CHAPTER #1 INTRODUCTION TO REPORT

BACKGROUND OF THE STUDY

Financial institutions operating in country are the strength of the economic growth of the country. The Banking sector is one of the example of financial institution which can play a very vital role in the development of the over all economy of a country. Banking sector has now become a very challenging field with the advent of modern technology of in creased competition. ASKARI BANK LIMITED is a well-known financial institution having 46 branches through out the country. It incorporated in Oct 9, 1991 and went public on Jun 14, 1992. The major sponsor of group is Army Welfare Trust (AWT) which holds 46% equity stake in Bank. ASKARI BANK LIMITED in its short history has tremendous progress. As far as this report is concerned I have put forward all the knowledge and practical experience which I have gained through my internship as well as my educational know how that I have got till now from my BBA (Hons). Banking can be termed as the origin of financing activities that is why, I have a lot of interest in banking sector of Pakistan and the reason that I have chosen ASKARI BANK is its well known reputation, its quality services and its innovative style, based on these reasons I choose ASKARI BANK LIMITED City Branch, Chowk Yadgar Peshawar, for my internship. Basically the areas which I have focused during my internship were as follow: The Deposit Department. The Remittance Department. Foreign Remittance Department. Accounts Department. This report attempts to present the study of ASKARI BANK LIMITED focusing its City Branch at Chowk Yadgar, Peshawar, the branch along with relevant macro level description and analysis. It is based on my 6-weeks internship at ASKARI BANK LIMITED, City Branch, Chowk Yadgar, Peshawar in the year 2009.

PURPOSE OF THE STUDY

Internship training before report writing is a necessary requirement for getting BBA (Hons) degree from I.B.M.S Agriculture University Peshawar. The internship program

provides the trainee with an opportunity of gaining knowledge of procedures and principles through observation and actual work performance. In this way, internship training is of great importance. It plays a vital part in developing the managerial skills of the trainees. The study is based on 6-weeks internship at ASKARI BANK LIMITED, City Branch, Chowk Yadgar Peshawar, it attempts to: i. Describe, analyze and evaluate the operations and performance of ASKARI BANK LIMITED. ii. Identify and highlight the Bank shortfalls, problematic areas etc. at macro level as well as, Cantt. Branch level. iii. Put forth recommendation for improvement in the Banks performance.

SCOPE OF THE STUDY

The study focuses to ASKARI BANK LIMITED, City Branch Peshawar, all departments of ASKARI BANK LIMITED are considered in this study. The financial analysis is however, done at macro level i.e. ASKARI BANK LIMITED as a whole. The internship programme was conducted for 6-weeks, which is quite short time to collect and to understand all the information about each of every section of the Bank. But, I made every possible effort to cover all the departments and to gain knowledge about their operations. In this report I have focused on the following departments of ASKARI BANK LIMITED.

Deposit department. Remittance department. Foreign Remittance Department. Foreign exchange department. Cash department. Advances.
In this report I have tried to make analysis of different policies and strategies of the Bank and did financial analysis as well. I have also tried to give suggestions to further improve the performance and efficiency of the selected functional departments of the branch.

1.4 Limitations
Study includes those aspects, which are closely relevant for the purpose of the study. Facts and figures which otherwise might be equally important but not having proper conclusions are ignored. The most important limitation from which the study suffers is the non-availability of information in a manner required for analysis and secrecy of the bank. Another most important limitation is the time constraints six weeks are not enough to study all the operations of bank thoroughly.

1.5 Delimitations
The information given in this report would be useful for the person who is interested in knowing about the operations carried out in the ASKARI BANK LIMITED, City Branch, Chowk Yadgar Peshawar. This report will be useful for the officers of the bank for their improvement in their work regarding their specific departments.

1.6 Methodology of Study

All the required data Both Primary & Secondary were used in compilation of the report obtained from two sources. 5.1 Primary Data: Certain types of information such as the perceptions and attitudes of employees are best obtained by talking to them by observing events, People, and objects or by administering questionnaires to individuals. Such data gathered from research from the actual site of occurrence of events are called primary data. For this report primary data was collected from following ways: Personal Observations Discussions with bank employees. Personal interviews Briefings with management Secondary Data:

2.6.2

Certain types of information such as the background details of the organization can be obtained from available published records, the web site of the organization its achieves, and other source. Other types of writing information such as company policies, procedures and rules can be obtained from the organizations records and documents. Data that already exist and do not have to be collected by the researcher and the data that had already gone through mathematical and statistical techniques after its collection is called Secondary Data. Secondary data is collected by following ways:

Manuals of departments of the Bank. Brochures of the Bank. Internet. Journals & Newspapers. Annual report of the Bank. Internship report. Reference Books. Circulars.

1.7 SCHEME OF THE REPORT:

In order to facilitate the reader I have divided this report into six 6sections, each section then further includes Chapters. The scheme of this report is as follows: Section No.1: Section No.1 consists of only 1 Chapter which includes EXECUTIVE SUMMARY, which is the theme or an outline of this report stating the main points and matters being discussed in this report. Section No.2: Section No.II consists of five chapters namely Chapter No.2,3,4,5,6 all these chapters mainly discusses the Askari Bank Limited its evolution, progress, operations, functions its achievements its objectives vision and mission and gives an overview of the entire Askari Bank organization.

Chapter #2 EXECUTIVE SUMMARY

ASKRI BANK LIMITED is a well-reputed organization and a leading bank among the various banks of Pakistan. Since its establishment, it has expended its network to great extent. ASKRI BANK LIMITED is performing all the functions of the commercial banking and has based its management on the functional basis. Strong and efficient capital and financial institutions are the basic requirements of any country. One of the components of these financial institutions are the banks. No one can deny the role of banks in empowering the economic and financial condition of a country. Globalization, industrialization and technological advancement needs improvement, expansion and stability all the times which is nearly impossible without stable money and a capital market working in flexible and independent way that is where the Banking sector comes into action. Banking sector is not only empowering the Government to smoothly follow its economic policies but it also control economic evils like inflation, deflation, recession, unemployment etc. The report aims at appraising the working of ASKARI BANK LIMITED, its functions and operation and also attempts to evaluate its performance by making the analysis of its financial statements. The Strengths, Weakness Opportunities and Threats have been highlighted for ASKARI BANK LIMITED; certain recommendations are presented at the end for the potential areas of improvement.
First section is about the introduction of the report. In this section I have discussed

that what this report is about.

Section two presents the introduction, importance and evolution of banking system,

how the banking sector is important for a strong economy to develop and to sustain its stability, what are the functions of a bank.
Section three includes An Introduction to ASKARI BANK LIMITED i.e. History of

ABL, its Evolution, its Growth Progress, Its Organizational Structure, Its Products and the Awards and Achievements of ABL.
Section four is the financial analysis of ABL in which analysis of ABLs financial

statements have been made thus evaluating its performance on the basis of its progress and sound basis this section is very important section from the stakeholders point of view. Financial statements are analyzed horizontally and vertically. Also the performance of the bank has been shown through ratio analysis and trend analysis. The said section the strengths, weaknesses, opportunities and threats of ABL are also analyzed. The year 2003 bring good sign for the bank and the economy is in boom state due to the consistent policies of the government and due to foreign investment the banking sector has also enjoyed the benefits. Year 2003 is very good for ABL because it has highest net profit margin and operating profit margin compared with
5

past four years. Advances to deposits ratio has been also improved due to increased in borrowing by investors, businessmens and industrialists.

Section five includes certain recommendations and possible suggestions that have been produced on the basis of overall analysis and evaluation of the Banks present position, for improvement of ABLs future performance, are given at the end.

CHAPTER #3 INTRODUCTION TO BANKING

A
otherwise.

3.1 INTRODUCTION
ccording To Banking Companies Ordinance 1962 Banking means the accepting, for the purpose of lending, or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or

It has not so far been expressly decided as to how the word Bank originated. The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by bankers, who used to make their transactions above a desk covered by a green tablecloth However, there are traces of banking activity even in ancient times.
(Banking companies mean companies which transact the business of banking in Pakistan.)2

In fact, the word traces its origins back to the Ancient Roman Empire, where money lenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a money changer, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome. Some authors opine that this word is derived from the words Bancus or Banque that mean a bench. The explanation of this origin is attributed to the fact that the Jews in Lombard transacted the business of money exchange on benches in the market place, and when the business failed, the Banco was destroyed by the people. Incidentally the word bankrupt is said to have been evolved from this practice. The opponents of this opinion argue that if it was so, then how is it that the Italian moneychangers were never called Banchierei in the middle Ages?

Other authorities hold the opinion that the word Bank is derived from the German word Back which means joint stock fund. Later on, when the Germans occupied major part of Italy, the word Back was Italianized into Bank. It is therefore, not possible to decide as to which of the opinions is correct, for no record is available to ascertain the validity of any of the opinion1.

3.2 EVOLUTIONS AND BRIEF HISTORY OF BANKING

The present forms of Banking Business are result of continuous progress and activities of different persons and societies during different period of times. Evolution of Banking can be associated with 3 classes of old times, money merchants, moneylenders and gold smiths. Banking in its modern form and structure started in Britain when many of the Lombardy merchants came to England in the fourteenth century and settled in the parts of the city of London now called Lombard Street. They were so resourceful that, they dealt with not only keeping the money in safe custody but also changed money for the travelers or merchants engaged in foreign trade. The discovery of America brought riches to England and gave a tremendous boost to foreign trade. The merchants now began to hold part of their riches in cash. These merchants however, received a big seatback in 1640, when King Charles-I seized 130,000 and billion left for safe custody with the city merchants at the Royal mint. This shook the confidence of the merchants in the Royal Exchanger and the Royal Mint. Consequently this business was taken over by the goldsmiths who up to that time were dealing only in gold and silver. Since these goldsmiths required strong safes for the purpose of their own business, they introduced necessary facilities of safe-keeping of the valuables and cash of their customers. These goldsmiths issued receipts or notes to their depositors in respect of the cash or articles left with them. These were called Goldsmiths Notes, and carried an undertaking to return the money and articles to the depositors or bearers on demand. There were a considerable number of such Notes in circulation among various classes of merchants; and thus they can be aptly called Bank Notes in their earliest form. Over a period of time, these goldsmiths discovered that large sums of money were left in their custody for long periods there fore they started the use of this cash to advance loans to other persons for a fixed period of time and at a considerably high rate of interest. Moreover they further encouraged cash deposits by their customers by offering them a part of the profits earned on the money. Thus began the issues and deposit banking of modern times.

3.3 FUNCTIONS OF A BANK

Besides the main function of a Bank i.e.
1 2

Siddiqi Asrar H. Practice and law of Banking in Pakistan 6th ed. Royal book Co. Karachi P-1. www.askaribank.com.pk

i. ii.

Acceptance of deposits Lending of money.

A Banking company may undergo in any one or more of the following form of business manually. i. The borrowing, raising, or taking up of money. ii. iii. iv. v. vi. The lending or advancing of money either upon or without security. The drawing, making, accepting, discounting, buying of promissory The granting and issuing of letter of credit, travelers cheques (TC) and The buying and selling of foreign exchange (For-ex) including foreign The acquiring, holding issuing on commission, under writing and

notes, coupons, drafts, bills of lading. currency rates. Bank notes. dealing in stocks, funds shares, debentures, bonds, obligations, securities and investment of all kinds. vii. viii. The purchasing and selling of bonds, scripts or other form of securities The negotiation of loan and advances. on behalf of constituents or others.

3.4

BANKING HISTORY IN PAKISTAN

At the time of independence, as a new country without resources it was very difficult for Pakistan to run its own Banking system immediately. Therefore in accordance with the provision of India independence Act of 1947, an expert committee was appointed to study the issue. The committee recommended that the Reserve Bank of India should continue to function in Pakistan until 30th Sep, 1948, so that the problem of item and demand liabilities, coinage, and currency exchange can be settled. At the time of partition there were 631 offices of schedule Banks (having a paid up capital of Rs.5 Lac or more) and West Pakistan contained 487 and East Pakistan had 144 such offices. As a result of transfer of Head Offices of Schedules Bank to India by nonMuslims in July 1948, the number of offices was reduced to 81 in West Pakistan and 114 in East Pakistan causing an overall reduction from 631 to 195. The Reserve Bank of India showed reluctance in solving the Banking crises. It rather created further difficulties by refusing to give Rs. 55 corers, which Pakistan was entitled to share the in cash balance of undivided India. Therefore, the government of Pakistan decided to establish its own currency authority earlier than it was mutually agreed upon. The Reserve Bank of India was relieved of its function in Pakistan from the first day of July 1948. The Governor General of Pakistan Quaid-e-Azam Muhamamd Ali Jinnah issued order for the establishment of State Bank of Pakistan on 1st of July 1948/ The SBP is entrusted with the duty of : Regulating the issue of Bank notes and keeping of reserve with a view to seeking monetary stability in Pakistan and generally to cooperate the currency and credit system of the country to its advantage.

 State Bank of Pakistan has the monopoly of the note issue. Act as fiscal agent for the Government. Supervises the operation of the Commercial Bank. Performs the function of clearing house between the Banks. Maintains the external value to the rupee. Controls credit and carries out the economic policies \of the government for promoting economic development in the country. In order to develop sound Banking system and weeding out weak institutions, the Banking Companies (control) Act was promulgated in 1949, empowering the State Bank to control the operation of Banking Companies in Pakistan, including preparation of the required trained man-power. The Government of Pakistan established the Pakistan Industrial Finance Corporation (PIFC) in 1949, to provide medium and long term creditor facilities to industrial concern engaged in manufacture, preservation or processing of goods, mining and generation of power. Later it converted into Industrial Development Bank of Pakistan (IDBP) since August, 1, 1961. Pakistan is basically an agricultural country and Finance was needed for its rapid development with a view to meet this basic need. The Agriculture Finance Corporation (ADFC) was set up in 1951, and was entrusted with the task of providing financial facilities for the development and modernization of agriculture, including forestry, animal husbandry, poultry and diary farming. Also in 1952, House Building Finance Cooperation was established to provide financial aid to individual and co-operative housing societies for construction of residuals houses in urban areas of Pakistan. Another very significant event in the development of Banking in Pakistan was the appointment of credit enquiry commission in 1959 to examine the scope and working of the institutions providing credit facilities to agriculture, trade, commerce and industry and recommended measures for further improvements. With a view to broadening the base of investment and developing the capital market, the Government of Pakistan established the Investment Cooperation of Pakistan (ICP) in February 1966. National Development Finance Cooperation (NDFC) was established on January 3, 1973 for the purpose of providing long and medium term loans, working capital and other assistance and advice to Government-managed or Government sponsored enterprises. Nationalization of Bank was considered necessary so that the nation as a whole could benefit from a better channeling of resources. Accordingly, on January 1, 1974 the Government of Pakistan decided to nationalize the Pakistani scheduled Banks and promulgated the Bank (nationalization) Act 1974 with the following main objectives:

To reduce income inequality. To distribute equal Bank credits to different classes, sectors and regions. To co-ordinate the Banking policy.

The following facts & figures in (Table 1) reflect the rapid development of banking system in Pakistan from 1948 to 1993. 1948 880m 200m 81
Table 2

Bank Deposit Bank Credit Offices of Scheduled Banks

1993 290,000m 21,000m 7,100

% increase 32854 10500 8665

The nationalization was very smooth though there were doubts about its positive results. The number of Commercial Banks branches increased from 3397 on December 1973 to 5400 as on June 30, 1993. Similarly the Bank deposit, which stood at Rs.1925 crore at the end of 1973, reached the high mark of about Rs.2800 corers. The target for agricultural finance got exceeded. The number of foreign branches increased from 15 in December 1973 to 16 in June 1993. Due to the provision of the Bank nationalization Act 1974, all the Commercial Banks were reorganized and merged into the following five Banks. 1. 2. 3. 4. 5. Habib Bank Limited. United Bank Limited National Bank of Pakistan Muslim Commercial Bank Allied Bank Limited.

With the passage of time, the Government of Pakistan realized that public sectors, production and trade, dominated the national economy and finance was over regulated. This resulted in budget deficit, social infra structure etc. These led to developing such conditions, which could not be changed without disinvestments and privatization of the nationalized and public sector. Bank (Nationalization) (second amendment), ordinance 1991 was promulgated to pave the way for privatization of Banking in Pakistan. MCB was disinvested in two phases and ABL was sold to the employees of the Bank. UBL and HBL are also enlisted for privatization. Also some development financial institution are planed to disinvest and privatized. It is expected that this new policy and practice of disinvestments and privatization of Banking and financial sector would help in bringing a new era of economic development and processional efficiency in Pakistan. Thus its said that the growth of Banking in Pakistan since 1948 is indeed phenomenal. The network of not only Pakistans but also the foreign Bank has been a very large segment of population in every nook and corner of the country. They mobilize the savings and other fund from public in general and finance various sector of economy from

this pool. Specialized credits and financial institution have developed over the year and cater to the needs of specific sector. New products and their systematic consumption are making Banking comparable to their several modern counterparts anywhere in the developed world. During the period of 1956-58 new Pakistani Banks were registered and scheduled as the National Commercial Bank Limited, Industrial Credit and Investment Cooperation. For bringing the Banking into that new era of further development, Pakistani Commercial Banks were nationalized since January 1, 1974. Beside privatization and establishment of Commercial and other Banks, private sector was also encouraged in the field.

3.5

COMMERCIAL

BANKING

ACTIVITIES

IN

PAKISTAN
Until 1973, 14 Pakistani Commercial Banks were operating and functioning all over the country. These were joint stock Banking companies functioning under Banking Companies Act. In 1974, most of the Commercial Banks were merged and reorganized into five Banks. i.e. HBL, UBL, NBP, MCB and ABP. Commercial Banks constitute the most important source of institutional Credit in the economy of Pakistan. It has been the largest deposit institution and the main source of shortterm credit and financial activities in Pakistan. In case of classification of Bank by size, the Commercial activities of Banks have been divided into two categories as: 1. 2. Scheduled Banks. Non-Scheduled Banks.

All scheduled Banks are entitled with the State Bank of Pakistan and are the members of the Clearing House arranged and supervised by the State Bank of Pakistan. The statutory cash reserve requirements of Scheduled Bank are now maintained at 5% of their total demand and twice liability in Pakistan. The Commercial Banks are required to submit weekly and monthly returns about their financial position to State Bank. The State Bank in their credit and investment policies also guides the Commercial Banks. The Commercial Banks can maintain their liquidity of cash by rediscounting their bills of exchange from the State Bank. The non-scheduled Banks are not entitled to receive accommodation from the State Bank. At the Commercial Banking system in Pakistan was based on three kinds of Banks as: i. ii. iii. Pakistan Commercial Banks. Foreign Banks. Indian Banks.

Now the base has been diverted to the three new bases as: i. ii. Private Banks. Government Owned Banks.

iii.

Foreign Banks.

In order to meet the need of the time, the Government of Pakistan introduced comprehensive economic reforms aimed at deregulation of trade, commerce, industry, banking and finance, so that the role of the public sector in industrial and commercial activities is reduced and social sector activities are increased. In order to deregulate the financial sector under these reforms, a program of privatization of public sector banking and financial institution was started and various governing laws were amended in 1990 in which strict criteria for selection of good entrepreneurs as investors was also drawn. Besides these undertakings, private sector was not only invited but also encouraged to set up commercial banks and financial institutions in Pakistan. As a result, a number of banks Modaraba and Leasing companies came into existence and are now actively operating in private sector. It is hoped that this polish of liberalization and privatization of financial institutions will make way for the economic development and professional efficiency in Pakistan.

Chapter # 4 THE ASKARI BANK LIMITED (A Brief Profile)

4.1 Brief History
Banking sector holds vast promise in Pakistan and realizing this fact Army Welfare Trust (AWT) (Askari Group of Business Enterprises)1, decided to establish a commercial bank with its branches spread nation-wide. ABL was incorporated in Pakistan on October 9, 1991 as a public limited company, AWT, which is doing great job for the welfare of the Army people. The bank obtained its commencement certificate on Friday March 26, 1992. Askari Bank commenced its operations in April 1st 1992, and has since expanded into a nation wide presence of 155 branches, including 15 dedicated Islamic Banking branches connected online and supported by a shared network of over 2,670 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service. Askari Bank also has a wholesale Banking Unit in Bahrain. The bank is listed on the Karachi, Lahore and Islamabad Stock Exchanges and the initial public offering was over subscribed by 16 times. While capturing the largest market share amongst the new banks, Askari has provided good value to its shareholders. Their share price has remained approximately 12% higher than the average share price of quoted banks during the last four years. Askari Bank is principally engaged in the business of banking as defined in the Banking Companies Ordinance, 1962. As at December 31, 2007, the bank had and equity of Pak Rupees 5.047 billion the Bank had total assets of Pak Rupees 182,171,885, with over 250,000 banking customers. The bank obtained its commencement certificate on February 26, 1992 and started operations from April 1, 1992. Since its establishment its performing a great job.. Internationally its connected with 92 branches. Phased upgrading of the online computer system countrywide have enabled the bank to fertile improved its services to retail and corporate customers and enhanced the banks risk control an assets and liability management ability. The bank is also providing ATM and credit card facility to its customers. The bank is a schedule commercial bank and is principally engaged in the business of banking as define in the banking companies ordinance 1962. Askari Bank is the only bank with its operational Head Office in the twin cities of Rawalpindi-Islamabad, which have relatively limited opportunities as compared to Karachi and Lahore. This created its own challenges and opportunities, and forced us to evolve an outward-looking strategy in terms of our market emphasis. As a result, we developed a geographically diversified assets base instead of a concentration and heavy reliance on

www.awt.com.pk

business in the major commercial centers of Karachi and Lahore, where most other banks have their operational Head Offices.1

4.2 Evolution of Askari Bank Limited:

ASKARI BANK is the leading private sector bank in Pakistan, delivering quality service through innovative technology. In the success story of ASKARI BANK during the last 17 years of its age, one of the most important factors, apart from its dynamic management and prudent approach, is the QUALITY of its SERVICES, which gives it a great edge over its competitors. ASKARI BANK has always strived to facilitate its customers by introducing various high quality hitech services for the first time in Pakistan. Askari Bank Limited is proud of pioneering role in providing the most modern and technologically advanced services to their customers. Knowing their customers and their needs is the key to its business success. Askari Banks products and services are as diverse as its market segments. Technology has played a pivotal role in meeting customer expectations, particularly with respect to the speed and quality of services. Askari Bank have fully automated transaction-processing systems for back-office support, their branch network is connected on-line real-time and customers have access to off-site as well as on-site ATMs, all over Pakistan. This includes not just establishing and maintaining technology infrastructure for providing operational support to all units of the Bank, but also encompasses introducing latest state-of-the-art technology-driven products and service delivery systems, such as ATM networking, Internet Banking, Mobile ATM, Credit Cards, Debit Card, Prepaid Card, utility bills payment through ATMs & Internet which have brought about cost-effectiveness, timesaving and safety. Askari bank has also achieved another milestone with the launch of Askari Bank Zari Credit Card. This is the first ever credit card offered to the farmers in Pakistan with complete product features and service benefits. It aims to meet farmers production and development needs and to supplement cash flows, whenever required. It is also a matter of satisfaction that ASKARI BANK has been the first bank to introduce PTCL and WAPDA utility bills payment electronically through ATM and Internet on an Online-Real-Time Basis. For the first time in Pakistan, ABL have introduced Mobile ATMs to provide banking facilities at the doorsteps of their customers. Askari banks mobile ATMs first in the banking history of Pakistan, now four in number, continue to serve customer needs. ABLs Phone Banking and Internet Banking facility allows its customers, to access their accounts from anywhere in the world, and effect transactions.

Annual Report 2003. ABL

Bank has established its Data Warehouse and Customer Care Centre, a dedicated customer call center to provide one window service to our valued customers in terms of their telephonic enquires. Askari bank remains focused on using technology for improving customer service standards and expanding the range of products being offered and other technology based solutions.

4.3

PRESENT

OPERATIONS

OF

ASKARI

BANK

LIMITED 4.3.1 Askari Cooperate Banking:

In 1999, the Bank went into Cooperate Banking Division which is expanding the Banks Credit portfolio by looking quality assets. It also generated sustained non-funded business, which made a useful contribution towards the fee-based income of the Bank. Recently the Bank has syndicated as the Lead Bank for providing loan facility of Rs.4 billion to NADRA, for the creation of a national data base warehouse.

4.3.2 Askari In Retail Banking:

ASKARI BANK LIMITED launched its retail-Banking group to concentrate on consumer Banking, small business and new products to meet individual needs. The group is focusing on relatively low cost deposits and new high yielding personal finance products. For this recently introducing Askar for car financing and Askari Bank successfully launched Pakistans first e-commerce venture in the form of a product called ASK-IBL Online.

4.3.3

Askaris Creditability:

The Pakistan Credit Rating Agency (Pvt.) Ltd. an affiliate of FITCH, IBCA, LTD, UK, for maintaining the short-term retainer at Al + has awarded ASKARI BANK LIMITED. The rating upgrade recognizes the demonstrated capacity of ASKARI BANK LIMITEDs management to mange risk as well as its strong ability to mobilize resources, as along for having a strong capacity for the timely payment of financial commitments.

4.3.4 Recent LIMITED:

Reorganization

at

ASKARI

BANK

ASKARI BANK LIMITED has streamlined its operations by dividing the existing functions of Head Office into main group as: Corporate Banking and Financial Institutions. Operations and credit. Retail Banking.

The former deals with the relationships of the Bank with major multinationals, corporate customers, correspondent Banks and other financial institutions and constitutes of three division namely cooperate and merchant, international and treasury, while the Operations and Credit deals with divisions system and operations, ETD and Credit while the last one deals in investment, asset product unit and Credit Card Division.

4.3.5

Customer Services:

ASKARI BANK LIMITED has maintained its efficient and personalized services to its customer. It management has its enhancing ability to offer premise financial products to its clients. The Bank has linked to a real time Online Communication Network through VSAT in major cities. ATM services as ASKCASH have also been provided to its customers, as the installers are located at major cities. The credit card facilities are already being provided including the Visa Card, Master Card, and Dinner Club Card. For customers facility ASKARI BANK LIMITED has gone into Electronic Banking. For this ASKLINK as for Telephone Banking ASKNET, providing on line Branch facility. Also providing the SWIFT facility to expedite international financial transaction to benefit its customers.

4.3.6

Askaris Management Concept:

ASKARI BANK LIMITED has adopted new policies in the field of human resource. It aims to bring new and modern concept of management with the background of achieving staff satisfaction and bringing in aspects of motivation. The new concept has replaced the old confidential report system and brought in the exercise of appraisal inviting the staff. At the same time setting the Bank on dynamic footings. Preparing the staff for future changes as by providing in-house training. Thus sharpening their ideas and minds to cover the gap in the competition. Seminars are conducted in order to generate new ideas and modern concepts.

chapter # 5 Awards & Achievements Of Askari Bank Limited

Over the years, Askari Bank has proven its strength as a leading banking sector entity with ever-increasing commitment to its clients, through a strategic investment in electronic technology. Askari Bank achieved the following firsts in Pakistani banking: 1. The first Pakistani bank to offer on-line real-time banking on a country-wide basis. 2. The first Pakistani bank with nation-wide network of ATMs. 3. The first bank in Pakistan, foreign or local, to introduce Internet banking in the country. 4. The first bank in Pakistan, together with ABN-Amro, to develop an inter-bank switch for the ATMs. 5. The first bank in Pakistan to launch Mobile ATM. Askari Bank continues its success in competition. Recently they had once again been given the Best Retail Bank in Pakistan by The Asian Banker for the 2nd consecutive year. Askari Bank has been given the 1st Consumer Choice Award 2004 for the Commercial Banking Category by the Consumer Association of Pakistan. Askari have also received the Corporate Excellence Award for the financial sector from the Management Association of Pakistan (MAP) for the years 2002, 2003 and 2004.

Askari Bank have been given The Best Bank in Pakistan award by Global Finance magazine twice i.e. for the years 2001 and 2002. We have been given the Best Consumer Internet Bank award by Global Finance magazine for the years 2002 and 2003. Askari won the Euro-money and Asia-money awards as early as 1994, 1996 and 1997. They have A1+, the highest possible credit rating, for short-term obligations, and our long-term rating stands at AA. Askari won the prestigious Best Presented Annual Accounts award from the Institute of Chartered Accountants in Pakistan (ICAP), and The Institute of Cost and Management Accountants in Pakistan (ICAMP), for the Services Sector, for the years 2000, 2001and 2002. It has also received ranking prizes during the last six years from the South Asian Federation of Accountants (SAFA) for The Best Presented Annual Accounts for the financial sector, in the SAARC region. In 2007 Askari bank won The Best Consumer Banking Award 2006 for the third consecutive year from the consumer Association of Pakistan. In 2008, Askari Bank has been given The Best Retail Banking Award 2008 by Pakistan Guarantee Export Corporation Ltd. Following are some of the achievements of ASKARI BANK LIMITED, that shows its success in Banking Sector.

5.1 ATM:
ASKARI BANK LIMITED issue ATM cards to their customers. Askari Bank, being a leading Bank of Pakistan has been quick to introduce ATM (Automated teller Machine) services to it customers Electronic cash dispensary facilities are now available at major centers like Karachi, Lahore and Rawalpindi. All these ATMs are linked through a state of the art satellite base communications system offering real time 24-hour service.

5.2 Worlds Bank:

Askari Bank Limited Bank is the only private sector Bank that has been approved by the world Bank as a participating financial institution for the US$200 million line of credit sanctioned to the Government of Pakistan for the financial sector deepening and intermediation project ASKARI BANK LIMITED has received an A1+ rating for the short term and an AA for the long term, from the Pakistan Credit Rating agency (Pvt.) Ltd. (PACRA) as affiliate of IBCA Ltd. UK ASKARI BANK LIMITED is the first private sector Pakistani Bank to voluntarily obtain a rating from PACRA. Askari emphasis on further broadening its some foreign trade business translated into handling a higher volume of export and import business of Rs.26 billion registering a growth of 34% over the precious year. This enhanced foreign trade business because it was secured due to excellent customer services and efficient international settlement arrangements with our correspondent Banks.

5.3

Phone Banking:

ASKARI BANK LIMITED is one of the first private Banks in Pakistan to offer innovative products and services to its customers like 24 hours Telephone Banking. This enables our customers to Bank around the clock from the comfort of their homes. Askari Bank arranges Rs.4 billion syndicated facility for NADRA, ASKARI BANK LIMITED has arranged a syndicated loan facility of Rs.4 billion for National Data Base and Registration Authority (NADRA) for the creation of National Data Ware house. In this connection, on November 01, 2000, a syndicate signing ceremony was held at the NADRA, Islamabad attended among others by Mr. Kalim-ur-Rehman, President and Chief Executive ASKARI BANK LIMITED and Major General Zahid Ihsan, Chairman, NADRA. This is a medium term loan and is repayable over a period of 5 years though quarterly payments. This financing is reportedly the second largest syndication in the history of Pakistan and the first to be arranged and led by ASKARI BANK LIMITED. The facility is parked at ASKARI BANK LIMITEDs Blue Area Branch Islamabad. Standard Chartered Bank is the co arranger. Other syndicate members are ASKARI BANK LIMITED. Bank Alfalah, Soneri Bank, Bank of Khyber, Pak Libya Holding Company and Employees Old Age Benefits Institution. Askari Bank successfully launched additional retail products. Retail Banking Group (Asset team), after the successful launch of Askar in September 2000, also initiated few other consumer finance products including Askari Bank personal finance and DHA finance program. Askari Bank personal finance, along with Askari, is the second mainstream product launched by the Retail Banking division (Assets). Maintaining their history of institution

offering quality products to its customers. ASKARI BANK LIMITED is focusing on generating good business with emphasis on efficient and effective processes, while no major advertising campaigns have been employed for promoting the product, customer response has been quite encouraging. Extensive promotion through print media is planned for the next year. DHA financing program was yet another tremendous success for the customers and Bank financing for applying to the balloting for plots in PHV, Defense Housing Authority Lahore was made available to anyone with the participation of 12.5% of the amount required. Capitalizing on the opportunity and timing of the initiative, again, the response from the public was overwhelming. The entire exercise of loan acquisitions, processing, booking and maintenance was in live with its tradition of teamwork with excellent result. Success of such an end-use defined product undertaken on a very short notice is also an attestation of their continued efforts for strong yet flexible processing techniques and the ability of their staff to collectively achieve the impossible.

CHAPTER #6 VISION AND MISSION STATEMENT OF ASKARI BANK LIMITED The Vision

To be

The Bank of first Choice

In the Region

6.1 The Mission Statement of ASKARI BANK LIMITED Reads As Follows: To be a leading private sector Bank in Pakistan with an international presence, operating in niche markets, delivering quality service to clients, through the use of advanced information technology and effective human resource management in a modern and progressive organization culture of meritocracy, while maintaining the highest level of ethical and professional standards and providing enhanced value to all our stakeholders, with a commitment to good corporate citizenship. The mission statement of ASKARI BANK LIMITED covers all the above-mentioned components of a good vision statement. Mission statement is a statement that captures an organizations purpose, customer orientation and business philosophy.

6.2

Askari Banks Mission Statement for 2002:

To be the leading private sector Bank in Pakistan with an international presence, delivering quality services through innovative technology and effective human resource management in a modern and progressive organizational culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all our stakeholders and contributing to society.

The power to inspire and be insp ired

6.3 Corporate Philosophy

From knowing our customers requirements to understanding employee needs, from utilizing modern technology to making responsible social contributions, from enhancing stake-holders value to practicing corporate ethics. We are continuously and consistently striving to address newer challenges with a single motivation:

ONE VISION ONE MISSION ONE DESTINY

6.4 Core Values of ASKARI BANK LIMITED

The intrinsic values, which are the corner-stones of Askari Banks corporate behavior, are: Commitment Integrity Fairness Teamwork Service

6.5 The Acronym for Which is CIFT

C.I.F.T., (like the Urdu word CIFT) signifies those traits attributes and characteristics, which they, as ASKARI BANK LIMITED team members, must specially inculcate and practice, so as to develop a good corporate culture in a Bank. There are, of course, a lot of other noble values which they must also adopt and practice, to be good corporate citizens; but the above mentioned have been selected, from a long list, for special emphasis, as a result of the joint exercise held at Head Office.

6.6

OBJECTIVES OF ASKARI BANK LIMITED

6.6.1
1. 2.

Basic Aims

The aim is to channelize the private savings and public funds for investment purpose. To enhance the economic operational developments and other financial sectors of Pakistan.

3.

To extend loans on easy grounds and to boost the unorganized sectors of economy as to reduce the rate of recession in such sectors.

4.

To provide sufficient customer services and quality service and provide full corporation.

5.

ASKARI BANK LIMITED aims to build a strong customer relationship, by providing superior service and to have such relations based on mutual benefit.

As being a Commercial Bank it aims to have high profits and sounds growth rate.
6. To contribute for the socio-economic development of Pakistan.

6.6.2
1. 2. 3. 4. 5. 6.

ASKARI BANK LIMITED Aims At

Gathering its employees and working together as a team to bring the future bright altogether. Going into Retail Banking, the Bank circles to innovate and bring new and compatible products to its customers. Bring such Mark-up rates as to attract foreign and local investors to the boost the local economy. For high quality performance the Bank aims at rewards and appreciation. To provide clear and open channel communication channel to facilitate its customers. The Bank recognizes the value and creditability of its customers and bases their decisions on merit.

The concept of an organization without an objective is meaningless. The main objective of Askari Bank Limited Bank Limited is to maximize profit. This profit is transferred from army welfare trust to general head quarter from where it is distributed among the families of martyrs in proposed ratio. Apart from these the Bank serve its valued customers for their continuous trust and confidence on the Bank which has product Banking policies, enhanced focus on automation, imposed capital adequacy ratio, expanded branch network and solid resource base. The objectives of the Bank can be divided into the following types:

6.6.3
1. 2.

Managerial Objectives:

To provide the shareholders the greatest possible equity ratio. Controlling the staff at highest managerial criteria and selecting them of a standard caliber.

3.

To gain the confidence of the customers and satisfy the staff to reduce the opportunity cost.

4.

To take the staff as a team, in taking decisions related to management, working environment, and providing facilities to get things done at ease.

5.

To facilitate the departments to operate under full supervision and control.

6.6.4
1.

Promotional Objectives:

ASKARI BANK LIMITED to project its Bank in going into new fields and searching out new products.

2.

Adopting new marketing strategies to have competition, in both the local and foreign markets.

3.

Providing such promotional services to its customers as to ensure high quality profit and sound growth.

4.

Discovering new markets and selecting targets, to ensure the products to avail the desire market demands.

5.

Attracting customers through products, as to make them the Banks potential clients and customers.

6.

As being the Bank supported by the armed forces, involving the civil as to expand its operational market.

7.

Contracting the international market for long-term profit encounters.

6.6.5
1.

Corporate Objectives:

The corporate objectives of ASKARI BANK LIMITED are: To ensure growth and development of the Bank.

2.

To procure greater business, that is to acquire more deposit, which is considered to be the view material of the Bank.

3.

To channelize the resources of the Bank productively and to increase the wealth of the stock holders.

4.

Reduce the general trend of cash transaction and make the people more Bank minded.

6.6.6 Socio-Economic Objectives:

The socio-economic targets of ASKARI BANK LIMITED are: 1. 2. 3. 4. To participate to the economic development of the country. To ensure greater satisfaction of its customers by providing better quality services. To ensure more utilization of public money. To provide loan on easy terms to the unorganized sector of the economy, so as to reduce the income disparities and to help raise the standard and living of the poor. Beside these cooperate and socio-economic objectives, profit is the primary objective of all financial organization and all other activities aimed towards its achievement. The ASKARI BANK LIMITED being a business organization can relive its objective of profit maximization in two ways. Competition in Banking is intense and every Bank, Whether Foreign or Pakistani tries to increase their field deposits by providing better facilities to its customers. There are eighteen foreign and five nationalized Pakistani Banks and all of them try to attract more and more customers in order to increase their deposits. The Bank can extend grater amount of loans by increasing deposits and hence increase its profit. The Bank always tries to attract customers to open current account because on current accounts no interests are paid, although other facilities are provided. In-fact companies are not allowed to invest their money is saving or other deposits because of the nature of saving accounts that will discuss like. Increase in deposits mainly occurs because of: Providing better product with attractive interest rates. Improving its services. Courtesy. Professional customers services officers.

Chapter #7 Products of Askari Bank

Askari Bank offers the following retail products to serve the needs of the consumer market: Askari Banks Value Plus Rupee Deposit Account. Askari Banks Personal Finance Loans Scheme. ASKAR Auto Loans. Askari i-Net Banking Internet Banking solutions. Askari MasterCard Credit Card facility. Askari Travellers Cheques Rupee Travellers Cheques (R.T.C). ASKCARD Debit Card. Askari Banks Mortgage Finance Home Loans. Askari Banks Business Finance Business Loans. SmartCash Running Finance Facility for Consumers. Askari Kissan Agri Finance Programme.

7.1 Consumer Banking Services

7.1.1 Askari Debit Card

Askari Bank is committed to provide you innovative and competitive solutions to your banking needs in a more efficient and personalized manner. Your Bank enjoys a strategic competitive advantage over all domestic players by virtue of its leadership, large network and technological advancement. In line with our tradition of innovation, Askari Bank takes pride in announcing launch of "Askari Debit Card"- Askari Bank's Debit Card. Askari Debit Card is tailored to your shopping needs and is another valuable financial solution reflecting our commitment to build lasting relationship with you. Askari Debit Card means freedom, comfort, convenience and security, so that you can have retail transactions with complete peace of mind. Askari Debit Card is your new shopping companion which enhances your quality of life by letting you do shopping, dine at restaurants, pay your utility bills, transfer funds, withdraw and deposit cash through ATM anywhere, anytime.

7.1.2

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.

7.1.3

Mortgage Finance

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.

7.1.4

Business Finance

In pursuance of the National objectives to revive the economy of the country, ABL is providing loans to small and medium size business enterprises under Askari Bank's Business Finance Scheme. Our goal is to offer a loan, which enables business community to receive the financing required by them based on their cash flows. Our valued customers can enjoy the convenience of getting financing on attractive terms with the minimum processing turnaround time.

7.1.5

Smart Cash

This personal line of credit would be set up with a specified credit limit upto Rs. 500,000/-

7.1.6

Auto Financing

Yet another of our products, Askar offers the most convenient and affordable vehicle- financing scheme, which

provides our valuable customers an opportunity to own a brand new vehicle of their choice. With minimum down payment, lowest insurance rates and widest range of available car makes and models, Askcar offers the best value to our esteemed customers.

7.1.7

ASKARI CARD

ASKCARD means freedom, comfort, convenience and security, so that you can have retail transactions with complete peace of mind. ASKCARD is your new shopping companion which enhances your quality of life by letting you do shopping, dine at restaurants, pay your utility bills, transfer funds, withdraw and deposit cash through ATM anywhere, anytime.

7.1.8

Travelers Cheques

The range of our products and value added services enhances with introduction of Rupee Travelers Cheques (RTCs) launched in March 2002. In spite of our constraint on issuing higher denomination of RTCs against restrictions imposed by the Central Bank of Pakistan we have been striving to attain our shares with sizeable portfolio.

7.1.9

Value Plus Deposits

The first liability product launched by this unit is showing a remarkable acceptability in the market. The growth of this product is witnessed by its share, which has presently reached at Rs. 1,079 Million even after lowering down the profit rates due to sufficient liquidity in the market.

7.2 Islamic Banking Services

Islamic Banking was launched under the brand 'Askari Islamic Banking', by opening 6 dedicated Islamic Banking branches in major cities of the country. Further expansion is planned with improved capabilities for offering products conforming to the Shariah principles. Askari Islamic Banking opens the doors for Halal banking solutions. Our objective is to put in place an efficient banking system supportive to economic justice and welfare of society in line with Shariah standards. A comprehensive range of Islamic Banking products and services is being offered, in order to meet customer's demand of Shariah Compliant Banking, in the following areas:

Islamic Corporate Banking

Islamic Investment Banking Islamic Trade Finance Islamic General Banking Islamic Consumer Banking

Islamic Banking products have been approved by the Bank's Shariah Advisor. As per Shariah requirements, funds and products of Islamic Banking are managed separately from the Conventional Banking side. All funds obtained, invested and shared in Halal modes & investments, under supervision of the Shariah Advisor.

7.3 Askari Banks Services

Certain services and facilities being provided by ASKARI BANK LIMITED to its customers are as follows:

7.3.1 TRANSFER OF FUNDS

ASKARI BANK LIMITED transfers funds of the customers from one Bank to another. If the transfer is at one station, the Bank does not change any commission.

7.3.2 ACTS AS AN AGENT

Bank also acts an agent, correspondent or representative of its customers at home and aboard.

7.3.3 GENERAL UTILITY SERVICES

The general utility services offered by the Bank for customers are as followed: Lockers service. Safe custody of valuable. Foreign exchange business. Acts as a reference. Financial and advisory services. Travel service. Forward foreign exchange. Securities.

7.3.4

LOCKERS SERVICE

There are two types of lockers available. Large lockers. Small size lockers. Any account holder who wants to have a locker has to fill a form, which is requirement.

7.3.5

SAFE CUSTODY OF VALUABLE

Safe custody of valuable like securities is very common and well availed service of the Bank in which the Bank takes care of all the due securities and transfers the amount due to the account of customer owing the securities after deduction of the dues.

7.3.6

FOREIGN BUSINESS

ASKARI BANK LIMITED on behalf of the customers is making payment and collecting foreign bills. The Bank issues letters of credit (L/C), circular notes, Bank drafts, travelers cheques etc. for the convenience of its customers.

7.3.7

ACTS AS A REFERENCE

ASKARI BANK LIMITED provides a useful service to its customer by acting as a reference for its credit worthiness. The information is supplied in most secrecy and is based impartially on the respectability and financial standing of the client.

7.3.8

FINANCIAL AND ADVISORY SERVICES

It covers a wide range of facilities that can be tailored to suit the individual needs of the customer.

7.3.9

PRIORITY BANKING
The Bank offers complete financial management flexibility with a superior standard of service. With a comprehensive range of financial benefits, the dedicated staff who give priority attention, 24 hours Telephone Banking and exclusive services when the customers travel abroad. It helps them make the most of their time and money.

7.3.10

SPECIAL PACKAGES OF ACCOUNTS

Profit bearing current accounts with specially designed cheque-book.

 Foreign Currency Account (FCA) specially saving accounts in US dollars, pound

sterling, deutsche mark, and Japanese Yen. Local and foreign currency time deposits paying preferential interest rates for any of the above currencies. Available for period of 7 days and 30 days notice, 3 months, 12 months and 24 months. Customers can enjoy no-bounce cheque protection through our automatic sweep facility. If there are insufficient funds in the current account to cover cheques, it can be covered by fund from the saving accounts.

7.3.11

BETTER FINANCIAL MANAGEMENT

Customers receive a consolidated statement, which clearly shows the balance and transactions on all your accounts. Specially designed to let customers determine their financial position at a glance, the consolidated statement help to better manage finances. ASKARI BANK LIMITED has also arranged for customers to open any number of accounts quickly and easily, without having to complete additional application forms.

7.3.12

A NEW STANDARD OF SERVICE

Customers benefit from the preferential handling of there Banking business and received the kind of attention that there life style demands in addition to Phone Banking, appointments can be made with customer service officers for individual meetings. Further more office hours are even extended from 8 hours to 12 hours to provide extended convenience. ASKARI BANK LIMITED customer service officers can also provide an introduction to private Banking services.

Chapter # 8 organizational structure

Organizational Structure is the framework that defines the boundaries of the formal organization and within which the organization operates. A suitable organizational structure for the nature of the organization leads to better performance. A Bank's organizational structure is a hierarchical description of the functions and responsibilities of major units or departments in a Bank, typically catalogued in an organizational chart elucidating the interrelationship and relative positions of the unit and the executive responsible for managing them. Usually a Banks organizational structure is composed of a chief executive officer under the board of directors, divisional or departmental heads with specific responsibilities and authorities, further bifurcation of divisions into sections and units are also shown in the organizational chart.

8.1 ORGANIZATIONAL CHART

An organizational chart is graphical representation of the organizational structure. Each box in the chart represents a position within the organization and each line indicates the nature of relationship among different positions. Keeping in view the organizational chart of ASKARI BANK LIMITED (Chart-1) greater delegation of authority is possible to the different levels of management. The supreme body that runs and controls the affairs of Askari Bank Limited Bank Ltd. is a Board of Directors (BOD) consisting of twelve members including a chairman and a secretary. The BOD is the supreme decision making body that approves the policy matters concerning staff members as well as sanctioning of fund or non fund based facilities. The serving Adjutant General of Pakistan Army with a rank of Lieutenant General is the chairman of the Board of Directors.

The president and the Chief Executive of the Bank who is a professional Banker and Managing Director of AWT who is a retired Lieutenant General are ex-officio members of the BOD. Similarly, other members of the BOD are the prominent persons mostly retired high-ranking army officers and prominent professional civilians including a government nominated NIT member. The BOD meets at a regular interval and discusses a prior decided agenda and after a thorough discussion approves, rejects or amends the decisions. The BOD always approves or disapproves anything keeping in view the policies of the Bank after detailed deliberations and never makes a hasty decision.

Section No.4 Section No.4 CHAPTER NO.8:CHAPTER NO.8: ORGANIZATIONAL ORGANIZATIONAL STRUCTURE OF STRUCTURE OF ABL ABL

CHART NO. 1

ORGANIZATIONAL CHART OF ASKARI

COMMERCIAL BANK LIMITED

Chart No. 1

5.4 ASKARI

BANK

LIMITED

CHOWK

YADGAR

BOARD OF DIRECTOR Executive Committee President & Chief Executive Finance Group Head Inspection & Audit Human Resource Division
Group Head Operat. & Credit

President Support Office

Group Head. Corporate Banking & Financial
institutions

Corporate Banking

International Division

Credit Cards
Electric & Technical Div.
System & Products

Merchant Banking

Treasury

Operation s

Credit

North

Central

South

West

BRANCH. BRANCH

5.5 STRUCTURE
ASKARI BANK LIMITED Chowk Yadgar Branch. Branch has a well defined pattern of roles and responsibilities. Branch manager is the actual head of his branch. His immediate subordinate is manager operations who take care of the overall operations of various departments. Manager Banking is next in this hierarchy. Every member of the Bank is working diligently to perform his duties.

33

INTERSHIP REPORT ON ASKARI BANK LIMITED. BANK LIMITED. BY: RIZWAN ASIF INTERSHIP REPORT ON ASKARI BY: RIZWAN ASIF

CHART NO. 2

CHIEF Manager Operation s Inch Inch Inch Inch arge arge arge arge Com Dep Fina Cre pute Loa osit FC nce dits Cre r ns & Exp dit s Acc Adv orts Car ount anc ds s esAcc Che que ount Post Ope ing ning Aud it Inch arge Cas h Inch Inchar arge ge Acc Remitt ount ances Remitts Bills ances ATM Car ds

Ter m Dep osit s

Source: Askari Bank Circular 2006

34

8.2

ORGANIZATIONAL HIERARCHY OF ASKARI

BANK LIMITED
The level of precedence exists in almost all organization. The previous organizational hierarchy has been revised by the new president of ASKARI BANK LIMITED Mr. Kalim-Ur-Rehman to more effectively manage the various aspects of the Banks operations. In revised organogram the role of the presidents secretariat is being expanded and hence forth its called the President Support Office (PSO),. The PSO will include some young Bankers who will assist the president in the development of new ideas and approaches, including product development, as well as credit proposals, monitoring/implementation of plans, and the follow up of important issues with the concerned units. Most of the existing functions of head office have been divided into 2 groups, which have been broadly named as:

8.3

CORPORATE BANKING AND FINANCIAL

INSTITUTION. 8.3.1 OPERATIONS AND CREDIT

Group 1 mentioned above would cover the relationship of the Bank with major out side entities including larger corporate customers, multinationals, correspondent Banks and other financial institutions. Group 2 will deal with functions relating to customers service book, office processing, credit cards, expense control, new branches, premises, stationary equipment. The function of finance and human resource management (together with related administration matters) would report directly to the president ASKARI BANK LIMITED head office circular. Planning and corporate affairs functions will be handled by the president support office. The future plan to implement the regional officers concept at the earliest and where possible with immediate effect.

35

Branch operation will be divided into 4 broad regions as shown in the organizational chart. The regions are sub divided into areas where considered necessary.

8.3.2

North

area

office

Rawalpindi/Islamabad
AWT Plaza Branch, Rawalpindi. GHQ Rawalpindi. Blue Area Islamabad. F-10 Islamabad. Chaklala Scheme-III. Raja Bazar. Satellite Town.

8.3.3

Area Office North

Chowk Yadgar Branch. Peshawar City. Mardan. Mirpur. Abbottabad.

8.3.4

Central Region Area Office Lahore

Lahore Badami Bagh. Lahore Cantt. Lahore Circular Road. Lahore Gulberg. Lahore Main. Lahore LCCHS.

36

 Lahore City.

8.3.5
Faisalabad. Gujranwala. Sialkot. Multan. Bahawalpur. Phoolnagar. Gujrat

Central Region Area Office East

8.3.6
Karachi Clifton.

South Region

Karachi Jodia Bazar. Karachi Shahrah-e-Faisal. Karachi Main. Hyderabad. Nazimabad Karachi. Sukkur.

8.3.7
Quetta.
Chemman.

West Region

37

8.4. CHART AND GRAPHICAL REPRESENTATION OF BRANCH NETWORK A. CHART NO. 3

NORTH REGION
Islamabad/Rawal pindi Area

CENTRAL REGION
North Area Lahore Area East Area

Islam abad

Rawa lpindi

Pesh awar Mirpu r

Mard an Abbo ttaba d

Bahawal pur

Rahi m Yar

Faisal abad

Phoo l Naga r

Gujra wala

Multa n

Sahi wal

Sarg odha

Sialk ot

South Region Hyde raba d

Khan

West Region

Karac hi

Gawa dar

Quett a

Cha mma n

38

B.

GRAPH

39

CHAPTER #9 DEPARTMENTATION
9.1 DEPARTMENTATION AT THE HEAD OFFICE

A board of directors, comprising of 12 directors, heads the Bank and are responsible for the affairs of the company including operations, management and control of companys business taking important decision and formulating board policies and objectives of the company. An executive committee and the president who is also the chief executive officer of the Bank follow in the hierarchy after the board of directors. The president is then responsible for the operating as well as management look after of the Bank. The departmentation lower in the hierarchy has been done on the basis of the functions performed by different divisions. The divisions at the head office level are engaged in formulating policies and strategies, which extend to the whole of the Bank. These Divisions are specialized units working in their area of specialization, thereby concentrating on that particular aspect of the Bank and ultimately resulting in a well-coordinated environment on the whole.

9.1.1

Credit division:

The Bank credit division is responsible for efficient and effective identification, control and management of credit, through sound and prudent sending policies. The aim of credit division is to develop a balanced and a well-classified good risk, portfolio of remunerative and productive loans and advances. It devises policies, evaluates prospective accesses for advancement of credit, monitors the performance of loans and looks for new to expand its credit base and increase its profit margin.

9.1.2

Treasury Division:

This division manages the operations of the Bank in the Money and Foreign Exchange markets. It also looks after the Banks investments in these channels there by boarding the asset base of the Bank.

9.1.3

Corporate and Merchant Banking Division:

This division become an independent unit in April 1999 and since then is working towards providing a complete range of services for its corporate clients. This division has established a separate corporate Banking unit in Karachi to market and service Karachi based customers more effectively. CBD is responsible for catering to the needs of large corporate clients in the public and private sector, having a well diversified portfolio with financing extended to industries

39

like Telecom, Fuel and Energy, Fertilizers, Chemicals, Textile, Cement and Food and Beverages. It provides numerous facilities to our clients including project financing, syndications, guarantees, working capital finance, underwriting, as well as advisory services.

9.1.4

Retail Banking Division:

This Division recently established division stresses and design and launch innovative consumer Banking products to meet the individual customer needs and the needs of the small businesses. The aim of the Retail Banking Division is to improve the sustainability of the Banks earnings by increasing our focus on generating relatively low cost deposits and new high yielding personal.

9.1.5

Electronic Technology Division:

This division keeps on adding new features to the existing products as well as introducing innovative facilities to automate the Banking Services of ASKARI BANK LIMITED. This is done keeping in view the connivance of the customers. The Division has recently launched an electronic bill payment system. Presently, this system enables telephone bills to be paid through Askari Banks ATMs, the Internet, and a direct debit authority with the branches. Depending on the cooperation from the other utility companies, this facility can be extended to the payment of the gas and electricity bills as well.

9.1.6

Credit Card Division:

CCD deals with the growing business of credit cards. Since the establishment of an independent credit card processing center at Karachi, this division is looking forward for the expansion of this service.

9.1.7

Internal Audit Division:

Internal order division monitors the procedural performance of the Bank and check whether the standard operational procedures are being followed. IAD reports to the Audit Committee of the Board of Directors and performs it functions independent of the management.

9.1.8

Human Resource Division:

HRD is strategically the most important contributor to organizational effectiveness. It is responsible for human resource management. This division deals with the policies related to the employees of the Bank. It formulates policies dealing with procurement, appraisal, benefit, compensation training and retirement of its employees. This division keeps on upgrading itself in order to practice modern management concept in the Bank.

40

9.1.9 International Division:

This division deals with the services related to the foreign trade. The management of financing of exports and imports and its facilitation is its responsibility.

9.2

DEPARTMENTS

OF

ASKARI

BANK

LIMITED

CHOWK YADGAR BRANCH.

The Askari Bank Limited Bank Limited Chowk Yadgar Branch. Branch is situated in the main Commercial area of Chowk Yadgar Branch. Located on Fakhr-e-Alam road. The premise is well-equipped and well-furnished and designed to offer maximum facilities to the customers under one roof. There is a specious car parking facility. The staff is qualified, courteous and well dressed. The suitable location facilities and aim able staff make the customers visit convenient and pleasant.

9.2.1

Deposit Department:

This department deals with the Retail Banking i.e., customers account. Accounts are opened here and maintained by them. It is the blood of whole Banking because accounts are the key to all the Banking activities. Bank reserves deposit in various shapes and offer a wide product line of deposits for sale to customers. Deposit department has three sections: i. Accounts section, which includes a number of accounts like local as well as

foreign current account, local saving as well as foreign saving account and ASDA accounts. ii. Machine room is the section of this department where the punching of data

takes place, statement of accounts is made and sent to the account holders. iii. Cash section is the customer service section where the reception of collection

and encashment of cheques takes place.

9.2.2

Remittance Department:

Remittance department deals with money transfer. The instruments accepted by remittance department of Bank are: i. ii. iii. iv. Pay order. Demand draft. Telegraphic transfer. Online transfer.

41

i.

Pay Order

It is a negotiable instrument and payable on demand. PO is an order from the customer to make payment in favor of the receiver within a city.

ii.

Demand Draft

It is also a negotiable instrument and payable on demand. It is an order by one Bank branch to the other branch in another city. DD is purchased by customer and send to a required receiver or creditor. There however, can also be FDD i.e. Foreign Demand Draft.

iii. Telegraphic Transfer

TT is transfer of funds for outstation purposes. It is like DD but it is more quick then DD. There are two modes of TT. 1. INWARD TT. 2. OUTWARD TT.

iv. Online Transfer

It is one of the latest instruments used for the transfer of funds. Nowadays most of the cash is remitted through on line system.
I.

Drafts and TTs upto Rs. 10,000. a. b. c. d. e. f. Rs. 10,001 to Rs. 100,000.

Rs. 25/- Flat 0.10% ... Minimum Rs. 50/-

Rs. 100,001 to Rs. 1,000,000 0.07%... Minimum Rs. 20/Over Rs. 1,000,000. 0.05% ...Minimum Rs. 1,000/-

Cancellation of demand draft Rs. 100/- (flat) Issuance of duplicate demand draft Postage charges Rs. 50/- Flat(in lieu of lost) No postage charges on DDs

9.2.3
i.

Accounts Department:
This department coordinates all the Banking activities and keeps them in a

sequence and provides up to date data. This department is responsible for proper accounting of assets and liabilities for the Bank in addition to book keeping. ii. It also deals with the financial statements of the Bank. Other functions

performed by the department are head office reconciliation, provision of expenses such as medical, repair and maintenance, utilities etc. disbursement of staff salaries,

42

pre audit function, budgeting, maintenance of SBP statutory deposit, depreciation calculation, half yearly and yearly closing.

9.2.4
i. ii. iii.

Foreign Exchange Department:

Dealing with the import exports facilities. Maintaining the Foreign Currency Accounts (FCA). Making efforts in increasing the foreign exchange balances.

The functions of the Fo-Ex department are significant in:

9.2.5

Computer Department:

Computers have become an important element of the modern Banking system. This department of the Bank is responsible for the computerization of all the branch operations and the maintenance of the computer system. Network software developed by this department includes: i. ii. iii. iv. v. Branch operations. General ledgers. Accounting. Foreign exchange operation. Reconciliation etc.

9.2.6

Credit/Advances Department:

The main function of the Bank is advancing loan and in return charges interest. Credit department takes care of advances. This department also issues Credit Card, Debit Card and ATM Card. CRD primarily concentrates on the evaluation and appraisal of the credit proposals through a team of highly experienced professional Bankers at all levels. The evaluation system comprises of well-designed multi-tier credit appraisal procedures with extensive guidelines covering the qualitative and quantitative aspects of credit evaluation. The emphasis has always been on diversification of the Banks risk assets to avert large-scale industry and single party exposures. Most of the advances are short-term trade related on a secure and self-liquidating basis.

43

9.2.7
i. ii.

Dispatch Department:

Dispatch department is concerned with mails. There are two types of dispatches. Income Mail. Out-going Mail.

i.

Incoming Mail

The mails, which we receive from other branches or head office or from any principal office, are known as Inward Mail. A separate incoming mail register is maintained for this purpose. All mails which are received are properly registered in incoming mail register. Then it is sent to manager, which are overviewed and checked by him. Then it is further circulated to the concerned officer for necessary action. While handling over department mail to the concerned department/officer, their acknowledgement is also obtained for confirmation.

ii.

Out-going Mail

The mails, which are sent from Bank to another Bank, branches or head office are known as outward dispatch. Here also a separate register i.e. outgoing mail register is maintained for this purpose and all the record of outgoing mails are kept in it.

9.3 INSTRUMENTS AND MACHINES USED BY THE BANK: 9.3.1 i. Instruments:

The Bank is making the use of certain instruments, which are explained below.

Signature Card

This instrument is used to keep a record of the customers. The customer fills this card at the time of account opening. It consists the customers name, account number, amount and signature specimen. All the signature cards are kept in stationary in the order of account numbers, so that whenever the card is needed it can easily be found out.

ii.

Vouchers:

Vouchers are used in every Bank. Every Bank has its own printed vouchers. Vouchers show the details about the amounts received and paid by the Bank. Bank use a double entry system i.e. debit and credit system. Therefore vouchers are of two types. a. Debit Vouchers

44

b.

Credit vouchers

a.

Debit Vouchers:

To differentiate these two types of vouchers, for the convenience for the officers, debit vouchers are printed in white color. Whenever Bank incurs some expense, entries are made in debit vouchers.

b.

Credit Vouchers:

These vouchers are printed in green color. They are used to enter the credit transactions. Any income or amount received by the Bank is entered in a credit vouchers. All the sections of the Bank use vouchers because they are a sort of documentary proofs, which indicates that the transaction has taken place. Each section of the Bank collects its vouchers and if any discrepancy is found it is removed at the end of the day. All the debit credit vouchers are sent back to office, which processes them. They are then sent to the concerned branches of ASKARI BANK LIMITED.

9.3.2

Machines Used by the Bank:

In todays modern world an organization must adopt the modern machinery to be efficient and consequently profitable. The use of modern machinery can save a good deal of wastage of resource.

i.

Fax Machine:

In the Bank fax machine is used to communicate the message from one Bank to another for sending important letter or any other documents for urgent consideration.

ii.

Electronic Typewriter:

It is an advance form of the typewriter. Electronic typewriter has its own memory. The error chance is limited over here. Documents are also stored to some extent. ASKARI BANK LIMITED also uses these typewriters in order to improve its efficiency.

45

Chapter # 10 FINANCIAL ANALYSIS

Financial statements are the principal means of reporting the financial condition and results of operations of a business entity. These statements are the means to assist various parties in decision making who are interested in the activities of the business. These statements are means to an end of helping stakeholders in decision making to improve the quality of decision making proper analysis of these statements helps a lot. Financial statement analysis helps in determining the financial conditions at any particular point in time and effectiveness of operations of a firm during a specific period. The various stakeholders of business are all interested in the analysis of financial statements. But the focus of interest of all is not the same. For example creditors and credit reporting agencies are interested in finding out the credit worthiness of the firm to which they have extended credit or intend to extend credit. Short term creditors are interested in the short term liquidity of the business and long term creditors are interested in the long run cash flow which the firm can generate over the long period of time. Investors are interested in the firms ability to sustain profitability over a period of time. Government agencies analyze financial data for tax purposes. The internal users of financial statement like management also analyze financial data for planning and control. The financial data of Askari Bank is analyzed in the following ways: Ratio Analysis Time series Analysis (Also Known as Common Size or Index Analysis) Growth Analysis

46

FINANCIAL POSITION OF ASKARI BANK LIMITED AS ON 9TH NOVEMBER 2009 AN OVERVIEW

Askari Commercial bank has continued and sustained the growth during the year 2007. The bank's operating profit (before provision against non-performing advances and taxation) for 2007 stood at 6.22 billion against Rs. 4.47 billion last year an increase of 39% the profit before tax registered a decrease over the corresponding year due to 248% increase in provision against non-performing loans and advances (NPLs) as the consequence of the change in SBP's prudential regulations vide BSD circular No. 7 dated October 12, 2007. However profit after tax for 2007, increased by 19% over last year from Rs 2.250 billion to R 2.681 billion giving earning per share (EPS) of Rs. 8.92 which shows a 19% increase from Rs 7.48 in the previous year. By the end of 2007, deposits had reached Rs. 143.04 billion from Rs 131.84 billion at end 2006, an increase of 8% during the year. Deposits are generally regarded as the life blood of the banking industry. Gross advances increased by 5% to Rs 108.19 billion as of December 31, 2007 from Rs. 102.72 billion at the close of last year. Although the credit expansion was under pressure, it remained well diversified and yielded better returns. The banks non performing loans (NPLs) increased from Rs. 3.66 billion to Rs. 6.99 billion mainly due to further downgrading of a few large exposures. These loans have been fully provided for upto December 31, 2007. Management has ensured effective management of bank's assets and liabilities effective control over operating expenses, introduction of market oriented products, and customization of existing products and strategic expansion of branch network, As a result Askari bank's performance has shown consistent improvement during 2007.

47

ASKARI BANK LIMITED BALANCE SHEET

AS AT NOVEMBER 09, 2009, 2006, 2009

48

F.Y 2005 Rs. in 000 ASSETS

Current Assets: Cash and balance with treasury banks Advances Other assets Balances with other banks Lending to financial institutions Investments Total Current Assets Net fixed assets Long term Advances Long term investment Total Non-Current Assets

F.Y 2006 Rs. in 000

F.Y 2007 Rs. in 000

Source1
11,766,925 64,934,517 2,732,641 5,550,148 10,172,242 17,521,458 112,677,931 3,192,862 21,042,378 8,186,736 32,421,976 14,879,230 73,721,324 3,812,788 7,333,002 8,392,950 18,303,453 126,442,74 7 3,810,331 25,458,048 10,322,462 39,590,841 13,356,055 73,963,821 5,535,038 3,497,054 14,444,143 28,854,062 139,650,17 3 5,128,428 26,816,341 10,576,943 42,521,712

TOTAL ASSETS LIABILITIES

Deposits and other accounts Borrowings Bills Payables Liabilities against assets subject to fin lease Other Liabilities Total Current Liabilities Long Term Borrowing Deposits Fixed Long Term subordinated debt Deferred Liabilities
1

145,099,90 7

166,033,5 88

182,171, 885

80,795,103 10,249,977 1,315,680 1,459 2,271,393 94,633,612 312,361 37,999,587 2,999,700 567,217

91,489,342 12,321,923 1,839,077 _ 2,603,113 108,253,45 5 2,642,164 40,349,941 2,998,500 736,298

113,039,13 3 15,223,319 2,627,051 _ 3,219,796 134,109,29 9 2,330,206 29,997,574 2,997,300 471,519

Source: Based on figures available in Financial Statements, Askari Bank Ltd., 2005, 2006 3,879,278 6,376,962 5,799,025 Total Non-Current Liabilities and 2007.
TOTAL LIABILITIES SHARE HOLDERS EQUITY 136,512,47 7 49 154,980,3 58 169,905, 898

50

ASKARI BANK LIMITED INCOME STATEMENT

AS AT NOVEMBER 09, 2009, 2006, 2009
F.Y 2005 Rs. in 000 F.Y 2006 Rs. in 000 F.Y 2007 Rs. in 000

Markup/ interest Earned Markup / Interest expensed Gross Profit Selling. Gen. And Admin. Expense Non-markup / Interest Income Operating Profit Provision against non-performing loans Profit Before Tax (EBIT) Prov. for Taxation Net Income

8,780,698 4,278,374 4,502,324 2,593,817 1,552,566 3,461,073 601,992 2,859,081 837,085 2,021,996
Source1

12,596,921 6,977,313 5,619,608 3,283,494 2,139,254 4,475,368 1,128,513 3,346,855 1,096,881 2,249,974

15,143,241 8,685,624 6,457,617 4,801,587 4,565,496 6,221,526 3,921,741 2,299,785 (381227) 2,681,012

Source: Based on figures available in Financial Statements, Askari Bank Ltd., 2005, 2006 and 2007

51

Ratio analysis
The analysis of relationship among various financial statement items is essential for interpretation of data. Therefore in addition to comparative and common size statements and index analysis, the analyst will find that a number of individual Ratios will aid him in analyzing and interpreting financial performance of an organization.

In other words to evaluate firms financial condition, performance, financial analyst needs to perform checkup on various aspects of firms financial health. A tool frequently used during these checkups is financial Ratio, which relates two accounting number and is obtained by dividing one number by the other.

Thus it's said that Ratio analysis is widely used tool of financial analysis and is defined as The systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm, as well as its historical performance and financial conditions can be determined.

The ratio analysis for Askari Bank is based on the financial figures taken from the last Three years financial statements.

52

TABLE: FINANCIAL RATIOS

Financial Ratios I. Liquidity Ratio 1. Current Ratio
=

Formula for calculation

F.Y. 2005

F.Y. 2006

F.Y. 2007

Current Assets Current Liabilitie s

1.19

1.16

1.04

II. Lever age Ratio 1. Debt-to-Total Asset Ratio 2. Debt-to-Equity Ratio 3. Total Debt-to-Fixed Assets 4. Owners Equity-to-Total Assets Ratio 5. Owners Equity-to-Fixed Asset Ratio 6. Time Interest Earned Ratio

Total Liabilitie s Total Assets Total Liabilitie s Share H older ' s E quity Total Liabilitie s Fixed Assets

0.94 15.90 42.75 0.05 2.68 0.66

0.93

0.93

14.02 40.67 0.06 2.90 0.47

13.85 33.13 0.06 2.39 0.26

=
=

Shareholde r ' s Equity TotalAsset s

Shareholde r ' s Equity Fixed Assets EBIT Interest Expense

III. Profit abilit y Ratio s 1. Return on Total Asset Ratio 2. Return on Owners Investment Ratio

N Incom et e 100 Total Assets

1.39

1.35 20.04%

1.47 21.86%

Incom e 100 Shareholde r ' s Equity 23.5%

Source: Based on figures available in financial statements, Askari Bank, 2005, 2006 and 2007

53

3. Gross Profit Margin Ratio 4. Net Profit Margin Ratio 5. Operating Profit Margin Ratio 6. Book Value Per Share 7. Earning Per Share

Gross Pr ofit 100 Sales

51.27% 23.02 39.42 56.99 13.42

44.6% 17.86 35.53 36.74 7.48

42.6% 17.70 41.08 40.81 8.92

Net Income 100 Sales

=
=

Operating Pr ofit 100 Sales

Share holder ' s Equity C m om on Shares Net Incom e Comm on Shares

54

55

10.1
10.1.1

LIQUIDITY RATIO
Current Ratio:

It measures the ability of the firm to meet the current debts with currents Assets. OR It shows the short-term debt-paying ability of an organization.

1.2 1.15 1.1 1.05 1 0.95 F.Y. 2005 F.Y. 2006 F.Y. 2007 1.19 1.16 1.04

Interpretation
This means that Askari bank has Rs. 1.19, 1.16 and Rs. 1.04 in its Current Assets to meet its every Rs.1 Current Liabilities in the years 2005, 2006 and 2007 respectively.

Analysis
If we look at the Current Ratio of ABL, we will see a decreasing trend from 2005 towards 2007. In 2005, current ratio is 1.19 (119%); this means that the Bank is in good position to meet its current liabilities with its current assets. In 2006 and 2007 current ratio decreases to 1.16(116%) and 1.04 (104%) respectively. So the Bank is not in a good position to meet its current liabilities with its current assets. It's also said that lower the current ratio, the worst the creditors position because of the lower probability that the debts will be paid when due.

56

10.2. LEVERAGE RATIO 10.2.1Debt-to-Total Asset Ratio:

The Debt to total assets Ratio measures the level of debt in relation to our investment in assets. The Debt Ratio tells us the percent of funds provided by creditors and to what extent our assets protect us from creditors. A low Debt Ratio would indicate that we have sufficient assets to cover our debt load. Creditors and management favor a low Debt Ratio

0.94 0.938 0.936 0.934 0.932 0.93 0.928 0.926 0.924 Series1 F.Y 2007 0.94 F.Y 2008 0.93 F.Y 2009 0.93

Interpretation
This means that for each Rs 1 invested in the Total Assets Rs 0.94, 0.93 and Rs 0.93 have been brought by the creditors during the years 2007, 2008 and 2009 respectively.

Analysis
In 2007, the ratio is 9.4. In 2008 this ratio decreases to 9.3, and remained same in the year 2009 there is a decreasing trend and its a good sign that shows the ability of Askari bank to pay its debt out of its assets. This shows that if high percentage of assets are financial by debt, than higher is the ratio, greater is the financial risk which decreases the creditor's margin of protection. So this ratio should be relatively low because higher debt burden makes creditors less certain of receiving their payment and so as a result they become reluctant of making investment in the Bank.

10.2.1 Debt-to-equity Ratio:

It indicates the extent to which the debt financing is used relative to Equity financing. This ratio is used to determine an entitys long-term debt-paying ability. It helps to determine how well the creditors are protected in case of insolvency of a company. It compares the funds provided by creditors to the funds provided by shareholders.

57

16 14 12

F.Y. 15.9

F.Y.

F.Y.

14.02 13.85

Interpretation
This indicates that for every 1 Rs. of equity (brought by share holders) creditors brought 15.9, 14.02 and 13.85 in the year 2007, 2008 and 2009 respectively.

Analysis
This ratio indicates the proportion of debt to equity being used to finance assets. In 2005 debt to equity ratio is 15.9, which decrease to 14.02 in 2006, where as in 2007 it decreases to 13.85. Creditors would generally like this ratio to be low, because they feel more protected, as lower the ratio the higher the level of the firms financing that is being provided by shareholders and larger the creditors margin of protection. The debt to equity ratio of Askari Bank is too high which shows a great risk for creditors in case of insolvency and also not a good sign for Askari Bank in case of attracting and satisfying the creditors.

10.2.1Total debt-to-fixed asset ratio:

The Debt to Fixed assets Ratio measures the level of debt in relation to our investment in fixed assets. The Debt Ratio tells us the percent of funds provided by creditors and to what extent our fixed assets protect us from creditors. A low Debt Ratio would indicate that we have sufficient assets to cover our debt load. Creditors and management favor a low Debt Ratio 60 40 20 0 F.Y. 42.75 F.Y. 40.67 F.Y. 33.13

58

Interpretation
This means that for each Rs 1 invested in the Fixed Assets of the Bank, Rs 42.75, 40.67 and Rs 33.13 have been brought by the creditors during the years 2007 2008 and 2009respectively.

Analysis
This ratio shows the percentage of fixed assets supported by debts or in other words this ratio defines the proportion of debt contributed in the acquisition of fixed assets. This ratio decreases in the year 2007 i.e. 33.13 as compared to the year 2008, where the ratio was 40.67 which means that the increase in fixed assets is majorly financed by the equity rather then the creditors. How ever this ratio was very high in the year 2005 i.e. 42.75, and decrease in 2009 is a significant change.

10.2.1 Owners Equity-to-total Asset Ratio:

This Ratio measures the percentage of total investment in assets that is financed by the owners. This ratio is often called proprietary ratio or stock holder's ratio. 0.06 0.055 0.05 0.045

F.Y. 0.05

F.Y. 0.06

F.Y. 0.06

Interpretation
It indicates that for every 1 rupee of Asset the contribution by the owner is 0.05, 0.06 and 0.06 in 2007, 2008 and 2009 respectively.

Analysis
In 2007 only 5% of the total assets are financed by the owners equity which means that the rest of 95% are supported by debt. In 2008, 6% and in 2009 again 6% of assets are financed with owners equity. From creditor's points of view, larger is the ratio, the more satisfactory the financial strength of the business is, as owners equity represents the margin of the safety for creditors. In this case, it shows high financial risk and less protection to the creditor. But relatively a decreasing trend.

59

10.2.1 Owners Equity-to-Fixed Asset Ratio:

This Ratio tells us the percent of funds provided by Owner's and to what extent our fixed assets protect us from Owners.

3 2 1 0 F.Y. 2.68 F.Y. 2.9 F.Y. 2.39

Interpretation
This means that for each Rs 1 invested in the Fixed Assets of the Bank, Rs 2.68, 2.9 and Rs 2.39 have been brought by the Owners during the years 2007, 2008 and 2009 respectively.

Analysis
This ratio explains the contribution/of owners fixed assets. Here in 2007, 2.68 of fixed assets being financed by the owners own fund where as in 2008 the contribution from owners side was 2.90 and 2009 this ratio decreases to 2.39. This indicates that owners contribution is very high into fixed assets. Thus it decreases the financial risk and increases the creditor margin of protection.

10.2.6

Time interest earned Ratio:

Time interest earned ratio comes under the scope of coverage analysis we use this ratio to measure capacity /capability of a concern to meet its cost of funds and or current installments out of its EBIT.

60

0.8 0.6 0.4 0.2 0 F.Y. 0.66 F.Y. 0.47 F.Y. 0.26

Analysis
It shows a decreasing trend from 0.47 to 0.26 in 2007 and 2008 respectively. This decreasing trend is a bad sign and indicates shortage of net income over interest. Thus it shows that ABL has decreased time interest earned ratio, as its generating less funds to meet its financial charges, with high coverage ratio. It means you dont have sufficient EBIT to pay your financial charges.

10.3 PROFITABILITY RATIO

10.3.1 Return On Total Assets Ratio:
This Ratio measures the productivity of Assets. It shows the profit earned through the use of all its assets. Or it tells you how many times in a year each s. 1 of your asset is converted into net income, but how to reach a conclusion for this we should be looking into the trend, or past records.
FY2009, 1.47% FY2007, 1.39%

FY2007

FY2008

FY2009

FY2008, 1.35%

Interpretation
The ratio indicates the contribution of Rs. 1 of asset in generating net income that is 1.39, 1.35 and 1.47 in 2007, 2008 and 2009 respectively.

61

Analysis
This ratio shows a down ward movement with 1.39 in 2007, which reduced to 1.35 in 2008 but in 2009 it, showed an upward movement and increased to 1.47. This Ratio is the indicator of profitability of the company and also compares the business performance to industry norms: higher the ratio the greater is the return on assets. Which is the good sign for the company as is the net income to total assets employed is increased, which is attributed to efficiency of management. However, this has to be balanced against such factors as risk, sustainability and reinvestment in business through development cost. ABL has maintained its ROA well above the industry average. However, the decrease in 2009 is only the result of lower margins.

10.3.2 Return on Owners Investment Ratio:

Return on owners investment or return on equity gives the profit earned by an organization through the use of capital supplied by the stockholders. It measures the over all efficiency of firm in managing its total investment in assets and return to its shareholders. Its the primary measure of how well the management is running the company.
FY2009, 21.86% FY2007, 23.50%

FY2008, 20.40%
FY2007 FY2008 FY2009

Interpretation
This means that Askari Bank has been able to grant a return of 23.50%, 20.40% & 21.86% to all shareholders on their equity during, 2007, 2008 & 2009 respectively. It is a high return for shareholders & thus too much attractive for investors. OR The ratio indicates that for every one rupee of owner investment the return is 0.23, 0.20 and 0.21 in the year 2007, 2008 and 2009 respectively.

Analysis
ABL return on equity for the year 2009 is 21.86% which shows strong earning growth and high returns on equity while maintaining a strong financial position. Achieving this objective relies on efficient deployment of capital and other resources, efficient risk management and sound liquidity funding and equity management. But comparatively return on investment is less than the F.A 2005.

62

10.3.3 Gross Profit Margin Ratio:

Gross Profit Margin measures the percent of profits you generate for each dollar of sales.
FY2009, 42.60% FY2007, 51.27%

FY2008, 44.60%
FY2007 FY2008 FY2009

Interpretation
This means that the Askari Bank earned Rs.42.60, 44.60 and Rs. 51.27 as Gross profit for each Rs 100 for 2007, 2008 and 2009 respectively.

Analysis
Its a profitability ratio that has shown a decrease over the year with 42.60% in 2007 as compared to 42.60% in 2008 and 51.27% in 2009. This decreasing trend is a not a healthy sign for management as its the measure of the efficiency of the firms operation. This ratio should be large enough to cover operating and other expenses and to provide an adequate net income.

10.3.4 Net Profit Margin Ratio:

Profit Margin measures the percent of profits you generate for each dollar of sales. Profit Margin reflects your ability to control costs and make a return on your sales. Management is interested in having high profit margins.
FY2009, 17.70%

FY2007, 23.02%

FY2008, 17.86% FY2007

FY2008

FY2009

Interpretation
This means that the Askari bank earned Rs.23.20, 17.86 and Rs. 17.70 as net profit for each Rs 100 for 2007, 2008 and 2009 respectively.

Analysis
Net profit margin measures the proportion of revenue i.e. profit, after taking out all expenses and income taxes. The ratio of net profit margin of Askari Bank shows a decreasing trend. In 2007, it was 23.02% which fall upto 17.86% in 2008 and 17.70% in 2009. This indicates that the Bank is not in good position or not efficiently generating revenues.

63

10.3.5 Operating Profit Margin Ratio:

The amount of operating profit which is one of the most important figure shown in the income statement reveals the profitableness of operations in revenue.

41.08

39.42

F.Y 2007 F.Y 2008 F.Y 2009

35.53

Interpretation
This means that the Askari bank earned Rs.39.42, 35.53 and Rs. 41.08 as net profit for each Rs 100 for 2007, 2008 and 2009 respectively.

Analysis
There are many factors that may bring about variation in operating income from year to year, such as operating expenses, unless compensated for, would affect the amount of operating income. Same situation tends to be true with the Askari bank, its operating expenses has shown an increase of 32% yet it achieved to obtain 41.08% operating profit Margin Ratio in 2008, as compared to 35.53% in 2009.

10.3.6Book Value Per Share:

FY2009, 40.81 FY2007, 56.99

FY2008, 36.74
FY2007 FY2008 FY2009

The Book valve of capital stock is the total of the owners equity as shown by the books. This Ratio has shown increase in 2007, due to increase in owners equity with 40.81 in 2008 as compared to 36.74 in 2009. The greater is the ratio the better it is from the stock holders point of view as they would be willing to invest in stock holders equity however increases as a result of additional issuance of capital stock and accumulation of retained earnings and decreases when capital stock is retired, dividends are declared and losses are incurred.
64

10.3.7Earning Per Share

FY2009, 8.92

FY2007, 13.42

FY2008, 7.48
FY2007 FY2008 FY2009

Its the amount of net income per share and is computed by dividing net income by number of outstanding shares. The more is the EPS, the better its for share holders as they would be willing to invest more in the shares. In 2008 the EPS of Askari bank stands at PKP 8.92 as compared to PKP 7.48 at November.09, 2009. This has shown an increase of 17%.

65

CHAPTER # 11 GRAPHICAL REPRESENTATION OF GROWTH AND LOSS

Balance sheet and income statement are purely the representatives about the performance of an organization. Among these statements following are the figures that shows the performance of Askari Bank during last three years, i.e. 2007, 2008 and 2009 accompanied by there respective charge, that in turn indicates the growth and loss of Askari Bank during these three years.

11.1

KEY OPERATING FIGURES INDICATING GROWTH

F.Y 2007 Rs. in 000 F.Y 2008 Rs. in 000 F.Y 2009 Rs. in 000 3,497,054

AND LOSS OF ABL

Key figures Balances with Other Banks Advances Deposits Borrowings from other Banks Net Assets Share holders equity Mark-up / Interest and discount Cost / Return on Deposit Net markup Income Provision for nonPerforming Advance Operating Expense Operating profit Profit after taxes Change (%age) (52.31%) 0.32% 8.49% 23.54% 9.73% 10.97% 20.21% 24.48% 113.41% 247.51% 46.23% 39.01% 19.15%

5,550,148 64,934,517 118,794,69 0 10,249,977 145,099,90 7 8,587,430 8,780,698 4,278,374 1,552,566 601,992 2,593,817 3,461,073 2,021,996

7,333,002 73,721,324 131,839,28 3 12,321,923 166,033,58 8 11,053,230 12,596,921 6,977,313 2,139,254 1,128,513 3,283,494 4,475,368 2,249,974

73,963,821 143,036,70 7 15,223,319 182,171,88 5 12,265,987 15,143,241 8,685,624 4,565,496 3,921,741 4,801,587 6,221,526 2,681,012

64

Earning per share (in rupees)

13.42

7.48

8.92

19.25%

65

11.2

GRAPHICAL

REPRESENTATION

AND

INTERPRETATION
Graphical Representation and interpretation of some key operating figures that shows the growth and loss of Askari Bank during the year 2007, 2008 and 2009 are as follows: 11.2.1 Balances with other Banks:

8,000,000 6,000,000 4,000,000 2,000,000 0 2007 5,550,148 2008 7,333,002 Years 2009 3,497,054

Balance with other Banks showed (52.31%) change in 2007 as compared to 2008, Thus there was a positive change in the year 2009 while a negative change in the year 2009. 11.2.2 Advances:
75000000 Rs. in ''000'' 70000000 65000000 60000000 2007 64934517 2008 73721324 Years 2009 73963821

Advance increased to Rs73963821000 from Rs. 73721324000. This increase of 0.32% was achieved through a focused approach in a challenging market where very few quality credit opportunities were chased by all Banks and financial institution with excess liquidity, mainly by undercutting each other margins.

Rs. in ''000'''

66

11.2.3Deposits:
200000000 Rs. in ''000''' 100000000 0

2007 118794690

2008 131839283 Years

2009 143036707

Deposits grew up by 8.49% in 2007 as compared to 2008. In 2009, the deposits amounted to Rs.131839283000 which rose to Rs.143036707000 in 2007. 11.2.4Borrowings from other Banks:
20000000 Rs. in ''000'' 10000000 0

2007 10249977

2008 12321923 Years

2009 15223319

Borrowing from other Banks has shown a remarkable change of 23.54% in the year 2007. It was rupees 12321923000 in 2008, which rose up to Rs.15223319000 the year 2009. This increase was majorly due to the borrowing from financial institution within the Pakistan. 11.2.5Net Assets:

200000000 150000000

Rs. in ''000''
100000000 50000000 0 2007 145099907 2008 166033588 Years 2009 182171885

67

During the year, assets grew by a healthy 9.73%, financed mainly by customer deposits that increased by 8.49%. Thus showing a rapid change with net assets standing at Rs.182171885000 in 2008 as compared to Rs.166033588000 in 2009. 11.2.6Share Holders Equity:
15000000 Rs. in ''000'' 10000000 5000000 0

2007 8587430

2008 11053230 Years

2009 12265987

Share holders equity increased by 10.97% in 2007 as compared to 2008. It was Rs. 11053230000 in 2009 and rose to Rs. 12265987000 2009. This increase primarily resulted from net earnings. 11.2.7Mark-up / interest and discount:
20000000 Rs. in ''000'' 15000000 10000000 5000000 0 2007 8780698 2008 12596921 Years 2009 15143241

Mark-up / interest and discount showed on upward movement with 20.21% increase in 2007. They amounted to be Rs. 12596921000 in 2008, which increased to Rs. 15143241000 in 2009.

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11.2.8Cost / Return on deposit:

10000000 Rs. in''000''

5000000

2007 4278374

2008 6977313 Years

2009 8685624

Cost / return on deposit increased by 24.48% in 2007. This was Rs. 6977313000 in 2008, which increased to Rs.8685624000 in 2009. This change was majorly due to the markup / return / interest expensed on deposits. 11.2.9 Net mark-up income:
5000000 4000000 Rs. in ''000'' 3000000 2000000 1000000 0 2007 1552566 2008 2139254 Years 2009 4565496

Net mark up income grew up by 113.41% with Rs.2139254000 in 2007 and Rs.4565496000 in 2008, thus representing a positive change of 113.41% in the year 2009 and is the result of increase in earning assets. 11.2.10 Provisions for non-performing advances:
5000000 Rs. in ''000'' 4000000 3000000 2000000 1000000 0 2007 601992 2008 1128513 Years 2009 3921741

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Provisions for non-performance advances increased to Rs.3921741000 in 2007 against Rs.1128513000 in 2008. This made a change of 247.51%. 11.2.11 Operating Expense
6000000 Rs. in million 4000000 2000000 0 2007 2593817 2008 3283494 Years 2009 4801587

In the year 2007, operating expense was Rs.3283494000 which rose to Rs.4801587000 in 2008, thus representing an increase of 46.23%. This increase in operating expense reflects higher staff cost from expansion of branch credit cards and Retail Banking operations. Other operating expenses also grew correspondingly mainly due to new branches and continued investment in information technology to maintain their position as leader in EBanking in the country. 11.2.12 Operating Profit:
10000000 Rs. in ''000'' 5000000 0

2007 3461073

2008 4475368 Years

2009 6221526

During the year, the Bank achieved a millstone by posting an operating profit (before provision and tax) of Rs.6221526000 as compared to Rs.4475368000 2007, there by registering an increase of 39.01% in a scenario where Banks profitability was severely affected by an all-round reduction in market rates and spreads. Increased customer focus, prudent business practices, deft management of assets and liabilities, effective control over operating expenses, introduction of market oriented products and strategic expansion of network enabled this performance.

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11.2.13

Profit After Taxes:

3000000 2000000 1000000 0

2007 2021996

2008 2249974 Years

2009 2681012

Profit after taxes represents the net profit of an organization. In this case it grew up by 19.15%, which is shown by the fact that in the year 2005 it was Rs. 2021996000, which increases to Rs. 2249974000 and further to Rs. 2681012000 in the year 2007 and 2008, representing an increase of net income by 19.15%. 11.2.14 Earning Per Share:
Earning per share (in rupees) 20 10 0 2007 13.42 2008 7.48 Years 2009 8.92

Earning per share is the amount of net income (earnings) per share. Askari Banks EPS for November. 09, 2009 was PKR 8.92 which increased by 19.25% over the last year from PKR 7.48. It has been able to obtain a higher then market average EPS year on year.

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CHAPTER # 12 SWOT ANALYSIS

12.1 SWOT ANALYSIS CONCEPT
SWOT is an acronym in which S stands for strengths W stand for weaknesses O stands for opportunities T stands for threats SWOT analysis consists sizing up a firms internal strengths and weaknesses and its external opportunities and threats. It is an easy tool to get a quick overview of a firms strategic situation. These factors tend to drive the organization through its ups and downs, success and failure. SWOT analysis is grounded on the principle that strategy must produce a strong fit between a companys internal capability (its strengths and weaknesses) and its external situation (its opportunities and threats). SWOT approach suggests that the major issues facing an organization can be isolated through careful analysis of each of these four elements. Strategies can then be formulated to address these issues. The relative importance of these issues needs to be determined and then potential impact on strategy formulation needs to be evaluated.

12.2

SWOT ANALYSIS OF ASKARI BANK LIMITED

As SWOT abbreviates, the indicators which results in the Strengths, Weaknesses, Opportunities, and Threats, that affects the future operations of any organization. To confront them there are certain strategic factors, which are undertaken to evaluate the present and future performance of any organization. With this background Askari Bank Limited Bank Ltd., as a whole has been sorted out for its strengths, weaknesses, opportunities and threats confronted. 12.2.1 Strengths:

Strength is something a company is good as doing or a characteristic that gives it an important capability. A strength can be a skill, a competence, a particular organizational resources or competitive asset or something the company has done that parts it in a position

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of market advantage (like having a better product, stronger name recognition, superior technology or better customer service). It defines the positive aspects, which goes with Bank. Due to these points, the Bank is running its trend towards growth. The points followed are as: 1. In a short span period, the Bank has entered the line of largest operating Bank in the country. 2. 3. 4. Rapid spreading of branches all over Pakistan, now operating with 46 branches. Having large International Correspondent Network. Offering latest technology in Banking, as SWIFT, on-line Banking, ATM services, and Web Site service. 5. 6.
7. 8.

Having more deposits in comparison to other Commercial Banks in Pakistan. Offering modern Banking tools as the Retail Banking and Corporate Banking. 1st Bank to offer Internet Banking Service. 1st Bank to offer E-commerce solution. Well equipped computerized system, through out the country and abroad. Branches available at the facility of customers all over the country. The Bank operates under experienced and high-class management. Offering product innovation day by day. Encourages female staff. Serve both army officials and civilian. Having qualified and trained staff. It has a large base of employees. ASKARI BANK LIMITED has the ability to work under stress and tough completion and under conditions sneaked out with success.

9. 10. 11. 12. 13. 14. 15. 16. 17.

18. 19. 20. 21.

Offers handsome salary and benefits to satisfy its employees. Its the Bank with lowest employee turn over rate. Serving the locals as well as people abroad people with all Banking services. To enhance deposits, offers attractive mark-up rates.

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22. Bank. 23. 24.

To benefit the lower class offer schemes to generate profits for both customer and

Gives prior value to its customers. ASKARI BANK LIMITED, deals in credit cards, debt cards, offers travelers cheques of all types of facilitate its local and foreigner customers.

25. 26.

Also provide on-lease facilities especially in automobiles. ASKARI BANK LIMITED, with its modern techniques also facilitates its employees to serve on modern lines.

27.
28.

Offers a range of products to enhance Banking. Its the 1st Bank with nation-wide ATM network. Making investments to be incurred on staff, pertaining credit cards business to new branches, new retail Banking products and management training programme to enhance the income generating capacity of the Bank.

29.

30.

Having a credit division responsible for efficient and effective identification, control and management of credit risk, through sound and prudent lending policies.

31. 32.

Having a leadership position in Trade Finance Area. Askari Bank Limited Bank Ltd., has its own Web page by askaribank.com.pk thus offering Internet Banking facilities to their valued customer.

33.

1st Bank to offer on-line real-time Banking on a countrywide basis. For past 4 years, ASKARI BANK LIMITED have received prizes from the South Asian Federation of Accountants for the best-presented annual accounts, for the financial sectors, in SAARC region.

34.

35.

ASKARI BANK LIMITED have structured and syndicated financing arrangements, provided working capital and balancing modernization replacement (BMR) facilities and financed international trade.

36.

Provides small business loans, cash management services and developed innovative investment and loan products for individual savers and households.

37.

Provides most modern and technologically advanced services to its 250,000 relationships.

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38.

ASKARI BANK LIMITED have made useful contributions in areas of sport, culture, poverty alleviation, health and medical science, education and scientific research.

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12.2.2

Weaknesses:

Weakness is something a company lacks or does poorly or a condition that puts it at a disadvantage. A weakness can be strategically important or not depending on how much it matters in the competitive battle the company is in. Weakness in any organization dont mean that the organization lack administrative and operational functioning. It simply indicates the loopholes. These needs to be filled in and covering their up for effective and efficient future. ASKARI BANK LIMITED also has some weak sights as: 1. 2. Major influence of army officials. Negligence on part of merit as a criterion towards selection and promotion of employees. 3. 4. 5. 6. 7. 8. 9. Still the products offered are in a narrow range, alternatives are easily found. High mark-up rates, thus discourages the middle class investor. At the lower level of management, no upward communication is there. No motivational strategies for employees are found. Most of the branches are either over staffed or are either understaffed. No advertising for new posts. Salary distinction, as the official staff is offered while the clerical staff is under wage ratio. 10. Though equipped with latest technology, still most of the branches lack the facilities such as ATM facilities. 11.
12.

Most of the branches lack IT professionals. Present appraisal system found to be quite ineffective, as most of the employees are not satisfied.

13. 14. 15. 16. 17.

Lengthy process of issuing credit cards. Most of the branches lack marketing department. Having the upper hand of influential and authorities. No clear feed back system from employees. Promotion for products is limited to big cities.

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12.2.3

Opportunities:

Opportunities are a big factor in shaping a companys strategy. The prevailing and emerging industry opportunities most relevant to a particular company are those in which the company has a competitive advantage or those that offer important avenues for growth. There are the means and ways, provident to any organization, in order to straighten out it loopholes. These are to be recognized and matched with the prevailing circumstances. 1. 2. 3. To facilitate the customers, the Banking hours are to be increased. Products with attractive packages and incentives are providing along. A Champaign with marketing background people are taken in and set to make local and international promotion. 4. It should market its products both nationally and internationally though different channels of media. 5. 6. Balance should be there in staffing of employees. Fresh graduates having administrative, commerce and computer technology backgrounds are to be taken in. 7. 8. ASKARI BANK LIMITED at every branch should install an ATM machine. Investment packages for Pakistanis living abroad to attract their investments in Pakistan. 9. 10. 11. 12. Boosting its research and development specialists abroad for a broader viewpoint. Army influence should be minimized. Competent staff should be hired, trained and mentioned by offering different benefits. Reducing the clerical staff in order to provide them with reasonable salary and allowances. 13. 14. Lowering the credit cards rates to lower income groups to enhance the sale rate. At the branch level, there should be manager subordinate direct communication system, to avoid any misconception and also to have efficient output. 15. 16. The facilities with which the Bank is known should be provided to all of the branches. Launching the Telephoning Banking Service through local telephone exchange.

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17.

Lowering the installment rates on automobiles and land, as to attract the middle class to take benefit.

18.

Internal audit is to conduct two times a month, as to reduce errors and mishaps in Banking operations.

19.

The Bank can go towards providing loan to Agriculture sector. Thus boosting the economy and also paving towards new Banking sites.

20.

Being a private Bank, ASKARI BANK LIMITED can avail more opportunities than any other Bank, it can support the army families on Commercial bases.

21.

With the available competent and specialized computer technocrats, the present system can be regenerated.

22.

Experienced technocrats in respective Banking practice are to be invited and seek their advice for better operations.

23.

At many branch areas, the local markets are quite weak to support the importers and exporters. So it trade facilities, at nominal charges are providing as compare to other Banks it can help in boosting the foreign trade business for the Bank.

24.

Providing Merchant-Banking facilities in other important cities as in Lahore, Faisalabad, Peshawar, Quetta like cities.

25. 26. 27.

Before managing a conflict its important to identify it. Encourage supportive climate. Though analysis should be made regarding, where addition of staff is needed, but care must be taken because over burdened employees can prove to be a great menace to the efficiency of any organization. This should be accomplished by the process of job analysis, job description job specification, and proper job evaluation.

28. 29.

Duties and responsibilities should always be defined at every level. ASKARI BANK LIMITED should make effort to avoid favoritism so to motivate employees.

30.

Job rotation should be given attention, which is an alternative to job specialization that involves systematically moving of employees from one job to another.

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12.2.4

Threats:

Threats can stem from the emergence of cheaper technologies. The introduction of new or better products by rivals the only of low cost foreign competitions into a companys market stronghold new regulations that are more burdensome to a company than to its competitors, vulnerability to a rise in interest rates. The potential of a hostile take-over, unfavorable democratic shifts, un-affordable shifts in foreign exchange rates, political un stability in a foreign country where the company has facilities and the like. These indicate the pinch points, the edges after which the production and profitability margin of any organization hampers. These are the obstacles in the external environment. Also provide opportunity to set Bank certain future strategies to face the threats. Similar obstacles are found against the Banking practice of ASKARI BANK LIMITED. 1. 2. 3. 4. 5. 6. 7. Increase in growth of other and foreign Banks in the country. Uncertainty in economy, a draw back for investors. Political influence and their vested interest. Due to inflation reduction in saving accounts. Rapid downsizing, reducing people confidence in private Banks. Rapid rate of global technology and slow pace of acquiring them. Low trend of new generation towards Banking, as being a stringent and nondynamic profession. 8. 9. 10. Expensive modern technology. Unstable political and economic conditions. Raising trend of interest free Banking.

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CHAPTER # 13 FINDINGS AND RECOMMENDATIONS

FINDINGS
My findings are based on eight weeks internship at Askari Bank Limited Bank Chowk Yadgar Branch. The observations during my stay lead to the following findings and recommendations. Performance Oriented Environment: Environment of the Bank is very conductive, cooperative and goal oriented which helps in attaining efficiency. The manager has an effective control over the staff. Branch Network: The branch network of ASKARI BANK LIMITED has only 46 branches which of course are less as compared to its competitors. No doubt the branch network has shown a substantial increase when compared with the past few years. The business of the Bank is reduced because of this limited network. Branch Spacing: The spacing of the branch really requires expansion. The employees are placed very close to each other. Customers also have to suffer a lot due to less space. If a lot of customers come to the Bank at the same time, the Bank gives a look of a stock exchange. Credit Rating: During the year, the Pakistan Credit Rating Agency (PACRA) upgraded the Banks Long Term entity rating to AA, while maintains the Short Term Rating at A1+ (The highest possible in the Category). The Bank has also got Best Bank in Pakistan Award by Global Finance, which is an American Magazine. On Line Banking: The worlds Banking system is converting to the on-line Banking. In Pakistan ASKARI BANK LIMITED is the first Bank to start on line Banking this facility enable the customers to operate his account from any outlet of ASKARI BANK LIMITED in the country. Marketing: The Bank is a part of a service industry so its marketing strategies are customer oriented. The Banks marketing moves are in line with the their competitors. Whenever a new product is launched proper strategy is followed so that the prospective customers of the Bank can know about the new product. Advertisements are placed on the television, newspapers, magazines etc. The Bank issues a newsletter in which the achievements of the Bank are mentioned. These newsletters do tell something about the new products launched and to be launched by the Bank.

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ATM: The ATM present at the ASKARI BANK LIMITED is located outside the building of the Bank. Its in the open and not enclosed in a cabin. The ATM works on a card reader system, which is very sensitive to dust and moisture. Even a slight amount of dust and moisture can cause a problem in card reading system. There is also lack of privacy for the customer to make their transaction. IT Staff: There is lack of IT personnel in the Bank. Just one person is assigned to take care of the working, maintenance and reports generation. The lack of the IT personnel has also caused a considerable workload for the IT coordinator. Long working hours exceed the regular Banking hours has become a routine for the IT coordinator. Lack of Technical Expertise: At ASKARI BANK LIMITED, Peshawar a complex mix of hardware and software is installed which needs technical staff for their maintenance to keep them working efficiently. But at present there is lack of technical expertise. In case of a major technical problem faced, the head office Karachi is contacted which causes a considerable delay in the working. Importance of Employees Development: The employees of the Bank are given a fair chance to develop their careers. The Bank encourages its employee to improve their education, seminars and training course are arranged. These courses and seminars improve their personnel career. Salary and Rewards: The employees are satisfied with the pay structure of the Bank. Reward system is established to keep the employees motivated. The employees showing good performance are given cash rewards, bonuses and increments. These rewards also pay an important role to keep the employees motivated in future. Combine Training Institution: Although the Bank is spending a lot of money on Human resources development but it should take steps, to make permanent arrangement for creating a source that may provide them with trained manpower as and when required. Research to find out peoples need: ASKARI BANK LIMITED is a leading Bank but it is not conducting research in order to find out needs, and attitude of the people towards the Bank. Favoritism: The Bank is suffering from the problem of favoritism. Staff is selected not purely on merit basis but their references from the high army officials are given preference.

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RECOMMENDATIONS
Askari Bank Limited Bank, a prestigious name in todays modern Banking. But being an organization run by human, it needs some remedial actions. With concern loopholes, Certain corrective suggestions and recommendations have been given. These are as follows: Full Automation of the branch: Full automation of the branch is required for the betterment of the operation of ASKARI BANK LIMITED Chowk Yadgar Branch i.e an extensive computer network is required. Because there is excessive paper work in the Bank, if the computerized network is introduced in the Bank it will reduce the excessive paper work which in turn will reduce the burden on the Bank employees. Latest operating system: For a good reputation its important to have the latest operating system available in the market, which not only fulfills its needs but also improves the working of efficiency of the Banking activities. Windows 98 is on the edge of being out dated in its function and expertise. So it should be replaced by new windows 2000 server. Windows 2000 has more power to support large volume of data, and is easy to install as well. It has advanced plug and play system, being more reliable core operating system it also provides support to the new networks, which presents a strong base for advanced web base application. Communication System: This system makes management possible, and helps in selection, appraisal, and training of the employees. It is to be upward and down ward communication. Thus help to get productive feed back. Secondly there should be two-way communication between branches and main office. Although satellite communication is very good but due to power failure, weather other or dish movement the communication can be disrupted. Also alternate path using dial-up networking through PTCL lease lines is very unreliable. The system recommended is optic fiber connection. It is under ground so its not effected by weather, it provides a multiple channel for communication. Optic fibers are found to be fast, efficient and effective as well. Marketing Tools: In order to promote any product, service, or even an organization it self, its necessary to have marketing tools. These tools are either print media, electronic media or marketing staff. ASKARI BANK LIMITED do realize the importance of their marketing tools but it should put more emphasis on this area. The Bank should hire certain people, who can make promotion to the Bank, by visiting influential area would be very much useful. Even print media can be used, either by brochures, or contacting the business. Magazines can bring their products on broad scale. Television can also be used, as a biggest and vast source for promotion of any product or service. Askari Bank can take help from various institutes or advertising campaigns to arrange for its promotion, more easily can be through a sponsor agency. And building of such agency which

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serves the purpose and marketing the Bank products both locally and internationally along with the use of print media. ATM Arrangements: To increase the number of outlets of ATMs, ASKARI BANK LIMITED has made arrangements with HBL, but this should be with other leading Banks as well, so that the customer can enjoy this facility more and more. Proper maintenance of ATMs should also be pursued. Mark-Up Changes: This is the main tool to make advances at flexible routine and to attract customers as to and earn profits. Both for maintaining accounts and for lending loans. If the mark up rates on holding accounts are kept at a hand some rate. Then this will facilitate the Bank to have more deposits to keen out and there to earn profit on normal rates. It will also help the foreign investment to crawl in, thus favoring both the profitability of the Bank as well as the economy. Broad Network of Branches: The ASKARI BANK LIMITED should extend its existing branch network through out the country. To attain customer loyalty of to provide better access for the customer, which is very necessary for a growing service organization, maximum branches are to be opened at potential business places through out the country. This gradual expansion is necessary, as it will fetch new business and will provide customer a better choice. Suitable Spacing: The over all spacing of the branch requires expansion. The interconnected departments should be placed together. The flow of work should be followed while space is given to the departments. Customer spacing should be expanded so that the routine work should not be hampered and continues in normal fashion. Research To Find Out Peoples Needs: After fixed period of time research should be conducted in order to find out needs attitude of people towards the Bank.

Combine Training Institution: As ASKARI BANK LIMITED is a leading Bank in the country and a pretty good number of Commercial Banks both in the public and private sectors, with wide network of branches are working in Pakistan. Askari Bank Limited Bank therefore, join hands to make permanent arrangement for creating a source that may provide them with trained manpower as and when required. Selection On Merit: When an organization hires employees it goes through a certain selection procedure. This process takes cost and time. If the selection is wrong, then it becomes burden on the finances of the Bank. The Bank should strictly follow merit policy. Any sort of favoritism or nepotism

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should be avoided. The persons who are suitable for the Bank should be selected purely on merit because it has been observed that being an Army Welfare Bank the say of army is mostly preferred. But it should not be the case. First priority should always be merit, based on educational background and skills; secondly even if such influential cant be avoided then it should be observed that the recommended person is of certain productive capacity to the Bank. Other wise the prestige of the Bank can be at stake. Competent Staff: Certain officers are either too good for the job while the others lack the quality to a great extent. This brings unbalance in the functioning of the departments and causes job stress. People with abilities and certain know how are to be given a job they are competent for. Otherwise adjustments are to be made. Job Rotation: It is an important aspect for any employee to get satisfied with the job. It brings experience, equal distribution of work and providing the employees a suitable environment to work for better output. While at the branch, this trend is very slow and is also uneven. Job rotation should be done on yearly bases, as once a year the departments are to be given new officers from the other departments, as for them to gain experience and increase their know how. This is also to be followed with the choice of the officers as well. Prevention of Job Stress: To prevent the job stress and anxiety the working environment of the Bank has to be very friendly. There should be recognition for good work and employees should be considered part of what is going on Job Security, good wages, promotion and growth opportunity should be provided to reduce anxiety. Staff Performance Appraisal: This practice provides various opportunities towards the management as to work out their problems related to their job. This also evolves the participation of the employees in the management. For this purpose the manager is to conduct a weekly staff gathering. Where he is to discuss the weekly functioning and the problems related to them. This will help the manager to evaluate the participation of the staff is Bank activities. And will also help to make promotions and provide incentives to them. Discipline: Good Organization follows discipline. Absenteeism is not a good practice. It should be discouraged. Proper procedures should be adopted and implemented to check the attendance of the employees and discourage the mal practice. Reengineering The System: For the manufacturing of this system new knowledge or skills of employees become the human inputs. Therefore profits, surplus of income over costs, reinvestment in cash and capital goods needs new managerial knowledge. New changes can be brought in through value of engineering the service and through introducing quality circles. This is to provide ideas and suggestions through people and research.

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Separate Account opening department: Deposit Dept. services the function and maintaining accounts and also the opening of accounts. This dual service has over burdened the deposit department. As account opening form needs care and attention. So an individual with full concentration can serves the job. For this, either one of the deposit officer (there being two) serves the purpose. As accounts opening is a daily activity but with less number. So the load can be shared later on after Bank timings. This can avoid mistakes and errors.

Brochures for the Departments: These are quite helpful explain the elements and products each department is offering besides their actual functioning. If small size pamphlets are issued on behalf of the departments, to give recent development in their products and their details and these brochures should have both the languages English and Urdu, to facilitate the local people.

Equal Distribution of facilities to All Branches: No doubt that ASKARI BANK LIMITED has shown its success in very few years, with now offering dozens of facilities but its not enough. The facilities with which the Bank is known should also to be provided to the branches. Before going for any branch, along with the economic market, if the infrastructure facilities and the latest equipment linked with the Bank are provided firstly, then it will help the branch to boost up its activities very soon. Such like the Building, Internet connection, On-line service, qualified staff and above of all a marketing staff send before to make the market familiar with their products.

Introducing Fresh Blood and Minds: With intellectuals from various aspects of the society, the Bank has proven to run at a successful pace. But only experience cant be counted in. Fresh minds from various academic institutes are to be taken in. Their skills are to be judged through appropriate selection criteria set. Not just written tests, but also asking the institutions for their best recommendations, especially from administration, commerce, economic and information technology areas. This will generate new ideas and concepts to the Banking business. Avoiding Defensive Climate and Encourage Supportive Climate: The climate in which conflict is managed is important. Defensive climate, which is characterized by these qualities, should be prevented: Evaluation: judging and criticizing other group members. Control: imposing the will of one group member on the others. Strategy: using hidden agendas.
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 Neutrality: demonstrating indifference and lack of commitment. Superiority: expressing dominance. Group should foster a supportive climate, marked by these traits: Description: presenting ideas or opinions. Problem orientation: focusing attention on the task. Spontaneity: communicating openly and honestly. Empathy: understanding another persons thoughts. Equality: asking for opinions. Provisionalism: expressing willingness to listen the ideas of others. The manager should arrange an informal gathering and bring out the causes of conflict. Presentation or seminar can be arranged to make the employees understand of the harmful effects of the conflicts, and to amplify the coordination and team spirit among different departments of the Bank. Training programs can be arranged and offered to the employees who are behind in education to prevent any unbalance. The Bank should have uniformity in their hiring procedures to prevent these conflicts. In addition to this manager should try to match the personalities and work habits of the employees to avoid conflict among the individuals. Training program for internees and orientation for internees: The Bank should organize an intern-training program to make the best possible outcome from the interns. Interns in the Bank face many problems due to various reasons. In short, the Bank lacks an intern-training program. So before designing an interns-training program, few drawbacks need prior attention. The Bank can handle interns only if they are few in number and the department is not overcrowded with them. It makes the employees in a state of confusion and frustration as they cannot assign work to every intern and explain them what is required of them. It takes time to explain the processing of each and every product that the department deals in. The employees are justified in their own place and cannot be blamed as they are already under tension due to heavy workload. Orientation covers the activities in introducing the organization. After selecting the interns, they should be given a formal orientation of the Bank. This can only be possible if they take group of intern at a particular time. When the next group comes same process should be followed. A brief orientation can be given by any employees discussing the history, mission, the Banks role and importance, organization structure, various products, department etc. this will give an insight to the interns to better understand the interdependency and the processing of the Bank. It would be a general out look. Moreover, necessary handout brochures etc can be given to the internees.

Arrangement of a Proper Eating Place ASKARI BANK LIMITED lacks a proper eating-place, for its employees: therefore most of the officers have their lunch at their own stations tables. No doubt ASKARI BANK LIMITED is a customer-restricted area. But still the professionalism of an ASKARI BANK

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LIMITED is challenged due to the lack of an appropriate eating-place; therefore ASKARI BANK LIMITED must have a separate area for this purpose.

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CHAPTER # 14 CONCLUDING OBSERVATIONS

Performance of Banking sector in general, has remained depressed due to unpredictable economic situation prevailing in the country. Competition among various Banks remained very tough; ASKARI BANK LIMITED continues to grow despite economic stagnation in the country. The Bank has successfully penetrated key markets through branch expansion and business diversification. System of regional management is in place to ensure greater thrust and improvement productivity. They are alive to the change and growth-taking place in the global financial markets the opportunities and threats endangered by greater deregulation, and the increasing customer expectations. These provide them the impetus to make the best use of available resources, including modern technology, to meet the challenges ahead. ASKARI BANK LIMITED has been growing at varying pace in every aspect of Banking. Its employees, from top to bottom, are committed and strive hard to achieve the over all objectives of the Bank. They are constantly striving to improve their skill and knowledge regarding new development in the Banking sector. Efforts are directed to provide prompt and rapid services to its customers. Lectures, seminars and short courses are arranged at regular intervals through which employees are given the opportunity to develop their skills and broaden their knowledge. ASKARI BANK LIMITED offers considerable benefits for its customers through expertise of its staff around the country, who offer highly competitive and diverse services. Over 46 branches are working in Pakistan Management in each branch are the nationals of Pakistan. Askari Bank Limited Bank is leading private sector Bank, so it should join hand with the Commercial Bank for the improvement of Banking sector in Pakistan. They should conduct research of find out peoples needs and attitude. Despite of the fact that profitability of the Bank increasing day by day. There is still considered room for improvements no doubt that with the passage of time, improving managerial polices and full introduction of modern techniques, the Bank has planned to further enhanced its activities in future. New millennium is full of opportunities and threats in the field of Banking. It is vital to identify these opportunities in order to benefit from them. At the same time concrete steps are required to meet the challenges of the new century.

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