing data for a number of consecutive

periods. It is distinguished from vertical analysis or static analysis which refers to

the review of the financial information of only one accounting period.



Horizontal Analysis

Balance Sheet Accounts

2009 2008 Difference %age

ASSETS

Cash 13356055 14879230 -1523175 -10.2369

balances wid other banks 3497054 7333002 -3835948 -52.3107

Lendings 14444143 8392950 6051193 72.09852

Investments 39431005 28625915 10805090 37.74583

Advances 100780162 99179372 1600790 1.614035

fixed assets 5128428 3810331 1318097 34.59272

defferd tax assets

other assets 5535038 3812788 1722250 45.17036

TOTAL 182171885 166033588 16138297 9.719899

LIABILITIES

bills payable 2627051 1839077 787974 42.84617

Borrowings 17553525 14964087 2589438 17.30435

Deposits & other acc 143036707 131839283 11197424 8.493238

sub-ord loans 2997300 2998500 -1200 -0.04002

liabl against assets

deferred tax liab 471519 736298 -264779 -35.9608

Other liab 3219796 2603113 616683 23.69021

TOTAL 169905898 154980358 14925540 9.630601

Net assets 12265987 11053230 1212757 10.97197




ASSETS ANALYSIS

LIABILITIES COMPARISON


Profit And Loss Accounts

2009 2008 Difference %age

interest earned 15143241 12596921 2546320 20.21383

interest expensed 8685624 6977313 1708311 24.48379

net mark up/interest income 6457617 5619608 838009 14.91223

loans & advances 3920240 1128137 2792103 247.4968

value of investment 1501 376 1125 299.2021

bad debts written off 3921741 1128513 2793228 247.514

interest income after provision 2535876 4491095 -1955219 -43.5355

Non markup/interest income

fee,comm,brockerage income 1072868 1013660 59208 5.841012

dividends income 137079 109326 27753 25.38554

income from dealing in for curr 655761 584344 71417 12.22174

gain on sale of inv 2361251 112474 2248777 1999.375

unleasing gain 1728 -2308 4036 -174.87

other income 336809 321758 15051 4.677739

total non markup/interest income 4565496 2139254 2426242 113.4153

7101372 6630349 471023 7.104045

Non markup/interest expense

admin exp 4789536 3277353 1512183 46.14038

other pro/write offs

other charges 12051 6141 5910 96.2384

total non markup/interest expense 4801587 3283494 1518093 46.23407

2299785 3346855 1047070 -31.2852

Profit before taxation

current yrs 98535 983875 -885340 -89.985

prior yrs -233950

Deferred -245812 113006 -358818 -317.521

-381227 1096881 -1478108 -134.756

Profit after taxation 2681012 2249974 431038 19.15747

profit brought forward 1799979 1617597 182382 11.27487

profit available for appr. 4480991 3867571 613420 15.8606




MARK UP ANALYSIS

PROFIT ANALYSIS




Vertical Analysis

Balance Sheet Accounts

2009 2008

ASSETS

cash 13356055 7.331567657 14879230 8.961578

balances with other banks 3497054 63.18030698 7333002 4.416577

lendings 14444143 7.928854115 8392950 5.054971

Investments 39431005 21.64494538 28625915 17.24104

advances 100780162 55.32146851 99179372 59.73452

o.fixd assets 5128428 2.815158881 3810331 2.294916

other assets 5535038 3.038360173 3812788 2.296396

TOTAL 182171885 166033588

LIABILITIES

Bills payable 2627051 1.442072689 1839077 1.107654

Borrowings 17553525 9.635693784 14964087 9.012687

Deposits&other acc 143036707 78.51744357 131839283 79.40519

Sub-ord loans 2997300 1.645314259 2998500 1.80596

liabl against assets

deferred tax liab 471519 0.258831927 736298 0.443463

other liab 3219796 1.767449461 2603113 1.567823

TOTAL 169905898 154980358

Net assets 12265987 11053230



Findings on the Basis of Analysis

By the horizontal or comparative analysis in which base year is taken as 2008 certain

changes are measured in the Bank’s performance. Cash with other banks and balances

with other banks gradually increased in the time line showing the bank’s good

performance and this indicate that bank can earn more by making balances with the

other banks. Lending to financial institutions not done in the last year due to more

investments done by the bank and by giving more and more advances to the

customers but this also has increased the bad debts and provisions of the bank as

compared to the previous years.

Operating assets has been decreased so that is in favor of the bank. On the liabilities

side bank also has increased its bills payable that shows that bank has certain

increased in the liabilities as well bank’s deposits also increased showing the great

penetration in the market place as well customer’s believe on the bank to make

deposits that’s why bank’s mark up expense has been increased. Equity also increased

in the previous year but bank’s profit has been decreased because bank has invested

so much and in the development process so increased in the expenses. Overall bank’s

financial position in the marketplace has been increased in terms of deposits and

advances. All these reasons are favorable to the bank in year 2008 because at one side

bank’s assets have been increased in the form of advances and at other side markup

income increased due to deposits because bank can more invest it

Balance Sheet’s one portion that is Assets shows certain changes during the year. e.g

Cash & balances with treasury banks have been increased that shows the bank has

fulfilled and improved SBP requirements because of maintenance of foreign currency

as well as Pakistani currency with other banks due to this balances with the other

banks whether outside the Pakistan or inside the Pakistan have been increased.

While investment have been decreased due to making balances with the other banks

and so advances increased by giving more to the customers so earning power also

increased. In 2009 bank not lend money to the financial institutions. Bank’s operating

fixed assets have been decreased to a small extent due to this profit also is increased

because bank is the service organization and for service organizations no need of

more operating fixed assets. Bank’s deposits and other accounts have not been



increased to the same extent as bank is giving advances. Well that shows a positive

trend because bank expenses would be automatically decreased that are due to cash

management.

Bank’s net assets have been decreased because of less operating fixed assets and also

due to increase in liabilities. Balance Sheet shows the assets are more contributed by

the Advances and liabilities are more contributed y the Deposits that are favorable for

the Bank. Overall result is less profit for 2009 as compared to 2008. But this has

certain different reasons these are as follows Increase cash and balances with the other

banks

More advances

Increase in deposits

All these reasons are favorable to the bank in year 2009 because at one side bank’s

assets have been increased in the form of advances and at other side markup income

increased due to deposits because bank can more invest it.

Applications of Class Room Concept

In Accounts department there was an implementation of Financial Accounting

in making balance sheets, income statements, calculation of depreciation etc

In credits department there was an implementation of different categories of

loans like personal loans, corporate loans etc which was studied in Financial

Management.



SWOT Analysis

SWOT (Strength, Weaknesses, and Opportunities& Threats) analysis of AKBL is

described below:

Strengths

The management of the bank trusts in customer focused banking instead of

product oriented banking.

It offers phone banking & online banking services.

It operates full day and is leading private sector bank. It has the biggest ATM

network as well.

It is sensitive to ethical banking, legal concerns related to banking and its

overall public image.

AKBL has got a well-developed on-line system in most of its branches.

Remittance Department is working very efficiently in transferring the funds of

people due to this system.

The Bank has also started ATM facility in most of its branches. 24-hour

Banking is new trend in Pakistan and AKBL has also taken apart in this trend.

One distinctive feature of the Bank is that it is the only Bank working for the

welfare of army officers, which was established by Army Welfare Trust.

The productivity of the Bank is very good. Bank is providing a high quality

service to its customers.

AKBL have strength that most of the imports which are done in Multan are

handled by AKBL Multan.

Weaknesses

AKBL has lesser number of branches as compared to many other banks. Due

to this problem, army officers can not avail the benefits of their own Bank.



Manual bookkeeping, lack of centralization and specialization are also hurdles

for the bank.

The human resource department is not performing the function of selection

and recruitment very effectively. Selection process is not on merit due to

which competent persons cannot be selected.

Bank should boost the product development and increase the range of facilities

offered for customers.

Bank is weak in its credit management. Bank should lend to very sound parties

and increase its payment rate.

Opportunities

Government is taking very bold steps to promote IT in Pakistan. AKBLhas an

opportunity to take benefits from advancements in technology.

AKBL is surrounded by many competitors. It has an opportunity to do

aggressive marketing to increase its business.

AKBL may increase its branches in competitive areas.

It has huge business; therefore it can attract a big amount of foreign

investment.

It has sturdy prospective for growth and continuous increase in the Deposits.

It has overseas workings and many branches in small villages.

It can improve its Islamic Banking.

It can get strident upsurge in imports and exports.

Threats:

AKBL has many competitors, which are continuously increasing its products

and market aggressively. It may cause its customers to shift to competitors.

It has high employee turnover and it charges too high to customers as interest.



Rate of return is low.Staff is also not much experienced to tackle tough

competitors.

Some other Banks have competent taskforce, which is also a threat for AKBL.

because human resource is the most valuable factor.

Due to the increased bad situation of Pakistan in which army is considered to

be involved increase the frequency of withdrawals, which would decrease

deposits.



Internal Factor Evaluation Matrix

IFE Matrix is an effective tool for the purposes of auditing and evaluation of the

organization’s business position. This matrix shows the internal strengths and

weaknesses in a tabular form showing weight-age and rating.

S.NO FACTORS WEIGHT % RATING WEIGHTED SCORE

INTERAL STRENGTHS:

1 High credit rating 15 4 0.6

2 Smooth business process 10 4 0.4

3 Customer Facilitation 20 4 0.8

4Motivated Human

Resource5 3 0.15

5 Employees satisfaction 5 3 0.15

INTERAL WEAKNESSES:

1 Bad office politics 10 2 0.1

2 Personal dislikes 10 2 0.2

3No strictness on

employees working10 1 0.1

4 Undue favors 5 2 0.1

5 Weak internal controls 10 1 0.1

Major Weakness (1), Minor Weakness (2), Minor Strength (3), Major Strength (4)

TOTAL WEIGHTED SCORE



External Factors Evaluation Matrix

EFE Matrix is an effective strategic management tool for assessing the business

conditions and for external auditing purposes. The EFE matrix is very similar to

the IFE matrix. The major difference between the EFE matrix and the IFE matrix is

the type of factors that are included in the model.

S.NO FACTORS WEIGHT RATING WEIGHTED SCORE

EXTERNAL OPPORTUNITY:

1 Modernized technology 10 4 0.40

2 Investments 10 4 0.40

3 Foreign trade 10 3 0.30

4 Leasing business 10 3 0.30

5 Commercial financing 10 3 0.30

EXTERNAL THREATS:

1 Market Competition 10 2 0.20

2 Govt. Policies 10 2 0.20

3 Unstable political forces 10 2 0.20

4 Inefficient team 10 1 0.10

5 Low Advertising 10 2 0.20

Poor (1), Below Average (2), Above Average (3), Superior (4)

TOTAL WEIGHTED SCORE



Threats Opportunities Weaknesses Strengths Matrix

External Opportunities External Threats

Internal Strengths High credit ratingSmooth business process

CompetitionGovernment Policies

Internal Weaknesses Bad office politics Inefficient team

The above graph depicts SWOT analysis matrix that how Askari bank can work better

to deploy its strengths to avail market opportunities and how threats and weaknesses

can be can be handled. Askari bank has a positive high credit rating and this can be

further enhanced with littlebit extra effort. Askari banks also posses strong and

effective business process. The reason behind this that they have invested hefty

money in deployment of information systems according to the needs of each dept.’s

functions and process. On the other hand, organizational politics can have adverse

impact on organizational success. High market competition also threats in banking

sector as Govt. policies are in favor of FDI which may cause the increase of

competition. Also, banks products range has been increased with the demand in the

market and technological demands. Askari bank also has the challenge to find skilled

people in the country, because with the passage of time, new products and processes

have been introduced in developed countries. To benchmark these processes in

Pakistan’s banking system, qualified team is required.



Competitive Profile Matrix

Askari Bank Ltd. Alfalah Bank Ltd.Muslim

Commercial Bank Ltd.

Critical Success Factors

Weight RatingWeighted

ScoreRating

Weighted Score

RatingWeighted

Score

Advertising 0.20 2 0.40 2 0.40 3 0.60

Service Quality 0.15 4 0.60 3 0.45 4 0.60

Competitiveness 0.10 3 0.30 3 0.30 2 0.20

Management 0.15 4 0.60 3 0.45 3 0.45

Financial

Position0.10 3 0.30 2 0.2 4 0.40

Customer

Loyalty0.05 4 0.20 4 0.2 4 0.20

Expansion 0.05 3 0.15 3 0.15 4 0.20

Market Share 0.20 3 0.60 2 0.4 4 0.80

TOTAL 1.00 3.15 2.55 3.45



Boston Consulting Group Matrix (Bcg)

The BCG Matrix graphically portrays differences among divisions in terms of relative

market share position and industry growth. It is divided in four sections i.e. Question

Marks, Stars, Cash Cows and Dogs.

HIGH

LOW

LOW HIGH


QUESTION MARKSSTARS

CREDIT CARDS CAR FINANCINGHOME LOANS

DOGS CASH COWS

BANK INSURANCE LIFE INSURANCEIJARAH FINANCING AGRO - FINANCING


Porter’s Five Forces Analysis

The strategic planning process is considered essence of strategic management. The

Analysis starts by defining business and by forming a vision and mission and further

goes on through the audit of environment (internal and external).

Analysis------Planning--------Implementation---------Control

Barriers to entry:In an industry, significant structural components are used to limit

the new competitor’s entry into the market. In Pakistan, Govt. policies are very much

in favor of FDI and local investment in all industry specially in banking sector.

Number of banks has been opened in Pakistan in recent years, so barrier to entry are

not much in favor of banking sector in Pakistan.

Rivalry:Competition has increased in Pakistan due to large number of banks. The

foreign banks with huge amount of investment and automated way of business

processing are have increased the market competition.

Substitutes: the variety of products ranges have been introduced in banking sector.

To remain competitive and to be a market leader, substitutes have been introduced by

Askari bank with response to target market. Substitutes on the other hand also

increase competition with current products of the organization so reasonable

comparison should be made to Ancash all products ranges.

Power of Suppliers: Suppliers also impact on business. In banking sector, the

different Information system vendors sometimes put pressure on organizations to

restrict the use of that system. Like SAP, a joint ERP and Banking (IS) provider in the



world, sometimes restrict its users to buy its other products to make its integration

much better.

Power of Buyers: Buyers possess important status in real market. Bargaining powers

of buyers sometimes affect interest rates to be reduced in the market. The Quantity or

volume is the major factor to determine buyer’s bargaining power.”

Value Chain Analysis

Value chain analysis is important in understanding the effectiveness of activities

within organizations, which create value for customers. Value chain analysis is based

on the rules that organizations exists to create value for customers. In analysis,

activities with added values are divided into separate sets. On the basis of this

analysis, organizations can more effectively anticipate their internal strengths by

identifying and observing each of these activities. Every activity which adds value is

considered to be competitive advantage for the enterprise.”



Ansoff Growth Analysis

This model shows the market attractiveness in the industry. Askari bank has resources

to penetrate in existing market. Also product development is helpful to remain

competitive in the market, because with the advent of technology, new products

needed in the market. New markets and market development strategies are also

required by compete in banking



Conclusion

After spending six weeks in different departments of the bank, interacting with the

employees, getting their views, observing the organizational structure and design, I

have come up with the following suggestions that in my view, will definitely improve

a few weaknesses observed in the bank by me.

1. Flexible Policies

The bank should adopt flexible policies, especially in the areas of recruitment,

promotions, evaluation of employees otherwise the high turnover observed in

the bank will continue to create problems for the bank now and in future.

2. Job Security

The employees of the organization should be ensured about their job security

to avoid any pressure on employee’s performance.

3. Permanent Hiring

Fresh hiring should be made on permanent basis which will increase the

motivation among employees.

4. Trainings

On the job and off the job trainings sessions should be conducted to improve

skills of the employees as well as to get them updated with the changing rules,

regulationsand procedures.

5. Perks and Fringe Benefits

Perks and fringe benefits shall be enhanced according to the increasing

inflation and market competition.



Recommendations

Measures should be taken to resolve internal conflicts or internal office

politics, so that work environment remains smooth and calm.

Coordination among the Co-workers is required to achieve the targeted results.

Updated software technologies should be adopted to enhance the services and

customer facilitation.

Work environment should be flexible.

Proper delegation of work.

Customers should be given some sort of facilities which can convince people

for investment and go for Askari bank for Exports and Imports.

First floor of bank is much congested, there is needed to work on that.

There is not a proper environment of customer dealing on that floor that’s why

customer feels difficulty in that.

Accounts department was much congested, so area of that department should

be extended.

After annual closing of bank there should be a get together of all the

employees of bank which can give them a healthy atmosphere to work.

Few of the employees used to interfere in others work so they should be

strictly advised to perform their own duty well.



References

www.askaribank.com.pk

www.pakbiz.com

Edward. W Schin: 1985, A management system for information Business: Prentice

Hall, P-243

S.Sadagopan: 2004, Management Information System: PHI learning Pvt. Ltd., P-

123

Alexander Kossowski: 2007, Strategic Management: Porter's Model of Generic

Competitive Strategies - Theory and Analysis: GRIN Verlag, P-121

Amit Konar: 2007, Artificial Intelligence and Soft Computing: Behavioral and

Cognitive Modeling of the Human Brain, Volume 1, Taylor & fFrancis

Group, P-234


http://www.pakbiz.com/

http://www.askaribank.com.pk/

Documents

Askari Bank Report Final VU