Afzaal's Final Internship Report

8/6/2019 Afzaal's Final Internship Report

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CHAPTER NO.1

OBJECTIVES OF STUDYING THE ORGANIZATION

The objectives or purposes of internship are to learn the existing accounting and

finance practices being followed in the bank. The main objectives are given as

under:

1 To understand financial system of country.

2 To understand role of banking sector in financial system of country.

3 To understand the application of theoretical knowledge in practical life.

4 To attain specialization in banking and finance.

5 To understand application of Prudential Regulation issued by SBP.

6 I want to get job in bank so I select bank for studying.

7 Askari bank is leading bank in the country.

8 To study the accounting and financial internal control system of Askari Bank

Limited.

9 To review its appraisal and auditing system.

10 To analyze the financial system and financial reports..

11 To study the role of Askari bank in banking Sector of Pakistan.

12 To get the thorough knowledge of different credits offered by bank.

13 To be a part of a competitive environment and enhances my skills.

14 To printout/identify problems, opportunities and providing recommendation there

on.

To develop understanding of finance and accounting function integrated, Askari

bank Limited is an organization, which can help a student to learn finance and

accounting practices in a system fully equipped with latest technology to cater for

the needs of present business environment.

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CHAPTER NO.2

ASKARI BANK LTD.: AN OVERVIEW

2.1: BRIEF HISTORY

skari Bank Ltd was incorporated in Pakistan on October 09, 1991, as a

Public Limited Company. The initial public offering of PKR 120 million

was over subscribed 16 times. It commenced operations on April 1, 1992

and is principally engaged in the business of banking, as defined in the Banking

Companies Ordinance, 1962. The Bank is listed on the Karachi,

Lahore & Islamabad Stock Exchanges.AAKBL is one of the financial ventures of the Army Welfare Trust (AWT) that is rated

as the top private bank in the country. The bank is one of leading bank in the

country. The Askari Bank is one of the major resource pools for the AWT, which has

4.91 percent stakes in the Bank. A Board of Directors, dominated by the AWT,however, controls the Bank. Another 39.67 percent shares are owned by its various

directors, who are mostly retired military personnel. These retired generals have

personal financial stakes as well.

In the early years, the focus of the business was primarily on non-corporate sector of

the retail market. However, with substantial growth in its deposit base, the bank has

shifted its focus to wholesale trade, manufacturing and project financing, while

retaining its niche with the medium-sized customers, who continue to provide the best

return on the earning assets. As a result of annual compound growth rate of 26% over

the last three years in its deposit base, and a growth of modest 9% in the loans

portfolio, the bank has been able to generate substantial surplus liquidity,

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which it diverted to high yielding government paper. This has given its asset base a

great deal of leverage, while at the same time generating high quality earnings.

During the same period, the bank has been heavily involved in the financing of the

international trade and handled imports and exports to the tune of PKR 61,356 million,

establishing excellent correspondent banking the leading banks around the globe.

2.2: NATURE OF THE ORGANIZATION

Askari Bank Ltd. The Group's principal activities are to provide lending, depository and

related financial services. Financial services include credit risk management, foreign trade,

treasury, corporate and merchant banking, retail banking, electronic banking, credit cards,

marketing and customer service. The Bank operates through 200 branches. On 30-May-

2008, the Group acquired Askari Investment Management Limited.

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2.3: BUSINESS VOLUME

2008 2007 2006 2005 2004

Revenue 18,393,313 15,143,241 12,596,921 8,780,698 7,890,513

Deposits 167,676,572 143,036,707 131,839,283 117,794,690 93,318,795

Advances 128,818,242 100,780,162 99,179,372 85,976,895 69,838,392

Investments 35,677,755 39,431,005 28,625,915 25,708,194 17,239,156

2.4: NUMBER OF EMPLOYEES

2008 2007 2006

Permanent 4252 3834 3241

Temporary/on contractual basis 1703 1273 687

Daily wages __ __ __

Commission based 541 789 657

Outsourced 1064 912 641

Total Staff at the end of the years 7560 6808 5226

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2.5: PRODUCT LINE

PRODUCTS AND SERVICES

Askari Bank Ltd. offers a full range of banking products and services to its customers

across the country. The elegantly designed products offer to the customers the ease

and convenience of conducting banking transactions in full confidentiality in a first

class way. Askari Bank Ltd. gives its customers the convenience of 24 hours

telephone banking service; internet banking and online ATMs and funds transfer

facility.

Following are the list of products Askari Commercial Bank Ltd. Is dealing with:

A. Retail banking

B. Corporate & investment

C. Askari master card

D. Agricultural banking

A- RETAIL BANKING

The Retail Banking Group offers auto, mortgage, personal and business finance as its

core products. The Group is organized on a hub and spokes basis and its 6 hubs, i.e.,

Retail Banking Centers (RBC), in Rawalpindi, Peshawar, Lahore, Karachi and Quetta

are now supported by 38 spokes, i.e. Retail Banking Units (RBU), which operate

from the branches in close proximity of the relevant RBCs.

Products

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Ask Card (Debit / ATM card)

Ask Power (Prepaid card)

Askari Banks mortgage finance (Home loans)

Askari Banks business finance (Business loans)

Askari Banks personal finance

SmartCash (Running finance facility for consumers)

I-Net Banking (internet banking solutions)

Askar (auto loans)

Askari Touch 'N' Pay (online utility bill payment services)

Askari Value Plus (flexible deposit accounts) Cash Management Services

Rupee traveler cheques

Askari investment certificates

Personal Finance

Personal Finance is a parameter driven product for catering to the needs of the general

public belonging to different segments. One can avail unlimited opportunities through

Askari Bank's Personal Finance. With unmatched finance features in terms of loan

amount, payback period and most affordable monthly installments, Askari Bank's

Personal Finance makes sure that one gets the most out of his/her loan. Once a good

credit history is established, the door to opportunity opens much wider.

Featuring:

Loan amount up to 500,000

Repayment period from 1 to 5 years

Fixed monthly repayment

Competitive Rates

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No pre-payment penalties

Shortest processing time

Servicing available at all ACBL branches

And certainly unmatched service quality

Not restricted to new financing, under Personal Finance scheme, ACBL offers

extended facilities, which are:

- Back to Original:

Under this scheme borrower can avail extended amount of finance up to the

utilized allocated amount, if his/her repayments are regular.

- Balance Transfer Facility:

It gives the customer the opportunity to pay off his/her outstanding dues on

their credit cards or other loans at a rate of interest much lower than what one

pays on them. That not only frees up their credit limit, but cost of servicing the

debt is greatly reduced.

- Computer Loans:

This scheme was launched to promote the I.T. technology in the country. In

this regard, we have signed MOUs with Multinational companies and large

local corporate including schools & colleges.

- Dream Life (Financing for Consumer Durables):

We are the financial market player in delivering quality service to customers

with highly professional standards. We have joined hands with various

Electronic Companies for sale, of the domestic appliances against consumer

financing. Under this scheme, Askari Bank is financing products of these

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companies, which would benefit those people who can only afford to buy

home appliances on installments due to limited resources. In addition to this,

we have also signed agreements with other top manufacturers of automobiles

for financing of motorcycles to the general public at most competitive rates.

You are eligible to apply if:

Your age is between 21 and 57

You have a verifiable minimum gross monthly income of Rs. 10,000/-

Salaried:

Minimum length of confirmed service with present employer is at least six

months with a total length of at least one year service

Self-Employed:

In business for the last one year.

Mortgage Finance

Ever since the inception of life, shelter has been rated among the primary needs of

mankind. Owning a home for oneself still remains an exclusive dream for many. Askari

Bank has made the realization of your dream to have a house of your very own possible.

Whether you plan to build a house, tailor made to your requirements or buy a constructed

house, Askari mortgage finance enables you to pursue your goal without any problems.

Askari "Mortgage Finance" offers the convenience of owning a house of choice,

while living in it at its rental value. The installment plan has carefully designed to suit

both the budget & accommodation requirements. It has been designed for enhancing

financing facility initially for employees of corporate companies for purchase/

construction/ renovation of house.

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Featuring:

Finance limit up to Rs. 10,000,000/-

Tenure : Up to 20 years

Markup Servicing: Monthly

Life/Property Insurance

Early settlement charges NIL

Balance Transfer Facility

You are eligible to apply, if you:

Are a Pakistani national & wish to acquire/construct a

residential accommodation in Pakistan.

Are interested in obtaining financing for a residential

property located in the urban developed areas

Are 25 years & above and under 60 years of age, having a

verifiable income

Have a minimum income of 20,000 per month

Are a permanent employee for at least 2 years of service with

present employer

Are self employed individual with at least 5 years of business

track record

Have a total debt burden not exceeding 35% of your net

verifiable income

Business Finance

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In pursuance of the National objectives to review the economy of the country, ACBL is

providing loans to small and medium size business enterprises under Askari Bank's

Business Finance Scheme. The goal is to offer a loan, which enables business community

to receive the financing required by them based on their cash flows. Valued customers can

enjoy the convenience of getting financing on attractive terms with the

minimum processing turnaround time.

Featuring:

Running finance facility ranging from 500,000 to 3,000,000

Pay mark up on daily outstanding loan balance

You are eligible to apply:

If your age is between 25 and 55 years

If you are a resident of Pakistan

If you have 1 year or more business or professional experience in the

present business

If you are the member of the relevant trade body

If you are willing to provide your own or co-borrower residential

urban property as security.

ASKCAR (Car Finance)

Yet another of AKBLs products, Askar offers the most convenient and affordable

vehicle- financing scheme, which provides to the valuable customers an opportunity

to own a brand new vehicle of their choice. With minimum down payment, lowest

insurance rates and widest range of available car makes and models, Askcar offers the

best value to the esteemed customers.

ASKCARD

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Askari Banks debit card is tailored to the customers shopping needs and is another

valuable financial solution reflecting commitment to building lasting relationship with

the customers. ASKCARD means freedom, comfort, convenience and security, so

that you can have retail transactions with complete peace of mind. ASKCARD

enhances the quality of life by letting the customers to shop, dine at restaurants, pay

your utility bills, transfer funds, withdraw and deposit cash through ATM anywhere,

anytime

Travellers Cheques

The range of products and value added services enhances with introduction of Rupee

Travellers Cheques (RTCs) launched in March 2002. In spite of the constraint on

issuing higher denomination of RTCs against restrictions imposed by the Central

Bank of Pakistan ACBL has been striving to attain our shares with sizeable portfolio.

AskSmart

This personal line of credit would be set up with a specified credit limit up to Rs.

500,000/-

Value Plus

The first liability product launched by AKBL is showing a remarkable acceptability in

the market. It promises greater financial freedom and security in an unmatched way.

A unique partnership between AKBL and New Hemisphere Insurance Group brings

global accidental protection for the entire family. It offers a choice enrolment plan

with an automatic monthly premium deduction facility at a price as low as Rs=20/-

per month.

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B: CORPORATE & INVESTMENT

The Corporate and Investment Banking Divisions (CBD & IBD) are strongly

positioned across priority markets with a distinct strategy for developing corporate

business. The strategic framework generates sustainable returns based on strong

market presence and financial solutions ranging from debt and equity market

transactions to syndicate finance, and from transaction banking to corporate finance

advisory services.

In 2007 The Corporate Banking Division (CBD) undertook a number of dept re-

pricing swap transactions, aimed at reducing the financial burden of its key client

portfolios and also managed advisory and loan arrangement activities. The major new

relationships cover telecommunications, oil and gas, and chemicals sectors. CBD has

dedicated marketing and support units functioning at Karachi and Lahore. In order to

enhance focus on relationship management, and service quality, more dedicated staff

is being assigned.

The investment banking activity mainly covers, debt / capital markets, advisory

services and trading (both equities and derivatives).After the initial start-up phase, the

capital market desk, based at Karachi, increased the volume of capital market related

transactions.

The corporate and investment banking will continue to play a major role in loan

syndications, structured financing and debt / capital raising transactions with the

objective of providing entire range of corporate and investment banking solutions to

its valued clients under one umbrella.

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Corporate and Investment Banking Group Products

Loan syndications (arranger / co-arrangers & lead manager)

Structured finance

Equity financing

Working capital financing

Corporate finance advisory services

Commercial paper

Debt swaps

Balance sheet restructuring

Debt capital markets

Capital raising

Trading activity (equities and derivatives)

Discretionary portfolio management

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C- ASKARI MASTER CARD

Askari MasterCard is global member of MasterCard International. AKBL knows the

customer requirements & provide them payment solutions & continue to bring new &

exciting ways to pay & support the valued customers, from utilizing modern

technology to making responsible social contributions; we are continuously &

consistently striving to address newer challenges with single motivation: "The

Sensible Choice"

Products

Askari MasterCard (credit card facility)

Balance Transfer Facility

Smart Installment Plan

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D- AGRICULTURE BANKING

The role of agriculture in Pakistan economy is of pivotal nature. Due to diverse

geographical and climatic conditions the country has tremendous potential for growth

and development in agriculture. However, adequate and timely financial assistance to

the farmers will improve production potential of agriculture sector in the country. The

modern concept of agricultural credit envisages establishment of an efficient

institutional credit system to serve as a package of credit, supplies and knowledge

for the overall strength of the farmers who at present suffer from low productivity andfinancial insecurity. A successful credit evaluation system, therefore, should have the

basic ingredients to provide adequate amount at the right time and in the right form to

help farmers in making a productive use of loan funds.

The Agriculture Credit Division (ACD), a relatively new setup, dedicated to serve the

needs of the largest sector of our economy. ACDs primary focus remained on the

development and introduction of agriculture financing products based on the farmers

needs and sound credit management principles and practices. Since its launch, ACD

has introduced a broad range of products, under the 'Askari Kissan' agri finance

program, to adequately meet short and long term financing requirements of the

farmers for raising crops, dairy farming, poultry, fisheries, forestry and orchids. Agri

loans are also provided for farm mechanization, transportation, marketing of

agriculture produce, storage, land improvements and irrigation.

The initiation of all proposals is based on sound and well defined criteria for assessing

quantitative and qualitative risk profiles of each applicant / transaction within the

admissible lending practices of agriculture credit allowed by SBP. All finances are

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asset based / collateralized and / or secured by other acceptable securities.

Appropriate margins on securities are applied where specified by SBP, or determined

by the Bank, on the basis of disposal costs and potential prices movements of the

underlying assets. Crops / asset and life insurance of borrowers are mandatory for

mitigating risks arising from uncertainties.

The Division remains proactively engaged in evolving policies and procedures for

strengthening the credit framework for the benefit of all stakeholders, and is

determined to make its full contribution towards ensuring that Pakistan is a food and

fiber surplus country.

Askari Kissan Agriculture Finance Program

The Askari Kissan Agri Finance Program (AKAFP) has been designed to meet ON

FARM / OFF FARM credit requirements of farmers on the most convenient, flexible,

easy terms and conditions. The programfeatures:

Featuring:

A broad array of credit lines designed to meet farming requirements.

Repay and borrow at your convenience on revolving credit basis at

lowest mark-up rates renewal able after three years.

Convenient repayment terms based on cash flow abilities.

Availability of leased Tractors / Transport without Land / Collateral.

No Hidden Cost.

Availability of interest free package for inputs and tractors etc.

No Pre-adjustment penalties.

Earn prompt payment Bonuses and reduce financial costs.

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Insurance cover of leased assets, animals, crops and life assurance of

borrowers

Products

Askari Kissan Ever Green Finance

Askari Kissan Tractor Finance

Askari Kissan Aabpashi Finance

Askari Kissan Livestock Development Finance

Askari Kissan Farm Mechanization Finance

AskCard

Askari Kissan Farm Transport Finance

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CHAPTER NO 3.

ORGANIZATIONAL STRUCTURE

3.1: STUCTURE OF OVERALL ORGANIZATION

Board of Directors

Lt. Gen. Javed Zia

Chairman

Lt. Gen. (R) Imtiaz Hussain

Mr. Kashif Mateen Ansari , FCMA

Mr. Zafar Alam Khan Sumbal

Mr. Muhammad Riyazul Haque

Mr. Shahid Mahmud

Mr. Ali Noormahomed Rattansey , FCA

Dr. Bashir Ahmad Khan

Mr. Tariq Iqbal Khan, FCA

(NIT Nominee)

Mr. M.R.Mehkari

President & Chief Executive

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Audit Committee

Dr. Bashir Ahmad Khan

Chairman

Mr. Ali Noormuhammad Rattansey, FCA

Mr. Zafar Alam Khan Sumbal

Company Secretary

Mr. Saleem Anwer , FCA

Auditors

A.F. Ferguson & co.

Chartered Accountants

Legal Advisor

Rizvi, Isa, Afridi & Angell

Shariah Advisor

Dr. Muhammad Tahir Mansoori

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REGISTER &SHARE TRANSFER OFFICE

Askari Asssociates (Private) Limited,

6th floor,AWT Plaza, The Mall,

P.O. Box 678, Rawalpindi.

Tel. (051) 9272442-44

Fax: (051)9272447E-Mail: [email protected]

REGISTERED OFICE/ HEAD OFFICE

AWT Plaza, The Mall,

P.O.Box No. 1084,

Rawalpindi- Pakistan.

Tel. (051) 9372150-53

Fax. (051) 9272455

Website: www.askaribank.com.pk

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3.2: STRUCTURE OF THE PIRMALAH BRANCH

Branch Manager

Aftab Ahmad Zia

Operational Manager

Assmat Tahir

In charge General Banking

Ahsan Iftkhar

Agriculture Credit Officer

Haider Ali

System Administration

Yasir Imran

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Accounts

Rashid Mehmood

C.D. Incharge

Muhammad Hanif

Remittance Incharge

Junaid Baber

Cash Officer

Muhammad Ruuman

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3.3: REVIEW OF VARIOUS DEPARTMENTS

VARIOUS DEPARTMENTS OF THE ORGANIZATION

This Group is responsible for serving the needs of large corporate clients in public and

private sector, managing correspondent banking relationships and undertaking money

market transactions. The Group is organized in three divisions namely Corporate and

Merchant Banking Division, International Division and the Treasury.

3.3.1: CORPORATE AND MERCHANT BANKING DIVISION

This Division is engaged in provision of financing facilities to large corporate clients

including multinationals. Principal activities include syndicated loans, guarantees, and

working capital finance, underwriting and advisory services. The Division has played an

important role in providing development finance for the modernization and expansion of

the country's core industries. Credit risk is well diversified with exposures in sectors like

fuel & energy, chemicals, textiles and fertilizers. Three units have been set-up at Karachi,

Lahore and Rawalpindi for sales and operations, which are supported by centralized

marketing from the Head Office.

3.3.2: 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,

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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.

3.3.3: TREASURY

Responsible for managing Banks 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.

3.3.4: RETAIL BANKING GROUP

Retail banking group was formed in 2000, this group is responsible for serving the needs of

the retail market. Focusing on individual consumers and small and medium size enterprises,

for purpose of product differentiation, the group is managed in three business arms i.e.

Investments products unit, asset products unit, and the credit cards division.

INVESTMENT PRODUCTS UNIT

Responsible for developing and managing brands which serve the investment needs of the

consumer market, this unit focuses on deposit mobilization, provision of value added

services based on modern technology and undertaking the centralized marketing and

advertising for the Bank. This unit is also actively involved in the acquisition business and

has signed-up over 300 merchants nation-wide which offers shopping discounts to the

Bank's Privilege Card members.

Askari Bank's Value Plus is a unique deposits account, which offers handsome monthly

profits, accidental insurance cover, partial liquidity on all time deposits and free Privilege

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Card membership. The Unit is also administering the sales and distribution, including

arrangement for strategic partnership alliances for Askari- i-Net Banking, the first internet

banking in Pakistan, which allows routine banking transactions from any where in the

World, round the clock, over the internet.

ASSET PRODUCTS UNIT.

This Unit is engaged in the development and management of retail credit schemes. The

consumer market in Pakistan has not only grows exponentially over the last decade or so,

but the needs of this segment have become extremely diverse. In order to sustain

competition, it is but imperative to continue offering innovative consumer credit schemes.

With the launch of Askari Bank's Personal Finance an Askar (auto-loans), this unit isemerging as a significant contributor to the Bank's loan growth. The unit also administers

the first e-commerce banking solution in Pakistan, under the brand name ASK-IBL online.

This is a b2b automated credit transaction module, offering merchandise credit to retailers

on goods purchased form one of the largest distributors n the country. Strong collection and

prudent risk management policies have restricted delinquencies to very low levels.

CREDIT CARDS DIVISION.

This Division manages Askari Master Card brand and is headquartered at Karachi. With a

new fully automated transaction processing system, the brand was re-launched in 2001,

supported by an aggressive advertising campaign and strong sales team network. The

product now has portfolio of nearly 20,000 cards, in less than one year. The brand is

accepted worldwide and over 3,000 locations in Pakistan.

OPERATIONS AND CREDIT GROUP

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A support function group mainly responsible for development of systems and procedures,

process re-engineering, automation and credit management. The group is organized in three

divisions i.e. System and operations division, electronic technology divisions and the credit

division.

3.3.6: SYSTEM AND OPERATIONS DIVISIONS

This group has been instrumental in development of procedures and manuals for various

operating requirements of the bank. After careful mapping of the existing process flows, the

division recommends automation and re-engineering requirements. To improve transaction

efficiencies. The division is active in providing equipment procurement support and

development of new branches. The protection of fixed assets of the bank is also managed

by the by this division, as directs function. During year 2001, the division has proposed

several cost cutting initiatives based upon improvement of our existing procedures and

documentation reduction. Seven new branches have been opened during this year. The

division successfully implements the model branch concept during 2001, which has been

proved to be a milestone towards improving our customer service standards and achieving

process uniformity with optimum resource utilization.

3.3.7: ELECTRONIC TECHNOLOGY DIVISION

This division operates as the backbone for all operational functions in the bank.

Responsible primarily for the development of banking software and provision of computer

hardware to all business units, the division also engaged in the development of technology

based value added customer service products. The division has helped the bank in playing

the pioneering role in offering Internet banking service e-commerce solution and on-line

banking. The division provides online real time branch connectivity and has full-automated

transaction processing support programmers in the place. The division is focusing on use of

data-warehousing technology to enhance the relationship management program of the bank.

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3.3.8: 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

Taking into account the expanding branch network and the increasing customer base, credit

administration was strengthened by decentralizing the delegation of lending authorities at

the regional and area management level.

The decentralization has benefited the bank and its customer tremendously as the new

arrangements now provide for faster credit delivery, focused credit development, and more

effective monitoring and controls. Further steps are being taken to streamline credit

appraisal procedures and training to credit officers at all levels.

3.3.9: HUMAN RESOURCE DIVISION

Strategically, perhaps the most important division at the head office is responsible for

human resource management, including recruitment staff training and evaluation. The

division also handles matters relating to administration. This division operates on future

oriented strategy focusing on employees personal and professional growth.

Staff development activities are geared to enhance their capabilities for applying the

knowledge and facts towards development of practical situations. Under our human

resource management policy, we develop and groom our management personal for

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positions of greater responsibilities analytical, interpersonal, conceptualized and specialized

skills to enable them understand cause-and-effect relationships and to think logically.

Staff is given on the-the -job as off-site training in diverse areas of banking and

management. Our hiring philosophy is based upon meritocracy and selecting the right

person for the right job. We lay greater emphasis on employees honesty and integrity

besides technical competence. Candidates are selected through well defined and systematic

selection procedure.

3.3.10: FINANCE DIVISION

Responsible for bookkeeping and accounts, this division at head office, prepare all financial

return and the MIS through its management-reporting wing. The division is actively

involved in preparing market comparative analysis, consolidation of bank's budgets, its

monitoring and constant review of various financial indicators.

Finance division works as the backbone for the bank's operations. The division, which

reports directly to the president and chief executive of the bank, has been instrumental in

preparation of banks business plans and future strategies. The budgetary performance are

constantly reviewed and through a sophisticated " monthly performance report which is a

computer based program, the division provides feed back to the senior on strategic issue

like reasons for budgetary variance and methods to arrest negative performance factors.

Preparing the bank's annual accounts and coordinating external audit is also a direct

function of the finance division. Through the dedicated efforts of staff at this division, the

bank has been winning various awards foe the best presentation of the annual accounts and

also the management has also been able to monitor and review the bank's performance in

proactive manner.

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3.3.11: 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 compliance with the

boards policies and directives, as also the prudential regulations and other directives of the

SBP. However their role is not intended to just that of fault finding; but also guiding and

assisting branches in improving their operations.

The division is responsible for evaluating every aspect of the bank's operations with the

goal of improving the effectiveness of risk management and internal control. There is also aregional audit function attached to each area office; the nature of this business is of more

quality assurance rather than strictly audit. The regional audit report to the area manager,

and assist them in ensuring that there is proper compliance with all the relative directives,

and also that customer service standards are maintained and improved, at the branches in

the area.

The system of regional and area offices has been introduced since 1999for 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.The bank's branch

network has been divided into 6 regions:

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

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A process of effective decentralization has been implemented, with delegation of authority

and greater responsibility and accountability. Under this system the regional heads have the

primary responsibility for business development, profitability productivity, operational

efficiency and credit quality.

The system helps our customers through quick decision-making and fast product delivery.

It has now enabled the bank to further expand and diversify its geographical reach and

business activities

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CHAPTER NO 4.

STUCTURE AND FUNCTIONS OF THE ACCOUNT

DEPARTMENT

4.1: STUCTURE OF ACCOUNT DEPARTMENT

Branch Manager

Mr. Aftab Ahmad Zia

Operational Manager

Assmat Tahir

Incharge Account Department

Rashid Mehmood

4.2: ACCOUNTING OPERATIONS

Accounts Department is quite important department of the Bank. This is the department

who is responsible for all account statements like as expenses, taxes etc. it prepare the

reports on daily, weekly, monthly, quarterly, and annually basis. It makes the

correspondence with the head branches also.

Following are the responsibilities of the said department.

a. Checking of Activity on Daily Basis

b. Maintenance of SBP Account

c. Payment of Bills to Different suppliers/couriers etc.

d. Depreciation Vouchers at end of Each Month

e. Payment of Staff Salary

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f. Submission of all relevant statements to SBP/Head Office

DAILY BANK POSITION STATEMENT

All relevant reports pertaining to the whole day working are printed out in the daily

working procedure of End of Day run by the Computer Department. Some reports in

which each financial transaction either pertaining to customers accounts or to General

Ledger Accounts is printed in this procedure are called Daily Activity Reports.

This is responsibility of Accounts Department to check each transaction made through

computer posting in order to assure that the entry passed in quite right and correct.

Each & every voucher is sorted out and then is placed in the following bunches accordingto its nature.

1. Saving Accounts

2. FCY Accounts

3. Head Office Vouchers

4. Current Deposit Accounts

Features

It manages the vouchers of their day to day transactions.

It has the responsibility to see on line transactions like transfer of amounts by

customers and check and verified them through vouchers.

They make the budget for their monthly and daily expenses (refreshment,

stationary; etc.) Salaries of the staff are prepared in this department.

Approval of expenses of exceed from budget.

It makes the account statements on daily, weekly, monthly, quarterly and annually

basis.

It deals in the tax also.

It makes the correspondence with head office and head branches also.

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Incharge of this department also is the incharge of all labor type employees. Simply

In charge of this department is also responsible for maintaining of branch and

refreshment in the branch.

Salaries of employees.

Maintain fixed assets register / Depreciation of assets.

4.3: ROLE OF FINANCIAL MANAGER

The financial manager does all financial transactions with other financial institutions:

Payment of cheques

Payment of demand draft

Cash receive from other financial institutions

Included

1: Cheques

2: Demand Draft

3: Travel Cheques

All these transactions done by financial manager of bank, he can receive and pay all such

kind of payments with all other financial institutions. And all other transactions with any

financial institutions are also done by financial manager.

Lend money to other banks and also borrow money from other banks is also

responsibility of financial manager in bank.

Responsible for bookkeeping and accounts at head office, prepare all financial return and

the MIS through its management-reporting wing. It actively involved in preparing market

comparative analysis, consolidation of bank's budgets, its monitoring and constant reviewof various financial indicators.

Financial manager reports directly to the president and chief executive of the bank, has

been instrumental in preparation of banks business plans and future strategies.

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Preparing the bank's annual accounts and coordinating external audit is also a direct

function of the finance manager.

4.4: ELECTRONIC DATA IN DECISION MAKING

Banks use different types of electronic data in decision making. Internet is the major source

for collecting data. With the help of internet and intranet banks perform their lot of

transactions and it make possible to do E banking.

Electronic data which is most useful in decision making include

D.D. system

Data related to computerized demand draft also include in decision making in banks

Computerized D.D. includes electronic and hard copy demand draft.

O.B.C (Outward Bill for Collection)

Banks add data of cheques which is sent by bank to other banks for collection.

Electronic Reports

After getting information from ATM and Emails banks make electronic reports.

Such kinds of reports are very helpful in decision making.

Software used by Bank

Unibank

Unibank is readymade software which performs all kinds of banking transactions in Askari

bank.

Functions on Unibank

Debit and Credit

Transfer balance

Account Opening

Electronic Vouchers

Commission Charges

Cheque Book charges

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Connecting to Head Office

Closing Format (day end)

Weekly Format

Basic Data (monthly closing report)

Monthly tax statement

4.5: Sources of funds for last five years

Deposits

2008 2007 2006 2005 2004

167,676,572 143,036,707 131,839,283 118,794,690 83,318,795

4.6:Generation of funds for last five years

Investments

2008 2007 2006 2005 2004

35,677,755 39,431,005 28,625,915 25,708,194 17,239,156

4.7: Allocation of funds for last five years

Advances

Loans

2008 2007 2006 2005 2004

128,818,242 100,780,162 99,179,372 85,976,895 69,838,392

4,479,754 14,444,143 8,392,950 10,172,242 2,324,839

CHAPTER NO 5.

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CRITICAL ANALYSIS OF THE THEORETICALCONCEPTS RELATING TO PRACTICAL

EXPERIENCE

During our education we study lot of subjects but during any job or business applications of

all these subjects are not possible. But some of them must apply in any job or business.

Every organization must follow theoretical concepts but its not possible to apply as well

as. Its possible they use such concepts in their own way.

So during my MBA I study 20 subjects but I observe that few of them applicable in bank

like CREDIT MANAGEMENT, FINANCIAL MANAGEMENT, BANKING LAW,

COST ACCOUNTING, FINANCIAL ACCOUNTING, INVESTMENTS.

Which concepts I study during my college work, I observe during my internship bank also

apply these concepts. I am not saying that they apply as well as but they follow such rules

and laws. For example we study about bank accounts, bank also follows such rules but they

divide the features of such accounts according to their products.

Other point is that theoretical concepts are relating to the rules of state bank of Pakistan

and the banks also work under the SBP.

All other theoretical concepts like debit, credit, vouching, general entries, ledgers, financial

statements have the same application in bank.

In short bank must follow all theoretical concepts in their practices but its possible they use

such concepts according to their requirements or needs, and its not possible for them to

make their own concepts for banking.

CHAPTER NO 6.

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FINANCIAL ANALYSIS

6.1: FIVE LATEST YEAR BALANCE SHEETS

Rupees in 000

2008 2007 2006 2005 2004

Assets

Cash and

Balance with

Treasury Banks

16,029,35 13,356,055 14,879,230 11,766,925 8,762,866

Balance with

other banks

3,954,814 3,497,054 7,333,002 5,550,148 4,847,899

Lending to

financial

institutions

4,479,754 14,444,143 8,392,950 10,172,242 2,324,839

Investments 35,677,755 39,431,005 28,625,915 25,708,194 17,239,156Advances 128,818,242 100,780,162 99,179,372 85,976,895 69,838,392

Operating fixed

assets

8,266,458 5,128,428 3,810,331 3,192,862 2,595,023

Deferred tax

assets

_ _ _ _ _

Other Assets 8,964,480 5,535,038 3,812,788 2,732,641 1,559,023

206,191,138 182,171,885 166,033,588 145,099,907 107,167,540

LiabilitiesBills Payable 2,584,828 2,627,051 1,839,077 1,315,680 1,227,093

Borrowings 15,190,148 17,553,525 14,964,087 10,562,338 13,781,555

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Deposits and

other accounts

167,676,572 143,036,707 131,839,283 118,794,690 83,318,795

Sub-ordinate

loans

2,996,100 2,997,300 2,998,500 2,999,700 1,000,000

Liabilities

against assets

subject to

finance lease

_ _ _ 1,459 14,159

Deferred tax

liabilities

12,987 471,519 736,298 567,217 1,282,980

Other liabilities 4,759,140 3,219,796 2,603,113 2,045,340 526,866

193,219,775 169,905,898 154,980,358 136,286,424 101,151,448

Net Assets 12,971,363 12,265,898 11,053,230 8,813,483 6,016,092

6.2: FIVE LATEST YEAR INCOME STATEMENTS

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Rupees in 000

2008 2007 2006 2005 2004

Mark_up/Return/

Interest earned

18,393,313 15,143,241 12,596,921 8,780,698 4,487,206

Less

Mark_up/Return/

Interest expense

10,650,719 8,685,624 6,977,313 4,278,374 1,117,206

Net markup/

Interest income

7,742,594 6,457,617 5,619,608 4,502,324 3,370,000

Provision against

nonperforming

loan and

advances

3,824,778 3,920,240 1,128,137 638,547 277,398

Provision for

impairment in

the value of

investment

508 1,501 376 (36,555) 38,066

Bad debts

written off

directly

247,311 __ __ __ 7

4,072,597 3,921,741 1,128,513 601,992 315,471

Net

markup/Interest

income after

provision

3,669,997 2,535,876 4,491,095 3,900,332 3,054,529

Add Non markup /Interest income

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Fee, Commission 1,257,584 1,072,868 1,013,660 838,561 708,377

Dividend income 173,621 137,079 109,326 51,143 26,318

Income from

dealing in

foreign currency

873,512 655,761 584,344 356,218 180,992

Gain on sale of

investments

36,743 2,361,251 112,474 99,825 540,193

Un realized gain 22,384 1,728 (2,308) __ __

Other income 343,156 336,809 321,758 206,819 177,648

Total non

markup/

interest income

2,707,000 4,565,496 2,139,254 1,552,566 1,633,528

6,376,997 7,101,372 6,630,349 5,452,898 4,688,057

Less Non markup/interest expenses

Administrative

expenses

5,904,169 4,789,536 3,277,353 2,591,985 1,845,317

Other provisions 459 __ __ __ 2,842,740

Other charges 10,987 12,051 6,141 1,832 138

Total expenses 5,915,615 4,801,587 3,346,855 2,593,817 1,845,317Profit before tax 461,382 2,299,785 3,346,855 2,859,081 2,842,740

Less Taxation

Current year 17,363 98,535 987,875 828,774 876,089

Prior years (50,000) (233,950) __ (188,247) __

Deferred 107,794 (245,812) 113,006 196,558 43,611

Total Tax 75,157 (381,227) 1,096,881 837,085 919,700

Profit after tax 386,225 2,681,012 2,249,974 2,021,996 1,923,040

Unappropriated

profit brought

forward

2,144,810 1,799,979 1,617,597 1,538,432 ____

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Profit available

for

appropriation

2,531,035 4,480,991 3,867,571 3,560,428 1,923,040

6.3: RATIO ANALYSIS FOR THE LAST FIVE YEARS

2008 2007 2006 2005 2004Gross Profit Ratio 0.07:1 0.32:1 0.50:1 0.52:1 0.61:1

Net Profit Ratio 0.061:1 0.38:1 0.34:1 0.71:1 0.41:1

Expense Ratio 0.93:1 0.68:1 0.50:1 0.48:1 0.39:1

Return of

Investment/Earning

Power

0.0019:1 0.015:1 0.014:1 0.014:1 0.018:1

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Return of Fixed

Assets

0.047:1 0.52:1 0.59:1 0.63:1 0.75:1

Assets Turn Over

Ratio

0.031:1 0.039:1 0.04:1 0.038:1 0.044:1

Fixed Assets Turn

Over Ratio

0.77:1 1.38:1 1.74:1 1.71:1 1.83:1

Return on Equity 15.0:1 14.2:1 19.3:1 18.5:1 19.2:1

Return on Average

Assets

0.9:1 0.9:1 1.4:1 1.5:1 1.6:1

Price Earning

Ratio(P/E)

4.7:1 5.5:1 3.2:1 8.8:1 8.3:1

Debt Ratio 48:1 57:1 77:1 90:1 80:1

Interest Coverage

Ratio

1.08:1 3.09:1 2:1 2.1:1 2.54:1

Quick Ratio 0.92:1 0.94:1 0.90:1 0.91:1 0.90:1

Current Ratio 1.02:1 1.04:1 1.047:1 1.041:1 1.034:1

Ratio Analysis

Gross Profit Ratio

G .P. Ratio gradually decrease in the period of 2004 to 2008, in first three years there is

very slight change but in last two years there is great decrease in GP Ratio.

Net Profit Ratio

Net Profit Ratio fluctuated in the period of 2004 to 2008, in first year it increase but thenext year it decrease and again increase but big decrease in 2008.

Expense Ratio

Expense Ratio constantly increase from 2004 to 2008, very small change in 2005 to 2006

but 60% increase in the whole period.

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Large decline in GP Ratio and NP Ratio is due to high addition in

Expenses of the organization.

Return of Investment/Earning PowerEarning power of the organization decrease in first year but it constant in next two years

then a very vast decline in 2008.

Return of Fixed Assets

Return of Fixed Assets frequently decline in the period of 2004 to 2008.

Assets Turn Over Ratio

Assets Turn over Ratio is fluctuated in the whole period. In start it decrease but slightly

increase in 2006 then again decrease up to final year.

Fixed Assets Turn Over Ratio

Fixed Assets Turn Over Ratio vary from period to period and perform like previous it

reduce in start but slightly increase in 2006 then once more decrease up to final year.

Return on Equity

Return on Equity rise and fall from 2004 to 2008, primary year it fall and rise in 2006, next

year Return on Equity fall and for a second time rise in last year.

Return on Average Assets

Return on Average Assets is continuously shrink in first three years but still same in last

two years.

Price Earning Ratio (P/E)

Price Earning Ratio fluctuate in all five analysis years at start it get higher but go down in

coming year and again grow and drop in next two years.

Debt Ratio

Debt Ratio improve only in 2005 as contrast to first year but in next three years it

frequently decline up to 2008.

Interest Coverage Ratio

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Interest Coverage Ratio go down in initial three years then rapidly get higher in 2007 and

yet again lower in 2008.

Quick Ratio

Quick Ratio is not extra fluctuating in this five years period. There is a very tiny

differentiation in Quick Ratio of all such years.

Current Ratio

There is no large difference in the current assets and current liabilities of the organization in

this assessment period so that Current Ratio is not extra fluctuate, in early three years it rise

and in last two years it fall but these fluctuation is very minor.

6.4: HORIZONTAL ANALYSIS OF THE BALANCE SHEET

FOR THE LAST FIVE YEARS

2008 2007 2006 2005 2004

AssetsCash and

Balance with

Treasury Banks

-82% 52% 69% 34% 100%

Balance withother banks

-19% -28% 51% 15% 100%

Lending to

financial

institutions

93% 521% 261% 338% 100%

Investments 107% 129% 66% 49% 100%

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Advances 84% 44% 42% 23% 100%

Operating fixed

assets

219% 98% 47% 23% 100%

Other Assets 475% 255% 145% 75% 100%

92% 70% 55% 35% 100%

LiabilitiesBills Payable 111% 114% 50% 23% 100%

Borrowings 10% 27% 1% -24% 100%

Deposits and

other accounts

101% 72% 58% 43% 100%

Sub-ordinated

loans

199% 199% 199% 200% 100%

Deferred tax

liabilities

-99% -63% -43% -56% 100%

Other liabilities 803% 511% 394% 288% 100%

91% 70% 53% 35% 100%

Net Assets 116% 104% 84% 46% 100%

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Horizontal Analysis of Balance Sheet

For the purpose of Horizontal Analysis of Balance Sheet for the last five years 2004 to

2008. I select 2004 as a base year and evaluate assets and liabilities of all other four years

on the base of 2004 and compare all this period. Cash and Balance with Treasury Banks,

increase 34% in 2005, 69% in 2006 and in 2007 52% but it decrease with -82% in 2008 as

compare to base year.

Balance with other banks, go up from 2004 with 15%and 51% in 2005, 06 then it

decrease with -28% and -19% in 2007, 08. Lending to financial institutions, constantly

increase but with fluctuations. It rise 338% in 2005, then 261% in 2006, 521% in 2007, but

only 93% in 2008. Investments repeatedly increase up to 2007 then bit decline. So 49%

increase in 2005,66% in 2006,and 129% increase in 2007 but in 2008 percentage increase is

107, as compare to 2004. Advances of the organization continually grow in whole

evaluation period, if we compare it with base year 23% growth in 2005, 42% in 2006, and

44% expansion in 2007,but a high growth of 84% in 2008. Operating fixed assets also

have same condition similar to advances, 23% enlargement in 2005, 47% in 2006, and 98%

in 2007, but a very vast growth 219% in 2008 as compare to 2004. Other Assets also

increase constantly In evaluation period, 75% increase in 2005, measure up to 2004, in

2005, 145% in 2006, 255% but a big change in 2008 of 475%. This continuity in expansion

is due to enlarge in assets of organization every year. Total Assets of the organization are

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also continually rise from base year to final year, 35% enhance in 2005, 55% in 2006, 70%

in 2007, and 92% growth in 2008, as compare to 2004.

Bills Payable is the first item of liability side, and it fluctuates during its growth. In 2005,

23% enhance as compare to base year. And 50% increases in 2006, 114% increase in 2007,

but in 2008 growth rate in 111% in bills payable.

There is large fluctuation in Borrowings of the organization in the selected period. Thus

-24% decrease in 2005, but in 2006 only 1% increase in Borrowings and 27% in 2007, but

only 10% increase in 2008 as compare to 2004. Deposits and other accounts regularly rise

with the passage of time, 43% increase in 2005, 58%,72% and 101% growth in 2006,07and

08, as compare to base year. Sub-ordinated loans 200% rise in2005, but a same growth of199% in rest of three years as compare to 2004. Deferred tax liabilities frequently turn

down in the whole period of evaluation, -56%,-43%,-63% and -99% in 2005 to 2008 as

match up to to base year. Other liabilities raise gradually, 289% in 2005, 394% in 2006,

511% in 2007 and 803% in 2008 as evaluate to 2004 that is base year. Liability side of the

balance sheet also go up continually, 35%, 53%, 70% and 91% from 2005 to 2008, as

measure up to to base year.

After subtracting liabilities from the assets side of the balance sheet the Net Assets are

also continually grow up as compare to base year, 46% in 2005,84% in 2006, 104% in 2007

and 116% growth in 2008.

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6.5: HORIZONTAL ANALYSIS OF INCOME STATEMENT


2008 2007 2006 2005 2004

Markup/Return/

Interest earned

310% 237% 181% 96% 100%

Less

Markup/Return/

Interest expense

853% 677% 525% 283% 100%

Net markup/

Interest income

130% 92% 67% 34% 100%

Provision against

nonperforming

loan and

advances

1279% 1313% 307% 130% 100%

Provision for

impairment in

the value of

investment

-98.67% -96.06% -99.02% -196% 100%

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1191% 1143% 258% 91% 100%

Net

markup/Interest

income afterprovision

20% -17% 47% 28% 100%


Fee, Commission 76% 51% 43% 18% 100%

Dividend income 560% 421% 315% 94% 100%

Income from

dealing in

foreign currency

383% 262% 221% 97% 100%

Gain on sale of

investments

-93% 337% -79% -82% 100%

Other income 93% 90% 81% 16% 100%

Total non

markup/

interest income

66% 179% 31% -5% 100%

36% 51% 41% 16% 100%


Administrative

expenses

220% 160% 78% 40% 100%

Other charges 7862% 8633% 4350% 1228% 100%

Total expenses 221% 160% 81% 41% 100%

Profit before tax -84% -19% 18% 0.6% 100%

Less Taxation

Current year -98.2% -89% 13% -5% 100%

Prior years __ __ __ __ __

Deferred 147% -664% 159% 351% 100%Total Tax -92% -141% 19% -9% 100%

Profit after tax -80% 39% 17% 5% 100%

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Horizontal Analysis of Income statement

For the purpose of Horizontal Analysis of Income Statement for the last five

years 2004 to 2008. I select 2004 as a base year and evaluate incomes and

expenditures of all other four years on the base of 2004 and compare all this

period. Markup Earned of the bank is fluctuate in the whole period, it increase 96% in

2005, 81% in 2006, 237% in 2007, and 310% growth in 2008 as compare to 2004. Markup

Expense gradually increase in evaluation period, thus 283% increase in 2005, 525%

increase in 2006, 667% rise in 2007, and 853% increase in 2008. This expense increase

gradually due to increase in deposits of the bank every year. Net Markup also rises

constantly due to rise in markup income. And 34% growth in 2005, 67% in 2006, 92% in

2007 and 130% growth in 2008 as compare to 2004. Provision against nonperforming

loan and advances rapidly increase from base year to final year. It rise 130%,307%,1313%

and 1279% from 2005 to 2008. Provision for impairment in the value of investment

constantly decrease with fluctuation, -196% fall in 2005, -99.02% in 2006,-96.06

in2007,and -98067% fall in 2008 as compare to base year. Net Markup after Provision

fluctuate in evaluation period 28% growth in 2005, 47% in 2006, but -17% fall in 2007,as

compare to base year and only 20% rise in 2008, on base of 2004.Non Markup Income,

include Fee or Commission gradually rise with 18%,43%,51%a and 76% from 2005 to

2008 on the base of 2004.Divident income too rise constantly on the base of 2004, 94%

increase in 2005, 315% in 2006, 421% in 2007, and 560% in 2008 .Income from Foreign

Currency as well grow gradually 97% grow in 2005, 221% in 2006, 262% in 2007,and

383% grow in 2008 from base year. Gain on sale of investment fluctuate in the whole

period, -82%,-79% decrease in 2005 and 2006,but in 2007 it increase 337% then again fall

of -93% in 2008 from base year. Other Income rise continually 16%,81%,90%and 93%

from 2005 to 2008 on the base of 2004. After addition of all these income, 16% increase in

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2005, 41%,51%and 36% in 2006,07and 08.Non Markup Expense include Administrative

Expenses 40%,78%,160% and 220% from 2005 to 2008, on the base of 2004.Other

Charges expense make a big difference as compare to base year 1228%,4350%,8683%and

7862% from 2005 to 2008 fluctuate. Profit before Tax is rise in start 0.6% and 18% in

2005 and 2006 then decrease constantly from 2007 to 2008, -19% and -84% compare with

base year. Total Tax is ebb and flow with -9%,19%,-141%,-92% from 2005 to 2008 on the

base of 2004.Profit after Tax increase in start but at last year suddenly fall due to increase

in expenses of the organization. As compare to 2004, 5% growth in 2005, 17% in 2006,and39% in 2007 but in 2008 it decrease with -80%.

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6.6: VERTICAL ANALYSIS OF BALANCE SHEET FOR THE

LAST FIVE YEARS

2008 2007 2006 2005 2004

AssetsCash and

Balance with

Treasury Banks

8% 7% 9% 8% 8%

Balance with

other banks

2% 2% 5% 4% 5%

Lending to

financial

institutions

2% 8% 5% 7% 2%

Investments 18% 22% 17% 18% 16%

Advances 62% 55% 60% 69% 65%

Operating fixed

assets

4% 3% 2% 2% 2%

Other Assets 4% 3% 2% 2% 2%

100% 100% 100% 100% 100%

LiabilitiesBills Payable 1% 1% 1% 0.9% 0.10%

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Borrowings 7% 10% 9% 7.3% 13%

Deposits and

other accounts

81% 78% 79% 82% 79%

Sub-ordinated

loans

2% 2% 2% 2% 0.9%

Deferred tax

liabilities

_ _ _ 0.4% 1%

Other liabilities 3% 2% 2% 1.4% 0.5%

94% 93% 93% 94% 94.5%

Net Assets 6% 7% 7% 6% 5.5%

100% 100% 100% 100% 100%

Vertical Analysis of Balance Sheet

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For the purpose of Vertical Analysis of Balance Sheet for the last five years

2004 to 2008. I evaluate assets and liabilities of the organization that how

much its share includes in total.Cash and Balance with Treasury Banks have 8%

share out of 100% in 2008,7% in 2007, 9% in 2006, and again 8% in 2005,04. Balance

with other banks have 2% contribution in 2008,07 and 5% in 2006 and 2004 but 4% in

2005, out of 100% total assets. Lending to financial institutions have 2%,8%,5%,7%

and2% share in 2008 to 2004 out of 100%. Investments include 18% in 2008,22% in 2207,

17% in 2006, 18% in 205 and 16% in 2004.the largest contribute in assets is Advances that

have contribution of 62% in 2008, 55% in 2007,60% in 2006, 69% in 2005 and 65% in

2004. Operating fixed assets and Other Assets both have same ratio 4% and 3% share in

2008 and 2007 and 2% in 2006 to 2004, in total assets.

On liability side Bills Payable is the first item and it has 1% share in total liabilities from

2008 to 2006, and 0.9%, 0.10% in 2005, 04. Borrowings include in total liability 7%, 10%,

9%, 7.3% and 13% from 2008 to 2004.The largest contribution in liabilities is Deposits

and other accounts that is 81%in 2008,78% in 2007, 79% in 2006,82% in 2005 and again

79% in 2004 out of total liabilities in all five years. Sub-ordinated loans include in total

liabilities 2% from 2008 to 2005 and only 0.9% in 2004. Deferred tax liabilities only

include in 2005 and 2004, 0.4% and 1%. Other liabilities have 3% share in 2008, and 2%in 2007 and 2006, 1.4% in 2005, and 0.5% in 2004 in total liabilities. Total Liabilities have

94% in 2008 and 2005, 93% in 2007 and 2006, and 94.5% in 2004.

After subtracting total liabilities from total assets we Net Assets have 6% in 2008 and

2005,7% in 2007 and 2006, 5.5% in 2004.

6.7: VERTICAL ANALYSIS OF THE INCOME STATEMENT


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2008 2007 2006 2005 2004

Mark_up/Return/

Interest earned

100% 100% 100% 100% 100%

Less

Mark_up/Return/

Interest expense

58% 57% 55% 49% 25%

Net markup/

Interest income

42% 43 % 45% 51% 75%

Provision against

nonperforming

loan and

advances

21% 26% 9% 7.3% 6%

Provision for

impairment in

the value of

investment

_ _ _ (0.3)% 1%

Bad debts written

off directly

1% __ __ __ __

22% 26% 9% 7% 7%

Net

markup/Interest

income after

provision

20% 17% 36% 44% 68%


Fee, Commission 6.9% 7.1% 8% 10% 16%

Dividend income 1% 0.9% 0.9% 0.6% 0.6%

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Income from

dealing in

foreign currency

4.8% 4% 4.6% 4% 4%

Gain on sale of

investments

0.2% 16% 0.9% 1.1% 12%

Un realized gain 0.1% __ __ __ __

Other income 2% 2% 2.6% 2.3% 4%

Total non

markup/

interest income

15% 30% 17% 18% 36%

35% 47% 53% 62% 104 %


Administrative

expenses

32% 32% 26% 29% 41%

Other charges _ _ _ _ _

Total expenses 32% 32% 26% 29% 41%

Profit before tax 3% 15% 27% 33% 63%

Less Taxation

Current year 0.1% 1% 8% 9% 19%

Prior years -0.3% -2% __ (2)% __

Deferred 0.6% -2% 1% 2% 0.1%

Total Tax 0.4% -3% 9% 10% 20%

Profit after tax 2.6% 18% 18% 23% 43%

Vertical Analysis of Income statement

Vertical Analysis of the organization from 2004 to 2008. I evaluate all the incomes and

expenditure for all five years and in the last year profit ratio is very short due to high

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expenses of the bank. Mark up earned is the maim source of income and mark up

expense is the main expenditure of bank. Markup are 58% in 2008, 57% in 2007, 55%

in2006, 49%in 2005 and 25% in 2004 of interest income, after subtracting markup expense

from markup income we get Net Markup income that is 42% in 2008, 43% in 2007, 45%

in 2006, 51% in 2005 and 75% in 2004 of markup income. Then Subtract provision from

net income 22%, 26%, 9%, 7%, 7% from 2008 to 2004. Now net income is 20%, 17%

36%,44%,68% from 2008 to 2004.Total non markup income is 15% in 2008,30% in

2007,17% in 2006, 18% in 2005and 36% in 2004 out of total income. After that add non

markup income and the net income is 35% in2008, 47% in 2007, 53% in 2006, 62% in

2005, and 104% in 2004. Then less non markup expenses 32% in 2008,07 and 26% in

2006, 29% and 41% in 2005and 2004. We get profit before tax 3% in 2008, 15% in 2007,27% in 2006, 33% in 2005 and 63% in 2004 out of total income of bank. And the total

taxes of these five years are 0.4%,-3%, 9%, 10%, and 20% from 2008 to 2004. After

subtracting total tax we obtain Profit after Tax, 2.6% in 2008, 18% in 2007 and 2006,

23% in 2005 and 43% in 2004 out of total revenue of bank.

CHAPTER NO.7

Compare the Organization with its Competitors

Askari Bank Ltd vs. United Bank Ltd

Rupees in 000

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Askari Bank Ltd United Bank Ltd

2008 2007 2008 2007

Assets 206,191,138 182,171,885 592,185,170 546,795,871

Liabilities 193,219,775 169,905,898 540,965,713 498,904,933

Profit after Tax 386,225 2,681,012 5,855,847 5,776,553

Balance Sheet Ratios


2008 2007 2008 2007Current Ratio 1.02:1 1.04:1 1.06:1 1.05:1

Debt Ratio 0.05:1 0.06:1 0.053:1 0.06:1

Debt to Total

Asset Ratio

0.9:1 0.93:1 0.9:1 0.9:1

Askari Bank Ltd vs. United Bank Ltd

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Profitability Ratios


2008 2007 2008 2007

Profitability in

Relation to

Investment

0.002:1 0.015:1 0.009:1 0.01:1

Return on

Equity

0.095:1 0.89:1 0.58:1 0.7:1

Interest

Coverage Ratio

1.08:1 1.48:1 2:1 2.32:1

Askari Bank Ltd vs. Bank Alfalah Ltd

Rupees in 000

Askari Bank Ltd Bank Alfalah Ltd

2008 2007 2008 2007

Assets 206,191,138 182,171,885 310,209,754 330,679,872

Liabilities 193,219,775 169,905,898 292,632,928 313,265,718

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Profit after Tax 386,225 2,681,012 1,008,807 638,812



2008 2007 2008 2007Current Ratio 1.02:1 1.04:1 1.75:1 2.1:1

Debt Ratio 0.05:1 0.06:1 0.065:1 0.08:1

Debt to Total

Asset Ratio

0.9:1 0.93:1 1.2:1 1.6:1

Askari Bank Ltd vs. Bank Alfalah Ltd


2008 2007 2008 2007Profitability in 0.002:1 0.015:1 0.045:1 0.05:1

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Relation to

Investment

Return on

Equity

0.095:1 0.89:1 0.60:1 1.3:1

Interest

Coverage Ratio

1.08:1 1.48:1 1.5:1 1.02:1

Askari Bank Ltd vs. Bank of Punjab

Rupees in 000

Askari Bank Ltd Bank of Punjab

2008 2007 2008 2007

Assets 206,191,138 182,171,885 2 00,400,065 2 34,974,195

Liabilities 193,219,775 169,905,898 1 89,455,998 2 15,978,401

Profit after Tax 386,225 2,681,012 204,609 718,689

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2008 2007 2008 2007Current Ratio 1.02:1 1.04:1 1.05:1 0.9:1

Debt Ratio 0.05:1 0.06:1 0.09:1 0.05:1

Debt to Total

Asset Ratio

0.9:1 0.93:1 0.95:1 0.8:1

Askari Bank Ltd vs. Bank of Punjab

Profitability Ratios


2008 2007 2008 2007Profitability in

Relation toInvestment

0.002:1 0.015:1 0.055:1 0.13:1

Return on

Equity

0.095:1 0.89:1 0.60:1 0.70:1

Interest

Coverage Ratio

1.08:1 1.48:1 0.85:1 1.38:1

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CHAPTER NO.8

FUTURE PROSPECTS OF THE ASKARI BANK

The operating environment for banks in 2010 will be very challenging in the wake of

intense competition in the pricing of asset and liability products. Effective asset

liability management together with banks ability to offer improved and innovative

products will play a key role in producing better results.

ACBL will be start a new soft ware in 2010.Which is helpful to control the expenses

because only one admin control whole branches of the region.

ACBL should be continued to pursue strategic expansion of its nation-wide branch

network which reached 200 by the end of the year 2007. Further expansion is plannedand is in progress. In addition to the existing network which offers conventional

banking services, the Bank will be launching dedicated Islamic Banking branches

during 2011. The Bank will also be looking at augmenting its existing delivery

channels with new IT backed channels to boost customer convenience. The Bank will

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continue to diversify its credit portfolio with emphasis on consumer, SMEs and

agriculture while ensuring credit growth strictly on the basis of quality, risk and

pricing, aimed at improving returns on assets and capital.

In 2010, ACBL will further consolidate its corporate identity and offer to the clients a

better -service and more customized products. Through this more focused approach,

ACBL plans to out perform the competition.

Askari Bank should be consistently focused on building long term shareholders

value, as the primary objective. The strength of the brand name, supported bystrategic expansion and the depth of the customer relationships, gives ACBL a strong

foundation on which to build and continue growing in the times ahead. The key

elements of planning have been to increase market share, mobilize resources, develop

retail, agriculture and Islamic banking, introduce fresh initiatives for corporate and

investment banking, capitalize on new business opportunities and implement various

technology initiatives.

At ACBL planning is done at top level. Every year board meeting is held to discuss

various business issues. It begins from studying the market trends and goes on to

forecasting future where various indicators such as market indicators, industry picture

and internal processes are given thorough consideration. Board of Directors takes

keen interest in the affairs of the Bank and in the formulation of policies. The agenda

approved by the Board of Directors is then passed on to the Executive Committee

where further essentials are carefully planned and then the goals formulated are

assigned to various business heads.

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CHAPTER NO.9

WEAKNESSES

Perfection is only the claim of Allah Almighty. No other being living or dead cansay this for itself. Similarly, Askari Bank also has some shortcomings that need to be

mentioned:

Most of the employees are overloaded with work.

Lack of expert finance managers.

Lack of training of employees.

Inefficient software (Unibank)

Less Advertising in Electronic Media.

Lack of Marketing Promotion.

Low number of branches.

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It is slow in the introduction of new services

Domestic bank with operations only in Pakistan and does Not Possess Foreign

Network.

Less walk in customers

Few consumer products

High expenditure

High degree of centralization in the bank

Opportunities

capitalizing on the real estate sectors boom by introducing flexible house financing

more facilities for credit card users

more retail banking products

Extension of local branch network

Establishing foreign branch network

Capitalizing on information technology

Unexplored market of multinational corporations

Growth in textile sector

Adopt E-banking

Threats

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Mergers of small banks with bigger banks thereby increasing competition

Foreign investments are increasing. Standard Chartered bank acquired Union bank

Private banks are increasing their customer base and no of deposit

CHAPTER NO.10

Conclusion

The Askari Bank continued to aggressively fortify its banking network across the country

during financial years 2004-08. The bank under its expansion program of its operations

added highest number of branches in this period.

The bank will continue to expand as per SBPs instruction as work is already underway tosome proposed locations during the current year as well. The Askari bank aims to explore

new markets by expanding its network to smaller towns and by offering agriculture banking

products supported with technology-based services.

EPS during the period stood at Rs13.42 compared to Rs12.76 previously. The Bank also

declared final cash dividend at Rs1.50/share along with 33per cent bonus shares payout.

The interest income of Askari Bank portrayed exceptional growth of 21per cent to Rs18,

393million, primarily due to 82per cent increment in interest earned on loans and advances

to customers to Rs.12,818 million as against Rs100,780million during last year.

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Moreover, markup earned on investments also increased. These are the cumulative

consequence of increased branch network, effective asset/liability management and

substantial growth in business volumes.

From the above discussion it is evident that the bank is progressing. Being a domestic bank

it has been able to satisfy its customers with the latest technology. The expansion of the

network of branches of the bank will further enable it to maintain its competitive position.

CHAPTER NO.11

RECOMMENATIONS

Askari bank is a very good organization on every point of view, i.e. public dealing and also

with the business point of view. Here the customers do not feel any difficulty dealing with

the bank due to the hard working staff. Inspire of this effective and efficiency but I have

some suggestions, which can add some input in than in than aviating environment.

ADMINISTRATIVE ANALYSIS

CENTRALIZATION

Askari bank is a totally centralized bank. In order to improve the working condition of

three branches, modern techniques of decentralization must be adopted. Some of the

authority must be delegated to the lower management and the staff, unto some extend. This

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will improve the confidence of the employees, their working performance and may result in

quick and prompt attenuation paid to the customers.

CONTROL AND EXPENATIONS

Expenditures must be control, which are very high.

New software

Want to introduce new soft ware which easily use and fill up all aspects.

PERSONNEL MANAGEMTN ANALYSIS.

NEED FOR BETTER TRAINING

It has been noticed that the training program of Askari bank is not proper. Special

marketing and financial management training should be given to the employees. They

should be given to the employees who concerned with marketing. They should learn the

new methods for motivating customers. The training program of the bank should include

scientific techniques to improve the decision making inter-done by incorporating case

studies, sensitivity training and special projects. Both the specialized and generalized

training should be provided to the fresh as well as the on-job workers to maintain the highstandard of the fresh as well as the on-job workers to maintain the high standard of the

services. A recommended training program for the employees training is given bellow

Practical Market Research Skills

This program should be designed for department and filed Sales personnel who are some

times required to actually conducting their own market research without having any

professional skill. The focus of this course should be on those specific market skills are

more likely to be used in Pakistan.

Better Field Finance Managements

This should aim at improve the skills and the knowledge used by the filed finance mangers

in controlling financial activities,. Executive in charge of the finance areas/territories and

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who supervise several staff. The basic trust of this program should be one presenting the

filed finance manager job comprising of leading team, motivating sub-ordinates to perform,

and controlling a profit center.

Appraising the Market

This would offer the trainees the practical ways to reduce new project risk by proper market

appraisal. Market appraisal of the new project can not be done in Pakistan and shows how

four techniques can be systematically applied in estimating the real market potential,

judging the price trends, identifying the market risks and forecasting the capacity utilization

SOCIALZINGThe most important recommendation is that the branch should have more of social

Parties and evenings where the employers are invited so that this becomes a source of

motivation. Because working the entire time makes one socially dull.

Currently banking sector is experiencing some major changes because of mergers and

acquisition. Standard Chartered Bank has set a new trend in the banking industry of

the country after having acquired Union Bank. Policy-makers at the State Bank

believed that the banking environment has changed and the merger of the Union Bank

was the outcome of the policies adopted by the SBP. The SBP has been pursuing the

policy of merger of small banks with strong banks. 1 Such a scenario will increase the

competition for domestic banks and Askari Commercial Bank LTD is one of them.

Reports suggest that some more European banks are interested in increasing their

stakes in the financial industry of Pakistan.

Higher-ups in the banking industry said that they expected the country to see more

deals in the banking industry such as the merger of Union Bank. They said a lot of

inquiries about the performance of financial institutions and regulatory laws were

1

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being received from European banks.Bankers said that the attraction was not just the

surplus money floating in the European banking industry but the performance of

banking industry in Pakistan was also attractive.

In order to compete in such a rapid changing environment ACBL needs to be more

aggressive. It should be flexible enough to adapt to the ever changing banking

industry of Pakistan. The banks promote retail banking aggressively and needs to

work on lowering rates. Keeping a close watch on competitors and continuously

updating banking facilities for its customers is necessary for survival. Also

introduction of innovative products catering to the banking needs of the customers

both the corporate clients as well as the individuals is required.

REFERENCES

James C.Van Horne, 2000. Financial Management

N. Khurram, 2004. Financial Analysis

www.askaribank.com.pk

www.sbp.pk

www.wikipedia.org

www.ubl.com.pk

www.bankalfalah.com.pk

www.bop.com.pk

71
http://www.askaribank.com.pk/http://www.sbp.pk/http://www.wikipedia.org/http://www.ubl.com.pk/http://www.bankalfalah.com.pk/http://www.bop.com.pk/http://www.askaribank.com.pk/http://www.sbp.pk/http://www.wikipedia.org/http://www.ubl.com.pk/http://www.bankalfalah.com.pk/http://www.bop.com.pk/


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Audited Financial Reports of Askari Bank

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