Internship Report

ACBL Internship Report

INTRODUCTION

ACCORDING 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

otherwise.”

“Banking companies mean companies which transact the business

of banking in Pakistan.”

COMMERCIAL BANK

“The commercial bank receives surplus money from the public and

lend to others who needs funds. Bank collects cheque, bills of

exchange etc from customers. It transfers money from one place to

another. It provides agency and general utility services. Purpose of

commercial bank is to earn profit.”

IBA University of the Punjab Lahore 1


HISTORY OF ASKARI COMMERCIAL BANK

The banking sector has witnessed a dramatic change during

the last ten years with the development of Askari Bank, which is not

only redefining priorities and focus of the banks, but also

threatening the domination of traditional players.

The story begins with the incorporation of Askari Commercial

Bank limited in Pakistan on October 09, 1991, Askari Bank

Commenced (begin) to operations in April 1992, as a public limited

company. 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 target market share amongst the view

banks, Askari has provided good value to its shareholders. Its share

price has remained approximately 12% higher than the average

share price of quoted banks during the last four years.

Askari Bank has expanded into a nation wide presence of 83

Branches, and an Offshore Banking Unit in Bahrain. A shared

network of over 800 online ATMs covering all major cities in

Pakistan supports the delivery channels for customer service. As on

December 31, 2004, the Bank had equity of Rs. 6.016 billion and

total assets of Rs. 107.168 billion, with over 475,000 banking

customers, serviced by a total staff of 2,118.

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 as to



evolve an outward-looking strategy in terms of Askari market

emphasis. As a result, Askari developed a geographically diversified

assets base instead of a concentration and heavy reliance on

business in the major commercial centers of Karachi and Lahore,

where most other banks have their operational Head offices.

MOTIVATION OF ASKARI COMMERCIAL BANK

While successfully penetrating the key domestic markets

through strategic expansion and business diversification they

remain alive to the challenge emanating from the development in

the global financial markets; the opportunities and threats

engendered by greater deregulation and increased customer

expectations. These provide them the impetus (moment) to make

the best use of available resources, including modern technologies,

to meet the challenges ahead.

Historically, Askari’s core marketing focus for its asset base

has been the middle and upper middle business houses (including

wholesalers and manufacturers) operating in the large urban

centers of Pakistan, which are primarily oriented towards foreign

trade. This segment constitutes significant revenues to the bank.

The liability side remains focused on the middle and upper middle

class retired and serving government and armed forces personal

and mid-size business houses.

Their corporate banking division was established in April 1999

with the primary focus on servicing large corporate and multi-

national companies (MNCs). Benefiting from the bank’s growing

balance sheet size, this division B now gaining momentum and their

long-term aim D to develop it into an independent.



Strategic business unit (SBU)… This would the bank to

acquire, develop and specialized abilities, and enhance their focus

on serving the emerging needs of the corporate clients.

With this branch network of 75 and further expected increase

in future, the ATM’s facility and internet Banking, Askari Bank’s

reach is ever increasing. In recognition of this reach, they have set

up a retail-banking group in July 2000, the mobile ATM’s facility is

first time started by Askari commercial bank in 2005 dedicated to

serving the urban consumer market; Askari is committed to

aggressively market this segment. The strategy is to provide their

customers with a basket of innovative products to meet their

varying needs.

Askari Commercial Bank is the only Private Sector bank that has

been approved by the World Bank as a Participating Financial

Institution for the US$ 200 million Line of Credit sanctioned

(authorized) to the Government of Pakistan for the Financial Sector

Deepening and Intermediation Project.

Askari's emphasis on further broadening its core foreign trade

business translated into handling a higher volume of Export and

Import business of Rs. 36 billion registering a growth of 42% over

the pervious year. This enhanced foreign trade business was

secured due to excellent customer services and efficient

international settlement arrangements with our correspondent

banks.

Askari Bank is operating throughout Pakistan. Most of the branches

are connected through our State of the Art, On-line Communications

Network, which gives the bank a competitive edge in providing

instant services to its clientele. We also offer direct access to the

latest Foreign Exchange Rates through our Online Communications.



FIELD OF ACTIVITIES

THE BANK BASICALLY WORKS UNDER THREE GROUPS NAMED AS

1) Corporate banking and financial institutions group

2) Retail banking group

3) Operations and credit group.



1-CORPORATE BANKING AND FINANCIAL INSTITUTION

GROUP

This Group is responsible for serving the needs of large corporate

clients in public and private sector, managing correspondent

banking relationships and undertaking money market transactions.

The Group is organized in three divisions namely

Corporate and Merchant Banking Division,

International Division

And Treasury.

CORPORATE AND MERCHANT BANKING DIVISION

This Division is engaged in provision of financing facilities to large

corporate clients including multinationals. Principal activities include

syndicated loans, guarantees, and working capital finance,

underwriting and advisory services. The Division has played an

important role in providing development finance for the

modernization and expansion of the country's core industries. Credit

risk is well diversified with exposures in sectors like fuel & energy,

chemicals, textiles and fertilizers. Three units have been set-up at

Karachi, Lahore and Rawalpindi for sales and operations, which are

supported by centralized marketing from the Head Office.

INTERNATIONAL DIVISION

Mainly responsible for managing correspondent banking

relationships and planning overseas operations, the Division plays a

vital role in extending foreign trade transactions support to the

branches. The Bank became a member of SWIFT in the Year 2000

and is also a contributor to the equity of Pakistan Export Finance

Guarantee Agency Ltd With a network of 167 correspondents

spread over 95 countries worldwide, the Bank continued to reinforce



its leadership position in trade finance, transacting business of over

Rs. 70 billion, during this year. Through the concerted efforts of this

Division, we are a participating Bank under the "Pakistan Trade

Enhancement.

Facility" of the International Finance Corporation, and our customers

are entitled to avail of the "Political Risk Guarantees Scheme"

extended by the Asian Development Bank.

TREASURY

Responsible for managing Bank’s liquidity and foreign exchange

transactions, our Treasury in one of the most active in the market.

Through reported transactions, purchase of Government paper and

foreign exchange trading, the Division adds substantially to the

Bank's sustained earnings.

2-RETAIL BANKING GROUP

Retail banking group was formed in 2000, this group is responsible

for serving the needs of the retail market. Focusing on individual

consumers and small and medium size enterprises, for purpose of

product differentiation, the group is managed in three business

arms.

Investments products unit,

Asset products unit,

And the credit cards division.

INVESTMENT PRODUCTS UNIT

Responsible for developing and managing brands which serve the

investment needs of the consumer market, this unit focuses on

deposit mobilization, provision of value added services based on



modern technology and undertaking the centralized marketing and

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

acquisition business and has signed-up over 300 merchants nation-

wide which offers shopping discounts to the Bank's Privilege Card

members.

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

handsome monthly profits, accidental insurance cover, partial

liquidity on all time deposits and free Privilege Card membership.

The Unit is also administering the sales and distribution, including

arrangement for strategic partnership alliances for Askari- i-Net

Banking, the first internet banking in Pakistan, which allows routine

banking transactions from any where in the World, round the clock,

over the internet.

ASSET PRODUCTS UNIT

This Unit is engaged in the development and management of retail

credit schemes. The consumer market in Pakistan has not only

grows exponentially over the last decade or so, but the needs of

this segment have become extremely diverse. In order to sustain

competition, it is but imperative to continue offering innovative

consumer credit schemes. With the launch of Askari Bank's Personal

Finance an Askar (auto-loans), this unit is emerging as a significant

contributor to the Bank's loan growth. The unit also administers the

first e-commerce banking solution in Pakistan, under the brand

name ASK-IBL online. This is a b2b automated credit transaction

module, offering merchandise credit to retailers on goods purchased

form one of the largest distributors n the country. Strong collection

and prudent risk management policies have restricted

delinquencies to very low levels.



CREDIT CARDS DIVISION

This Division manages Askari Master Card brand and is

headquartered at Karachi. With a new fully automated transaction

processing system, the brand was re-launched in 2001, supported

by an aggressive advertising campaign and strong sales team

network. The product now has portfolio of nearly 20,000 cards, in

less than one year. The brand is accepted worldwide and over 3,000

locations in Pakistan.

3- OPERATIONS AND CREDIT GROUP

A support function group mainly responsible for development of

systems and procedures, process re-engineering, automation and

credit management. The group is organized in three divisions,

System and operations division

Electronic technology divisions

And the credit division

SYSTEM AND OPERATIONS DIVISIONS

This group has been instrumental in development of procedures and

manuals for various operating requirements of the bank. After

careful mapping of the existing process flows, the division

recommends automation and re-engineering requirements. To

improve transaction efficiencies. The division is active in providing

equipment procurement support and development of new branches.

The protection of fixed assets of the bank is also managed by the by

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



proposed several cost cutting initiatives based upon improvement

of our existing procedures and documentation reduction. Seven new

branches have been opened during this year. The division

successfully implements the model branch concept during 2001,

which has been proved to be a milestone towards improving our

customer service standards and achieving process uniformity with

optimum resource utilization.

ELECTRONIC TECHNOLOGY DIVISION

This division operates as the backbone for all operational functions

in the bank. Responsible primarily for the development of banking

software and provision of computer hardware to all business units,

the division also engaged in the development of technology based

value added customer service products. The division has helped the

bank in playing the pioneering role in offering Internet banking

service e-commerce solution and on-line banking. The division

provides online real time branch connectivity and has full-

automated transaction processing support programmers in the

place. The division is focusing on use of data-warehousing

technology to enhance the relationship management program of

the bank.

CREDIT DIVISION

Providing extensive support to branches for credit administration,

control and monitoring, the division has played a pivotal role in

helping the bank achieve a remarkable loan

Growth of 31%, with well diversified risk exposures. Most of the

loans are of shot -term trade financing on a secure and self-

liquidating basis. The division has a special assert management



team, which is responsible for ensuring low ratio of bad debts,

effective monitoring of delinquent advances and close follow-up of

recoveries. Bank's head office credit committee, reviews the credit

quality and pricing on regular basis not only to ensure healthy credit

growth but also the management of bank's risk assets in almost

prudent and profitable manner

Taking into account the expanding branch network and the

increasing customer base, credit administration was strengthened

by decentralizing the delegation of lending authorities at the

regional and area management level.

The decentralization has benefited the bank and its customer

tremendously as the new arrangements now provide for faster

credit delivery, focused credit development, and more effective

monitoring and controls. Further steps are being taken to streamline

credit appraisal procedures and training to credit officers at all

levels.

HUMAN RESOURCE DIVISION

Strategically, perhaps the most important division at the head office

is responsible for human resource management, including

recruitment staff training and evaluation. The division also handles

matters relating to administration. This division operates on future

oriented strategy focusing on employee’s personal and professional

growth.

Staff development activities are geared to enhance their capabilities

for applying the knowledge and facts towards development of

practical situations. Under our human resource management policy,

we develop and groom our management personal for positions of



greater responsibilities analytical, interpersonal, conceptualized and

specialized skills to enable them understand cause-and-effect

relationships and to think logically.

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

banking and management. Our hiring philosophy is based upon

meritocracy and selecting the right person for the right job. We lay

greater emphasis on employee’s honesty and integrity besides

technical competence. Candidates are selected through well defined

and systematic selection procedure.

FINANCE DIVISION

Responsible for bookkeeping and accounts, this division at head

office, prepare all financial return and the MIS through its

management-reporting wing. The division is actively involved in

preparing market comparative analysis, consolidation of bank's

budgets, its monitoring and constant review of various financial

indicators.

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

The division, which reports directly to the president and chief

executive of the bank, has been instrumental in preparation of

banks business plans and future strategies. The budgetary

performance are constantly reviewed and through a sophisticated "

monthly performance report” which is a computer based program,

the division provides feed back to the senior on strategic issue like

reasons for budgetary variance and methods to arrest negative

performance factors.

Preparing the bank's annual accounts and coordinating external

audit is also a direct function of the finance division. Through the



dedicated efforts of staff at this division, the bank has been winning

various awards foe the best presentation of the annual accounts

and also the management has also been able to monitor and review

the bank's performance in proactive manner.

AUDIT DIVISION

The audit division reports directly to the board through the

executive committee, which is also the audit committee. The audit

division is completely independent of the management and is

responsible for checking and reporting on the management

compliance with the boards policies and directives, as also the

prudential regulations and other directives of the SBP. However

their role is not intended to just that of fault finding; but also

guiding and assisting branches in improving their operations.

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

operations with the goal of improving the effectiveness of risk

management and internal control. There is also a regional audit

function attached to each area office; the nature of this business is

of more quality assurance rather than strictly audit. The regional

audit report to the area manager, and assist them in ensuring that

there is proper compliance with all the relative directives, and also

that customer service standards are maintained and improved, at

the branches in the area.

The system of regional and area offices has been introduced since

1999 for effective supervision and control of branches. The scope of

the system also spans the development and management of bank's

business and activities, on a regional basis.



The bank's branch network has been divided into 6 regions:

1) North region

2) Comparison of Islamabad and Rawalpindi area and the north

area.

3) Central region

4) Comprising of Lahore and East area.

5) South region: and

6) West region

A process of effective decentralization has been implemented, with

delegation of authority and greater responsibility and

accountability. Under this system the regional heads have the

primary responsibility for business development, profitability

productivity, operational efficiency and credit quality.

The system helps the customers through quick decision-making and

fast product delivery. It has now enabled the bank to further expand

and diversify its geographical reach and business activities.



THE MISSION, VISION

&

OBJECTIVE



THE MISSION STATEMENT:

To be the leading private sector bank in Pakistan

With an international presence,

Delivering quality services

Through innovative technology

An effective resource management

In a modern and progressive organization

Culture of meritocracy, maintain

High ethical and professional standards,

With providing enhance value to all our stakeholders,

And contributing to society

VISION

To be the leading bank in the region...



CORE VALUES

The intrinsic values, which are corner stones of Askari

corporate behavior, are:

Commitment

Integrity

Fairness

Team-work

Service

OBJECTIVES OF THE ACBL

As Askari Bank looks ahead to the future by moving through the

decade of the 1990's its efforts are guided by a broad framework

of corporate objectives, which are as follows:

Askari is committed to its identity of " security & trust " and

will endure to uphold this image at al the times.

It will endure to provide its customers with as many creative

financial services and products, as is required. As today

customer demands a package of services suited to his

particular business, Askari plans to develop different and new

products to cater to the customer's demand. Askari bank has

they strength to be a market leader.

Bank will keep standing and by and develop, its human capital

base. It is planning to provide all the required training to its

staff towards achieving a higher level of professionalism.

Askari will continue striving to build a strong, motivated and

dedicated work force where total commitment will be towards

customer's satisfaction and wealthy growth of organization.



Askari bank will endure to provide a competitive return to its

shareholders and will strive to maximize its share value. The

enhancement in its capital and returns will be a continuous

process. Askari bank is interested in being one of the most

financially viable institutions. So it lays great emphasis on

gradual building up to a healthy deposit mix. In the years

ahead, the bank will enhance its focus on growth through

operational efficiency, creating strategic alliances developing

well-structured networking system innovating new products,

enhancing marketing and sales efforts improving customer

service, achieving greater employee motivation and providing

the best value to its stakeholders - will make it a leader in the

corporate world.

HOW CHALLENGE BE DELIVERED

These objectives and guiding mission will be achieved through

Focused objective

Winning as a team

Excellence in delivery

Relentless quality

Upward rising sales



CODE OF BUSINESS PRINCIPLES

Askari code of business principles is to:

Deliver solutions that meet customers financial need;

Build and sustain a high performance culture;

Build trusted relationships with all shareholders;

Build and manage the bank’s portfolio of businesses to

achieve strong and sustainable shareholder returns; and

Create and leverage strategic assets and capabilities for

competitive advantage.

CORPORATE PHILOSOPHY

“The Challenge... to bring a dream to life”

From knowing Askari customers' requirements to understanding

employee needs, from utilizing modern technology to making

responsible social contributions, from enhancing stake-holders'

value to practicing corporate ethics, Askari is continuously and

consistently striving to address newer challenges with a single

motivation - the power to inspire and be inspired. Organizational

goal and strategy define the purpose and competitive techniques



that set it apart from others organizations. Goals are often written

down as an enduring statement of company intent.

A strategy is the plan of action that describes the resource

allocation and activities for dealing with the environment and for

reaching the organizational goal. Goals and strategies define the

scope of operations and the relationship with employees, clients

and competitors.

With over 14 years of experience in trade finance and an extensive

international branch network, Askari Commercial Bank is committed

to help the customer succeed in every competitive environment. To

keep pace with changing needs, ACBL constantly review its

comprehensive cash, trade and treasury products and services,

ensuring that a full range of flexible and innovative services is

always available for the customer wherever they trade.

CUSTOMER RELATIONSHIPS

"Before we discover, we must explore"

Knowing Askari customers and their needs is the key to Askari

business success. Askari products and services are structured to

touch and improve the quality of lives of all segments of society.

Service quality standards are designed and monitored to ensure a

consistent and convenient customer experience. Askari client

relationship managers are well equipped and well trained to provide

most efficient and personalized service to each and every customer.

Askari products and services are as diverse as Askari market

segments. Askari have structured and syndicated financing

arrangements, working capital finance, Balancing-Modernization -

Replacement (BMR) facilities, financing of international trade,



consumer credit, small business loans, credit cards and unparalleled

investment products for the individual saver. Askari Bank is proud of

the pioneering role in providing the most modern technological

services to its customer base, which today exceeds 150,000

relationships.

EMPLOYEE RELATIONSHIPS

"Unusual effort on part of the employees who are apparently

ordinary workers is one of the key indications of a superior

enterprise"

Askari staff is Askari most valuable asset. The human

resource philosophy at Askari Bank focuses on multi-talent hiring,

professional grooming, requisite training and meritocracy based

reward system. Askari lays great emphasis on the development

and nurturing of "Askari Culture", a cohesive teamwork, where

each relies on the strength of the other and together they achieve

common objectives.

Staff welfare has always been a priority. New initiatives like

hospitalization plan, car buy-back facility and home loan

insurance have added new dimensions to the staff-care policy and

motivated them to out-perform Askari competitors.

Employee productivity enhancement is organized through

extensive in-house and external training programs. Askari

continue to offer opportunities for people to develop their

knowledge, skills and personalities, thus ensuring greater self-

fulfillment and progression in the organization.



TECHNOLOGICAL INNOVATION

"Modern science is not an option, it is an obligation”

Technology is rapidly changing the way Askari think, act and does

business. It has played a pivotal role in enhancing customer

expectations, particularly with respect to speed and quality of

service.

Askari enjoy a strategic competitive advantage over all domestic

players by virtue of Askari leadership in technological innovations.

Askari have fully automated transaction-processing systems for

back-office support. Askari branch network is connected on-line

real-time and Askari customers have access to off-site as well as

on-site ATMs, all over Pakistan.

Askari Phone Banking service and Internet Banking facility allows

customers to enjoy routine banking services from anywhere in the

world, 365 days a year, 24 hours a day. Askari have also

pioneered commerce venture in Pakistan through a major retail

distributor.

Askari qualified and experienced technology team is now

focusing on data warehousing to enhance the Customer

Relationship Management (CRM) program



ETHICAL VALUES

"Professionalism without integrity is like a book without

pages"

Because the right may not always be obvious, Askari must be

guided in every action by a set of well-defined values, governing

Askari decisions. Askari understand that its commitment to satisfy

customers’ needs must be fulfilled within a professional and

ethical framework. Askari subscribe to a culture of high ethical

standards, based upon development of right attitudes.

The following primary core values provide the guiding principles

for Askari corporate behavior:

Commitment

Integrity

Fairness

Team-work

Service

As part of Askari internal communications program, these core

values are inculcated in Askari employees through internal

memos, posters and most importantly leading by example.

CORPORATE CITIZENSHIP

"The greatest of life's pleasures are shared"



Askari role as a responsible corporate citizen is as important

to ACBL as the products and services they offer.

Askari have made useful contributions in the areas of

sports, culture, poverty alleviation, health & medical

sciences, education and scientific research.

Askari was one of the co-sponsors of the 9th South Asian

Federation Games, held at Islamabad in the Year 2003.

Askari have also sponsored various sports tournaments at

both amateur and professional level.

Askari contributions to the NGOs dedicated to the treatment

and welfare of the blind is a ray of hope in the darkness.

Askari have made donations to the drug-addiction control

programs and Askari efforts to help support Aids Awareness

programs and contributions to the mental and social welfare

of women and children have won much acclaim.

Askari participated in IUCN Water conservation initiative and

have helped in creating better understanding about the

country on the international platform by cosponsoring the

first interactive encyclopedia on Pakistan.

GROWTH

"There is no sin punished more implacably by nature than

the sin of resistance to change"

Askari live in a moment of history where everything is

changing so fast that Askari begin to see the present only when it

is already disappearing.

Askari customer needs are changing and their expectations

are growing. Technology is fast proliferating the distribution

channels and now banking services can be accessed from



multiple contact points. Askari believe that balanced growth is the

key to survival in today's global banking environment.

From a humble beginning with just 7 branches in 1992,

today Askari enjoy a network of 73 outlets in Pakistan, spread

across the country. A network of self-service ATMs supports these

outlets.

Askari total assets now exceed Rs.50.9 billion and Askari

have over 17 products and services to match Askari customers'

individual needs. Bank's equity base stands at Rs. 2.58 billion

with 20% growth over the last 5 years. The human resource

capital of the bank today exceeds 1,200 employees. As part of

Askari growth strategy Askari is now extending Askari banking

services to the remote and rural areas.

CORPORATE ACHIEVEMENT

"Winning isn't everything, it's the only thing.”

Amidst tough competition, Askari efforts to go an extra mile

in providing superior services to Askari customers have been

acknowledged at the national as well as international levels.

These acknowledgements serve as a great source of

encouragement and appreciation at one hand and inspire ACBL to

perform even better, on the other.

The Global Finance Magazine has honored Askari with the

“The Best Bank in Pakistan” award. Askari won the Euro money

and Asia money awards as early as 1994, 1995 and 1996. Askari

have Al+, the highest possible credit rating, for the short-term

obligations, and Askari long-term rating stands at AA. Askari won

the prestigious "Best Presented Annual Accounts" award from the



Institute of Chartered Accountants in Pakistan, and The Institute

of Cost and Management Accountants, Pakistan, for the services

sector, for 2000. Askari have also received prizes during the last

four years from the South Asian Federation of Accountants (SAFA)

for the "Best Presented Annual Accounts" for the financial sector,

in the SAARC region.

Askari was the first bank in Pakistan to offer Internet Banking

services and b2b e-commerce solutions for merchants looking to

purchase on credit.



MANAGEMENT SYSTEM

CORPORATE INFORMATION

MANGERIAL POLICIES



ORGANOGRAM


BOARD OF DIRECTORS

Executive Committee

President and Chief Executive

Internal Audit

Corp. Banking & Fin. Inst. Group

Operating and credit group

Regions Retail Banking Group

Credit Cards

International Credit Rawalpindi/Islamabad

Asset Products Planning and Corporate affairs

Treasury Electronic Technology

North Investment products

Human Resource

Corporate and Merchant Banking

Systems and Operations

Lahore Finance

Data Reporting East

Legal Affairs South I

South II

West


CORPORATE INFORMATION

Board of Directors

Lt. Gen. Waseem Ahmed Ashraf Chairman

Lt. Gen. (R) Masood Perwaiz Chairman Executive committee

Mr. Kalim-ur-Rehman President & Chief Executive

Brig (R) Mohammad Shiraz Baig Director

Brig (R) Muhammad Bashir Baz Director

Brig (R) Asmat Ullah Khan Niazi Director

Brig (R) Mohammad Safdar Ali Director

Mr. Javed Ahmad Noel Director

Mr. Zafar Alam Khan Sumbal Director/Secretary

Mr. Shahid Hafeez Azmi Director

Mr. Mohammad Afzal Munif, FCA Director

Mr. Tariq Iqbal Khan, FCA Director (NIT Nominee)

Audit Committee

Mr. Muhammad Afzal Munif, FCA Chairman

Brig (R) Muhammad Shiraz Baig Member

Brig (R) Asmat Ullah Khan Niazi Member

Mr. Zafar Alam Khan Sumbal Secretary

Auditors

A.F.Ferguson & Co

Chartered Accountants

Legal Advisors

Rizvi,Isa, Afridi & Angell



Registrar & Share Transfer Office

M/s THK Associates (Private) Limited

Ground Floor, Modern Motors House,

Beau mount Road, Karachi, 75530

Tel : (021) 5689021, 5686658, 5685681

Fax: (021) 5655595

E-Mail: [email protected]

Registered Office /Head Office

AWT Plaza, The Mall,

P.O.Box 1084, Rawalpindi.

Tel: (051) 9063000 Fax: (051) 9272455

Website: www.askaribank.com.pk

MANGERIAL POLICIESA. Financial policies


http://www.askaribank.com.pk/

mailto:[email protected]


B. Procurement policies

C. Marketing policies

D. Promotional policies

E. Lending policies

F. Personal policies

FINANCIAL POLICIES

The financial policies of any bank are the most important policies

through which the whole banking activity is conducted. These

policies are primarily conducted on:

Source of funds

Use of funds

SOURCE OF FUNDS:

The bank finance policy is acquiring funds from the following

sources:

Deposits of account holders.

Interest on advances and loans granted to the borrowers.

Income and commission from the services provided by the

bank.

Bank open various types of accounts for its customers

Services are provided for earning.

Interest income and commission bank providing the services

to its customer.

USE OF FUNDS:

After the acquisition of the funds their acquisition become

necessary. The bank seeks the best way for making investment to

got more profit with the maximum security. The bank has an



investment portfolio in which it allocate its funds for crediting to

borrowers, investment in the stock market, investment in the real

estate property etc. for allocation of funds a bank has to follow

some banking policies and the prudential regulations of SBP these

are:

A bank has to maintain a liquidity with central bank ,i.e. 25 %of its

total deposits.

A bank cannot invest all of its funds otherwise it will be difficult to

meet urgent needs.

A substantial part of funds is received from interest on loans and

advances. Before granting a loan the bank analyze and observe the

borrower and conduct a complete ratio analysis. Bank prepare

credit line for this purpose the major thing is granting an advance is

the security offered by the borrower and its actual market value.

PROCUREMENT POLICIES

Procurement policies are more concerned with manufacturing

organizations. In bank industry that is service industry procurement

means the procurement of funds from various sources such as

deposits. It involves attracting and holding the funds of the

depositors. After the acquisition of funds, the bank invest the acquire

funds. One alternative is to lend its money and earned interest

markup or invest in govt. securities etc. as already mentioned in the

above paragraph the major sources of funds for a bank are the

deposit of the general and the other sources of income includes

interest or markup charges received for various services offered by

the bank to its clients.

A bank tries to attract maximum no. Of accounts so that it can

increase it’s deposits and these lending ability. In order to get



maximum no. of accounts the staff of the bank must be efficient as

compared to the other banks and the manager of the branch must

take personal interest in attracting deposits. Good quality of the

service is the key to success.

MARKETING POLICIES

Marketing policies are also one of the most important policies

because they are related to the growth of the organization.

Marketing for a bank would mean:

1. Creation of new product and services.

2. The bank marketing must be consumer oriented.

Following are the marketing policies of the ACBL.

a. Keeping the track of latest development in the world

and incorporating the latest and most modern

equipment to make the banking procedures simple and

easy for the customers.

b. Development of products for the customers.

c. Giving good services and maintaining good relations

with the customers.

These policies can be implemented by providing the right product

and service to the customer at the right place, at the right time, at

the right price.

It is necessary for the managers to keep in touch with consumers,

observe their needs and develop products, which meet their needs.



PROMOTIONAL POLICIES

Public relation and advertising has assumed a great importance in

the modern banking business. As for as promotional activities are

concerned, the main objective of the bank is to inform the existing

clients and other people about its new products or change in the

existing services. ACBL establishes its purpose through:

1. Direct contact with customers.

2. Relation with business organizations.

3. Community relations.

LENDING POLICIES

Every bank has its own lending policies except for those, which are

common for all the banks, i.e. the policies, which are imposed on all

the commercial banks by the SBP, are known as prudential

regulations. The lending policies of ACBL are as follows:

1. The bank only invests in those sound and viable projects,

which have good rate of return.

2. Bank prefers to advance loan to their account holders.

3. Loan is given to reliable person only.

4. No political loan is sanctioned by bank.

5. Any account holder can apply for running finance or demand

finance. The manger apprises the past record of account

holder and his credit worthiness. If he finds any thing wrong

he can refuse to sanction the amount.

6. The bank while taking security prefers govt. Securities to

shares.



7. It also advances working capital loans.

PERSONAL POLICIES

Personal policies have an important role in the success of an any

organization. ACBL have its proper personal policies. Good personal

policies motivate the employees towards hardworking.

Following are the main personal policies of ACBL:

1. Selection of employees on merit

2. Selection of capable employees.

3. Attractive salary package for motivation of employees.

4. To train and develop the future management of the bank.

5. Every employee must have certain set of clearly defined

duties

6. Effective communication at al levels of the organization.



DEPARTMENTS

GENERAL BANKING DEPARTMENT

CREDIT DEPARTMENT

FOREIGN EXCHANGE DEPARTMENT

Banking procedures are divided between various

departments. Different departments do their jobs in occurrence with

the bank policies. In ACBL each branch is divided into various

departments. Head of department manages each department &

officials of the branch follow procedures.

The departments working within a branch are as:



GENERAL BANKING DEPARTMENT

Account opening department

Remittances department

Cash department

Clearing department

PRIVILEGE BANKING DEPARTMENT

Online banking

Lockers

CREDIT DEPARTMENT

FOREX DEPARTMENT

Import department

Export department

Foreign currency department

ACCOUNTS DEPARTMENT

IT- DEPARTMENT

ACCOUNT OPENING DEPARTMENT


Account Opening In-charge

OfficerOfficer


Functions of Account Opening Department

Providing account opening form according to the customer's

requirements,

Guide the customer about the requirements of the account

opening and form filling,

Check the forms whether they are correctly completed or not,

Preparing checklist,

Stamping on the form,

Maintaining account opening register,

Pasting of forms in register after release from general banking

in charge,

Issuance of cheque books,

Issuance of accounts maintenance certificate,

Closure of account

Verification of signature in case of cheque presented before

releasing of account opening from SS card is not yet scanned

IMPORTANCE OF INTRODUCTION FOR A\C OPENING

Introductory references As soon as a person opens an account with

the bank, the banker customer relationship is established. In such

situation this is advisable the banker should not open new accounts

of unknown persons unless references regarding the integrity and

responsibility of the purposed persons are obtained from

respectable parties.

Failure to exercise this care may result in serious consequences not

only for the banker concerned but also for the other bankers and



general public. It is not sufficient to obtain the reference but its

genuineness must also be verified. Omission of this may have

serious consequences.

In practice we see that there is tough competition among bankers

for procurement of deposits, so to press a prospective new

customer to find the desired reference may offend him, yet he is to

be welcomed by the banker as a source of fresh deposits. But these

practical difficulties have to be handled tactfully because the risk

involved to carry out this requirement partially or wholly may lead

to undesirable results.

PRECAUTIONS TO AVOID FRAUD

If preliminary necessary inquiries mentioned above are not made

and account is opened, it is possible that an undesirable person is

provided with a chequebook to defraud innocent people or the

person being an undercharged bankrupt may put the banker in

difficult situation.

1. SAFEGUARD AGAINST UNINTENTIONAL OVERDRAFT

Sometimes due to misreading of the balance an account may be

inadvertently overdrawn or the credit entry of customer is placed

into the account of another person by mistake who happens to have

withdrawn that amount. in all such cases the amount can only be

realized if the person is man of integrity.

2. INQURIES ABOUT CUSTOMERS

Have all necessary information with him regarding his Generally a

banker is asked by another banker to give his opinion about his

customer’s financial position. Therefore, it is beneficial for the both

that the banker should customers.



3. PROOFS FOR REASONABLE CARE AND INQUIRY

Under section 131 of negotiable instrument act, 1881 a collecting

banker is protected provided he collects the cheques of his

customers in good faith and without negligence. But if the banker

fails to make preliminary inquiries he may be deprived of statutory

protection, being guilty of negligence.

ACCOUNT OPENING PROCEDURE &PRECAUTIONS:-

KNOW YOUR CUSTOMERS

The objective of knowing a customer is to have a fair idea about the

identity, financial resources, and general information about the

customer at the time when the relationship is established. A banker

must have following information about the customer:

Customer name:

Enter complete name as mentioned in original ID card /other

business documents.

Nature of business /profession: if customer is of salaried class enter

his employer name. If the customer is a businessman, trader, sole

proprietor, enter the business name, for example “Jamil

Traders”etc.also enter the customer’s title/position and address of

the business/employer. Address with P.O.BOX is not acceptable.

Similarly remarks like

“Private service”, “business” are not acceptable, rather specify

what type of company/business the customer is associated with for

example Manager Philips Electrical Company.

Address:

Enter the complete business/residential address. With in the

brackets you may also provide prominent address identification

marks for ease of physically locating the address.



Contact Numbers:

Enter home, official, mobile, fax number and e-mail address (if

available). Banker can verify the number by giving the customer a

courtesy call or by sending him a e-mail.

Other/ secondary/ mailing address:

Some customer may volunteer their parents or siblings’ addressor

second home address or a mailing address other than a permanent

address.

Special instructions:

Clear-cut special instructions must be obtained from customers. If

the customer has not given any special instruction specified column

must be cancelled by drawing a line, as this column must not be left

blank in any circumstance.

Existing/other bankers:

Almost most all the bankers usually have a banking relationship

with another bank. In case of customer who does not have an

existing banking relationship, or does not want to disclose the

existing relationship, then it is strongly recommended that at least

for some time this particular account must be kept under

observation.

TYPES OF ACCOUNTS

1) ACCOUNTS OF GENERAL CUSTOMERS

Minor account

Illiterate person account



Joint account

2) ACCOUNT OF SPECIAL PERSONS

Proprietorship account

Partnership account

Limited company’s account

Accounts of club societies and associations

Agent’s accounts

Trust account

Liquidator’s account executer’s and administrator’s

account

REMITTANCE DEPARTMENT

Functions of remittances department

The functions of remittance departments is to handle with the

following instruments:

Pay Order

Demand Draft

Pay slip

Telegraphic Transfer

Payment of Remittances

Cancellation of pay order & demand draft

The remittance department deals with the transfer of money from

one place to another.



This department deals with the local currency transfer only. ACBL

provides these services to both customers & non-customers

Remittance can be made through:

1) Instrument transfer

2) Electronic transfer

3) Mail transfer

Instruments of the Remittances Departments

PAY ORDER

Pay order issued from one branch only be payable from the same

branch. It is normally issued for payment in the same city. It is

normally referred as banker's cheque

Get the application form.

Issue pay order after recovering cheques.

Do necessary vouchering.

Make entry in PO issue register.

All pay order shall be crossed" payees account only".

Charges on issue of Pay Order

Amount (Rs) Charges (Rs)

Less then 100,000 50

Above 100,000 Nil



Duplicate Pay Order:

Check the record to insure that payment has not been

effected.

Get application for issuing of duplicate PO.

Recover charges.

Issue duplicate pay order.

DEMAND DRAFT

It is an instrument on demand for which value has been received,

issued by the branch of the bank drawn i.e. payable at some other

place(branch) of the same bank. In case of agency arrangement-

demand draft can also be issued by one branch of the bank payable

to other branch of the other bank e.g. DD issued by ACBL payable

by MCB.

Charges on issue of Demand Draft

Amount (Rs) Charges (Rs)

1 - 10,000 25

10,000 – 100,000 50 or .1%

100,000 - 1000,000 200 or .07%

Over 1000,00 1000 or .05%

PAY SLIP

The bank for settlement of it own payment issue pay slip.



No excise duty

No commission

CASH DEPARTMENT

All physical movement of cash in the bank is made through the cash

department. Normally cash department performs following

functions

Receipt

Payments

Act according to any standing instructions

Transfer of funds from one account to another

Handling of ATM

Verification of signatures

Posting

Handling of prize bond

Cash receipt section

In this section the cashier in following manner receives cash:


Fill- up deposit slip

Deposited on Receipt Customer

Process of deposits


Cash payment section

In this section honoring the cheque through following process

makes payment.


Cashier counts the amounts and fulfills other

requirement

Cashier counts the amount and fulfills other requirements

Cheque is presented at token counter

Cheque is recorded & token # is allotted

Cashier counts the amount & payment is made

Cancellation officer cancels cheque

Posting is madeTwo signatures on back of the cheque by customer

Process of payment


CLEARING DEPARTMENT

MEANING OF CLEARING

The word clearing has been derived from the word “Clear” and is

defined as “ a system by which banks exchange cheques and other

negotiable instruments drawn on each other within a specific area

and thereby secure payment for their clients through the Clearing

House At specified time” in an efficient way”.

1. Since clearing does not involve any cash etc. and all the

transaction take place through book entries , the number of

transaction can be unlimited.

2. No cash is needed as such the risk of robbery, embezzlements

and pilferage are totally eliminated.

3. As major payments are made through clearing, the banks

came manage cash payments at the counters with a minimum

amount of cash in vaults.

4. A lot of time, cost and labor are saved.

5. Since it provides an extra service to the customer of banks

without any service charges or costs, more and more people

are inclined and attracted towards banking.

CLEARING HOUSE



It is a place where representatives of all banks sit together and

interchange their claims against each other with the help of

controlling staff of State Bank of Pakistan And where there is no

branch of State Bank of Pakistan the designated branch of National

Bank of Pakistan act as controlling member instead of State Bank of

Pakistan

MEMBERSHIP CEASES

It ceases to be a scheduled Bank.

It is not able to meet its liabilities.

State Bank of Pakistan or Central Govt. prohibits it to

receive fresh deposits.

RULES AND REGULATIONS HAVE CLEARING HOUSE:

Timing:(Monday through Saturday)

i. 1st Clearing at 10:00 a.m.

ii. 2nd Clearing at 2.30 p.m.

Each bank will send competent representative to exchange

the cheques.

Each bank is required to insure that all cheques and other

negotiable instruments are properly stamped and suitably

discharged

An objection memo must accompany each and every cheque

when return unpaid duly initialed.

Each bank is required to maintain sufficient funds in the

principal account with SBP to meet the payment obligations.

The State Bank of Pakistan debit the account of each member

of the clearinghouse with the proportionate working expenses

incurred on the operation of clearing house. These expenses

are very nominal.



.

OUTWARD CLEARING AT THE BRANCH:

The following points are to be taken into consideration while an

instrument is accepted at the counter to be presented in outward

clearing:

The name of the branch appears on its face where it is

drawn o.

It should be stale or post dated or without date.

Amount in words and figures does not differ.

Signature of the drawer appears on the face of the

instrument.

Instrument is not mutilated.

There should be no material alteration ,if so, it should be

properly authenticated.

If order instrument suitably indorsed and the last

endorsee’s account being credited.

Endorsement is in accordance with the crossing if any.

The amount of the instrument is same as mentioned on the

paying-in-slip and counterfoil.

The title of the account on the paying-in-slip is that of

payee or endorsee (with the exception of bearer cheque).

If an instrument is in order than our bank special crossing stamp is

affixed across the face of the instrument. Clearing stamp is affixed

on the face of the instruments, paying-in-slip and counterfoil (The

stamp is affixed in such a manner that half appears on counterfoil

and paying-in-slip). The instrument is suitably discharged, where a



bearer cheque does not require any discharge and also an

instrument in favor a bank not need be discharged.

The instrument along with pay-in-slip is retained while the

counterfoil is given to the customer duly signed. Then the following

steps are to be taken:

1. The particulars of the instrument and the pay-in-slip or credit

voucher are entered in the outward clearing register.

2. Serial no. Is given to each voucher.

3. The register is balanced; the credit vouchers are balanced

from the instruments and are released to the respective

departments against acknowledgement in the register.

4. The instruments are arranged bank wise.

5. The schedules are prepared in triplicate, two copies which are

attached with the relevant instrument and the third is kept as

office copy.

6. The house page is prepared from schedules in triplicate.

7. The schedules and house pages are signed by the house

incharge with branch stamp.

8. The grand total of the house page is taken and agreed with

that of the outward clearing register.

9. The instrument along with duplicate schedule and house page

are sent to the main office.

However the amount is kept in float till final status of various

instruments is known from respective paying banks in second

dealing.

The entry of the instrument returned unpaid is made in Cheques

returned Register. If the instrument is not to be presented again in

clearing then a covering memo is prepared. The covering memo



along with returned instrument and objection memo is sent to the

customer who sent the same to his account.

INWARD CLEARING OF THE BRANCH:

1. The particulars of the instruments are compared with the list.

2. The instruments are detached and sort out department wise.

3. The entry is made in the inward clearing register (serial no.

Instrument no. Account no. Is written).

4. The instruments are sent top the respective departments

5. The instruments are scrutinized in each respect before

honoring the same.

OUTWARD CHEQUES RETURNED UNPAID:

These are the cheque returned unpaid by us in inward clearing. due

to some objections.

INWARD CHEQUES RETAINED UNPAID:

These are the cheques retained unpaid to us which were lodged by

us in Outward Clearing.

RETURN OF CHEQUES AFTER CLEARING HOUSE:

Suppose all cheques received in the inward clearing are passed and

later on it is found that a cheque should have been returned, in

such cases, we contact the collecting branch and request them not

to make payment against the proceeds of the cheque which was not

returned unpaid by us in due time. the cheque with objection memo

along with a covering letter is sent to the collecting branch, making

request to issue a payment order in favour to balance the Cash-

cum-day book we may debit suspense account sundry debtors with



the approval of the manager. When the payment order is received,

it is lodged in clearing and suspense account, sundry debtors is

adjusted accordingly.

SPECIAL CLEARING:

In addition to the normal clearing function at Clearing house it is

mutually agreed to hold an extra clearing at the clearing house on

the particular day and time which is known as “special clearing” it is

arranged due to the rush of work arising out of say, more Holidays

declared by the Central Govt. at a time, but normally special

clearing is he4ld on last working day of our half yearly and yearly

closing i.e. 30th June and 31st Dec. every year.

ONLINE BANKING



Online banking means that the customer of ACBL can deposit /

withdraw funds in / from other branches of ACBL. Askari bank

provides online facility to all its branches.

ONLINE CHARGES

Amount of Deposits Charges ( Rs)

25,000 or below 50

25,000 - 200,000 100

200,001 - 500,000 250

500,001 - 2000,000 500

Above 2000,000 750

LOKERS

Askari bank offers facility of lockers to its customers.

There are three sizes of lockers available:

CHARGES

Size of lockers Rent of locker (Rs) p.a.

Large 2500

Medium 1500

Small 1000

CREDIT DEPARTMENT



Although the study of money is important for the understanding of

the way in which our economic system operates, we must recall this

point that most exchange transactions in this system are carried on

today without the use of actual money, i.e. Those are carried on by

means of credit and credit instruments rather than money. While

money still forms the basis of credit and deferred payments, it is

necessary to examine the nature of credit operations, and the

instruments and institutions trough, which these operations are

carried on, in considerable detail.

THE NATURE OF CREDIT

On the surface, credit operation appears to be of many kinds, but

they all have a fundamental similarity. In credit transactions, one

party to the transaction, the creditor, turns over to the debtor a

certain amount of money, commodities or services at the present

time and relies on the debtor to repay an equivalent amount,

usually the money in the future plus interest at some future time.

THE BASIS OF CREDIT

There has been much discussion, concerning the essential basis of

credit or borrowing operation. Some writers on the subject have

stoutly insisted that confidence is the basis of all grants of credit,

that if one did not have confidence that the borrower would repay a

loan one would never thinks of making the loan, save on grounds of

friendship of philanthropy. Others have held property, rather than

confidence is the basis of all genuine credit transactions. Some

insist that character is the essential factor, while still other writers

have indulged in a propensity of alliteration by sating that the bases

of credit are character, capital and capacity; or the man and the

means; or reliability and resources.



TYPES OF CREDIT

The verities of credit may be classified in numerous ways- according

to the status of eh debtor, according to the status of the creditor,

according to the time for which the credit is granted, and so on; but

the most fruitful classification usually indicates the use to which the

credit is put.

1.Public and Private Credit:

In the first place, a distinction is usually made between public and

private credit. Public credit comprises the promises to pay off

governmental bodies, that is, their acquisition of goods in the

present in return for promises to pay in future; and private credit

refers to the promises to pay all non-government debtors. Among

the sub-classes of private credit, the most significant are band

credit, commercial credit and consumption credit.

2. Band Credit:

In Comprehends all kinds of promises to pay off banking institutions,

including demand deposits, time deposits, notes, bankers,

acceptances, cash, letters of credit, debentures, and bonded

obligations. Frequently, the term bank credit is restricted in use to

refer only to the demand deposit liabilities of the commercial banks,

and one must constantly be on guard to recognize the employment

of the term in this restricted sense. As a sub-class of bank credit,

central bank credit is of outstanding importance in modern

monetary system it includes the central bank's circulating notes and

its deposit liabilities, the better consisting chiefly of the reserve

balances of the commercial banks.



3. Investment Credit.

The credit structure, business if found upon examination to consist

very largely of two forms of credit. Investment credit is extended

through loans, the proceeds of which are put into the fixed assets of

a business enterprise. If the owners of business cannot themselves

furnish all of the capital necessary for investments in land, buildings

and equipment. Obviously what they need is loans of capital

running over a considerable period of years.

4. Commercial credit

In addition to seeking credit in long term investment in fixed assets,

most business periodically ask for credit in the form of short term

loans. Commercial credit is business supplier for current business

operations, such as manufacturing and marketing of goods. It often

take more business capital than business can themselves supply to

pay for raw materials, to make the outlays for wages and to carry

inventories of finished goods until they can be converted into cash.

To help finance such operations short-term loans usually running

from thirty days to six months are negotiated. Commercial loans

like investment loan must ultimately be paid out of accumulated

earnings of a business. But if the business earnings are of

immediate future, such loans can be safely made and promptly

paid. Commercial loans are base done quick assets, such as raw

material and finished goods, which are in constant process of

liquidation and thereby provide the cash with to extinguish loans.

5. Consumers credit and producers’ credit

Consumers credit involves advance of purchasing power for

economic goods to consumers for consumption purposes. Its

distinguish characteristic lies in the factor that the things acquired

by the debtors as result of the loans are not supposed to furnish



them with the means of repaying the loans the loan must be repaid

out of the income of the borrowers.

TYPES OF CREDIT INSTRUMENTS

There are various types of credit instruments. The more important

credit instruments are as follows:

Bills of exchange:

A bill of exchange is define by negotiable instruments act as "an

instrument in writing, containing an unconditional order, signed by

the maker, directing a certain person, to pay certain sum of money,

only to or to the order of a certain person, or to the bearer the

instrument".

Cheque:

A Cheque is defined “a bill of exchange drawn on specific banker

and not expresses to be payable otherwise than on demand."

Cheques may be of various types, which are as follows:

Bearer cheque

Order cheque

Open cheque

Crossed cheque

Marked cheque

Drafts:

These are bills of exchange issued by a banker on his branch office.

Banks draft like bills of exchange, are of great importance in the

financing of trade, especially foreign trade

Promissory note:



It is an instrument in writing containing an unconditional

undertaking, signed by the maker, to pay the certain sum of money

only to or to the order of a certain person to the bearer of the

instrument. a promissory note in order to be the so, must fulfill all

conditions.

Letter of credit:

A letter of credit as name signifies does one person or bank to

another requesting the letter to pay any amount of money up to a

certain limit to the person write a letter named in the letter or in

whose favor the letter is written. In this letter generally a date is

fixed upto only the addressee should make which advances. Thus a

letter of credit remains in force upto a certain date only. Generally

banks grant this letter of credit.

FOREIGN EXCHANGE DEPARTMENT

The term "foreign exchange" is used to denote either a foreign

currency or the rate at which one currency is converted into another

or the means & methods by which one currency is exchanged for

another.



Functions of Foreign Currency Account Department

Foreign exchange department performs following functions:

Foreign Bills for collection (FBC)

Foreign telegraphic transfer (FTT)

Foreign Demand Draft (FDD)

TDR

Issuance of Proceed realization certificate

Inward remittances

Daily Reporting

Requirement of Funds Transfer

For transfer of fund in foreign currency, a person must have his

account in foreign exchange in the bank.

Requirement of account opening is $500 or any other currency

equivalent to $500.

Types of currency Interest p.a.

Dollar .25%

Pound sterling 2%

Euro 1%

THE CORPORATE AND INVESTMENT BANKING DIVISIONS

CBD & IBD are strongly positioned across priority markets

with a distinct strategy for developing corporate business. Our

strategic framework generates sustainable returns based on strong

market presence and financial solutions ranging from debt and



equity market transactions to syndicate finance, and from

transaction banking to corporate finance advisory services.

2004 was challenging year due to historic lows in interest rates,

particularly for corporate business. The Corporate Banking Division

(CBD) undertook a number of dept re-pricing swap transactions,

aimed at reducing the financial burden of its key client portfolios

and also managed advisory and loan arrangement activities. The

major new relationships cover telecommunications, oil and gas, and

chemicals sectors. CBD has dedicated marketing and support units

functioning at Karachi and Lahore. In order to enhance focus on

relationship management, and service quality, more dedicated staff

is being assigned.

The investment banking activity mainly covers, debt / capital

markets, advisory services and trading (both equities and

derivatives).After the initial start-up phase, the capital market desk,

based at Karachi, increased the volume of capital market related

transactions.

The corporate and investment banking will continue to play a major

role in loan syndications, structured financing and debt / capital

raising transactions with the objective of providing entire range of

corporate and investment banking solutions to its valued clients

under one umbrella.



AWARD AND ACHIEVEMENTS

In 1994, 1996 and 1997 the bank received Euro money and Asia

money awards. Askari has A1+ rating for short-term obligations the

highest possible for the category, while the long-term rating stands

at AA. Askari Bank Won the prestigious “Best presented Annual

Accounts” awards for 2000 and 2001 from the institute of cost and

Management Accountants of Pakistan, for the services sector.

Mr. Kalim-ur-Rahman, President

Askari Bank, with group having

award of

'The Best Retail Bank of Pakistan

2004'

For the past four years, the Bank has received prizes from the

South Asian Federalism of Accountants for “The Best presented

Annual Accounts” for the financial sector, in the SAARC region.

Over the years, Askari Bank has proved its strength as a

leading banking sector entity, by achieving the following firsts in

Pakistan banking.

i) First Pakistani Bank to offer on-line real-time banking on a

countrywide basis.

ii) First bank with a nation-wide ATM network

First bank to offer Internet Banking services

First Bank to offer e-commerce solutions.

The Askari Commercial Bank Limited has been declared “The

Best Bank in Pakistan” by the Global finance, an international

financial magazine of high repute as a result of their latest study of



Banks in the Emerging Markets. This is the 2nd consecutive year that

the magazine has selected their bank for this prestigious Award.

The award will be presented to the Bank on the occasion of

the World Bank IMF meetings in Washington this autumn. While the

magazine will be formally announcing the names of the award

winning Banks in its May 2002 issue, they have already issued press

information for the international media, giving names of the award

winning banks, including the Askari commercial Bank limited.

Over the years, we have received several awards for the

quality of our banking service to individuals and corporate.

These Include:

Best Commercial Bank Consumer Choice award 2005 by

The Consumers Association of Pakistan

Best Retail Bank in Pakistan award 2004 & 2005 by The

Asian Banker

Best Corporate Report 1st prize awarded for 2000, 01, 03 &

04 by Institute of Chartered Accountants of Pakistan (ICAP)

and institute of Cost & Management of Accountants of

Pakistan (ICMAP)

Corporate Excellence awards for 2002 & 03 The

Management Association of Pakistan (MAP)

Best Corporate / Institutional Internet Bank in Pakistan

award for 2004 by Global Finance magazine

Best Consumer Internet Bank in Pakistan

award for 2002, 03 & 04 by Global Finance magazine

The Best Bank in Pakistan

award for 2001 & 02 by Global Finance Magazine



Best Presented Accounts

Ranking prizes awarded from 1997 to 2002 by South Asian

Federation of Accountants (SAFA)

Commercial Bank of the Year

award for 1994 & 96 by Asia money magazine

Best Domestic Bank in Pakistan

award for 1995 by Euro money



PRODUCTS AND SERVICES

PRODUCT AND SERVICES

The product & services of askari commercial bank limited are

developed keeping in view the customers needs & wants, & the

expectation that the customer attaches with its financial

institutions.

A product ACBL includes all those services which customer normally

required for effectively managing his business.



ACBL offers the following financial services to its customers.

1) Deposits

2) Advances

3) Products

4) International banking services

5) Agency services to customers

1) DEPOSITS

One of the basic functions of commercial banking is to receive

deposits. ACBL accepts deposits in both local & foreign currency.

Local currency deposits

Current Account

PLS Saving Account

Term Deposit

Notice Deposit

Askari Faida Account

Askari Special Deposit Account

Value Plus Saving Account

Askari Advantage



Current Account

A current account is a running & active account, which may be

operated upon any number of transactions during a working day.

The banker undertakes to repay these on demand & therefore

theses account are called demand deposits.

Transaction fee

The bank charges no transaction fees if the minimum balance

requirement is met. However, if the average balance falls below the

min. balance then the fees is charged at the rate of Rs. 10 per

transaction.

Saving Accounts

The saving account is usually opened by lower or middle class

people so that they can meet their future contingencies, as the

objective of such account is to promoting the habit of thrift among

people, the bank impose certain restrictions on withdrawals from

the saving accounts.

Transaction fees

Transaction fees are charged of Rs. 20 per transaction if the min

balance is not met.



2. ADVANCES

Advances are major sources of earning of income for commercial

banks. Banks attracts surplus balances from the customers at

low interest rates & makes advances at higher interest rates to

the individuals or business firms.

ACBL offer these facilities in two forms:

Funded facilities

Non- Funded facilities

Funded facilities

In funded facilities the bank actually advance money against further

repayment. These facilities are known as cash credits.

Non- Funded facilities

Non- Funded facilities are those in which bank substitutes its own

credit for its customers.

ACBL offers to its customers are large number of non-funded

facilities.

These facilities includes:

1. Guarantee

2. Latter of credit

Irrevocable letter of credit

Revocable letter of credit

Sight letter of credit



Usance letter of credit

3. PRODUCTS

PERSONAL FINANCE

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.

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. The maximum

financing amount is Rs. 10 million with a repayment tenure upto 20

years.

BUSINESS FINANCE

In pursuance of the National objectives to review the economy of

the country, ACBL is providing loans to small and medium size



business enterprises under Askari Bank's Business Finance Scheme.

Our goal is to offer a loan, which enables business community to

receive the financing required by them based on their cash flows.

Ore valued customers can enjoy the convenience of getting

financing on attractive terms with the minimum processing

turnaround time.

ASKCAR (Car Finance)

Yet another of our products, Askar offers the most convenient and

affordable vehicle- financing scheme, which provides our valuable

customers an opportunity to own a brand new vehicle of their

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.

ASKCARD

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.

TRAVELLER CHEQUES

The range of our products and value added services enhances with

introduction of Rupee Travellers Cheques (RTCs) launched in March

2002. In spite of our constraint on issuing higher denomination of

RTCs against restrictions imposed by the Central Bank of Pakistan

we have been striving to attain our shares with sizeable portfolio.



Total volume handled by the department during the year 2004 is

Rs. 798 Million.

ASKPOWER

Askpower represents a useful tool with which to make secure

payments without the need to have any account, a debit or credit

card. This card comes with a number of unique features and

diversified usage capabilities like cash withdrawal from ATMs,

payment of utility bills through ATMs and internet Banking, transfer

of balance to another card and refill option. The prepaid card is

enjoying a great success all over the country.

VALUE PLUS

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.

ASKARI MASTER CARD

NO JOINING FEE

When you successfully apply for an Askari MasterCard, we will not

charge you any Joining Fee. It’s almost like you are getting it for

FREE!

GLOBAL ACCEPTABILITY



Your card provides you with service at thousands of locations in

Pakistan, and at over 23 million establishments worldwide. As an

added convenience, you will have the benefit of receiving your

monthly billing in Pak Rupees, regardless of the currency of

purchase.

Think of the freedom this gives you!

24-HOUR CUSTOMER SERVICE

With Askari MasterCard, you are always a phone call away from the

assistance you need. To speak to one of our friendly Customer

Service representatives, please call our UAN 111-000-787 for

Karachi, Lahore or Rawalpindi/ Islamabad.

LOW SERVICE CHARGES

Your Askari MasterCard provides you the experience of revolving

your spending at comparatively low service charges. In addition, the

same rate also applies to cash advance obtained on your Askari

MasterCard.

ZERO LOSS LIABILITY

Please report loss or theft of your Askari MasterCard immediately at

our Customer Services UAN 111-000-787 for Karachi, Lahore and

Rawalpindi/Islamabad. Once you have registered the loss of your

credit card, your liability against its fraudulent use will be limited

and we will send a replacement card within 48 hours of reporting.



SUPPLEMENTARY CARDS FOR YOUR LOVED ONES

Save yourself the inconvenience of applying for a separate Askari

MasterCard for your loved ones by requesting supplementary cards

when you apply for your own card. You will receive a consolidated

monthly account statement, which covers all the cards. This offer is

available for your loved ones over 18 years of age.

CASH ADVANCE FACILITY

Cash advance facility is available for Askari MasterCard holders.

You can get up to 80% of your sanctioned credit limit as cash

advance in Pakistan or anywhere else in the world. The facility is

available at all ATMs displaying the Cirrus logo around the world

and in Pakistan. You may also avail this facility at designated

branches of Askari Commercial Bank, during banking hours.

BALANCE TRANSFER FACILITY

With Askari MasterCard, you can avail an incredible offer of a

Balance Transfer at the exclusive rate of just 1.5%* per month.

A special privilege exclusively for Askari MasterCard members

FREE TRAVEL INSURANCE

Just purchase your travel tickets on Askari MasterCard and you are

automatically covered under our Travel Insurance Plan (in case of

personal accident resulting in death or permanent disablement) for

up to Rs.8,000,000/- on a Gold Card and Rs.4,000,000/- on a Silver

Card.



STRESS FREE TRAVELLING

When you purchase your airline tickets for international travel on

Askari MasterCard you get:

· UPto * Rs.10,000 insurance cover for flight delays exceeding

6 hours.

· Upto* Rs.10,000 insurance cover for baggage delays

exceeding 6 hours.

· Upto* Rs.20,000 as baggage loss claim.

(*Certain conditions apply)

COMPLIMENTARY CIP & RAWAL LOUNGE FACILITIES

The next time you travel internationally, be a privileged guest at the

CIP lounge of Quaid-e-Azam International Airport, Karachi and

RAWAL Lounge of Islamabad International Airport. Your Askari

MasterCard entitles you to a host of Complimentary services like;

· Snacks and Beverages

· Free Internet, phone and fax facilities

· Newspapers and magazines

· Flight details information



· Cellular phone charger connections

· So, no matter where you are going, you are always assured of a

red carpet welcome.

DISCOUNT AT AVARI HOTELS

Your Askari MasterCard entitles you to the following exciting

discounts* at Avari Hotel in Karachi, Lahore and Dubai:

· 60% on Room Rack Rates

· 10% on Restaurants

· 15% on Hall Rentals

· 15% on Family Health Club membership only

· 15% at the Business Center

· 10% on Conferences / Meetings Package Rate (cannot be used in

conjunction with Hall Rentals

· 10% at Beauty Saloon

· 10% on Rent a Car

*(Where available. Certain conditions apply)



AGRICULTURE BANKING

The role of agriculture in Pakistan economy is of pivotal

nature. Due to diverse geographical and climatic conditions the

country has tremendous potential for growth and development in

agriculture. However, adequate and timely financial assistance to

the farmers will improve production potential of agriculture sector in

the country. The modern concept of agricultural credit envisages

establishment of an efficient institutional credit system to serve as a

package of credit, supplies and knowledge for the overall strength

of the farmers who at present suffer from low productivity and

financial insecurity. A successful credit evaluation system,

therefore, should have the basic ingredients to provide adequate

amount at the right time and in the right form to help farmers in

making a productive use of loan funds.

ASKARI KISSAN AGRICULTURE FINANCE PROGRAM

The Askari Kissan Agriculture Finance Program (AKAFP) has been

designed to meet ON FARM / OFF FARM credit requirements of

farmers on the most convenient, flexible, easy terms and

conditions. The program features:

A broad array of credit lines designed to meet farming

requirements.

Repay and borrow at your convenience on revolving credit basis at

lowest mark-up rates renewal able after three years.



Convenient repayment terms based on cash flow abilities.

Availability of leased Tractors / Transport without Land / Collateral.

NO HIDDEN COST.

Availability of interest free package for inputs and tractors etc.

No Pre-adjustment penalties.

Earn prompt payment Bonuses and reduce financial costs.

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

of borrowers.

PRODUCTS

Askari Kissan Ever Green Finance

Askari Kissan Tractor Finance

Askari Kissan Aabpashi Finance

Askari Kissan Livestock Development Finance

Askari Kissan Farm Mechanization Finance

Askari Kissan Farm Transport Finance

Ask Card



FINANCIAL ANALYSIS

OBJECTIVES OF FINANCIAL STAEMENTS

ACCOUNTING POLICIES

BALANCE SHEET

INCOME STATEMENT

TREND ANALYSIS

COMMON SIZE ANALYSIS

RATIO ANALYSIS

GRAPHS OF STEADY GROWTH



OBJECTIVES OF FINANCIAL STSEMENTS

“Financial statements are like a firm perfume – to be sniffed but not to swallowed.” “Abraham Brillof”

The firm itself and outside providers of capital – creditors, and investors – all

take benefit from the firm’s financial statements. The type of analysis varies

according to the specific interest of the party involved. Similarly objectives of

the financial statements analysis vary from person to person.

Trade creditors are primarily interested in the liquidity of the firm.

Their claims are short terms, and the ability of the firm to pay their

claims quickly is best judged by an analysis of the firm’s liquidity.

Bondholders are more interested in the cash flow ability of the firm

to service a debt over a long period of time. They may evaluate

their ability by analyzing the capital statement of the firm.

Investors usually focus on the profitability of the firm. They would

be concerned with the financial conditions insofar as it’s affects the

ability of the firm to pay dividends and avoid bankruptcy.

Management employees financial analysis for the purpose of

internal control and to better provide what capital suppliers seek in

financial conditions and performance from the firm

Management needs to undertake the financial analysis in order to

plan and control effectively.

Financial ratios are the tools, which are used to analyze the financial

conditions and performances.

Finally, financial statement analysis deals with the outcomes of the

past decisions and leads to the future planning.



ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash and balances treasury

banks and balances with other banks.

REVENUE RECOGNITION

Mark-up and return on investments and advances is recognized on accrual

basis except for income which is required to be carried forward in compliance

with Prudential Regulations issued by the State Bank of Pakistan.

ADVANCES

Advances are stated net of provisions for non-performing advances.

The management keeping in view the requirements of the

Prudential Regulations issued by the State Bank of Pakistan

determines provision for non-performing advances. In addition a

general provision is maintained on a judgmental basis. Advances

are written off when there is no realistic prospect of recovery.

INVESTMENTS

In accordance with the requirements of BSD circular No. 11 dated

04 August 2004 securities for which ready quotations are available

on Reuters Page (PKRV) or Stock Exchanges are valued at market

value and he resulting surplus/deficit is kept in a separate account

and is shown below the shareholders’ equity in the balance sheet.

Investments where ready quotations are not available are stated at

cost less permanent diminution in value thereof.



Had there been no change in accounting policy, surplus arising on

revaluation of investment would have been higher by 54.04 million

as at December 31, 2004.

Investments are classified as follow:

Held to maturity

Held for trading

Available for sale

CAPITAL WORK-IN-PROGRESS, OPERATING FIXED ASSETS

AND DEPRECIATION

Capital work-in-progress is stated at cost.

Fixed assets are stated at cost less accumulated depreciation

except for freehold land, which is stated at cost. Depreciation is

computed over the estimated useful lives of the related assets are

sates set out in note. The cost of assets is depreciated on the

diminishing balance method, except for vehicles, carpets and

renovation costs which are depreciated on a straight-line basis.

Depreciation is charged for the full month on purchase/acquisition

of an asset while no depreciation is charged in the month of

disposal of a n asset. Maintenance and normal repairs are charged

to income as and when incurred. Major renewals and improvements

are capitalized. Gains and losses on disposal of fixed assets are

taken to the profit and loss account.

Assets held under finance lease are accounted for by recording the

assets an related liabilities at the amounts determined on the basis

of lower of fair value of the assets and the present value of

minimum lease payments. Finance charge is allocated to

accounting periods in a manner o as to provide a constant periodic



rate of charge on the outstanding liability. Depreciation is charged

on leased assets on the basis similar to that of owned assets.

TAXATION

Current tax is the expected tax payable on the taxable income for

the year using tax rates enacted at the balance sheet date and any

adjustment to tax payable of previous years.

Deferred tax is provide for using the balance sheet liability method

providing for temporary differences between the carrying amounts

of assets and liabilities for financial reporting purposes and the

amount used for taxation purposes. The amount of deferred tax

provided is based on the expected manner of realization or

settlement of the carrying amount of assets and liabilities using tax

rates enacted at the balance sheet date. A deferred tax asset is

recognized only to the extent that it is probable that future taxable

profit will be available and credits can be utilized. Deferred tax

assets are reduced to the extent that it is no longer probable that

the related tax benefit will be realized.

STAFF RETIREMENT BENEFITS



DEFINED BENEFIT PLAN

The Bank operates an approved funded gratuity scheme for all its

permanent employees. Contributions are made in accordance with

the actuarial recommendation. The actuarial valuation is carried out

periodically using “Projected Unit Credit Actuarial Cost Method”. The

actuarial gains/losses of one accounting period are recognized in

the following accounting period.

DEFINED CONTRIBUTION PLAN

The Bank operates a recognized provident funds scheme for all its

permanent employees for which equal monthly contributions are

made both by the Bank and by the employees to the fund at the

rate of 8.33% of basic salaries of the employees.

COMPENSATED ABSENCES

The bank grants compensated absence of 15 days per annum to all

its permanent employees. Annual provision for liabilities towards

vested compensated absences is made on the basis of 1st drawn

basic salary.

FOREIGN CURRENCIES

Foreign currencies are translated into Rupees at exchange rats on

the date of transaction. Assets and liabilities in foreign currencies

are translated into Pak Rupees at the rates of exchange

approximating those ruling at the Balance Sheet date except those

covered by forward exchange contracts, which are converted at

contracted rates. Exchange gains and losses are taken to the profit

and loss account.



PROVISION OF CONTINGENCIES

Provision for guarantee claims and other off balance sheet

obligations is recognized when intimated and reasonable certainty

exists for the Bank to settle the obligations. Debating the

customer’s account recognizes expected recoveries. Charge to

profit and loss account is stated net off expected recoveries.

OFF-SETTING

Financial assets and financial liabilities are only offset and the net

amount is reported in the financial statements when there is a

legally enforceable right to set-off the recognized amount and the

bank intend either to settle on a net basis, or to realize the assets

and to settle the liabilities simultaneously.



BALANCE SHEET

AND

INCOME STATMENT

BALANCE SHEET AS ON

DEC.31 2004 20042003

ASSETS:

Cash and balances with treasury bank 8,762,866 6,678,026

Balances with other banks 4,847,899 2,650,166

Lending to financial institutions 2,324,839 5,770,842

Investments 17,239,157 22,104,425



Advances 69,938,041 44,777,538

Other assets 1,459,716 1,425,986

Operating fixed assets 2,595,023 1,979,919

107,167,541 85,386,902

LIABILITIES:

Bills payable 1,227,093 973,703

Borrowing from financial institution 13,781,555 15,903,055

Deposits and other accounts 83,381,795 61,656,607

Sub-ordinated loans 1,000,000

Liabilities against assets subject to finance lease 14,159 37,350

Other liabilities 1,282,981 962,592

Deferred Tax Liabilities 526,865 806,753

101,151,448 80,340,060

Net Assets 6,016,093 5,046,842

Represented by:

Head office capital accounts 1,255,848 1,141,680

Capital reserve 4,317,301 2,759,599

Un remitted profits

5,573,149 3,901,279

Surplus on revaluation of securities-net of tax 442,944 1,145,563

6,016,093 5,046,842

ASKARI COMMERCIAL BANK LIMITEDPROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31ST DECEMBER, 2004

2004 2003(Rupees in thousand)

Mark-up/return / interest earned 4,487,206 4,073,715Mark-up/return / interest expensed 1,117,206 1,379,609Net mark-up / interest income 3,370,000 2,694,106Provision against non performing loans and advances 277,398 308,528Provision for diminution in the value of investments 38,066 -



Bad debts written off directly 7 -315,471 308,528

Net mark-up / interest income after provisions 3,054,529 2,385,578NON MARK- UP/ INTEREST INCOMEFee, commission and brokerage income 649,988 524,775Dividend income 26,318 37,658Income from dealing foreign currencies 180,992 112,808Other income 776,230 278,512Total non mark-up / interest income 1,633,528 953,753

4,688,057 3,339,331NON MARK-UP / INTEREST INCOMEAdministrative expense 1,845,179 1,436,304Other provisions / write offs - -Other charges 138 1,227Total non mark-up / interest expense 1,845,317 1,437,531

2,842,740 1,901,800Extra ordinary unusual items - -PROFIT BEFORE TAXATION 2,842,740 1,901,800Taxation – Current 876,089 873,639

Prior years - -Deferred 43,611 (74,904)

919,700 798,735Profit after Taxation 1,923,040 1,103,065Inappropriate profit brought forward - -Profit available for appropriation 1,923,040 1,103,065APPROPRIATIONS:Transfer to:Statutory reserves 384,608 220,613Capital reserves (reserves for the issue of bonus shares) 251,170 114,168Revenues Reserves 1,036,092 539,948Proposed cash dividend 251,170 228,336

1,923,040 1,103,065Un-appropriated profit carried forward - -Basic earning per share - (Rupees) 15.31 8.78



TREND ANALYSIS (Horizontal Analysis)

FINANCIAL SUMMARY

Trend Analysis, also called Horizontal Analysis of the financial

statements is one directional- upward or downward analysis and



involves the computation of the percentage relationship that each

statement item bears to the same item in the base year

The operating expenses of the bank has been increased with sharp

margin, the ACBL is newly born bank of only 14 years old and is

growing rapidly so, we can say that the reason behind the rapid

increase of its operating expenses may be the expansion of

business. In order to get handsome profit the expenses are

necessary as it is shown by the fact that if the bank’s operating

expenses have been increased then, there is also an increase in the

profit before income tax and profit after income tax.

IBA University of the Punjab Lahore

2000 2001 2002 2003 2004Profitability (Rs in million)

Total Income 3840 5047 5704 5028 6121Interest income 3213 4251 4858 4074 4487Interest exp 2274 2902 3017 1380 1117Fee, comm. Exch.Income

506 677 299 638 831

Other income 122 119 247 317 802Spread 939 1349 1841 2694 3370Operating expenses

680 854 1093 1438 1845

Operating Profit 886 1291 1595 2210 3158Non performing assets

134 283 351 308 315

Profit b/f tax 752 1008 1244 1902 2843Taxation 436 458 557 799 920Profit after taxation

316 551 687 1103 1923

88


SHAREHOLDER’S FUNDS

TREND ANALYSIS

The shareholder’s fund of the bank is continuously increasing, as

the bank is running on profit, therefore, the business take interest in

this project and wish to participate in it. The bank’s share capital

and reserves are also increasing with the expansion of business.

LIABILITIES


2000 2001 2002 2003 2004Shareholder’s Funds

(Rs in million)

Total share holders fund

2155 2579 4173 5047 6016

Share capital 986 1036 1087 1142 1256Reserves 1229 1521 1940 2760 4317Surplus on ROA (60) 22 1146 1145 443

2000 2001 2002 2003 2004Shareholder’s Funds

%AGE


100 119.6 193.6 234.2 279.2

Share capital 100 105.0 110.2 115.8 127.4Reserves 100 123.7 157.8 224.6 351.2

89


TREND ANALYSIS

New if we analyze the liability side of the bank we see that the

bank’s deposits are going on increasing since its birth which is a

very healthy sign for the bank as the bank’s basic business is to

deal in money. The increase in deposits show that the people have

interest in the bank and deposit their fund in the bank without any

hesitation. However it has not been mentioned here that how many

of the deposit are current and how many of them have fixed nature

but we can say that it is a very important source of the bank to earn

profit. As the banks usually earn through interest or mark ups

imposed on the deposits they keep with themselves.


2000 2001 2002 2003 2004Liabilities (Rs. in million)

Customers deposits

30360 41200 51732 61657 83319

Refinance borrowings

2882 3222 3392 7329 9777

Sub-ordinated loans

- - - - 1000

Other liabilities

3058 3980 11016 11354 7055

2000 2001 2002 2003 2004

Liabilities PERCENTAGE

Customers deposits

100 135.7 170.4 203.0 274.4


100 111.7 117.7 254.3 340.0

Other liabilities

100 130.1 360.2 371.3 230.7

90


ASSETS

2000 2001 2002 2003 2004Assets (Rs. in million)

Advances 17893 23292 30035 44778 69938

Investments 8651 11706 26737 22104 17239Cash, short funds and statutory deposits with SBP

10056 13436 10061 15099 15936

Operating fixed assets

641 723 1663 1980 2595

Other assets 1213 1824 1817 1426 1460

Total assets 38454 50980 70313 8538710716

8

Now we will discuss the assets side of the bank. The liquidity

position is essentially important for the bank, as it must have all the

time sufficient funds to meet the demands for the money that may

be made on it. It is the protection against the risk that losses may

develop if banks are forced to sell or liquidate creditworthy assets in

an adverse market. The current liquidity position of the bank has

improved as indicated by the percentages shown in the table below.

TREND ANALYSIS

2000 2001 2002 2003 2004Assets (Rs. in million)

Advances 100 130.2 167.8 250.2 390.9



Investments 100 135.3 309.1 255.5 199.3Cash, short funds and statutory deposits with SBP

100 133.6 100.0 150.1 158.4


100 112.7 259.4 308.9 404.8

Other assets 100 150.3 149.8 117.5 120.4

Total assets 100 132.5 182.8 222.0 278.7

An upward trend in deposits accompanied by a upward trend in

advances too, and mark up revenues means in effective credit

policies, efficient credit collection resulting in healthy financial

development.

The property plant and equipment is the kind of asset, which is

required by the service business only to increase its network

therefore the ratio of the bank’s plant and equipments as compared

with the other important particulars of the assets is high. But here

one thing should be mentioned that it is the policy of the bank not

to start the business on the rented premises. The bank has mostly

started business on its own premises. The other assets of the bank

are also showing a good amount that means that bank is in position

to earn money from every available source.

BUSINESS TRANSACTED


2000 2001 2002 2003 2004

Business Transacted

(Rs. In billion)

Imports 26.2 32.0 40.2 48.7 75.2Exports 30.6 38.8 47.3 56.8 70.1Guarantees 4.8 6.2 14.2 14.4 25.3

92


TREND ANALYSIS

Now we will discuss the business transacted opt the bank in terms

of import and exports we see that imports and exports through

ACBL are continuously on increase which is a very health sign for

the banking business as the banks earn major portion of their profit

through imports and exports. It shows the efficiency of the credit

department. The reasons for this improvement may be

Careful scrutinizing of all the documents

Intelligent corresponding with the customer

True 7 C’s analysis of the customer such as his business and

moral character

Granting facility to selected customers who rate well on the

selected criteria for loan disbursement.

This improvement in imports and exports is extremely large if we

compare it with the figures of 2000.


2000 2001 2002 2003 2004

Business Transacted (PERCENTAGE)

Imports 100 122.1 153.4 185.8 287.0Exports 100 126.8 154.5 185.6 229.1Guarantees 100 129.2 295.8 300.0 527.1

93





(VERTICAL ANALYSIS)


An analysis of percentage financial statements where all balance

sheet items are divided by total assets and all income statements

items are divided by net sales or revenues.

In addition to other financial ratios over time, it is often useful to

express balance sheet items and income statement items as



percentages. Common –size Analysis, also called Vertical Analysis,

or Component Percentage, or 100 percent Statements as each

statement is reduced to the total of 100 and each individual item is

stated as a percentage of the total of 100.

INTERPRETATION

The most important component of any profit and loss account of a

banking concern is its mark up expenses it has to pay for servicing

the depositors. The foregoing data shows that the markup expenses

absorb about 85% of the revenues (a favorable position). This shows

that the bank has been successful in

Selling larger volumes of higher profit items.

Increasing economy in procurement

Adopting other effective and more profitable deposit raising

policies at a lower lost.


2000 2001 2002 2003 2004Profitability (Vertical Analysis)

Total Income 100 100 100 100 100Interest income 83.6 84.2 85.2 81.0 73.3Interest exp 59.2 57.5 52.9 27.4 18.2Fee, comm. Exch.Income

13.2 13.4 5.24 12.7 13.6

Other income 3.18 3.94 4.33 6.30 13.1Spread 24.4 26.7 32.3 53.6 55.0Operating expenses

17.7 16.9 19.2 28.6 30.1

Operating Profit 23.1 25.6 27.9 43.9 51.6Non performing assets

3.49 5.61 6.15 6.12 5.15

Profit b/f tax 19.6 19.9 21.8 37.8 46.4Taxation 11.3 9.07 9.76 15.9 15.0Profit after taxation

8.23 10.9 12.0 21.9 31.4

96


The interest expense of the ACBL is 18.2% of the total revenue of

the bank in 2004, which is remarkable as the bank is earning about

85% of the revenue as interest income. We have handsome margin

between the interest income and the interest expense of the bank.

The data shows that the bank’s other income %age is not as much

high rather it is very low which shows that the bank does not rely on

other sources for its profit but it earns major portion of its income

through its basic business.

The bank seems to have increased control over its operating

expenses, i.e. non-mark up expenses as these now absorb only 30%

on average of the total revenues, that is a very healthy sign for the

bank. In the net shell, it would not be wrong to say that the bank

has improved its financial position and operating efficiency over the

last years.

The profit after tax is showing about 31.4% of the total revenues of

the bank although the margin of profit is not too much high but it is

shown from the data that the bank is going on increasing its profit

after tax over the year.

LIABILITIES AND OWNER’S EQUITY

(Vertical Analysis)


2000 2001 2002 2003 2004(Vertical Analysis)


5.29 4.82 5.69 5.65 5.38

Share capital 2.42 1.93 1.48 1.28 1.12Reserves 3.02 2.84 2.64 3.09 3.86Customers deposits

74.6 76.9 70.5 69.0 74.5


7.08 6.02 4.62 8.21 8.74

Other liabilities 7.52 7.43 15.0 12.7 6.31

Total 100 100 100 100 100

97


INTERPRETATION

The liabilities and owner’s equity are side components of the

bank showing the relationship as compared with the total of the

liabilities and owner’s equity. The bank’s shareholders fund is

showing percentage more than the share capital, which shows that

the bank own capital is lees than the shareholders capital. However

it is also evident from the data that the %age is decreasing of the

overall %age of the share capital over the last two or three years.

But it is also seen that the share capital %age as compared to the

total liabilities of the bank has also been decreased. So we can say

that the same conditions are prevailing regarding the share capital

and the shareholders fund.

Among the assets of the bank the highest %age is of the customer

deposits. The bank’s management seems to have adopted a very

effective marketing policy, as the deposits of the bank constitute

about 75% of the total assets of the bank. In the last year, this

figure stood at 69% of the total resource. This shows the high level

of products and associated services provided by the bank.

ASSETS (Vertical Analysis)

2000 2001 2002 2003 2004Assets (Vertical Analysis)



Advances 46.5 45.7 42.7 52.4 65.2

Investments 22.4 22.9 38.0 25.8 16.1Cash, short funds and statutory deposits with SBP

26.1 26.3 14.3 17.6 14.8


1.67 1.42 2.36 2.32 2.42

Other assets 3.15 3.57 2.58 1.67 1.36

Total assets 100 100 100 100 100

INTERPRETATION

On one hand Advances have also increased from 52% in the

previous year to 65% in the current year which may indicate that

the bank utilize the funds raised in the other activities primarily

lending to the financial institutions as it is the most secure source of

financing available in the economy.

Cash, short term funds and statutory deposits with SBP are also

increasing. The property plant and equipment of the bank is

showing a little portion of the bank’s total assets.

In the last the bank is over all showing a good financial health and is

going on healthy tracks in near future it has no risk of bankruptcy.

Although the bank is showing good results but we can’t say that

these are the best conditions prevailing in the bank as we are

unaware of the market conditions and can’t compare it with other

banks.



RATIO ANALYSIS

PROFITABILITY RATIOS

LIQUIDITY RATIOS



ASSET QUALITY RATIOS

PORTFOLIO MANAGEMENT

CAPITAL ADEQUACY RATIO

CAPITAL GEARING RATIOS

PROFITABILITY RATIOS

The continued viability of any bank depends on its ability to earn an

appropriate return on its assets and capital. Good earning

performance enables a bank to fund its operations, remain

competitive in the market and increase or decrease in market

funds.

RETURN ON CAPITAL FUND

Formula = Net mark up Received

Capital Funds

2004 = 3370000 = 60.47%

5573149

2003 = 2694106 = 69.06%



3901279

2002 = 1638357 = 54.13%

3026550

INTERPRETATION

This ratio relates the net profits to the amount of capital funds that

have been employed in making that profit.

The above given ratios suggest that the profitability of the bank has

increased very in the year 2003 indicating more profitable

operations of the bank. While discussing the trend analysis, we

mentioned that the mark up charges have increased in some

proportion but the mark up earned by the bank resulting increase in

the profit available on the capital funds employed. This ratio

showing a very good financial position of the bank.

RETURN ON INVESTMENT

Formula = Net income after taxes



Total Assets

2004 = 3370000 = 1.79%

5573149

2003 = 1103065 = 1.29%

85386902

2002 = 686994 = 0.98%

70313073

INTERPRETATION

This ratio indicates the profit earned by the bank on the resources

employed. As far as ACBL is concerned, we observe an increase in

the utilization of the resources. It has increased to 1.29 % in the

year 2003 from 0.98 % in the year 2002, It has increased to 1.79 %

in the year 2004 from 1.29 % in the year 2003, the reason behind

the slight increase in the increase of profit may be due to the efforts

of the management.



RETURN ON RISK ASSETS

Formula = Net income after taxes

Total risk assets

2004 = 1923040 = 2.75%

69938041

2003 = 1103065 = 2.46%

44777538

2002 = 550051 = 2.36%

23291367

INTERPRETATION



This ratio, with some fluctuation in 2003 came up from 2.46% in

2003 to2.75 % in the year 2004. It is indicating active utilization in

the form of advances. The bank is finding it difficult to keep the

level of its expenses less in proportion to the advances it has

disbursed. Lending, no doubt is the core function of a banking

concern. But the bank should find out effective ways of credit

provisions affecting less on profitability of the operations. Non-mark

up revenues should also be increased in the face of lower credit

disbursements resulting in more.

RETURN ON DEPOSITS

Formula = Net income before taxes

Total Deposits

2004 = 2842740 = 3.41%

83318795

2003 = 1901800 = 3.08%

61657000

2002 = 1244022 = 2.47%

41200166



INTERPRETATION

Interpret This ratio indicates to what extent deposits which

represent funds mobilization on the part of the bank contribute

towards income generation. Although the other ratios regarding the

profitability are showing satisfactory position of the bank but still

bank need to increase its utilization of resources in order to increase

its profitability because the banks have to pay heavy taxes on their

profit.

OPERATING EXPENSES TO NET REVENUE

Formula = Operating Expenses

Net Revenue

(Rs. In million)

2004 = 1845 = 30.1%

6121

2003 = 1438 = 28.6%

5028

2002 = 1093 = 19.2%



5704

INTERPRETATION

This ratio signifies the proportion of the revenues that is used to

cover the operating expenses of the bank. The ratios calculated

above gives a good picture of the bank’s operations. This ratio is

increasing from year 2002 to 2004 and giving a bright picture of the

profits for the bank. With respect to the banking expansions this

ratio is showing a very good picture as we know the expansions

required lot of expansions, although the operating expenses of the

bank are increasing as we have seen in the trend ratio but their

proportion of increase is not alarming.

In short, the bank in an attempt to maintain at a good level of

liquidity, has a low level of profitability but there is a continuous

push in the profits and there are chances that the bank will reach at

a point of high liquidity and profitability.



LIQUIDITY RATIOS

The liquidity position of a bank is like a reservoir. It may be

adequate, although nearly depleted, just before the start of the

rainy season. Or it may be inadequate, although three quarters full

just before the summer drought.

Liquidity can be defined as:

“The bank’s ability not only to meet possible deposit

withdrawals but also to provide for the legitimate needs of the

economy as well”

ADVANCES TO DEPOSITS RATIO

Formula = Advances

Total Deposits

2004 = 69938041 = 83.9%

83318795

2003 = 44778000 = 58.6%



61657000

2002 = 30035484 = 72.62%

51731506

INTERPRETATION

It demonstrate the degree to which bank has already used up its

available resources to accommodate the credit needs of its

customers.

This ratio, a comparison of funds generation and its funds

mobilization, indicates the total loans sanctioned by the bank in

relation to total amount of money deposited with the bank stands at

83.9% compared with the last year figure of 58.6%. This shows that

the bank has greater potential to advance additional loans. Total

loan able funds roughly measured by the deposits are sufficient to

enable the bank to make additional loans without recourse to more

or less continuous borrowing. At present, the bank has got a



relatively small amount of advances as compared with its deposits

raised. One reason for fewer advances is the cautious and selective

approach on the part of the management while deciding upon credit

proposals.

DUE FROM BANKS TO TOTAL ASSETS

Formula = Due from banks

Total Assets

2004 = 2324839 = 2.17%

107167541

2003 = 5770842 = 6.75%

85386902

2002 = 3414470 = 4.86%

70313073



INTERPRETATION

It is an indication of ACBL’s funds management policies. The funds

allocation to the financial institutions has increased to a great

extent despite the fact that still it holds a small proportion relevant

to the total resources raised by the bank. It is a positive indicator in

the sense that the financing to the banks are the most secure ways

of lending. Considering the economic conditions of the country, it

seems to be the best alternative available to the bank. In the

current year this ratio has been reduced to the little extent.

Although it is declining but the situation might not be alarming.

DUE FROM BANKS TO DUE TO BANKS

Formula = Due from banks

Due to Banks



2004 = 2324839 = 16.87%

13781555

2003 = 5770842 = 36.29%

15903055

2002 = 3414470 = 29.79%

11460394

INTERPRETATION

It shows the relationship between what the bank owes from other

banks and what is due to it. An unfavorable condition has been

observed in this ratio in the current year showing the fact that the

bank has to seek fewer funds from the financial institutions owing to

the strong liquid financial position. This ratio is going on increasing

in last year but decreasing in current year, which involves a slight

risk. In the phase of economic instability, the bank’s management

should be efficient to access the risk involved in lending and they

should control this ratio.



DUE TO BANKS TO TOTAL DEPOSITS

Formula = Due to banks

Total deposits

2004 = 13781555 = 16.54%

83318795

2003 = 15903055 = 25.79%

61656607

2002 = 11460394 = 22.15%

51732000

INTERPRETATION

This ratio is an indicative of the proportion of the lending from the

financial institutions in relation to the total funds raised by the bank

in the form of deposits.



This ratio for ACBL is 16.54% in the year 2004. There has been a

significant decline in this ratio as previously the bank depended

slightly more on the borrowings from financial institutions. It shows

that the bank is concentrating on raising funds from depositors and

trying to relies less on the borrowed funds.

It is a favorable indication in the sense that the bank has large

potential to ask for borrowed funds in the phase of tight

liquidity position.

Further more, it shows the efficiency of the marketing

department to have created so much of deposits that the

bank does not need to look at the financial institutions for

help in improving its liquid position.

There is another favorable aspect of this declining tendency.

The rate of interest offered to the depositors is very low in

comparison with the interest to be paid to the financial

institutions for their funds. A decline in this ratio means less

mark up burden on the bank resulting in less financial risk for

the bank.



COVERAGE RATIO

Coverage ratio measures the capacity of the bank to cover its

interest charges, which are the main obligations on the bank.

INTEREST COVERAGE RATIO

Formula = Earning before int. & Tax

Interest Exp.

2004 = 4688057 = 2.54 times

1845317

2003 = 3339331 = 2.32 times

1437531

2002 = 2336537 = 2.13 times

1092515

INTERPRETATION

It shows whether the bank is earning enough profit before mark up

charges to be paid to the financiers and the taxation obligations due

to the government in order to remain solvent.

The above figure shows the acceptable capacity on the part of the

bank to cover its interest payments. It has increased as compared

with the last year. This increase in the ratio is a sign of



improvement for the bank. But this is a short-term perspective of

the bank’s financial position. In view of the long run financial

perspective, this ratio is good for the bank.

CAPITAL ADEQUACY RATIOS

CAPITAL FUNDS TO TOTAL ASSETS RATIO

Formula = Capital Funds

Total Assets

2004 = 5573149 = 5.20%

107167541

2003 = 3901279 = 4.57%

85386902

2002 = 3026550 = 4.30%

70313073



INTERPRETATION

This ratio indicates the extent of the funds employed by the bank in

the total resources as shown in the balance sheet. This ratio has

been decreased in the current year with a very low margin.

Capital Fund to Risk Assets Ratio

Formula = Capital Fund

Risk Assets

2004 = 5573149 = 7.97%

69938041

2003 = 3901279 = 8.71%

44777538

2002 = 3026550 = 10.07%

30035484



INTERPRETATION

This ratio take into account the difference between cash and

marketable securities & other kind of assets. Cash & marketable

securities, which are risk less items, are excluded to find out the

true picture of the capital adequacy. In case of ACBL the ratio is

decreasing.

GRAPHS OF STEADY GROWTH

THE GRAPHS OF GROWTH ARE SHOWN FOR THE LAST FIVE

YEARS, FROM 2000 TO 2004

PROFIT BEFORE TAX

(Rs. In million)



The above graph shows that the profit before tax of the Askari

Commercial Bank shows a trend of increase and continuous

increase in the profit before tax of the bank, it goes on increasing

every year and its ratio has not been fall since the last five years.

In 2004 the profit before tax increased with greater margin as

compared to the previous four years.

DEPOSITS

(Rs. In million)



Askari Commercial Bank is known to be the leading bank in the

private sector. Customers’ shows a lot of loyalty to the bank,

therefore, the deposits of the bank go on increasing every year and

its ratio has not been fall since the last five years.

LOANS AND ADVANCES

(Rs. In million)

The Askari Commercial Bank has adequate amount of money as

result of deposits it keeps with itself of their valuable customers. It

keep a certain percentage of money in order to meet the day to day

transactions of the bank and lend reaming amount as advances and

loans which is very important source of business for the bank. The

graph shows that the capacity of the bank to lend the advances and



loans is going on increasing since the last five years and is highest

in the year 2004.

INVESTMENTS

(Rs. In million)

The Askari Commercial Bank is showing a mix trend of increase and

decrease in the investments of the bank, it goes on increasing from

year 2000 to 2002 and its ratio is highest in 2002. From 2002 it

starts declining.

TOTAL ASSETS

(Rs. In million)



Total Assets of the bank are increasing every year with the

expansion in the business .In 2004 the assets of the bank has been

increased more than twined a time as compared to the year

2000.which clearly shows the rapid expansion of the bank.

EARNING PER SHARE

(In Rupees)

The earning per share of the bank is also showing good position and

is enough to satisfy the shareholders of the bank, the number of the

shareholders fund has also been increased from the last five years.



The graph shows that the bank’s earning per share ratio is highest

in the year 2004 and is lowest in the year 2000.



SWOT ANALYSIS



SWOT ANALYSIS

An analysis indicating towards the organizations strengths,

weaknesses, opportunities and threat is termed as SWOT Analysis.

Such an analysis is very important for the management in retaining

the strength, overcoming the weaknesses, capitalizing over the

emerging market opportunities, and carving ways to successfully

tackle with the threats and ultimately converting them in the

strengths for the organization.

During six weeks of my stay at Askari Commercial Bank, Shahalam

Market Lahore, I have come across the following SWOT analysis of

the bank.

STRENGTHS

LEADING PRIVATE SECTOR BANK:Askari commercial bank is the leading private sector bank in the

banking network in Pakistan with many of them online branches in

major cities of the country

AUTOMATIC OPERATIONS:

The operations performed by the bank are highly automated that

result in assurance for the customers that their transactions are

completed reliably, efficiently and securely.



FULL DAY BANKING

One can avail the benefit of the services provided at the bank till

5:00 P.m. which is highly useful for those customers who find it

difficult to leave their officers in the morning..

ATM NETWORK

The bank has the largest ATM Network cross the country. The

customers of ACBL withdraw access their funds any time at all the

ATM Sites with ASKCASH Logo.

CUSTOMIZED SOLUTIONS

The management of the bank believes in customer focused banking

rather than the product oriented banking. The products and services

designed by the bank are specifically tailored to the individual

needs of its customers.

CUSTOMER ORIENTED BANKING

The priority banking centres of the bank offer an unmatched where

the customer receives highly privileged services in a highly elegant

environment. It gives the chance of experiencing new standards in

banking. Designed specially for those who appreciate only the finest

things in life, Priority Banking offers the very highest levels of

personalized banking to match customer’s unique status.

ELECTRONIC BANKING

The revolution in the banking in the form of electronic banking

operations have opened avenues of excellent, efficient and quick

services saving the time and costs of the customers and fortunately



ACBL is among those few banks who are already reaping the

benefits of electronic transactions.

ELECTRONIC FUNDS TRANSFER

ACBL management is quite prepared to adopt the latest

advancements in technology resulting in revolution in the banking

operations such as check clearing process, computer based teller

equipment, automatic teller machines, and electronic funds

transfers among the others.

PHONE BANKING

Phone banking service is very attractive for those classes of

customers who don’t have time to personally come to the bank i.e.

banking on the phone line thus saving the precious time of the

customers.

ETHICAL CONCERNS AND PUBLIC IMAGE

The organizations showing concern for the people, ethics, and

environment enjoy good public reputation and are able to reap the

benefits in the long run. ACBL management is quite sensitive to this

issue.

WEAKNESSES

In my opinions these are the points that might be detrimental to the

efficiency and profitability of the bank.



NOT HIGHLY AUTOMATED

The bank has still some of the traditional ways of operations in this

advanced technological environment.

MANUAL BOOK-KEEPING

Although the bank has computerized accounting system but, still

the bankers use to make their entries in the accounting register.

LOW JOB SATISFACTION

Understanding and the effective management of the human

resources is the most difficult challenge faced not only by the bank

but by all the organizations. Even though the people have been

sacrificed in the new organizational developments, it is becoming

clear that the true lasting competitive advantage comes through

human resources and how they are managed. ACBL seems to not

focusing on this highly critical issue as the job satisfaction level of

the employees working at ACBL, was quite low.

LACK OF SPECIALISATION

This famous and useful concept given by Adam Smith in 1776

seems to be missing in the bank. The employees are constantly

rotated from one job to another job of totally different characteristic

in the view of giving them the know-how of the working in all the

departments. But I think this is not a very good tactics used by the

management. Otherwise the situation might be like this ‘Jack of all

and master of none.’



CENTRALIZATION

There is a high degree of centralisation in the bank. Almost all the

decision-making is in the hands of the upper management. But

centralisation is effective up to a certain level otherwise it becomes

inefficient and at times costly too. I personally observed that delay

occurred in the operations of the employees only due to the fact

that they had not got any instructions from the head office.

LACK OF TRAINING FACILITIES

Presently there is no specific training program arranged for the new

recruiters. They have to learn based on their observations and also

their mistakes. It takes a bit time for the fresh one to learn the

banking the result is huge amount of blunders, mistakes etc.

resulting in monetary and non-monetary losses for the bank. There

is pressure not only on the new learner but also on the person

placed upon with this responsibility.

OPPORTUNITIES

Apart from the ones discussed in External Factors Evaluation Matrix,

the bank is facing the following threats and opportunities currently:

These are positive external environmental factors effecting the

organization.

It deals in bulk business.

A large amount of foreign investment is attracted.



Strong potential for growth

Steady increase in Customer Deposits

Overseas Operations

Branches In Remote Areas

Islamic Banking

Sharp increase in imports and exports

THREATS

High Employees Turnover

As discussed above, the job satisfaction level of the employee is

very low resulting in high turnover, which is bad for any

organization as there are huge monetary and non-monetary costs

involved in the fresh recruitments.

High charges

The schedules of charges indicate that the fees charged by the bank

on the various services it provides are extremely high. It may result



in decrease in the number of its exiting customers. Further more,

this could be very alarming situation for the bank in case some of

the competitors grasped the opportunity and lowered its rates. The

result would be either the lost of market share or decrease in the

charges resulting in lowering the bank’s income.

Less attractive rate of return

Commercial banks face considerable competition in attracting

deposits from individuals or small investors. In contrast, the Govt.

of Pakistan national saving scheme offers attractive rates of return

(approx. 16 to 18 percent annually) on 10-15 year fixed accounts,

which banks find difficult to match.

Stiff Competition

SCB is currently facing strict competition from the foreign banks

especially the American who banks enjoy a good market position.

Collectively U.S. banks hold approximately 9 percent of all

commercial banks' assets. At present, three American banks are

operating in Pakistan: American Express Bank; Bank of America

and Citibank.

Less Experienced Staff

Owing to huge turnover of the employees, the no. of experienced

and well trained staff is very low. Majority of the staff working in the

bank branches is quite young and inexperienced. If the bank failed

to bring down its high employees turnover, then it would be lacking

the most important resources of any organization i.e. the

experienced staff.



STRATEGIC MANAGEMENT

“The art and science of formulating, implementing and evaluating

cross-functional decisions that enable an organization to achieve its

objectives.”

STATEGIC MANAGEMENT PROCESS:


Develop Vision & Mission

Perform External Audit

Establish Long term objectives

Generate Evaluate, and select strategies

Implement strategies Management Issues

Implement strategies Marketing, Finance, MIS Issues

Measure and evaluate performance


Stage1_________________Stage2___________________Stage3

The strategic management process consist of three stages

1. Strategy Formulation2. Strategy Implementation3. Strategy Evaluation

STARTEGY FORMULATION STAGE:

The strategy formulation stage includes the development of vision

and mission, identification of organization external opportunities,

identification of the organizational internal strengths and

weaknesses, establishment of long term objectives, generation of

alternative strategies and selection of the pertinent strategies to

pursue in the long run. On the other hand, this stage also describes

about the selection of business, allocation of available resources,

expansion of operations, entering into the new markets and the

conditions of mergers and joint ventures.

STARTEGY IMPLEMENTATION STAGE:

This stage requires a firm to establish annual objectives, devise

policies, motivate employees and allocate resources so that

formulated strategies can be executed. As for the purpose of

achieving long term objectives the annual objectives are described

and the policies are established for them. By implementation of


Perform internal audit


strategies, it is evident that employees and the managers put the

formulated strategies to action. That’s why this stage is also called

an action stage of strategic management.

STRATEGY EVALUATION STAGE:

It is the final stage in the strategic management process. The

strategies, which are implemented at the second stage, are now

evaluated as hey are working in accordance with the objectives or

not. Besides it, all strategies are subject to future modification

because external and internal factors are constantly changing.

EXTERNAL AUDIT:

The purpose of an external audit is to develop a finite list of

opportunities that could benefit the organization and threats that

should be avoided. There are lots of factors, which are involved in

determining the external environment, but certain key variables are

taken that offer actionable responses. The organization should have

to respond either offensively or defensively to the factors by

formulating strategies that take advantage of external opportunities

or that minimize the impact of potential threats.

KEY EXTERNAL FACTORS:

External forces/ factors can be divided into five broad categories

1. Economic forces

2. Social, Cultural, demographic and environmental forces

3. Political, Governmental and Legal forces

4. Technological forces

5. Competitive forces



OPPORTUNITIES FOR ASKARI COMMERCIAL BANK

These are positive external environmental factors effecting the

organization.

It deals in bulk business.

A large amount of foreign investment is attracted.

Strong potential for growth

Steady increase in Customer Deposits

Overseas Operations

Branches In Remote Areas

Islamic Banking

Sharp increase in imports and exports

THREATS FOR ASKARI COMMERCIAL BANK

High Employees Turnover

High charges

Less attractive rate of return

Stiff Competition

Less Experienced Staff

EXTERNAL FACTOR EVALUATION MATRIX:

This Matrix summarizes and evaluates economic, social, culture,

and demographic, environmental, political, governmental, legal,

technological and competitive information. It shows the

opportunities and threats that are faced by an organization.



Weights:

0.0 = Not Important

1.0 = Very Important

Rating:

1 = The Response Is Poor

2 = The Response Is Average

3 = The Response Is Above Average

4 = The Response Is Superior

EXTERNAL FACTOR EVALUATION MATRIX

Key External Factors Weights Rating Weighted Score

Opportunities

1 It deals in bulk business.0.10 3 0.30

2. A large amount of foreign investment is attracted 0.10 4 0.40

3. Strong potential for growth 0.05 2 0.104. Imports are increasing 0.05 4 0.205. Steady increase in Customer Deposits

0.15 3 0.456. Overseas Operations 0.03 3 0.097 Branches In Remote Areas 0.02 2 0.04

8 Islamic Banking 0.01 1 0.01

9. Sharp increase in imports and exports 0.04 3 0.12

Threats

1. High Employees Turnover 0.05 2 0.102. High charges 0.05 2 0.103. Less attractive rate of return

0.15 3 0.454. Stiff Competition 0.10 3 0.305. Less Experienced Staff 0.10 2 0.20

TOTAL 1.00 2.86

Explanation:



The above Matrix depicts the opportunities and threats that are

faced by the bank. The weighted score of EFE Matrix of the bank is

2.86 that is above average (2.5). So it shows that the bank is

responding to the existing opportunities and threats in banking

industry.

INTERNAL AUDITAll organizations have strengths and weaknesses in their functional

areas of business. For analyzing the internal situation of the

organization with regard to its management, marketing, finance,

operations and research and development, internal audit is

performed. The internal audit is executed parallel to the external

audit. This process provides more opportunity for the participants

and the managers to understand the key areas within an

organization.

Key internal forces:

1. Marketing

2. Finance

3. Accounting

4. Management

5. Management Information System

6. Production/Operations

STRENGTHS OF ASKARI COMMERCIAL BANK

LEADING PRIVATE SECTOR BANK:

AUTOMATIC OPERATIONS:

FULL DAY BANKING

ATM NETWORK

CUSTOMIZED SOLUTIONS



CUSTOMER ORIENTED BANKING

ELECTRONIC BANKING

ELECTRONIC FUNDS TRANSFER

PHONE BANKING

ETHICAL CONCERNS AND PUBLIC IMAGE

WEAKNESSES OF ASKARI COMMERCIAL BANK

NOT HIGHLY AUTOMATED

MANUAL BOOK-KEEPING

LOW JOB SATISFACTION

LACK OF SPECIALISATION

CENTRALIZATION

LACK OF TRAINING FACILITIES

INTERNAL FACTOR EVALUATION MATRIX:

This strategy-formulation tool summarizes and evaluates the major

strengths and weaknesses in the functional area of a business and it

also provides a basis for identifying and evaluating relationships

among those areas. Intuitive judgments are required in developing

an IFE Matrix

Weights:

0.0 = Not Important

1.0 = All Important

Rating:

1 = Major Weakness



2 = Minor Weakness

3 = Minor Strength

4 = Major Strength

INTERNAL FACTOR EVALUATION MATRIX

Key Internal Factors

Internal Strength

Weights Rating WeightedScore

1. LEADING PRIVATE SECTOR BANK 0.10 3 0.302. AUTOMATIC OPERATIONS 0.05 4 0.203 FULL DAY BANKING 0.06 4 0.244 ATM NETWORK 0.04 3 0.125. CUSTOMIZED SOLUTIONS 0.05 4 0.206.CUSTOMER ORIENTED BANKING 0.07 4 0.287. ELECTRONIC BANKING 0.04 3 0.128 ELECTRONIC FUNDS TRANSFER 0.05 4 0.209 PHONE BANKING 0.03 4 0.1210 ETHICAL CONCERNS AND PUBLIC IMAGE

0.05 4 0.20

Internal Weaknesses

1 NOT HIGHLY AUTOMATED 0.05 2 0.102 MANUAL BOOK-KEEPING 0.10 1 0.103 LOW JOB SATISFACTION 0.05 2 0.10

4. LACK OF SPECIALISATION 0.05 2 0.105. CENTRALIZATION 0.06 2 0.12

6. LACK OF TRAINING FACILITIES 0.15 2 0.30

Total 1.00 2.80

Explanation:

The above Matrix comprises the strengths and weaknesses of Bank

Askari Commercial Bank and the weighted score of the bank is 2.80

that is above average (2.5) so it depicts that the bank has strong

internal position



THE COMPETITIVE PROFILE MATRIX:

The Competitive Profile Matrix (CPM) identifies a firm’s major

competitors and its particular strengths and weaknesses in relation

to a sample firm’s strategic position.

In CPM critical success factors are taken that include both internal

and external issues. In a CPM, the rating and total weighted score

for rival firms can be compared with the sample firm.

Weights:

0.0 = Not Important

1.0 = Very Important

Rating:

1 = Major Weakness

2 = Minor Weakness

3 = Minor Strength

4 = Major Strength



COMPETITIVE PROFILE MATRIX

Askari

Bank

Bank

Alfalah

Critical

Success

Factors

Weigh

t

Ratin

g

Score Ratin

g

Score

Customer

satisfaction

0.16 3 0.48 2 0.32

Branch network

0.12 2 0.24 3 0.36

Market share 0.09 4 0.36 4 0.36

Service quality 0.10 4 0.40 3 0.30

Advertising 0.05 2 0.10 3 0.15

Online facility 0.09 3 0.27 3 0.27

Full day

banking

0.12 3 0.36 2 0.24

Employee

satisfaction

0.15 3 0.45 3 0.45

Financial

position

0.12 4 0.48 3 0.36

TOTAL 3.14 2.81

EXPLANATION:

In the above Matrix, the position of Askari bank is stronger as

compared to its rival Bank Alfalah. 3.14 is the total of average

weighted score that reveal the relative strength of the firm against

its competitor. The total weighted score of Bank Alfalah is 2.81 that



show better position. But as compared to Askari Bank it is slightly

less.

STRATEGY-FORMULATION FRAMEWORK:

Strategy-Formulation Framework can be integrated into three-stage

decision making framework

THE INPUT STAGE:

External Factor Evaluation (EFE) Matrix

Competitive Profile Matrix (CPM)

Internal Factor Evaluation (IFE) Matrix

THE MATCHING STAGE:

Threats-Opportunities-Weaknesses-Strengths (TOWS)

Matrix

Strategic Position and Action Evaluation (SPACE) Matrix

Boston Consulting Group (BCG) Matrix

Internal-External (IF) Matrix

Grand Strategy Matrix

THE DECISION STAGE:

Quantitative Strategic Planning Matrix (QSPM)



THE STRATEGIC POSITION AND ACTION

EVALUATION (SPACE) MATRIX:

The SPACE Matrix is an important matching tool. It’s four-quadrant

framework indicates that whether aggressive, conservative,

defensive, or competitive strategies are most appropriated for a

specific organization.

Internal dimensions [FS] and [CA]

External dimensions [ES] and [IS].

Assign a numerical value ranging from +1 (worst) to +6 (best) to

each of the variables that make up the FS and IS dimensions. Assign

a numerical value ranging from –1 (best) to –6 (worst) to each of the

variables that make up the ES and CA dimensions.

Aggressive Strategic:

Market penetration, market development, product development,

backward integration, forward integration, horizontal integration,

conglomerate diversification, concentric diversification, horizontal

diversification, or a combination strategy.

Conservative strategies:

Are best options for the firm that lies in this quadrant. Most often

include market penetration, market development, product

development, and concentric diversification.

Defensive strategies:

Include retrenchment, divestiture, liquidation, and concentric

diversification.



Competitive strategies:

Include backward, forward, and horizontal integration; market

penetration; market development; product development; and joint

ventures.

SPACE MATRIX OF ASKARI BANK

FINANCIAL STRENGTH

Investment decreased +1Strong Liquidity Position +6Strong Cash flow position +4The Revenues increased +4Net Income After Tax increased +4Net Profit Margin increased +4Return On Equity +2

+25INDUSTRIAL STRENGTH

Strong potential for growth +6Computerized Banking system +2Potential for further increase in profits +6Growth prospects for Islamic Banking +2Electronic Banking

+18ENVIROMENTAL STABILITY

High Inflation rate -1Political Instability -3Competition from Foreign and Local banks -2Similar Products offered at higher rate by other banks -4Changes in laws by government -3Strict SBP regulations -4

-17COMPETITIVE ADVANTAGE

High quality services -1Customer oriented banking -2Vast product variety -2First ever free visa card -1Strong top management -1

-7CONCLUSION

ES Average is –17/6 = -2.8 IS Average is +18/5 = +3.6


-1


CA Average is –7/5 = -1.4 FS Average is +25/7 = +3.5Directional Vector Coordinates: x-axis: (-1.4)+(+3.6) = +2.2

y-axis: (-2.8)+(+3.5) = +0.7

EXPLANATION:

Directional vector of the Bank is located in aggressive quadrant

(upper-right quadrant). It shows that the bank has excellent position

to use its strengths, take advantage of external opportunities,

overcome internal weaknesses, and avoid external threats.

Therefore, market penetration, market development, product

development, backward integration, forward integration, horizontal

integration, conglomerate diversification, concentric diversification,

horizontal diversification, or a combination strategy can be feasible

according to specific circumstances.


ES

CA IS

-1-2-3-4-5-6 +1 +2 +3 +4 +5 +6

+3

+6

+5

+2

+1

+4

-1

-2

-3

-4

-5

-6

(2.5, 0.75)

Conservative Aggressive

Defensive Competitive


THE BOSTON CONSULTING GROUP

(BCG) MATRIX:

The BCG Matrix graphically portrays differences among divisions in

terms of relative market share position and industry growth rare.

Relative market share position is defined, as the ratio of a division’s

own market share in a particular industry to the market share held

by the largest rival firm in that industry.

QUESTION MARKS:

Division in Quadrant I have a low relative market share position, yet

they compete in a high-growth industry. Generally these firms’ cash

needs are high and their cash generation is low. These businesses

are called Question Marks because the organization must decide

whether to strengthen them by pursuing an intensive strategy

(market penetration, market development, or product development)

or to sell them.

STARS:

Firm that lies in this Quadrant (often called Stars) represent the

organization’s best long-run opportunities for growth and

profitability. Divisions with a high relative market share and a high

industry growth rate should receive substantial investment or

maintain or strengthen their dominant positions.



Forward, backward, and horizontal integration; market penetration;

market development; product development; and joint ventures are

appropriate strategies for these divisions to consider.

CASH COWS:

The organization that lies in this Quadrant has a high relative

market share position but compete in a low- growth industry. Called

Cash because they generate cash in excess of their needs, they are

often milked.

Product development or concentric diversification may be attractive

strategies for strong Cash Cows. However, as a Cash Cow division

becomes weak, retrenchment or divestiture can become

appropriate.

DOGS:

The organization that lies in this Quadrant has a low relative market

share position and competes in a slow- or no- market-growth

industry; they are Dogs in the firm’s portfolio. Because of their weak

internal and external position, these businesses are often

liquidated, divested, or trimmed down through retrenchment. When

a division first becomes a Dog, retrenchment can be the best

strategy to pursue because many Dogs have bounced back, after

strenuous asset and cost reduction, to become viable, profitable

divisions.



BCG MATRIX

Division Revenues

(000)

Percent

Revenues

Profits

(000)

Percentage Percentage

Market

Share

Percentage

Growth

Rate

Car

Finance

2,167,252 33% 371,276 34% 45% +16

Credit

Card

2,758,321 42% 393,116 36% 58% +15

Islamic

Banking

656,743 10% 109,199 10% 8% -2

Home

Loan

985,115 15% 218,398 20% 15% +16

Interpretation:

Car finance division and Islamic Banking have a low market share

position, yet they compete in a high growth industry. These

businesses are called as Question Marks, because the organization

has to decide whether to strengthen them by pursuing an intensive

strategy (Market development, Market Penetration, Or Product

Development) or to sell them.

Credit Cards represents the organizations best long-run

opportunities for growth and profitability. Credit card division has a

high market share position and a high industry growth rate,

therefore the bank should invest more in this division to maintain or

strengthen their dominant position. Forward, Backward, and



Horizontal Integration, Market Penetration, Market Development,

and Product Development are the appropriate strategies for this

Credit Card Division.

Home Loan division has a low Market Share Position and competes

in a slow or no market growth industry; they are dogs in the firm’s

portfolio. Because of their weak internal and external position, the

businesses are often divested or trimmed through retrenchment.

GRAND MATRIX:

The Grand Matrix has become a popular tool for formulating

alternative strategies. All organizations can be positioned in one of

the grand strategy matrix’s four strategy quadrants. A firms division

can be likewise positioned. Grand Strategy matrix is based on two

evaluative dimensions

Rapid Market Growth



Quadrant II

1. Market Development2. Market Penetration3. Product Development4. Horizontal Integration5. Divestiture6. Liquidation

Quadrant I

1. Market Development2. Market Penetration3. Product Development4. Forward Integration5. Backward Integration6. Horizontal Integration7. Concentric

Diversification

Quadrant III

1. Retrenchment2. Concentric Diversification3. Horizontal Diversification4. Divestiture5. Liquidation

Quadrant IV

1. Concentric Diversification2. Horizontal Diversification3. Conglomerate

Diversification4. Joint Venture

Slow Market Growth

Interpretations:

Bank falls in the first quadrant of the Grand Strategy Matrix. The

Bank is in excellent strategic position. For the bank, continuous

concentration on the current market (Market Development, Market

Penetration) and products (Product Development) is an appropriate

strategy. If the bank is highly committed to a single product, then

concentric diversification may reduce the risk associated with a

narrow product line the bank can afford to take advantage of the

opportunities in several areas. It can take risk aggressively when

necessary.

Quantitative Strategic Planning MatrixStrategic Alternatives


Strong Competitive

Position

Weak Competitive Position


MP PDKey Factors Weight AS TAS AS TASOpportunities

Advancement in Islamic Banking 0.05 2 0.10 1 0.05Expand Branch Network 0.05 - - 1 0.05Enhance Product Portfolio 0.05 2 0.10 3 0.15Get Into E-Business 0.05 1 0.05 - -Provide Financial Consultancy 0.10 2 0.20 1 0.10ThreatsGovernment Policies 0.10 1 0.10 - -Strict SBP Regulations 0.20 1 0.20 3 0.602nd Hand Car Finance By City Bank 0.15 4 0.60 3 0.45Cash Card Introduced By MCB 0.10 2 0.20 4 0.40Branches of Nationalized Banks in all Cities of Pakistan

0.05 2 0.10 1 0.05

1.0StrengthsBank Name 0.05 2 0.10 4 0.20Credit Card 0.10 4 0.40 3 0.30Strong Top Management 0.05 1 0.05 4 0.20Aggressive Banking 0.15 2 0.30 4 0.60Bad Debt Ratio 0.05 2 0.10 1 0.05Committed Workforce 0.05 1 0.05 3 0.15Financial Ratios 0.05 2 0.10 3 0.15Customer Satisfaction 0.05 4 0.20 3 0.15Islamic Banking 0.05 3 0.15 4 0.20WeaknessesNo International Branch Network 0.05 1 0.05 3 0.15Weak IT Structure 0.05 2 0.10 1 0.05Trade Through NOSTRO Accounts 0.05 2 0.10 1 0.05Less Job Rotation 0.05 1 0.05 - -ATM not available In Every Branch 0.10 4 0.40 3 0.30No Marketing Department 0.10 4 0.40 3 0.30Sum Total Attraction Score 1.0 4.10 4.70

AS = Attractiveness Score TAS = Total Attractiveness ScoreAttractiveness Score: 1 = not attractive 2 = somewhat attractive;



3 = reasonably attractive 4= Highly AttractiveMP= Market Penetration PD=Product Development

Interpretation:

The Bank must consider two alternative strategies i.e. Market

Penetration, and Product Development. The total attractiveness

score of Market Penetration is 4.10 and for Product Development is

4.70. Therefore the strategy which the Bank must adopt is Product

Development as the total Attractiveness score of this strategy is the

highest i.e. it appears to be the most attractive and suitable for the

bank.



TRAINING PROGRAMME

INTERNSHIP EXPERIENCES

DIFFICULTIES FACED…

INTERNSHIP EXPERIENCES



One of the most important aims of the student life is to express

himself / herself correctly and adequately. This was the believe in

my mind when I first decided to go to Askari commercial Bank to

complete my internship program.

Determined, Confident and Persistent in the pursuit of knowledge

and learning, I was on my way to Askari Commercial Bank,

Shahalam market Branch in the early morning of July 1, 2005. Just a

day before, I had taken my class of 3rd semester. Normally I wanted

rest and recreation after the tiring class in June but this time I was

anxiously waiting for the start of my internship.

FIRST WEEK

I started my internship from "General Banking" in the first week.

The General banking is basically divided into the following sub

departments, which are as follows:

Account opening

Bills and remittances

Clearing

Term deposit

Cash department

The first day of exposure to the practical field was at the (sub

department) Account opening.

The relationship of customer starts with this department. every one

is not allowed to come and open an account in the bank, for this

purpose there should be an introducer who himself is the account

holder in the same branch. He has to introduce the new client by



signing the opening account form and then his signature are

verified.

Applicant's fills the account opening form and provides it to the

bank with photocopy of I.D. card and signatures card.

Then the banker inquires the about the option of opening a joint

account or individual. If the customer wants to open joint account

then either it is "either or survivor" (i.e. Only one persons signature

is sufficient) or jointly (i.e. Both should sign the cheque).

Account opening:

Although the procedure of opening an account in a bank is a quite

complicated job but I am going to tell you only the basic necessities

for opening the account, which are as follows:

Introduction

National I.D. card

Personal data

Details of dealing with other banks.

These are some of the basic requirements for opening the account.

Issuance of chequebook

Once the account is opened, ACBL issues the chequebooks to the

customer so that they could withdraw their money whenever they

like. The producer of issuance of the chequebook is as follows:

For the customer who already has an account with the bank, the

lastly consumed chequebook requisition slip with the help of which



a new chequebook is issued. And the person who is going to open a

new account for the first time gets the chequebook free without any

requisition slip.

For the new depositors the cheque book is not issued at the time of

opening of account, rather it is issued after three days but, as the

most of the customers are from the armed forces so the usually get

the cheque earlier. ACBL issues the chequebooks for both the local

and foreign currency accounts.

I remained there in the account-opening department for one week

and daily I learnt a new thing

I come to know about the details of the account opened by the

banks, which I have explained in previous portion of "Departments".

In the start I have stated the account opening procedure and

issuance of cheque book in a very comprehensive way, now let me

tell u the further related detail of account opening

First of all a customer come and gets the information

regarding the opening of account. After getting the proper

information he gets an introducer and goes for opening an

account of any kind whatever he wants

He fills the from regarding the opening of account which is in

fact a request.

S.S card is filled which contains the signature that will be used

in future in order to identify that you are the same particular

person who perfectly eligible for receiving the benefits.

The S.S card and the application form is verified and the

verification stamp is imposed on it.



After verification the application forms are pasted in the file

with the serial, no which is actually the account no. Allocated

to the respective customers.

The chequebook is issued to the customer after three days.

A letter of thanks is posted to the customer as well as the

introducer. The introducer is thanked for the two

perspectives. First he should be thanked that because of him

the bank get another customer and the second reason behind

sending the letter to him is that if the customer had

fraudulently get the signature of that person as an introducer

then he should come to know that some one has used his

name as well as signature for his personal benefit and without

the consent of him (introducer).

The procedure for opening the account comes to an end after

sending the letter of thanks.

Active and inactive Account

The account becomes Inactive if there is no debit transaction.

Account becomes active if there is credit transaction.

SECOND WEEK

In the second week I was shifted to the TDR (Term Depots Receipts)

department. It was again a good experience to work with the officer

here. First of all he told me about the basics of the TDR.



Deposit is lifeblood of a commercial bank. The main function of a

commercial bank is to channelize the saving from the savers to the

ultimate users of the funds. This process of collecting saving is

called "deposit mobilization".

Deposits are of two types one is the demand deposit and the other

one is time deposit (these have been explained in detail in the

"department" portion). As the name signifies the demand deposit is

payable on demand so no interest or benefit is given on such

deposits but the time deposit is a kind of deposit, which gives you a

benefit in terms of cash. Most of the people who have surplus

money with them especially the landlords deposit their money in

such accounts.

Term deposits are payable on demand with certain maturity.

Different percentages of profit are given in the time deposit (the

detail is given in the Marketing Mix)

These are called fixed deposit because they are fixed and no

transaction is allowed till maturity. In fix deposit you can open an

A/c of the same title only than A/c number will be changed. While in

other accounts the A/c can't be opened under the same title even in

other branch of the same Bank.

Profit calculation

The Head office determines the provisional rates of the Profit. Every

bank has its own interest rate; usually established banks have low

interest rates then the non-established banks as the have to attract

the Customers.



There are different types of accounts, which are shown in

provisional rates of profit on “PLS deposit” and rate of return

minimum balance, and maturity is also shown in it. After every six

months the rates are revised on PLS deposit

On fixed deposit the interest is given on the Principle amount only

while on other profit and loss deposits the interest is given on profit

an principle amount (provided that the interest has not been

received in the given time). On fixed deposits the month is started

from the day from which you deposit the amount.

As the interest rates vary frequently you will calculate the interest

on the rate which is applicable during that particular duration. It

happens that sometimes the interest rate remains the same. But

during the year 2004 the interest rates were changed two times

within six months. First of all the interest rates were changed at the

start of the year and then these rates were changed again in the

month of the February i.e. these were changed twice in the six

months. The changing in the interest rate depends upon the will of

the Head office, which has the power to change them at any time.

Zakat is deducted on the first of Ramdan. However, the Bank can't

deduct the Zakat if you have given Affidavit (declaration regarding

not to deduct Zakat on Stamp paper).

Tax is deducted which is known as withholding tax only at the time

of deposit e.g. When you will deposit Rs.100,000 you will have to

give additional money of Rs. 300/- as the withholding tax. (The rate

of withholding tax is 0.3%). If you have National Tax Number NTN

then 0.3% withholding tax is exempt.



The rate of withholding tax on profit is 10% i.e. if you are going to

get a benefit of Rs. 10,000 then you will receive the cash of Rs.

9,000 as the remaining amount will be deducted as the tax.

For non-residents the tax and Zakat is exempt (visa is required as

the proof that the particular person is really a non-

resident).similarly Christians has not to pay the tax, they have to

pay the tax only.

Askari Bachat Certificates are tax-free.

The calculation of interest is done manually on the card and then

you feed (debit) it in the bank's account (Profit Saving Account) and

will be credited in the customer's account. A computerized voucher

is prepared which will be used as the record.

If there is any mistake in the Debit Credit that will be checked out

through Daily Balance Sheet of the Particular department.

For easy operations Customer prefer to give instruction that their

interest should be credited to their A/c otherwise a manual voucher

will be made that will be cashed on cash counter every time when

you come to take the interest.

Record keeping

The record of the TDR is although feed in the computer but there is

also a hard copy of the record. The verified TDR forms are pasted

with serial number of receipt given to the customer (the receipt of

the form regarding the deposit of the amount).



Askari Bachat Certificates are attached or pasted in the file

according to the date. The date may be of any month and any year

i.e if there is a card of the 8th then on this card you will find the

only 8th date of any month and any year in which the card was

issued.

THIRD WEEK

In the third week of my internship I was shifted to the Clearing

section and Bills for collection section as well. Three days I worked

with the "Clearing" and then with the "Bills for collection" section.

CLEARING

This is a "Inter-city clearing" i.e the cheques of Lahore city from

different banks like National Bank of Pakistan, Standard Chartered

Bank, Muslim Commercial Bank are deposited here. The deposited

cheque is received carefully by checking the title of cheque, date,

amount, and signature on the cheque. All the cheques go to the

State Bank of Pakistan. Everyday NIFT receives all cheques and

arranges them. By establishment of NIFT a lot of time, cost and

labor is saved. The cheques are stamped carefully. Two stamps are

required on the cheques

Clearing stamp

Payee's account will be credited

If any stamp is missed or unclear, SBP returned one the cheque with

reason.



When the cheques are deposited they enter all the cheques on the

computer with account number and these figures go to SBP.

There are four types of Balances in the computer

Available balance

Float amount

Block amount

Ledger balance

NIFT collects all the cheques at 2:00 pm. After that the computer

department give clearing sheet that is checked in clearing.

Same day clearing

All the cheques are cleared in coming day. But same day cheques

are cleared other same day when it is deposited. The same day

cheque amount is 50,000 below this amount the cheque, can't be

cleared in the same day.

Clearing house

It is a p[lace where representatives of all scheduled banks sit

together and interchange their claim against cash other with the

help of controlling staff of "state Bank of Pakistan" where there is no

branch of State Bank of Pakistan, the designated branch of State of

Pakistan.

So, system by which banks exchange cheques and other negotiable

instruments drawn on each other within specific area and there by

secure payment for their clients through the clearing house at

specific time In an efficient way.



BILLS FOR COLLECTION

Two types of cheques are deposited here

Outstation cheques

Askari other branch cheques (local)

Outstation cheques mean different cities cheques are deposited and

Local means Askari's other Branches like cantt, circular road,

defence, Gulberg etc. Are deposited. All cheques account numbers

on the computer and these figures go to SBP.

The cheques are cleared in 5-6 days. Because "NIFT" receives and

delivered to SBP where these cheques are cleared in 3 days and

deliver to the banks, which mention on the cheques.

The cheques require three stamps

Askari crossing stamp

OBC number

Payee's account will be credited.

If the cheques are returned due to some reasons, a returned memo.

Random is filled and entries are recorded on the register.

FOURTH WEEK



In the fourth week of internship I was transferred to the

"Remittances department". I met there with a quite sophisticated

personality, she tells me about the issuance, procedure and the

entries of the demand drafts and pay orders.

DEMAND DRAFT

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

received, issued by the branch of the bank drawn. Demand draft is

payable at some other branches of the same bank. But Askari Bank

contract with MCB so ACBL's demand draft is payable at MCB also.

Demand draft is very useful because there is no chance o fraud. The

person deposit cash and get demand draft. It is used for outstation

payment.

Issuance of demand draft

On the application form following particulars are given:

Name of beneficiary

Amount

Mode of payment

The place where DD is drawn

Signature

Name and address of the beneficiary

Request shall be made on standard application form. The customer

writes his name, address, I.D number, and phone number on the

backside of the application form. Commission is charged as per

schedule of charges. The issuance of DD is computerized and the

amount is automatically protect graphed drawing printing for the

avoidance of forgery.



The withholding tax and excise duty is deducted as per schedule.

when the customer depots cash in the cash department, he got

voucher from the cash department and gave it to the person who

makes the DD.

Payment of DD

When a person brings DD (which have been drawn on you), you will

check it from your DD payable record and ask the customer to sign

twice at the back of the DD so that it could be confirmed that he is

the eligible person for receiving the benefit, along with this you

obtain the ID of that person verify it and then make the payment.

After making the payment entry is made in the register that this DD

has been paid.

DD payable register

Every day you receive an IBCA from different banks and it contains

a list of DDs, which have been drawn on you. Banker records it in

DD payable register. These DD are those, which other branches

have drawn on your bank.

Payment of DD from Suspense A/c.

The payment of DD is made from the suspence account in the

following cases:

The amount of DD is paid from suspence a/c if advice is not

received yet.

If a DD is to be cancelled on the wish of the customer, in such

a case the payment will be made from suspence A/c.



Cancellation of DD

Following procedure is followed for the cancellation of the DD.

Obtain the application in writing for the cancellation of DD

along with the original DD.

Verify the signature of the applicant, which should tally, with

the signature on the application form (for opening the DD).

Mark caution on DD issued register or on computerized entry.

Make the payment from suspence account.

Inform the Drawee bank regarding the cancellation and ask

for IBCA. Inter Branch Credit Advice is the advice regarding

the payment (refund) of the amount which Drawer bank have

sent to them (which was deposited by the customer against

the demand draft).

When a demand draft is made, an IBCA is sent to the Drawee

bank regarding the payment.

Types of DD

DD’s are of the following types:

Crossed DD: In the case of crossed DD the amount is

deposited to the A/c of the benificiary.

Open DD: Incase of open DD the amount is handed over to

the benificiary at the cash counter.

TELEGARPH TRANSFTER



The transfer of funds from one branch to another branch of the

same bank is called telegraphic transfer. The bank apply test on

telegraphic transfer. The applicant receives Commission and

charges, if the Applicant’s account is in ACBL, he pays no charge

above Rs. 100,000/-

If he has no account in the ACBL then he has to pay charges

according to the amount e.g. for Rs. 100,000/- the charges are Rs.

250/-

If the account of benificiary is in another bank, his bank will present

The TT to ACBL through for payment.

PAY ORDER

Pay order issued from one branch can only be payable from the

same branch. Pay order is used for same city payment. E.g. If ACBL

(Main Branch) issued pay order it is only payable for Main Branch of

ACBL.

Procedure

Applicant fill the application

After paying charges he gets voucher and pay order is issued

All pay orders shall be crossed "payee's A/c only".

Cancellation

The applicant give application for cancellation

Charges are recovered from the applicant.

FIFTH WEEK



In the second last week of my internship I worked for two days in

the "ATM section" and then in the "Accounts section".

ACCOUNT SECTION

I worked three days in accounts department but as it is a

confidential department so they did not give me enough in

formation regarding their working. First day I sorted out the

cheques of ACBL with the help of the serial number and the

nature of the account and arrange them in sequence. After that i

checked the activity which contains the title of the cheque, amount,

date etc. Accounts department maintains the record of expenses of

all the departments, it also maintain the record of all the employees

regarding their basic salary, increment, benefits etc. It is the

backbone of ACBL

On the next day Is worked in the mail dispatch section, the person

appointed here asked me to arrange the letters and to write the

mailing address on the envelopes and then to put the letters into

the envelops. It was an interesting job but, the single thing which I

learned from here was that, I learnt by heart the addresses of many

branches of the ACBL, which helped me to complete the Marketing

Mix portion of the same report where I have given the detail of the

Place of the ACBL. On the following day I repeated the same job and

did nothing else.

ATM SECTION



I worked two days in ATM department. The countrywide network of

automated teller machine carrying the brand name "ASKCASH".

The branch network is corrected on-line real time and its customers

have access to off-sites as well as on-site atms all over Pakistan.

Being a part of the first inter-bank ATM switch in Pakistan with ABN

AMRO and Habib bank, the customer now here have access to

about 90 atms through the country.

For ATM cards first the customer open account in the bank after

that he/ she fills the application form for the ATM. the Head office

send a ATM cards in a ATM department but pin codes are sent in

other department. So in this way the customer gates his/ her ATM

cards.

ATM means "24 hours services" the customers get money at any

time at any place but during my period the function of ATM were

held by the Head office for three days. The branch has no authority

to held the machine, if it is not working; the Head office knows the

reason for it.

On the whole, it is an excellent strategy of ACBL and to sign a

strategic partnership with ABN-AMRO for ATM sharing arrangement

is first time in Pakistan.S

SIXTH WEEK

In the last week I was shifted to the "foreign exchange" department.

For the first three days I worked there but in the last three days I

was shifted again to the account-opening department due to the



absence of one of the Account opening officer. Therefore I was sent

back to the account-opening department.

THE PROBLEMS I FACED

Doing the internship was a wonderful experience for me but as far

as preparation of the report is concerned it was the most difficult

part of the project. Preparing for report become most difficulty and

tedious as most of the information was not available not only on net

but also from the bank also. I was unable to get the following

material.

History of the bank

Career ladder

Job description

I was fortunate to have a wonderful Annual report of the bank.

Especially it was rested according to the circular of the State Bank

of Pakistan, therefore, it was quite easy for me to analyse the

income statements of the bank. There are some other necessary

requirements for doing the financial analysis of the income

statements i.e.,

Information about the trends prevailing in the market,

And information regarding the positions of the competitors of

the bank that is the reason that I was unable to depict the

true picture of the financial position of the bank.

We are also unaware about the off balance sheet finance of

the bank so, can say nothing regarding the true liabilities of

the bank



Anyhow, it was a very learning experience for me that I will never in

my entire life.

CONCLUSIONS

AND

RECOMMENDATIONS



After spending six weeks at different departments of the bank,

interacting with the employees, getting their views, observing the

organizational structure and design, I have come up with the

following suggestions that in my view, will definitely improve a few

weaknesses observed in the bank by me.

Flexible Policies

The bank should be adopt flexible policies, specially in the areas of

the recruitment, promotions, evaluation of the employees otherwise

the high turnover observed in the bank will continue to create

problems for the bank now and in the future.

Job security

The employees in the organization should be insured job security so

that there is no pressure on the employees while performing their

tasks.

Permanent Hiring

The fresh hiring should be made permanent so that they are

secured of their future. Further the allowances and perquisites

attached with the permanent jobs will also increase the motivation

level of the employees.

Job Training Programs

The bank should place emphasis on the organization of effective

training and development programs for its new as well as existing

employees so that these are gradually updated regarding the recent

developments in the field of banking.



Perquisites and Allowances

The number of allowances and perquisites for the employees should

be increased to ensure that they put their body and soul in the jobs

assigned to them.

Revival of the Charges

The rates for the various charges provided by the bank should be

brought down a bit, as it would result in increase in the number of

customers of the bank.

Adoption of Effective technology

The current unibank system used by the bank is very slow in

processing so my view is that the bank should try to adopt some

other but more effective form of technology in order to provide

comfort to the customers as well as the staff.

Decentralization

The higher authorities should form team-based management rather

than centralized management. It would result in improvement in

uplifting the morale of the employees. They will be more motivated

and involved in all their operations resulting in overall effectiveness

of the organization.


Internship Report

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world bank

business of banking

askari banks reach

private sector bank

banking customers

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