final report internship khurram

Askari Bank Limited Multan.

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Internship Report

2009-2010

Master of Business Administration

Uzma Faiz

08-arid-1463

FINANCE

0333-5562733

[email protected]

University Institute of Management Sciences

University of Arid Agriculture Rawalpindi

Askari Bank Ltd

Tel: 061-9201388

Fax: 061- 9201395

Abdali Road Branch (0013), Multan

Supervisor’s Name: Mr. Adnan

0321-6223522

Starting Date: 26-07-2009

Ending Date: 26-09-2009

Report Date

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16-Feb-2010

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Evaluation

Uzma Faiz

Askari Bank Ltd

Internship report submitted for the final Evaluation in Partial Fulfillment of

the requirements for the Degree of

Master in Business Administration

It is certified that, the Internship report and the work contained in it

conforms to all the standards set by the Institute for the evaluation of any

such work.

1. -------------------------------------------------

2. -------------------------------------------------

University Institute of Management Sciences

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University of Arid Agriculture, Rawalpindi

DEDICATION

TO MY

PARENTS, FAMILY,

TEACHERS

AND MY FRIENDS.

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The Holy Quran.

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

to write qualities of my creator. Then the whole oceans would

be consumed in writing before his qualities, comes to an end.

[AL- KAIF]

The Holy Prophet (PBUH) Said:

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

world and here after ? Remember it is the company of those,

who remember and glorify ALLAH, day an night.”

[AL- SUNNAT]

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Preface

This report is an internship report on , “Askari

Bank, Abdali Road Multan.” It will provide you material and

information about the bank. Along with the general

information, in it, we will study about the special survey

about the different prospects of the bank.

In addition, I tried to collect the secondary data, from the

different “Departments of the bank, Research papers, Internet, and

from the Annual Reports of the bank”, & from any possible

source, which I could find.

Any how, I must thank to my teacher Mr. Raza Ali on

giving me the chance to report on “Askari Bank.” In

normal circumstances, I would never be able to attain such

valuable information about the respected bank.

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EXECUTIVE SUMMARY:

The Department of Administrative Sciences offers Masters degree in

Business Administration. They are giving the best education and are

offering for specialization, financial management, marketing

management, human resource management and computer

application to business. An important program is six to eight weeks

internship with any recognized institution.

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

is a competing Bank nowadays and gives a good training to the

internees. So in order to learn more this was my choice.

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

Bank Limited Multan Branch from 2nd June 2008 to 18th July 08.

During my internship I am able to learn practical aspect of business,

and get good working experience.

On the very first day of my internship I reported to Operation Manager

Mr. Noor ul Islam. He gave me small introduction of the Bank and

introduced me to the staff of the Bank. Every internee is rotated

among the Bank’s departments and so was I. This rotation is done in

order to have general concept regarding Bank’s functions, operations

and policies. In this rotation the stay in department is usually a week.

I have learned more about the Basic Banking, Credits and Foreign

Trade department and have given below the caption of activities I

was involved in during the period of six weeks.

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

Multan because most of the Exports and Imports in Multan are done

through this Bank. Multan is one of the cotton growing cities of

Pakistan. Most of the businesses in Multan are directly or indirectly

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

Because Multan is an Agricultural City, and its major export is Cotton

and Mango. So its export is done on seasonal basis. In the season

of cotton and Mango export Askari Bank get its target easily but

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

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

the deposit targets. The profit rates on Askari deposit schemes were

quite low when compared with other Banks especially with the

National Saving Centers, but now Askari Bank is giving a

comparatively high profit rates to its customers. In today’s every

customer is a rational customer, he knows the value of money and

wants a best return on his money.

________________________________________

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INTRODUCTION TO BANK:

Askari Bank Limited (AKBL) works as a Unit of Army Welfare Trust

was established for the Welfare of Army Officials. The office of Army

Welfare Trust is situated at AWT Plaza, Rawalpindi. AWT offers the

“AWT Saving Scheme” to the army officials only. AWT has its units as

under:

Askari Associates.

Askari Leasing.

Askari General.

Private Business.

Textile Mills.

Cement Industry.

Askari Commercial Bank.

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

Public Limited Company, and is listed on Karachi, Lahore and

Islamabad Stock Exchanges. The Bank obtained business

commencement certificate on February 26, 1992 and started

operations form April 1, 1992. Askari Bank is scheduled Commercial

Bank and is principally engaged in the business of Banking as

defined in the Banking Companies Ordinance 1962.

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

operations. The safety and security of depositor’s funds, high

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productivity and optimum use of technology are the hallmarks of its

corporate strength.

In 1994, AKBL earned international recognition as Asia Money Award

and the title of “Best Commercial Bank of Pakistan” for the year

1994, while Euro money declared the Bank as best domestic Bank of

Pakistan for the year 1995.

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ARMY WELFARE TRUST AWT

ASKARI GENERAL INSURANCE

ASKARI ASSOCIATE (PVT) Ltd.

BUSINESSES

ASKARI COMMERCIAL BANK

ASKARI LEASING

TEXTILEPETROLEUMCEMENT


BANK HIERARCHY

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PRESIDENT

SENIOR EXECTIVE VICE PRESIDENT

EXCUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICER GRADE I

OFFICER GRADE 2

OFFICER GRADE 3

JUNIOR OFFICER

PABX OPERATOR

DRIVER

PEON

BR

AN

CH

HIE

RA

RC

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ASKARI BANK LIMITED MULTAN

Askari Bank Limited Multan was inaugurated on December 28,1994.

It is located on Abdali Road Opposite to PIA Office. The location is

connected to all the main trade centers in Multan. It is a prosperous

branch streaming towards great achievements.

At the time of its establishment the factored who were considered are

as follows

Multan is zone covering a large population.

Multan City is linked to many big cities.

Agro based area constituting growers and gainers

Army Offices & Fort Colony

Educational Institution

DEPARTMENTS:

The bank has following department:

Account Opening department

ATM Department

Credit Card Department

Account Department

Credit Department

Remittance Department

Foreign Trade Department

Cash Department

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ACCOUNT OPENING DEPARTMENT

Borrowing funds from different sources has become an essential

feature of today's business enterprises. But in the case of a bank

borrowing funds from outside parties is al l the more vital because the

entire banking system is based on it. The borrowed capital of a bank

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

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

deposit creation is done through opening an account in the Bank.

In AKBL Multan Mr. Sheeraz Hassan is operating the account

opening department along with performing some auxiliary functions of

Check Book Issuing

TYPES OF ACCOUNTS

In AKBL, there are the following types of accounts:

Current account.

Saving Account.

Askari Special Deposit Account.(ASDA)

Basic Banking account

Term Deposit.

CURRENT ACCOUNT

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

purposes. They are paid on demand. When a banker accepts a

demand deposit, he incurs the obligation of the paying all cheques

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drawn against him to the extended of the balance in the account. As

there is no profit paid on this account it is also called chequing

account because cheques can be drawn on it. Current account is

mostly opened for business.

SAVING ACCOUNT

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

individuals in the neighborhood. The minimum deposit for opening the

account is Rs.1050/- (as obvious in the Annexure).

Though individuals open such accounts for saving purpose, persons

belonging to Armed forces and different military institutions are free to

use this account on current basis.

ASKARI SPECIAL DEPOSIT ACCOUNT

ASDA account is an interest bearing current account interest is paid.

The payment of return is monthly, where as the rate of return with

aspect to the amount of minimum deposit clear. It is also chequing

account because cheques can be drawn on it. It is necessary for this

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

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

account. It is mostly opened by Business but individuals too open this

account.

Tax of 0.3% would be deducted on ASDA if withdrawals are more

than Rs.25,000.

TERM DEPOSITS 15


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

at the end of the specific period. the customer is allowed to with draw

the principle amount .

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

of them is "Askari" Advantage one month. The rate of return on this

account is set by head office. The term deposit account vary one

month to 1 year for all following accounts .

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

By cash

By sending a bank Draft to depositors Home address or

Officers or whichever is specified as mailing Address.

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

the depositor.

ACCOUNT OPENING PROCEDURE

For the chequing accounts (C/A, ASDA, SAVING), there are different

types of account holders are required for all these types of account

holders. The operation /procedure requirement that is needed for "

Individual Account " differ greatly from " Joint account " proprietorship

"Partner ship “, "Limited Company"

and "Club society or Association " as explained below.

INDIVIDUAL'S ACCOUNT

When a single man or women opens an account in his/her own name

and has the right to operate it is called individual Account.

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DOCUMENTATION REQUIREMENT

For literate person copy of National Identity Card is required as a

primary requirement. For illiterate person and Veiled Women, along

with the copy of National Identity Card requirement he or she must

come in person for opening the account.

OPERATION

The person place a "Check Mark " in the type of account and

type of operation required

He/She fills in part-I of the form , a fix his /her either two or four

similar signature (or thumb expression in the signature space

and get it introduced and signed by a person who already has

an account with the bank and write his account no in the

specific rows in a specific space.

The person fills in "next of Kin " position where he/she father,

mother, husband/wife or any other relative's name, his /her

address, phone no and affix his/her signature to certify this

requirement. This requirement is needed because in his/her

absence bank can have correspondence with the specific

person.

The person put her /his signature (" or thumb expression) on

the signature Specimen Card (SS CARD) similar in the area on

the form. One the back of S.S card mailing address, telephone

no, Person to contact and introducer space is filled in. All these

requirement are necessary for future

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The person deposits the initial amount for opening account on

to the cash counter.

The person put his signature on form -A (check book

requisition) on two places in "authorized signature" and fills in

the "Title of Account space by writing his name.

If the person put his signature in Urdu or any language other

than English, he signed a "Vernacular form" where under take

that affixed signature are original and his own signature and

two postal size photos are needed.

The next day is the opening of account.

JOINT ACCOUNT

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

their name is called joint Account. Husband and wife or two persons

of same sex can open joint account.

DOCUMENTATION

For joint account copy of National Identity Card of all the persons is

obtained other things remaining same as in individuals account.

OPERATION

The person checks the type of amount and type of operation

required in the respective box on the form.

The persons fill in the Part-I and part-II in the form.

Signatures of both persons are obtained on the form in the area

specified for signature and S.S. Card.

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In the title of account space names of all the persons are

mentioned.

Accounts holder specified in the form that they will operate the

form singly or jointly.

PROPRIETORSHIP ACCOUNT

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

firm name, this account is called a proprietorship Account the proper

himself liable for all his acts.

DOCUMENTATION REQUIRED

For this kind of account, an application for opening the account on the

firm letter -pad (having the firm name) is required along with the NIC

Card of proprietor.

OPERATION

All operation remains the same except that the firm name is written in

the "Title of the Account” area and signature of the proprietor are

affixed in the S.S. Card and the area specified for signatures on the

form.

PARTNER SHIP ACCOUNT

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

two persons to act on behalf of the partner ship firmer all acts on

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behalf of firm. The partners in the partnership firm are liable for the

acts of the firm jointly and severely. Every partner has in a firm has

an implied authority bind his co. partners by drawing and enclosed

cheques.

DOCUMENTATIONS

Copy of N.I.C card of all partners

Application to open the account on the firm letter pad.

Partner ship deed in case registered partnership firm.

Letter showing the implied Authority of one or more partners to

act on behalf of the firm.

In case of non -registered partnership firm, understanding on

behalf of the firm to remain liable for all acts of the firm.

Name, address of all partners is written on the pad.

OPERATION

All other requirement remain same except that the form is dully

signed by all partners cards are signed by all those partners who will

act on behalf of the firm and along filling part-I , Part-Iv is also filled.

LIMITED COMPANY ACCOUNT

This account is for limited companies. In order to facilitate their

transaction with outside parties, bank provides many facilities.

DOCUMENTATION REQUIRED

Memorandum of Association. 20


Articles of the Association

Resolution of the Board of Director.

Certificate of Incorporation.

Certificate of commencement of business

N-I-C

OPERATION

The persons authorized in the Resolution of the Board of Directors

put their signatures on S.S Cards. Next of kin "requirement "is not

need in case of a Limited Company. After completing each and every

formality, introducer signature is verified by S.S card and is stamped

"Verified" customer signatures are admitted by stamping “Admitting"

near signature and again signatures on S.S card are admitted in the

same way. The same process of verification and admission of the

signatures is repeated on Form-A and next of Kin area.

After completing each and every formality, Accountant is open in the

computer by writing name, address, A/C Number etc.

LETTER OF THE THANKS

At the start of the letter 2nd day, AKBL issues letter of thanks to

"Account opener" and " Account Introducer " for the trust the have on

AKBL.

CHECK BOOK ISSUING

Check books are issued only for checking account such as current

Account, saving Account and ASDA Account. They are not issued for

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other fixed and term deposits because of their Long term Accounts

“nature.”

ISSUING PROCEDURE

Signatures on cheque – book requisition are verified by

matching with signatures on SS.

Cheque – book leaves number, account number, account

holder’s name are mentioned in the cheque- book is made by

mentioning the and the total of sum of excise duty and

provincial tax.

The name of A/c holder and date of cheque – book issuance is

written on cheque – book requisition the account-opening

officer puts his initials on requisition leave.

A/c number is stamped over the leaves of cheque book and

finally authorized person affix his signature over the debit

voucher and he voucher is attached from the cheque book and

is handed over to the customer .

RECEIVING INWARD CHEQUES

Another responsibility and function of account Opening Department is

to receive Inward cheques for collection of other Banks as well as of

AKBL . Then these cheques are sent to clearing official who clears

these checks at SBP from other banks.

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ACCOUNT CLOSING

Account is closed on the written request of the customer AKBL free of

cost. But to surrender the cheque book yet if some leaves are yet to

be write to the bank as a necessary requirements for closing the

account.

PROCEDURE

The customer for individuals account write an application to the

manager of the bank an a simple paper about the closing of his

account with the bank (In case of proprietor ship partnership

and limited company account the application should be written

an firm or company letter –head)

The individual or in case of other type- proprietor firm and

company surrender the cheque book to the bank.

The cheque book is then torn from one side and is attached

with the application.

In case of Ltd. Company account resolution of the board of

directors is also obtained to attach it with the application.

The account opening form of the account holder is taken from

the account-opening file, and the application, cheque book, and

resolution of board of directors in case of limited company

account are attached with the form.

Lastly, it is written in “Red Ink on the form that account closed”

and “Date of account closing.”

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EVERYDAY POSTING

Following transaction of cheque book is posted:-

Dr_____________ party A/c 50(for 10 leaves)

Rs 5/leave.

ATM- CARDS DEPARTMENT

This department deals in issuing ATM-Card, term deposits and

Askari Bachat Certificate. Mr. Sheeraz Hassan deals this department.

ATM CARD

ATM – Cards are only issue to Account Holder

ISSUING PROCEDURE

The person, first open the account within the blank.

Then he fills the ATM application form in which name of

account holder, Fathers name account number and N.I.Card

number are mentioned.

A copy of N.I. card is also attached with the application form.

After completing this process, the application package is sent to

head office

AKBL head office takes a period of 3-4 days for preparing and

processing of ATM – cards. First, list of card holder is issued

and then after 15 days cards are send to ACBL’s issuing

branch. The card and list are not sent simultaneously in order to

avoid any mishandling.

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ACBL takes Rs. 350/- for 1st time issuance as charges for a

$card

Biannually takes Rs 75.

ACCOUNTING DEPARTMENT

Accounts department is a department which deals and checks all the

activity of all the department .It also deals in expression of finance of

the bank. Salary payment is also one function of the bank.

CHECKING BANK’S DAILY ACTIVITY

Accounts department deals and checks the entire working of the

Branch; all the vouchers that have been posted at the computer are

scrutinized in accounts department. The “End of Day” i.e. computer

print is also received from the computer. The next day the activity is

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

activity separated some statements from the “End of Day”. The

vouchers are sorted out head wise. The vouchers are matched with

the entries in the statements.

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

and instruction are checked individually are checked individually

against the computer printouts. After checking they are signed by

Mr. .Naeem Shehzad and the internal auditor Mr. Shafiq.

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OTHER ACTIVITIES

Preparation of daily bank positions statement

Payment of salaries

Preparation of the statements

Depreciation calculation

Lockers Issuance

REMITTANCE DEPARTMENT:

The need of remittance is commonly felt is commercial life particularly

and in everyday life generally. The main function of the remittance

department is to transmit money from one place to another. By

providing this service to the customer, Bank earns a lot of income.

Also customer is able to meet its day to day financial requirements.

Demand Draft:

It is an instrument payable on demand for which value has been

received, issued by the branch of the Bank drawn i.e. payable at

some other place (branch) of the same Bank. If two Banks are

involved then the DD is sent to other Bank but in other case it is

handed over to the applicant.

Issuance Procedure:

A demand draft application is given to the customer, he fills in

relevant information and signs it.

The officer checks the information form.

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The Bank charges such as commission, excise duty is charged

as per effective schedule of charges. If he fills the tax

exemption form, tax is not charged.

In case of cash deposit, the cashier counts the amount and

signs the DD application and enters it in the register.

Then the officer of remittance department signs it and operation

manager counter signs it.

The entry is made in the DD issuing register, DD is given to the

customer.

Vouchers are prepared and posted.

DD advises are printed and mailed to the respective branch.

Payment Procedure:

The Bank receives DD.

The DD credit advice is received through mail. The numbers

are checked and signatures are verified.

An entry is made on the DD payable register and the vouchers

are made.

DD credit is attached with the vouchers and given for posting to

the computer.

When DD is received the test numbers are checked and the

payment is made.

Vouchers are given for posting and the entry that was made in

the register is closed i.e. DD payable is Nil.

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Pay Order:

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

from one branch can only be payable from the same branch. It is

normally referred to as Banker’s cheque. It is also called confirmed

cheque, because Bank issues this on it own guarantee.

Issuance Procedure:

The standard form is given to the customer. He fills in the

details and signs it.

The concerned officer checks the form.

Bank charges (or commission) as per the schedule of charges

and the withholding tax of 0.3% are applied.

The cash amount of the pay order is received.

A cash memo is signed, stamped and handed over to the

applicant as a receipt.

Then the pay order receipt is filled accordingly.

Counter foil is also filled.

An entry is made in the pay order issue register.

Then the authorized officer signs it after checking the pay order.

The order is then handed over to the applicant after obtaining

his signature on the PO Form.

A voucher is also made and posted at the computer.

Payment Procedure:

On presentation of the pay order receipt, two authorized officers

of the branch sign the receipt.

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PO entry is made in the PO issue register.

Then the amount is credited to the account of the customer or

pain in cash.

PO is posted at the computer.

Outward Bills for Collection:

The bills, which are received by the Bank and sent to other cities

(branches) for the local clearing in that city, are called Outward Bills

for Collection.

Procedure:

The cheques that are of other cities are separated.

They are entered in the OBC Register and OBC numbers are

given to them.

The OBC forwarding schedules are prepared for different

branches.

The respective cheques are attached with the schedule.

The office copy is filled and original schedule is mailed.

On clearing, the respective Banks send back the OBCs along

with the IBCA (Inter Branch Credit Advice).

The OBC numbers are checked from the OBC register, after

that entries are made.

Commission charges are deducted from the account.

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Inward Bills for Collection:

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

the city for local clearing are called Inward Bills for Collection.

Procedure:

The OBC of other branches will be the IBC of this branch. So

an OBC forwarding schedule is received by mail.

The cheques are entered in the IBC register. The IBC numbers

are allotted to them.

The cheques are lodged for clearing.

After realization, an IBCA is prepared and mailed to the branch

from where the cheque was received.

At the end of the day, two vouchers are prepared and posted.

FOREIGN TRADE DEPARTMENT

Foreign trade department deals in:

Foreign currency account

Exports

Imports

FOREIGN CURRENCY ACCOUNT

Mainly this account deals in individual, personal and companies

account

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CRITERIA FOR OPENING FOREIGN CURRENCY

ACCOUNT

There are not hard and fast rules for becoming the Foreign Currency

Account holder. Bank wants only introduction of the Client and very

little about the background. I.D card is also not necessary, if

someone has; well and good, otherwise no restriction will be there for

him.

FEATURES OF FOREIGN CURRENCY ACCOUNTS

There will be legal protection for the account holders.

According to foreign exchange rules and regulation every

citizen of Pakistan, either within the Pakistan or outside the

Pakistan, can open the foreign currency account.

Resident firms and Resident Companies including investment

Banks can open Foreign Currency Accounts.

All foreign nationals and foreign Companies in Pakistan or

abroad can open Foreign Currency Accounts.

Opening of Foreign Currency Accounts in the joint names of

residents/non-residents is permissible. Foreign Currency can

be deposited by:

Remittance received from abroad

Foreign Currency Notes

There will be no restriction and questioning to him about the

currency, which he wants to deposit that from where he got that

money.

No Zakat will be deducted on these accounts; no Income Tax

deduction, no Wealth Tax deduction will be there.

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These incentives reinforce and motivated the people to invest in

foreign currency accounts rather to keep the foreign currency

idle.

Foreign currency accounts can easily be transferred from one

person to another, one place to another, with in the ACBL

Branches or in other Bank.

The account holder can transfer the funds freely, in any

currency to any part of the world.

Foreign currency Accounts can be used for payment of

purchases at Duty Free shops.

FACILITIES

This account provides following facilities:

Traveling quota

Out ward remittances

In ward remittances receiving

To make remittances procedure flexible

EXPORT

Mainly export deals in:

Negotiation of documents

Sending the documents for collection

Pre-shipment financing

Post-shipment financing

Remittance against agent commission

Forward covered booking

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Handling the documents for negotiation according to the UCP

500 (uniform custom and practices)

Handling the documents for collection according to URR

(uniform rules for collection)

Submission of monthly returns to SBP regarding the export on

form A-2/O-2

IMPORT

Opening the letter of credit

Scrutinize the documents receive from flowing bank under letter

of credit. Account to UCP 500 and extending the credit facility

to the importer informs FIM (finance against imported

merchandise) FATR (finance against trust receipt).

Arrange forward cover booking regarding import payments

Also arrange forward cover booking for letter of credit open

other then ACBL

Submission of monthly returns to SBP regarding the import on

form I

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SWOT ANALYSIS

SWOT (Strength, Weaknesses, Opportunities & Threats) analysis of

AKBL is described below:

Strengths:

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

branches. Remittance Department is working very efficiently in

transferring the funds of people due to this system.

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

24-hour Banking is new trend in Pakistan and AKBL has also

taken apart in this trend.

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

working for the welfare of army officers, which was established

by Army Welfare Trust.

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

high quality service to its customers.

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

Multan are handle by AKBL Multan.

Weaknesses:

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AKBL has lesser number of branches as compared to many

other branches. Due to this problem, army officers can not avail

the benefits of their own Bank.

The human resource department is not performing the function

of selection and recruitment very effectively. Selection process

is not on merit due to which competent persons cannot be

selected.

Bank should boost the product development and increase the

range of facilities offered for customers.

Bank is weak in its credit management. Bank should lend to

very sound parties and increase its payment rate.

Opportunities:

Govt. is taking very bold steps to promote IT in Pakistan. AKBL

has an opportunity to improve in technology.

AKBL is surrounded by many competitors. It has an opportunity

to do aggressive marketing to increase its business.

AKBL may increase its branches in competitive areas

Threats:

AKBL has many competitors, which are continuously increasing

its products and marketing aggressively. It may cause its

customers to shift to competitors.

Some other Banks have competent taskforce, which is also a

threat for AKBL. Because human resource is the most valuable

resource.

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

considered to be involved increase the frequency of

withdrawals, which would decrease deposits.

Financial Analysis:

Financial Highlights

The current year’s profit (2007) after taxation of the bank stood at Rs.

2,681,012 as compared to Rs. 2,249,974 for last year. The deposits

decreased by 16.49% to Rs. 11,197,424 as against Rs. 13,044,593

as on 31 Dec 2006. The loans and advances figure stood at R.s

5,521,030 reflect on the improving market image of Askari Bank as a

formidable financial institution.

Ratio Analysis

The information contained in the four basic financial statements is of

major significance to various interested parties who regularly need to

have relative measures of the company’s operating efficiency.

Relative is the key word here, because the analysis of financial

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

analysis involves methods of calculating and interpreting financial

ratios to analyze and monitor the firm’s performance. The basic

36


inputs to ratio analysis are the firm’s income statement and balance

sheet.

Ratios 2008 2009Current ratio 1.03 1.04Total asst turnover 0.11 0.09Debt ratio 0.93 0.93Gross Profit margin 0.11 0.22Operating profit margin 0.21 0.12Net profit margin 0.22 0.26ROA 0.02 0.02

Earning asset to total assets

Earning assets are the assets which are very important for any

company for the bank earning assets are the assets on which bank

can earn its profit which may includes loans, advances, operating

fixed assets and other assets on the loans and advances bank can

make profit by giving or investing in some where so Askari Bank has

increased it’s earning assets in the year 2008 as compared to the

previous year that show the good trend in the profitability of the

Askari bank and the customer believe on the Bank.

Ratio tells that on what percentage earning assets contribute the total

assets. Well bank also has increased it’s earning assets ratio shows

the more profitability of the bank as it can be shown by the profit and

loss account of the 2008 that shows the net mark up income more for

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the year as compared to the previous year so bank is going gradually

to the more profitability by giving more advances and loans.

Earning assets

ASSETS 2008

Cash 13356055Balances with other banks 3497054Lending 14444143Investments 39431005Advances 100780162Operating fixed assets 5128428Total earning Assets 176636847Other assets 5535038

TOTAL 182171885

Total Earning Assets: Rs. 176636847

Formula:

Earning Assets / Total Assets

= 176636847 / 182171885

= 0.969616

Return on earning asset

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

making of the profit before taxation. This ratio is decreased during the

year. Why is it so it has different reasons these are as follows

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

the year 2008 because bank has low expenses and less provision for

the bad debts and also bank has small investments and limited loans

and advances but in 2008 situation has changed and bank increased

its loans and advances.

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

2008 so overall ratio has been decreased but shows the good trend

for the making of long term planning

Formula:

Profit after tax / earning assets

= 2,681,012 / 176636847

= .015

Loan loss coverage ratio

This important figure is a reserve account to cover unexpected

defaults on loans by borrowers. These are generally referred to as no

performing loans. The higher the no performing loan and charge-off

percentages, the higher the provision for loan losses should probably

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

share.

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Well in the year 2008 bank’s this ratio has been increased to a great

extent due to different reasons theses are as follows.

Profit before taxation is low for the 2008 due to more expenses

because bank is in expanding mode that’s why its expenses are

increasing day by day.

Provisions and bad debts also increased in the year 2008 because

bank also has invested more in this year and ad more also granted

more loans.

Formula:

Provision against non-performing loan and advances / profit

(loss) before tax

= 3,920,240 / 2,299,785

= 1.70

Loan to deposit

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

deposits are liabilities. But if a bank has low deposits then obviously it

will give low loans because bank gives it’s loans by the deposits and

earn on the loans then pay mark up on the deposits to the customers.

Well bank has increased its loans to deposits ratio in the year 2008

showing its more deposits as well more loans and that is good for the

bank to remain in the market and to penetrate in the market.

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But profit has not increased with the same ratio because

Bank has low mark up rates

Bank has more capacity for provisions

Formula:

Loans / deposit

= 14444143 / 11,197,424

= 1.289

Current ratio

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

decreased but nt much decreased during the year to a small extent

due to

Bank has increased its deposits so liabilities have been increased.

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

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

Formula :

Current assets / current liabilities

= 171508419 / 166214583

= 1.03

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Debt Ratio:

Debt ratio remained the same in previous year it was .93 and

in 2008 its again 0.93. Bank has not decreased its debt ratio in 2008.

Operating Profit Margin:

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

0.21.

Gross profit margin

The company’s gross profit margin was 0.22 in 2007 but

decreased to 0.11 in 2008. It tells us that the company incurred more

expenses in 2008 then in 2007 so its gross profit margin went down

also.

Horizontal and vertical analysis

Comparing analytical data for a current period with similar

computations for prior years affords some basis for judging whether

the condition of the business is improving or worsening. This

comparison of data over time is called as horizontal or trend

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

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consecutive periods. It is distinguished from vertical analysis or

static analysis which refers to the review of the financial information

of only one accounting period.

HORIZONTAL ANALYSIS

Balance sheet accounts

2008 2007 %ageASSETS

Cash 13356055 14879230 -1523175 -10.2369balances wid other banks 3497054 7333002 -3835948 -52.3107Lendings 14444143 8392950 6051193 72.09852Investments 39431005 28625915 10805090 37.74583Advances 100780162 99179372 1600790 1.614035o.fixd assets 5128428 3810331 1318097 34.59272defferd tax assetsother assets 5535038 3812788 1722250 45.17036

TOTAL 182171885 166033588 16138297 9.719899

LIABILITIES

bills payable 2627051 1839077 787974 42.84617Borrowings 17553525 14964087 2589438 17.30435deposits&other acc 143036707 131839283 11197424 8.493238sub-ord loans 2997300 2998500 -1200 -0.04002liabl against assetsdeferred tax liab 471519 736298 -264779 -35.9608other liab 3219796 2603113 616683 23.69021

TOTAL 169905898 154980358 14925540 9.630601

Net assets 12265987 11053230 1212757 10.97197

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PROFIT AND LOSS ACCOUNTS

2008 2007 %age

interest earned 15143241 12596921 2546320 20.21383interest expensed 8685624 6977313 1708311 24.48379

net mark up/interest income 6457617 5619608 838009 14.91223

loans & advances 3920240 1128137 2792103 247.4968value of investment 1501 376 1125 299.2021bad debts written off

3921741 1128513 2793228 247.514

interest income after provision 2535876 4491095-

1955219 -43.5355Non markup/interest income

fee,comm,brockerage income 1072868 1013660 59208 5.841012dividends income 137079 109326 27753 25.38554income from dealing in for curr 655761 584344 71417 12.22174gain on sale of inv 2361251 112474 2248777 1999.375unleasing gain 1728 -2308 4036 -174.87other income 336809 321758 15051 4.677739

total non markup/interest income 4565496 2139254 2426242 113.4153

7101372 6630349 471023 7.104045Non markup/interest expenseadmin exp 4789536 3277353 1512183 46.14038other pro/write offsother charges 12051 6141 5910 96.2384

total non markup/interest expense 4801587 3283494 1518093 46.23407

2299785 3346855-

1047070 -31.2852

Profit before taxation

current yrs 98535 983875 -885340 -89.985

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prior yrs -233950Deferred -245812 113006 -358818 -317.521

-381227 1096881-

1478108 -134.756Profit after taxation 2681012 2249974 431038 19.15747

profit brought forward 1799979 1617597 182382 11.27487

profit available for appr. 4480991 3867571 613420 15.8606

VERTICAL ANALYSIS

BALANCE SHEET ACCOUNTS

2008 2007ASSETS

cash 13356055 7.331567657 14879230 8.961578balances wid other banks 3497054 63.18030698 7333002 4.416577lendings 14444143 7.928854115 8392950 5.054971Investments 39431005 21.64494538 28625915 17.24104advances 100780162 55.32146851 99179372 59.73452o.fixd assets 5128428 2.815158881 3810331 2.294916defferd tax assetsother assets 5535038 3.038360173 3812788 2.296396

TOTAL 182171885 166033588

LIABILITIES

Bills payable 2627051 1.442072689 1839077 1.107654Borrowings 17553525 9.635693784 14964087 9.012687deposits&other acc 143036707 78.51744357 131839283 79.40519Sub-ord loans 2997300 1.645314259 2998500 1.80596liabl against assetsdeferred tax liab 471519 0.258831927 736298 0.443463other liab 3219796 1.767449461 2603113 1.567823

TOTAL 169905898 154980358

Net assets 12265987 11053230

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Findings on the basis of analysis

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

as 2006 certain changes are measured in the Bank’s performance.

Cash with other banks and balances with other banks gradually

increased in the time line showing the bank’s good performance and

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

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

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

more advances to the customers but this also has increased the bad

debts and provisions of the bank as compared to the previous years.

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

On the liabilities side bank also has increased it’s bills payable that

shows that bank has certain increased in the liabilities as well bank’s

deposits also increased showing the great penetration in the market

place as well customer’s believe on the bank to make deposits that’s

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

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

because bank has invested so much and in the development process

so increased in the expenses. Overall bank’s financial position in the

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marketplace has been increased in terms of deposits and advances.

All these reasons are favorable to the bank in year 2006 because at

one side bank’s assets have been increased in the form of advances

and at other side markup income increased due to deposits because

bank can more invest it

Balance Sheet’s one portion that is Assets shows certain changes

during the year. e.g

Cash & balances with treasury banks have been increased that

shows the bank has fulfilled and improved SBP requirements

because of maintenance of foreign currency as well as Pakistani

currency with other banks due to this balances with the other banks

whether outside the Pakistan or inside the Pakistan have been

increased.

While investment have been decreased due to making balances with

the other banks and so advances increased by giving more to the

customers so earning power also increased. In 2007 bank not lend

money to the financial institutions. Bank’s operating fixed assets have

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

because bank is the service organization and for service

organizations no need of more operating fixed assets. Bank’s

deposits and other accounts have not been increased to the same

extent as bank is giving advances. Well that shows a positive trend

because bank expenses would be automatically decreased that are

due to cash management.

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

fixed assets and also due to increase in liabilities. Balance Sheet

shows the assets are more contributed by the Advances and liabilities

are more contributed y the Deposits that are favorable for the Bank.

Overall result is less profit for 2008 as compared to 2007. But this has

certain different reasons these are as follows Increase cash and

balances with the other banks

More advances

Increase in deposits

All these reasons are favorable to the bank in year 2007 because at

one side bank’s assets have been increased in the form of advances

and at other side markup income increased due to deposits because

bank can more invest it.

Applications of Class Room Concept:

In Accounts department there was an implementation of

Financial Accounting in making balance sheets, income

statements, calculation of depreciation etc

In credits department there was an implementation of different

categories of loans like personal loans, corporate loans etc

which was studied in Financial Management.

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Recommendations:

Already the bank is having a good infrastructure not much

recommendations are needed as a manager but few can work :-

Customers should be given some sort of facilities which can

convince people for investment and go for Askari bank for

Exports n Imports.

Fist floor of bank is much congested, there is needed to work

on that.

There is not a proper environment of customer dealing on that

floor that’s why customer feels difficulty in that.

Accounts department was much congested, so area of that

department should be extended.

After annuall closing of bank there should be a get together of

all the employees of bank which can give them a healthy

atmosphere to work.

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

should be strictly advised to perform their own duty well.

______________________________________

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