Professional Documents
Culture Documents
INTRODUCTION
COMMERCIAL BANK
“The commercial bank receives surplus money from the public and
lend to others who needs funds. Bank collects cheque, bills of
exchange etc from customers. It transfers money from one place to
another. It provides agency and general utility services. Purpose of
commercial bank is to earn profit.”
Askari Bank is the only bank with its operational head office in
the twin cities of Rawalpindi-Islamabad, which have relatively
limited opportunities as compared to Karachi and Lahore. This
Askari Commercial Bank is the only Private Sector bank that has
been approved by the World Bank as a Participating Financial
Institution for the US$ 200 million Line of Credit sanctioned
(authorized) to the Government of Pakistan for the Financial Sector
Deepening and Intermediation Project.
FIELD OF ACTIVITIES
INTERNATIONAL DIVISION
Mainly responsible for managing correspondent banking
relationships and planning overseas operations, the Division plays a
vital role in extending foreign trade transactions support to the
branches. The Bank became a member of SWIFT in the Year 2000
and is also a contributor to the equity of Pakistan Export Finance
Guarantee Agency Ltd With a network of 167 correspondents
spread over 95 countries worldwide, the Bank continued to
reinforce its leadership position in trade finance, transacting
business of over Rs. 70 billion, during this year. Through the
concerted efforts of this Division, we are a participating Bank under
the "Pakistan Trade Enhancement.
Facility" of the International Finance Corporation, and our
customers are entitled to avail of the "Political Risk Guarantees
Scheme" extended by the Asian Development Bank.
TREASURY
Responsible for managing Bank’s liquidity and foreign exchange
transactions, our Treasury in one of the most active in the market.
Through reported transactions, purchase of Government paper and
foreign exchange trading, the Division adds substantially to the
Bank's sustained earnings.
CREDIT DIVISION
Providing extensive support to branches for credit administration,
control and monitoring, the division has played a pivotal role in
helping the bank achieve a remarkable loan
Growth of 31%, with well diversified risk exposures. Most of the
loans are of shot -term trade financing on a secure and self-
liquidating basis. The division has a special assert management
team, which is responsible for ensuring low ratio of bad debts,
effective monitoring of delinquent advances and close follow-up of
recoveries. Bank's head office credit committee, reviews the credit
quality and pricing on regular basis not only to ensure healthy
credit growth but also the management of bank's risk assets in
almost prudent and profitable manner
FINANCE DIVISION
AUDIT DIVISION
The audit division reports directly to the board through the
executive committee, which is also the audit committee. The audit
division is completely independent of the management and is
responsible for checking and reporting on the management
The system of regional and area offices has been introduced since
1999 for effective supervision and control of branches. The scope of
the system also spans the development and management of bank's
business and activities, on a regional basis.
1) North region
2) Comparison of Islamabad and Rawalpindi area and the north
area.
3) Central region
4) Comprising of Lahore and East area.
5) South region: and
6) West region
VISION
CORE VALUES
• Commitment
• Integrity
• Fairness
• Team-work
• Service
CORPORATE PHILOSOPHY
CUSTOMER RELATIONSHIPS
EMPLOYEE RELATIONSHIPS
TECHNOLOGICAL INNOVATION
Technology is rapidly changing the way Askari think, act and does
business. It has played a pivotal role in enhancing customer
expectations, particularly with respect to speed and quality of
service.
ETHICAL VALUES
CORPORATE CITIZENSHIP
GROWTH
CORPORATE ACHIEVEMENT
MANAGEMENT SYSTEM
CORPORATE INFORMATION
MANGERIAL POLICIES
ORGANOGRAM
BOARD OF DIRECTORS
South II
West
CORPORATE INFORMATION
Board of Directors
Lt. Gen. Waseem Ahmed Ashraf Chairman
Lt. Gen. (R) Masood Perwaiz Chairman Executive committee
Mr. Kalim-ur-Rehman President & Chief Executive
Brig (R) Mohammad Shiraz Baig Director
Brig (R) Muhammad Bashir Baz Director
Brig (R) Asmat Ullah Khan Niazi Director
Brig (R) Mohammad Safdar Ali Director
Mr. Javed Ahmad Noel Director
Mr. Zafar Alam Khan Sumbal Director/Secretary
Mr. Shahid Hafeez Azmi Director
Mr. Mohammad Afzal Munif, FCA Director
Mr. Tariq Iqbal Khan, FCA Director (NIT Nominee)
Audit Committee
Mr. Muhammad Afzal Munif, FCA Chairman
Brig (R) Muhammad Shiraz Baig Member
Brig (R) Asmat Ullah Khan Niazi Member
Mr. Zafar Alam Khan Sumbal Secretary
Auditors
A.F.Ferguson & Co
Chartered Accountants
Legal Advisors
Rizvi,Isa, Afridi & Angell
Website: www.askaribank.com.pk
MANGERIAL POLICIES
A. Financial policies
B. Procurement policies
C. Marketing policies
D. Promotional policies
E. Lending policies
F. Personal policies
FINANCIAL POLICIES
The financial policies of any bank are the most important policies
through which the whole banking activity is conducted. These
policies are primarily conducted on:
• Source of funds
• Use of funds
SOURCE OF FUNDS:
The bank finance policy is acquiring funds from the following
sources:
• Deposits of account holders.
• Interest on advances and loans granted to the borrowers.
• Income and commission from the services provided by the
bank.
• Bank open various types of accounts for its customers
Services are provided for earning.
• Interest income and commission bank providing the services
to its customer.
USE OF FUNDS:
PROCUREMENT POLICIES
MARKETING POLICIES
PROMOTIONAL POLICIES
LENDING POLICIES
Every bank has its own lending policies except for those, which are
common for all the banks, i.e. the policies, which are imposed on all
the commercial banks by the SBP, are known as prudential
regulations. The lending policies of ACBL are as follows:
PERSONAL POLICIES
DEPARTMENTS
CREDIT DEPARTMENT
FOREX DEPARTMENT
Import department
Export department
Foreign currency department
ACCOUNTS DEPARTMENT
IT- DEPARTMENT
Officer Officer
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 to carry out this requirement partially or wholly may lead
to undesirable results.
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 a e-mail.
Special instructions:
Clear-cut special instructions must be obtained from customers. If
the customer has not given any special instruction specified column
Existing/other bankers:
Almost most all the bankers usually have a banking relationship
with another bank. In case of customer who does not have an
existing banking relationship, or does not want to disclose the
existing relationship, then it is strongly recommended that at least
for some time this particular account must be kept under
observation.
TYPES OF ACCOUNTS
• Minor account
• Illiterate person account
• Joint account
• Proprietorship account
• Partnership account
• Limited company’s account
• Accounts of club societies and associations
• Agent’s accounts
• Trust account
• Liquidator’s account executer’s and administrator’s
account
REMITTANCE DEPARTMENT
• Pay Order
• Demand Draft
• Pay slip
• Telegraphic Transfer
• Payment of Remittances
• Cancellation of pay order & demand draft
1) Instrument transfer
2) Electronic transfer
3) Mail transfer
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
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. In case of agency arrangement-
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 ACBL payable
by MCB.
PAY SLIP
The bank for settlement of it own payment issue pay slip.
• No excise duty
• No commission
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
Verification of signatures
Posting
Handling of prize bond
Process of deposits
Deposited on
Fill- up deposit Receipt Customer
slip
Process of payment
Cancellation officer
Cashier counts
the amount & cancels cheque
payment is made
Two signatures on
back of the cheque Posting is made
by customer
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
House At specified time” in an efficient way”.
1. Since clearing does not involve any cash etc. and all the
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 pilferage 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.
CLEARING HOUSE
It is a place where representatives of all banks sit together and
interchange their claims against each other with the help of
controlling staff of State Bank of Pakistan And where there is no
branch of State Bank of Pakistan the designated branch of National
MEMBERSHIP CEASES
It ceases to be a scheduled Bank.
It is not able to meet its liabilities.
State Bank of Pakistan or Central Govt. prohibits it to
receive fresh deposits.
SPECIAL CLEARING:
In addition to the normal clearing function at Clearing house it is
mutually agreed to hold an extra clearing at the clearing house on
the particular day and time which is known as “special clearing” it is
arranged due to the rush of work arising out of say, more Holidays
declared by the Central Govt. at a time, but normally special
clearing is he4ld on last working day of our half yearly and yearly
closing i.e. 30th June and 31st Dec. every year.
ONLINE BANKING
Online banking means that the customer of ACBL can deposit /
withdraw funds in / from other branches of ACBL. Askari bank
provides online facility to all its branches.
ONLINE CHARGES
LOKERS
Askari bank offers facility of lockers to its customers.
CHARGES
CREDIT DEPARTMENT
Although the study of money is important for the understanding of
the way in which our economic system operates, we must recall this
point that most exchange transactions in this system are carried on
today without the use of actual money, i.e. Those are carried on by
means of credit and credit instruments rather than money. While
money still forms the basis of credit and deferred payments, it is
necessary to examine the nature of credit operations, and the
instruments and institutions trough, which these operations are
carried on, in considerable detail.
TYPES OF CREDIT
The verities of credit may be classified in numerous ways-
according to the status of eh debtor, according to the status of the
creditor, according to the time for which the credit is granted, and
so on; but the most fruitful classification usually indicates the use
to which the credit is put.
2. Band Credit:
In Comprehends all kinds of promises to pay off banking
institutions, including demand deposits, time deposits, notes,
bankers, acceptances, cash, letters of credit, debentures, and
bonded obligations. Frequently, the term bank credit is restricted in
use to refer only to the demand deposit liabilities of the commercial
banks, and one must constantly be on guard to recognize the
employment of the term in this restricted sense. As a sub-class of
bank credit, central bank credit is of outstanding importance in
3. Investment Credit.
The credit structure, business if found upon examination to consist
very largely of two forms of credit. Investment credit is extended
through loans, the proceeds of which are put into the fixed assets of
a business enterprise. If the owners of business cannot themselves
furnish all of the capital necessary for investments in land, buildings
and equipment. Obviously what they need is loans of capital
running over a considerable period of years.
4. Commercial credit
In addition to seeking credit in long term investment in fixed
assets, most business periodically ask for credit in the form of short
term loans. Commercial credit is business supplier for current
business operations, such as manufacturing and marketing of
goods. It often take more business capital than business can
themselves supply to pay for raw materials, to make the outlays for
wages and to carry inventories of finished goods until they can be
converted into cash. To help finance such operations short-term
loans usually running from thirty days to six months are negotiated.
Commercial loans like investment loan must ultimately be paid out
of accumulated earnings of a business. But if the business earnings
are of immediate future, such loans can be safely made and
promptly paid. Commercial loans are base done quick assets, such
as raw material and finished goods, which are in constant process
of liquidation and thereby provide the cash with to extinguish loans.
Bills of exchange:
A bill of exchange is define by negotiable instruments act as "an
instrument in writing, containing an unconditional order, signed by
the maker, directing a certain person, to pay certain sum of money,
only to or to the order of a certain person, or to the bearer the
instrument".
Cheque:
A Cheque is defined “a bill of exchange drawn on specific banker
and not expresses to be payable otherwise than on demand."
Cheques may be of various types, which are as follows:
Bearer cheque
Order cheque
Open cheque
Crossed cheque
Marked cheque
Drafts:
These are bills of exchange issued by a banker on his branch office.
Banks draft like bills of exchange, are of great importance in the
financing of trade, especially foreign trade
Promissory note:
It is an instrument in writing containing an unconditional
undertaking, signed by the maker, to pay the certain sum of money
only to or to the order of a certain person to the bearer of the
instrument. a promissory note in order to be the so, must fulfill all
conditions.
Letter of credit:
A letter of credit as name signifies does one person or bank to
another requesting the letter to pay any amount of money up to a
certain limit to the person write a letter named in the letter or in
whose favor the letter is written. In this letter generally a date is
fixed upto only the addressee should make which advances. Thus a
letter of credit remains in force upto a certain date only. Generally
banks grant this letter of credit.
In 1994, 1996 and 1997 the bank received Euro money and Asia
money awards. Askari has A1+ rating for short-term obligations the
highest possible for the category, while the long-term rating stands
at AA. Askari Bank Won the prestigious “Best presented Annual
Accounts” awards for 2000 and 2001 from the institute of cost and
Management Accountants of Pakistan, for the services sector.
For the past four years, the Bank has received prizes from the
South Asian Federalism of Accountants for “The Best presented
Annual Accounts” for the financial sector, in the SAARC region.
Over the years, Askari Bank has proved its strength as a
leading banking sector entity, by achieving the following firsts in
Pakistan banking.
These Include:
Best Commercial Bank Consumer Choice award 2005 by
The Consumers Association of Pakistan
Best Retail Bank in Pakistan award 2004 & 2005 by The
Asian Banker
Best Corporate Report 1st prize awarded for 2000, 01, 03
& 04 by Institute of Chartered Accountants of Pakistan (ICAP)
1) Deposits
2) Advances
3) Products
4) International banking services
5) Agency services to customers
1) DEPOSITS
• Current Account
• PLS Saving Account
• Term Deposit
• Notice Deposit
• Askari Faida Account
• Askari Special Deposit Account
• Value Plus Saving Account
• Askari Advantage
Current Account
Transaction fee
Saving Accounts
Transaction fees
2. ADVANCES
• Funded facilities
• Non- Funded facilities
Funded facilities
Non- Funded facilities are those in which bank substitutes its own
credit for its customers.
ACBL offers to its customers are large number of non-funded
facilities.
These facilities includes:
1. Guarantee
2. Latter of credit
Irrevocable letter of credit
Revocable letter of credit
Sight letter of credit
Usance letter of credit
3. PRODUCTS
PERSONAL FINANCE
MORTGAGE FINANCE
BUSINESS FINANCE
Yet another of our products, Askar offers the most convenient and
affordable vehicle- financing scheme, which provides our valuable
customers an opportunity to own a brand new vehicle of their
ASKCARD
TRAVELLER CHEQUES
The range of our products and value added services enhances with
introduction of Rupee Travellers Cheques (RTCs) launched in March
2002. In spite of our constraint on issuing higher denomination of
RTCs against restrictions imposed by the Central Bank of Pakistan
we have been striving to attain our shares with sizeable portfolio.
Total volume handled by the department during the year 2004 is
Rs. 798 Million.
ASKPOWER
VALUE PLUS
NO JOINING FEE
GLOBAL ACCEPTABILITY
With Askari MasterCard, you are always a phone call away from the
assistance you need. To speak to one of our friendly Customer
Service representatives, please call our UAN 111-000-787 for
Karachi, Lahore or Rawalpindi/ Islamabad.
Just purchase your travel tickets on Askari MasterCard and you are
automatically covered under our Travel Insurance Plan (in case of
personal accident resulting in death or permanent disablement) for
up to Rs.8,000,000/- on a Gold Card and Rs.4,000,000/- on a Silver
Card.
So, no matter where you are going, you are always assured of a
red carpet welcome.
10% on Restaurants
AGRICULTURE BANKING
NO HIDDEN COST.
PRODUCTS
FINANCIAL ANALYSIS
The firm itself and outside providers of capital – creditors, and investors – all
take benefit from the firm’s financial statements. The type of analysis varies
according to the specific interest of the party involved. Similarly objectives of
the financial statements analysis vary from person to person.
Trade creditors are primarily interested in the liquidity of the firm.
Their claims are short terms, and the ability of the firm to pay their
claims quickly is best judged by an analysis of the firm’s liquidity.
Bondholders are more interested in the cash flow ability of the firm
to service a debt over a long period of time. They may evaluate
their ability by analyzing the capital statement of the firm.
Investors usually focus on the profitability of the firm. They would
be concerned with the financial conditions insofar as it’s affects the
ability of the firm to pay dividends and avoid bankruptcy.
Management employees financial analysis for the purpose of
internal control and to better provide what capital suppliers seek in
financial conditions and performance from the firm
Management needs to undertake the financial analysis in order to
plan and control effectively.
Financial ratios are the tools, which are used to analyze the
financial conditions and performances.
Finally, financial statement analysis deals with the outcomes of the
past decisions and leads to the future planning.
ACCOUNTING POLICIES
REVENUE RECOGNITION
Mark-up and return on investments and advances is recognized on accrual
basis except for income which is required to be carried forward in compliance
with Prudential Regulations issued by the State Bank of Pakistan.
ADVANCES
Advances are stated net of provisions for non-performing advances.
The management keeping in view the requirements of the
Prudential Regulations issued by the State Bank of Pakistan
determines provision for non-performing advances. In addition a
general provision is maintained on a judgmental basis. Advances
are written off when there is no realistic prospect of recovery.
INVESTMENTS
In accordance with the requirements of BSD circular No. 11 dated
04 August 2004 securities for which ready quotations are available
on Reuters Page (PKRV) or Stock Exchanges are valued at market
value and he resulting surplus/deficit is kept in a separate account
and is shown below the shareholders’ equity in the balance sheet.
Investments where ready quotations are not available are stated at
cost less permanent diminution in value thereof.
Held to maturity
Held for trading
Available for sale
Assets held under finance lease are accounted for by recording the
assets an related liabilities at the amounts determined on the basis
of lower of fair value of the assets and the present value of
TAXATION
Current tax is the expected tax payable on the taxable income for
the year using tax rates enacted at the balance sheet date and any
adjustment to tax payable of previous years.
Deferred tax is provide for using the balance sheet liability method
providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the
amount used for taxation purposes. The amount of deferred tax
provided is based on the expected manner of realization or
settlement of the carrying amount of assets and liabilities using tax
rates enacted at the balance sheet date. A deferred tax asset is
recognized only to the extent that it is probable that future taxable
profit will be available and credits can be utilized. Deferred tax
assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
The Bank operates an approved funded gratuity scheme for all its
permanent employees. Contributions are made in accordance with
the actuarial recommendation. The actuarial valuation is carried out
periodically using “Projected Unit Credit Actuarial Cost Method”. The
actuarial gains/losses of one accounting period are recognized in
the following accounting period.
The Bank operates a recognized provident funds scheme for all its
permanent employees for which equal monthly contributions are
made both by the Bank and by the employees to the fund at the
rate of 8.33% of basic salaries of the employees.
COMPENSATED ABSENCES
FOREIGN CURRENCIES
Foreign currencies are translated into Rupees at exchange rats on
the date of transaction. Assets and liabilities in foreign currencies
are translated into Pak Rupees at the rates of exchange
approximating those ruling at the Balance Sheet date except those
PROVISION OF CONTINGENCIES
Provision for guarantee claims and other off balance sheet
obligations is recognized when intimated and reasonable certainty
exists for the Bank to settle the obligations. Debating the
customer’s account recognizes expected recoveries. Charge to profit
and loss account is stated net off expected recoveries.
OFF-SETTING
Financial assets and financial liabilities are only offset and the net
amount is reported in the financial statements when there is a
legally enforceable right to set-off the recognized amount and the
bank intend either to settle on a net basis, or to realize the assets
and to settle the liabilities simultaneously.
BALANCE SHEET
AND
INCOME STATMENT
107,167,541 85,386,902
LIABILITIES:
Bills payable 1,227,093 973,703
Borrowing from financial institution 13,781,555 15,903,055
Deposits and other accounts 83,381,795 61,656,607
Sub-ordinated loans 1,000,000
Liabilities against assets subject to finance lease 14,159 37,350
Other liabilities 1,282,981 962,592
Deferred Tax Liabilities 526,865 806,753
101,151,448 80,340,060
Net Assets 6,016,093 5,046,842
Represented by:
Head office capital accounts 1,255,848 1,141,680
Capital reserve 4,317,301 2,759,599
Un remitted profits
5,573,149 3,901,279
Surplus on revaluation of securities-net of tax 442,944 1,145,563
6,016,093 5,046,842
TREND ANALYSIS
(Horizontal Analysis)
FINANCIAL SUMMARY
The operating expenses of the bank has been increased with sharp
margin, the ACBL is newly born bank of only 14 years old and is
growing rapidly so, we can say that the reason behind the rapid
increase of its operating expenses may be the expansion of
business. In order to get handsome profit the expenses are
necessary as it is shown by the fact that if the bank’s operating
expenses have been increased then, there is also an increase in the
profit before income tax and profit after income tax.
SHAREHOLDER’S FUNDS
Total share
2155 2579 4173 5047 6016
holders fund
Share capital 986 1036 1087 1142 1256
Reserves 1229 1521 1940 2760 4317
Surplus on ROA (60) 22 1146 1145 443
TREND ANALYSIS
2000 2001 2002 2003 2004
Shareholder’s
%AGE
Funds
Total share
100 119.6 193.6 234.2 279.2
holders fund
Share capital 100 105.0 110.2 115.8 127.4
Reserves 100 123.7 157.8 224.6 351.2
LIABILITIES
Customers
30360 41200 51732 61657 83319
deposits
Refinance
2882 3222 3392 7329 9777
borrowings
Sub-
ordinated - - - - 1000
loans
Other
3058 3980 11016 11354 7055
liabilities
TREND ANALYSIS
2000 2001 2002 2003 2004
PERCENTAGE
Liabilities
Customers
100 135.7 170.4 203.0 274.4
deposits
Refinance
100 111.7 117.7 254.3 340.0
borrowings
Other
100 130.1 360.2 371.3 230.7
liabilities
New if we analyze the liability side of the bank we see that the
bank’s deposits are going on increasing since its birth which is a
very healthy sign for the bank as the bank’s basic business is to
deal in money. The increase in deposits show 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.
ASSETS
Now we will discuss the assets side of the bank. The liquidity
position is essentially 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 in the table below.
TREND ANALYSIS
BUSINESS TRANSACTED
TREND ANALYSIS
Now we will discuss the business transacted opt the bank in terms
of import and exports we see that imports and exports through
ACBL are continuously on increase which is a very health sign for
the banking business as the banks earn major portion of their profit
through imports and exports. It shows the efficiency of the credit
department. The reasons for this improvement may be
• Careful scrutinizing of all the documents
• Intelligent corresponding with the customer
(VERTICAL ANALYSIS)
INTERPRETATION
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. The foregoing data shows that the markup expenses
absorb about 85% of the revenues (a favorable position). This
shows that the bank has been successful in
• Selling larger volumes of higher profit items.
• Increasing economy in procurement
• Adopting other effective and more profitable deposit raising
policies at a lower lost.
shown from the data that the bank is going on increasing its
profit after tax over the year.
Total share
5.29 4.82 5.69 5.65 5.38
holders fund
Share capital 2.42 1.93 1.48 1.28 1.12
Reserves 3.02 2.84 2.64 3.09 3.86
Customers
74.6 76.9 70.5 69.0 74.5
deposits
Refinance
7.08 6.02 4.62 8.21 8.74
borrowings
Other liabilities 7.52 7.43 15.0 12.7 6.31
Total 100 100 100 100 100
INTERPRETATION
ASSETS
(Vertical Analysis)
INTERPRETATION
the bank utilize the funds raised in the other activities primarily
lending to the financial institutions as it is the most secure source of
financing available in the economy.
Cash, short term funds and statutory deposits with SBP are also
increasing. The property plant and equipment of the bank is
showing a little portion of the bank’s total assets.
In the last the bank is over all showing a good financial health and
is going on healthy tracks in near future it has no risk of
bankruptcy. Although the bank is showing good results but we can’t
say that these are the best conditions prevailing in the bank as we
are unaware of the market conditions and can’t compare it with
other banks.
RATIO ANALYSIS
PROFITABILITY RATIOS
LIQUIDITY RATIOS
ASSET QUALITY RATIOS
PORTFOLIO MANAGEMENT
CAPITAL ADEQUACY RATIO
CAPITAL GEARING RATIOS
PROFITABILITY RATIOS
70
68
66
64
percentage
62
60
58
56
2002 2003 2004
year
INTERPRETATION
This ratio relates the net profits to the amount of capital funds that
have been employed in making that profit.
The above given ratios suggest that the profitability of the bank has
increased very in the year 2003 indicating more profitable
operations of the bank. While discussing the trend analysis, we
mentioned that the mark up charges have increased in some
proportion but the mark up earned by the bank resulting increase in
the profit available on the capital funds employed. This ratio
showing a very good financial position of the bank.
RETURN ON INVESTMENT
1.5
percentage 1
0.5
0
2002 2003 2004
year
INTERPRETATION
This ratio indicates the profit earned by the bank on the resources
employed. As far as ACBL is concerned, we observe an increase in
the utilization of the resources. It has increased to 1.29 % in the
year 2003 from 0.98 % in the year 2002, It has increased to 1.79
% in the year 2004 from 1.29 % in the year 2003, the reason
behind the slight increase in the increase of profit may be due to
the efforts of the management.
2.8
2.7
2.6
2.5
percentage
2.4
2.3
2.2
2.1
2002 2003 2004
year
INTERPRETATION
RETURN ON DEPOSITS
percentage 2
0
2002 2003 2004
year
INTERPRETATION
Interpret This ratio indicates to what extent deposits which
represent funds mobilization on the part of the bank contribute
towards income generation. Although the other ratios regarding the
profitability are showing satisfactory position of the bank but still
bank need to increase its utilization of resources in order to
(Rs. In million)
35
30
25
20
percentage
15
10
5
0
2002 2003 2004
year
INTERPRETATION
LIQUIDITY RATIOS
Formula = Advances
Total Deposits
100
80
60
percentage
40
20
0
2002 2003 2004
year
INTERPRETATION
8
7
6
5
percentag
4
e
3
2
1
0
2002 2003 2004
year
INTERPRETATION
40
30
percentage 20
10
0
2002 2003 2004
year
INTERPRETATION
It shows the relationship between what the bank owes from other
banks and what is due to it. An unfavorable condition has been
observed in this ratio in the current year showing the fact that the
bank has to seek fewer funds from the financial institutions owing
to the strong liquid financial position. This ratio is going on
increasing in last year but decreasing in current year, which
involves a slight risk. In the phase of economic instability, the
bank’s management should be efficient to access the risk involved
in lending and they should control this ratio.
30
25
20
percentage 15
10
5
0
2002 2003 2004
year
INTERPRETATION
This ratio is an indicative of the proportion of the lending from the
financial institutions in relation to the total funds raised by the bank
in the form of deposits.
This ratio for ACBL is 16.54% in the year 2004. There has been
a significant decline in this ratio as previously the bank depended
slightly more on the borrowings from financial institutions. It shows
that the bank is concentrating on raising funds from depositors and
trying to relies less on the borrowed funds.
COVERAGE RATIO
INTERPRETATION
The above figure shows the acceptable capacity on the part of the
bank to cover its interest payments. It has increased as compared
6
5
4
percentage 3
2
1
0
2002 2003 2004
year
INTERPRETATION
This ratio indicates the extent of the funds employed by the bank in
the total resources as shown in the balance sheet. This ratio has
been decreased in the current year with a very low margin.
12
10
8
percentage 6
4
2
0
2002 2003 2004
year
INTERPRETATION
This ratio take into account the difference between cash and
marketable securities & other kind of assets. Cash & marketable
securities, which are risk less items, are excluded to find out the
true picture of the capital adequacy. In case of ACBL the ratio is
decreasing.
3000
2000
1500
1000
500
0
2000 2001 2002 2003 2004
The above graph shows that the profit before tax of the Askari
Commercial Bank shows a trend of increase and continuous
increase in the profit before tax of the bank, it goes on increasing
every year and its ratio has not been fall since the last five years.
In 2004 the profit before tax increased with greater margin as
compared to the previous four years.
DEPOSITS
(Rs. In million)
90000
80000
DEPOSITS
70000
60000
50000
40000
30000
20000
10000
0
2000 2001 2002 2003 2004
40000
30000
20000
10000
0
2000 2001 2002 2003 2004
INVESTMENTS
(Rs. In million)
30000
INVESTMENTS
25000
20000
15000
10000
5000
0
2000 2001 2002 2003 2004
TOTAL ASSETS
(Rs. In million)
120000
100000
TOTAL ASSETS
80000
60000
40000
20000
0
2000 2001 2002 2003 2004
Total Assets of the bank are increasing every year with the
expansion in the business .In 2004 the assets of the bank has been
increased more than twined a time as compared to the year
2000.which clearly shows the rapid expansion of the bank.
18
EARNINGS PER SHARE
16
14
12
10
8
6
4
2
0
2000 2001 2002 2003 2004
The earning per share of the bank is also showing good position
and is enough to satisfy the shareholders of the bank, the number
of the shareholders fund has also been increased from the last five
years. The graph shows that the bank’s earning per share ratio is
highest in the year 2004 and is lowest in the year 2000.
SWOT ANALYSIS
SWOT ANALYSIS
STRENGTHS
AUTOMATIC OPERATIONS:
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.
ATM NETWORK
The bank has the largest ATM Network cross the country. The
customers of ACBL withdraw access their funds any time at all the
ATM Sites with ASKCASH Logo.
CUSTOMIZED SOLUTIONS
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.
ELECTRONIC BANKING
The revolution in the banking in the form of electronic banking
operations have opened avenues of excellent, efficient and quick
services saving the time and costs of the customers and fortunately
ACBL is among those few banks who are already reaping the
benefits of electronic transactions.
PHONE BANKING
Phone banking service is very attractive for those classes of
customers who don’t have time to personally come to the bank i.e.
banking on the phone line thus saving the precious time of the
customers.
WEAKNESSES
MANUAL BOOK-KEEPING
Although the bank has computerized accounting system but, still
the bankers use to make their entries in the accounting register.
LACK OF SPECIALISATION
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
CENTRALIZATION
There is a high degree of centralisation in the bank. Almost all the
decision-making is in the hands of the upper management. But
centralisation 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.
OPPORTUNITIES
• Overseas Operations
• Islamic Banking
THREATS
High charges
The schedules of charges indicate that the fees charged by the bank
on the various services it provides are extremely high. It may result
in decrease in the number of its exiting customers. Further more,
this could be very alarming situation for the bank in case some of
the competitors grasped the opportunity and lowered its rates. The
result would be either the lost of market share or decrease in the
charges resulting in lowering the bank’s income.
Stiff Competition
SCB is currently facing strict competition from the foreign banks
especially the American who banks enjoy a good market position.
Collectively U.S. banks hold approximately 9 percent of all
commercial banks' assets. At present, three American banks are
operating in Pakistan: American Express Bank; Bank of America
and Citibank.
STRATEGIC MANAGEMENT
Perform
External
Audit
Generate Implement
Establish Implement Measure
Develop Evaluate, strategies
Long term strategies and
Vision & and Marketing,
objectives Management evaluate
Mission select Finance,
Issues performanc
MIS Issues
strategies e
Perform
internal
audit
Stage1_________________Stage2___________________Stage3
1. Strategy Formulation
2. Strategy Implementation
3. Strategy Evaluation
EXTERNAL AUDIT:
The purpose of an external audit is to develop a finite list of
opportunities that could benefit the organization and threats that
should be avoided. There are lots of factors, which are involved in
determining the external environment, but certain key variables are
taken that offer actionable responses. The organization should have
to respond either offensively or defensively to the factors by
formulating strategies that take advantage of external opportunities
or that minimize the impact of potential threats.
• Overseas Operations
• Branches In Remote Areas
• Islamic Banking
• Sharp increase in imports and exports
Weights:
0.0 = Not Important
1.0 = Very Important
Rating:
1 = The Response Is Poor
2 = The Response Is Average
3 = The Response Is Above Average
4 = The Response Is Superior
Threats
1. High Employees Turnover 0.05 2 0.10
2. High charges 0.05 2 0.10
3. Less attractive rate of return
0.15 3 0.45
4. Stiff Competition 0.10 3 0.30
5. Less Experienced Staff 0.10 2 0.20
TOTAL 1.00 2.86
Explanation:
The above Matrix depicts the opportunities and threats that are
faced by the bank. The weighted score of EFE Matrix of the bank is
2.86 that is above average (2.5). So it shows that the bank is
responding to the existing opportunities and threats in banking
industry.
INTERNAL AUDIT
All organizations have strengths and weaknesses in their functional
areas of business. For analyzing the internal situation of the
organization with regard to its management, marketing, finance,
operations and research and development, internal audit is
performed. The internal audit is executed parallel to the external
audit. This process provides more opportunity for the participants
and the managers to understand the key areas within an
organization.
Weights:
0.0 = Not Important
1.0 = All Important
Rating:
1 = Major Weakness
2 = Minor Weakness
3 = Minor Strength
4 = Major Strength
Explanation:
Weights:
Rating:
1 = Major Weakness
2 = Minor Weakness
3 = Minor Strength
4 = Major Strength
Askari Bank
Bank Alfalah
Critical Weight Rating Score Rating Score
Success
Factors
Customer 0.16 3 0.48 2 0.32
satisfaction
Branch 0.12 2 0.24 3 0.36
network
Market share 0.09 4 0.36 4 0.36
Service quality 0.10 4 0.40 3 0.30
Advertising 0.05 2 0.10 3 0.15
Online facility 0.09 3 0.27 3 0.27
Full day 0.12 3 0.36 2 0.24
banking
Employee 0.15 3 0.45 3 0.45
satisfaction
Financial 0.12 4 0.48 3 0.36
position
TOTAL 3.14 2.81
EXPLANATION:
STRATEGY-FORMULATION FRAMEWORK:
Strategy-Formulation Framework can be integrated into three-stage
decision making framework
Threats-Opportunities-Weaknesses-Strengths (TOWS)
Matrix
Strategic Position and Action Evaluation (SPACE) Matrix
Boston Consulting Group (BCG) Matrix
Internal-External (IF) Matrix
Grand Strategy Matrix
Aggressive Strategic:
Market penetration, market development, product development,
backward integration, forward integration, horizontal integration,
conglomerate diversification, concentric diversification, horizontal
diversification, or a combination strategy.
Conservative strategies:
Are best options for the firm that lies in this quadrant. Most often
include market penetration, market development, product
development, and concentric diversification.
Defensive strategies:
Include retrenchment, divestiture, liquidation, and concentric
diversification.
Competitive strategies:
Include backward, forward, and horizontal integration; market
penetration; market development; product development; and joint
ventures.
SPACE MATRIX OF ASKARI BANK
FINANCIAL STRENGTH
Investment decreased +1
Strong Liquidity Position +6
Strong Cash flow position +4
The Revenues increased +4
Net Income After Tax increased +4
Net Profit Margin increased +4
Return On Equity +2
+25
INDUSTRIAL STRENGTH
Conservative +6 Aggressive
+5
+4
+3
+2
+1
(2.5, 0.75)
CA IS
-6 -5 -4 -3 -2 -1
-1 +1 +2 +3 +4 +5 +6
-1
-2
-3
-4
-5
Defensive -6 Competitive
ES
EXPLANATION:
(BCG) MATRIX:
QUESTION MARKS:
STARS:
Firm that lies in this Quadrant (often called Stars) represent the
organization’s best long-run opportunities for growth and
profitability. Divisions with a high relative market share and a high
industry growth rate should receive substantial investment or
maintain or strengthen their dominant positions.
Forward, backward, and horizontal integration; market penetration;
market development; product development; and joint ventures are
appropriate strategies for these divisions to consider.
CASH COWS:
DOGS:
The organization that lies in this Quadrant has a low relative market
share position and competes in a slow- or no- market-growth
industry; they are Dogs in the firm’s portfolio. Because of their
weak internal and external position, these businesses are often
divisions.
BCG MATRIX
Interpretation:
Car finance division and Islamic Banking have a low market share
position, yet they compete in a high growth industry. These
businesses are called as Question Marks, because the organization
has to decide whether to strengthen them by pursuing an intensive
GRAND MATRIX:
Quadrant II Quadrant I
MP PD
Key Factors Weight AS TAS AS TAS
Opportunities
Advancement in Islamic Banking 0.05 2 0.10 1 0.05
Expand Branch Network 0.05 - - 1 0.05
Enhance Product Portfolio 0.05 2 0.10 3 0.15
Get Into E-Business 0.05 1 0.05 - -
Provide Financial Consultancy 0.10 2 0.20 1 0.10
Threats
Government Policies 0.10 1 0.10 - -
Strict SBP Regulations 0.20 1 0.20 3 0.60
2nd Hand Car Finance By City Bank 0.15 4 0.60 3 0.45
Cash Card Introduced By MCB 0.10 2 0.20 4 0.40
Branches of Nationalized Banks in all Cities of0.05 2 0.10 1 0.05
Pakistan
1.0
Strengths
Bank Name 0.05 2 0.10 4 0.20
Credit Card 0.10 4 0.40 3 0.30
Strong Top Management 0.05 1 0.05 4 0.20
Aggressive Banking 0.15 2 0.30 4 0.60
Bad Debt Ratio 0.05 2 0.10 1 0.05
Committed Workforce 0.05 1 0.05 3 0.15
Financial Ratios 0.05 2 0.10 3 0.15
Customer Satisfaction 0.05 4 0.20 3 0.15
Islamic Banking 0.05 3 0.15 4 0.20
Weaknesses
No International Branch Network 0.05 1 0.05 3 0.15
Weak IT Structure 0.05 2 0.10 1 0.05
Trade Through NOSTRO Accounts 0.05 2 0.10 1 0.05
Less Job Rotation 0.05 1 0.05 - -
ATM not available In Every Branch 0.10 4 0.40 3 0.30
No Marketing Department 0.10 4 0.40 3 0.30
Sum Total Attraction Score 1.0 4.10 4.70
Interpretation:
The Bank must consider two alternative strategies i.e. Market
Penetration, and Product Development. The total attractiveness
score of Market Penetration is 4.10 and for Product Development is
4.70. Therefore the strategy which the Bank must adopt is Product
Development as the total Attractiveness score of this strategy is the
highest i.e. it appears to be the most attractive and suitable for the
bank.
TRAINING PROGRAMME
INTERNSHIP EXPERIENCES
DIFFICULTIES FACED…
INTERNSHIP EXPERIENCES
One of the most important aims of the student life is to express
himself / herself correctly and adequately. This was the believe in
my mind when I first decided to go to Askari commercial Bank to
complete my internship program.
FIRST WEEK
• Account opening
• Bills and remittances
• Clearing
• Term deposit
• Cash department
The first day of exposure to the practical field was at the (sub
department) Account opening.
The relationship of customer starts with this department. every one
is not allowed to come and open an account in the bank, for this
purpose there should be an introducer who himself is the account
holder in the same branch. He has to introduce the new client by
signing the opening account form and then his signature are
verified.
Then the banker inquires the about the option of opening a joint
account or individual. If the customer wants to open joint account
then either it is "either or survivor" (i.e. Only one persons signature
is sufficient) or jointly (i.e. Both should sign the cheque).
Account opening:
Although the procedure of opening an account in a bank is a quite
complicated job but I am going to tell you only the basic necessities
for opening the account, which are as follows:
• Introduction
• National I.D. card
• Personal data
• Details of dealing with other banks.
These are some of the basic requirements for opening the account.
Issuance of chequebook
Once the account is opened, ACBL issues the chequebooks to the
customer so that they could withdraw their money whenever they
like. The producer of issuance of the chequebook is as follows:
For the customer who already has an account with the bank, the
lastly consumed chequebook requisition slip with the help of which
a new chequebook is issued. And the person who is going to open a
new account for the first time gets the chequebook free without any
requisition slip.
For the new depositors the cheque book is not issued at the time of
opening of account, rather it is issued after three days but, as the
most of the customers are from the armed forces so the usually get
the cheque earlier. ACBL issues the chequebooks for both the local
and foreign currency accounts.
SECOND WEEK
Deposits are of two types one is the demand deposit and the other
one is time deposit (these have been explained in detail in the
"department" portion). As the name signifies the demand deposit is
payable on demand so no interest or benefit is given on such
deposits but the time deposit is a kind of deposit, which gives you a
benefit in terms of cash. Most of the people who have surplus
money with them especially the landlords deposit their money in
such accounts.
These are called fixed deposit because they are fixed and no
transaction is allowed till maturity. In fix deposit you can open an
A/c of the same title only than A/c number will be changed. While in
other accounts the A/c can't be opened under the same title even in
other branch of the same Bank.
Profit calculation
The Head office determines the provisional rates of the Profit. Every
bank has its own interest rate; usually established banks have low
interest rates then the non-established banks as the have to attract
the Customers.
As the interest rates vary frequently you will calculate the interest
on the rate which is applicable during that particular duration. It
happens that sometimes the interest rate remains the same. But
during the year 2004 the interest rates were changed two times
within six months. First of all the interest rates were changed at the
start of the year and then these rates were changed again in
the month of the February i.e. these were changed twice in the six
months. The changing in the interest rate depends upon the will of
the Head office, which has the power to change them at any time.
The rate of withholding tax on profit is 10% i.e. if you are going to
get a benefit of Rs. 10,000 then you will receive the cash of Rs.
9,000 as the remaining amount will be deducted as the tax.
If there is any mistake in the Debit Credit that will be checked out
through Daily Balance Sheet of the Particular department.
Record keeping
The record of the TDR is although feed in the computer but there is
also a hard copy of the record. The verified TDR forms are pasted
with serial number of receipt given to the customer (the receipt of
the form regarding the deposit of the amount).
THIRD WEEK
CLEARING
This is a "Inter-city clearing" i.e the cheques of Lahore city from
different banks like National Bank of Pakistan, Standard Chartered
Bank, Muslim Commercial Bank are deposited here. The deposited
cheque is received carefully by checking the title of cheque, date,
amount, and signature on the cheque. All the cheques go to the
State Bank of Pakistan. Everyday NIFT receives all cheques and
arranges them. By establishment of NIFT a lot of time, cost and
labor is saved. The cheques are stamped carefully. Two stamps are
required on the cheques
• Clearing stamp
• Payee's account will be credited
• Available balance
• Float amount
• Block amount
• Ledger balance
NIFT collects all the cheques at 2:00 pm. After that the computer
department give clearing sheet that is checked in clearing.
Clearing house
It is a p[lace where representatives of all scheduled banks sit
together and interchange their claim against cash other with the
help of controlling staff of "state Bank of Pakistan" where there is
no branch of State Bank of Pakistan, the designated branch of State
of Pakistan.
• Outstation cheques
• Askari other branch cheques (local)
FOURTH WEEK
DEMAND DRAFT
Payment of DD
When a person brings DD (which have been drawn on you), you will
check it from your DD payable record and ask the customer to sign
twice at the back of the DD so that it could be confirmed that he is
the eligible person for receiving the benefit, along with this you
obtain the ID of that person verify it and then make the payment.
After making the payment entry is made in the register that this DD
has been paid.
DD payable register
Every day you receive an IBCA from different banks and it contains
a list of DDs, which have been drawn on you. Banker records it in
DD payable register. These DD are those, which other branches
have drawn on your bank.
Cancellation of DD
Following procedure is followed for the cancellation of the DD.
Types of DD
DD’s are of the following types:
TELEGARPH TRANSFTER
The transfer of funds from one branch to another branch of the
same bank is called telegraphic transfer. The bank apply test on
telegraphic transfer. The applicant receives Commission and
charges, if the Applicant’s account is in ACBL, he pays no charge
above Rs. 100,000/-
If he has no account in the ACBL then he has to pay charges
according to the amount e.g. for Rs. 100,000/- the charges are Rs.
250/-
PAY ORDER
Pay order issued from one branch can only be payable from the
same branch. Pay order is used for same city payment. E.g. If ACBL
(Main Branch) issued pay order it is only payable for Main Branch of
ACBL.
Procedure
• Applicant fill the application
• After paying charges he gets voucher and pay order is issued
• All pay orders shall be crossed "payee's A/c only".
Cancellation
• The applicant give application for cancellation
• Charges are recovered from the applicant.
FIFTH WEEK
ACCOUNT SECTION
I worked three days in accounts department but as it is a
confidential department so they did not give me enough in
ATM SECTION
I worked two days in ATM department. The countrywide network of
automated teller machine carrying the brand name "ASKCASH".
The branch network is corrected on-line real time and its customers
have access to off-sites as well as on-site atms all over Pakistan.
Being a part of the first inter-bank ATM switch in Pakistan with ABN
AMRO and Habib bank, the customer now here have access to
about 90 atms through the country.
For ATM cards first the customer open account in the bank after
that he/ she fills the application form for the ATM. the Head office
send a ATM cards in a ATM department but pin codes are sent in
other department. So in this way the customer gates his/ her ATM
cards.
ATM means "24 hours services" the customers get money at any
time at any place but during my period the function of ATM were
held by the Head office for three days. The branch has no authority
to held the machine, if it is not working; the Head office knows the
reason for it.
On the whole, it is an excellent strategy of ACBL and to sign a
strategic partnership with ABN-AMRO for ATM sharing arrangement
is first time in Pakistan.S
SIXTH WEEK
CONCLUSIONS
AND
RECOMMENDATIONS
Flexible Policies
The bank should be adopt flexible policies, specially in the areas of
the recruitment, promotions, evaluation of the employees otherwise
the high turnover observed in the bank will continue to create
problems for the bank now and in the future.
Job security
The employees in the organization should be insured job security so
that there is no pressure on the employees while performing their
tasks.
Permanent Hiring
The fresh hiring should be made permanent so that they are
secured of their future. Further the allowances and perquisites
attached with the permanent jobs will also increase the motivation
level of the employees.
Decentralization
The higher authorities should form team-based management rather
than centralized management. It would result in improvement in
uplifting the morale of the employees. They will be more motivated
and involved in all their operations resulting in overall effectiveness
of the organization.