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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
FOR THE LAST FIVE YEARS
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%
Add Non markup /Interest income
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%
Less Non markup/interest expenses
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
FOR THE LAST FIVE YEARS
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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%
Add Non markup /Interest income
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 %
Less Non markup/interest expenses
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
Askari Bank Ltd United Bank Ltd
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
Askari Bank Ltd United Bank Ltd
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
Balance Sheet Ratios
Askari Bank Ltd Bank Alfalah Ltd
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
Askari Bank Ltd 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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Balance Sheet Ratios
Askari Bank Ltd Bank of Punjab
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
Askari Bank Ltd Bank of Punjab
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
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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/8/6/2019 Afzaal's Final Internship Report
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Audited Financial Reports of Askari Bank
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