Third Askari 3

Table of Contents
EXECUTIVE SUMMARY:.........................................................................................................................II
1.2. AWARDS & ACHIEVEMENTS___________________________________________________________2
1.3. THE VISION ______________________________________________________________________5
1.4. THE MISSION _____________________________________________________________________5
1.5. CORE VALUES ____________________________________________________________________5
1.6. CORPORATE PHILOSOPHY _____________________________________________________________5
1.7. INSPIRING RELATIONSHIPS_____________________________________________________________5
1.15. CODE OF BUSINESS PRINCIPLES________________________________________________________8
BALANCE SHEET........................................................................................................................................26
AND___________________________________________________26
ASKARI COMMERCIAL BANK LIMITED......................................27
ASKARI COMMERCIAL BANK LIMITED...................................29
TREND ANALYSIS___________________________________________30
SHAREHOLDER’S FUNDS.......................................................................................................................31
I. LIABILITIES____________________________________________________________________32
TREND ANALYSIS............................................................................................................33
PERCENTAGE....................................................................................................................33
TREND ANALYSIS............................................................................................................35
LIABILITIES AND OWNER’S EQUITY.................................................................................................40
PROFITABILITY RATIOS........................................................................................................................43
RETURN ON CAPITAL FUND.........................................................................................................43
INTERPRETATION.................................................................................................................................44
RETURN ON INVESTMENT..................................................................................................................44
Total Assets.....................................................................................45
INTERPRETATION.................................................................................................................................45
RETURN ON RISK ASSETS...................................................................................................................45
Total risk assets........................................................................................46
INTERPRETATION.................................................................................................................................46
RETURN ON DEPOSITS.........................................................................................................................47
Total Deposits.....................................................................................................................................47
OPERATING EXPENSES TO NET REVENUE......................................................................................48
Net Revenue.................................................................................................................................48
INTERPRETATION.................................................................................................................................48
COVERAGE RATIO.....................................................................................................................55
INTEREST COVERAGE RATIO............................................................................................................55
INTERPRETATION.................................................................................................................................55
CAPITAL ADEQUACY RATIOS.................................................................................................56
CAPITAL FUNDS TO TOTAL ASSETS RATIO...................................................................................56
INTERPRETATION.................................................................................................................................56
INTERPRETATION............................................................................................................................57
6.FINDINGS.................................................................................................................................................60
ACKNOWLEDGEMENT:
All the Praise to Allah, the Most Merciful and Beneficent, who blessed me with the
knowledge, gave me the courage and allowed me to accomplish this task.
Before I get into the thick of the things, I would like to add a few heartfelt words for the
people who were part of this work in numerous ways….people who gave me unending
support right from the beginning. Here I add my thanks to the Management Sciences
Department who provide me this opportunity to have an experience in a reputed
organization and groom myself for the future professional responsibilities. I shall also
like to wish to acknowledge and show my deep gratitude to our respective Head of
Department Mr. Nasir Rajput for giving me opportunity to get awareness of the market.
It is out of question if I do not acknowledge our respected teacher, Sir Ishtiaq for her
consistence, advice and support given during the writing up of this report.
.
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EXECUTIVE SUMMARY:
This report is about the internship program at Askari Bank AWT Plaza Saddar
Rawalpindi. It discusses Departments in which I have completed my internship & have
learned a lot of practices and procedures.
The purpose of internship with Askari was to understand the overall environment of the
big organization in Banking Sector. Askari is one of the largest banking institutions in
Pakistan providing a variety of services and products and improving its efficiency and
customer loyalty with every increase in profitability.
This report is divided into several chapters, where chapter one company profile is
discussed including the historical background is discussed. Every company has mission,
vision and some core values; these are discussed in the next chapter. Chapter two consist
of company’s subsidiaries are discussed in details. In the next step overview of different
departments is given. Chapter three comprises of the focused department which finance.
Then the business analysis of the company is presented further more the financial
performance of the company is presented with ratio analysis. Every company has some
key indicators contributing to business the key indicators of the company are discussed.
And finally the SWOT analysis is presented.
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Askari Commercial Bank
1. INTRODUCTION
1.1. Askari Commercial Bank Limited (Brief History)

Askari Commercial Bank Limited (ACBL) works as a Unit of Army Welfare Trust
was established for the Welfare of Army Officials. The office of Army Welfare Trust is
situated at AWT Plaza, Rawalpindi. AWT offers the “AWT Saving Scheme” to the army
officials only. AWT has its units as under:
1. Askari Associates.
2. Askari Leasing.
3. Askari General.
4. Private Business.
5. Textile Mills.
6. Cement Industry.
7. Askari Commercial Bank.
Incorporated in Pakistan on October 09, 1991. The bank obtained business

commencement certificate on February 26, 1992 and started operations form April 1,
1992, as public limited company, and has since expanded into a nation-wide
presence of 51 branches, supported by a network of online ATMs. The Bank is
listed on the Karachi, Lahore and Islamabad Stock Exchanges and the initial
public offering was over subscribed by 16 times. Askari Commercial Bank is
scheduled Commercial Bank and is principally engaged in the business of banking as
defined in the Banking Companies Ordinance 1962.
Askari Commercial Bank limited continues to scale new heights in all areas of its
operations. The safety and security of depositor’s funds, high productivity and optimum
use of technology are the hallmarks of its corporate strength.
While capturing the largest market share amongst the new banks, Askari has provided
good value to its shareholders. Share price of ACBL has remained approximately 12%
higher than the average share price of quoted banks during the last four years.
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Askari Bank is principally engaged in the business of banking as defined in the Banking
Companies Ordinance, 1962.
Askari Bank is the only bank with its operational Head Office in the twin cities of
Rawalpindi-Islamabad, which have relatively limited opportunities as compared to
Karachi and Lahore. This created its own challenges and opportunities, and forced us to
evolve an outward-looking strategy in terms of our market emphasis. As a result, we
developed a geographically diversified assets base instead of a concentration and heavy
reliance on business in the major commercial centers of Karachi and Lahore, where most
other banks have their operational Head Offices.
1.2. Awards & Achievements
• Commercial Bank of the Year

Award for 1994 & 1996 by Asia money Magazine
• Best Domestic Bank of Pakistan

Award for 1995 by Euro money
• The Best Bank in Pakistan

Award for 2001 & 2002
By Global finance magazine
• Best Consumer Internet Bank in Pakistan

Award for 2002, 2003 and 2004.
By Global Finance Magazine
• Best Corporate/ Institutional Internet Bank in Pakistan

Award for 2004
By Global Finance Magazine
• Best Corporate Report

1st prize award for 2000, 01, 02 &03
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By Institute of Chartered Accountants of Pakistan (ICAP) & Institute of Cost and

Management Of Pakistan
• Best Presented Accounts

Ranking Prizes Award from 1997 to 2002
By South Asia Federation of Accountants (SAFA)
• Best Presented Annual Report
1st prize from 1997 to 2003
By National council of culture and Arts (NCCA)
• Best Retail Bank in Pakistan
Award for 2003 by Asian Banker
• Corporate Excellence
Award for 2002, 2003
By Management Association of Pakistan (MAP)
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Organizational Chart
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1.3. The Vision

“To be the Bank of First Choice in the Region”
1.4. The Mission
“To be the leading private sector bank in Pakistan with an international

presence, delivering quality service through innovative technology and
effective human resource management in a modern and progressive
organizational culture of meritocracy, maintaining high ethical and
professional standards, while providing enhanced value to all our
stakeholders, and contributing to society”.
1.5. Core Values

The intrinsic values, which are corner stones of our corporate behavior, are:
 Commitment
 Integrity
 Fairness
 Team-work
 Service
1.6. Corporate Philosophy

The Challenge.... to bring a dream to life.
1.7. Inspiring Relationships

From knowing our customer requirements to understanding employee needs, from
utilizing modern technology to making responsible social contributions, from enhancing
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stake-holders value to practicing corporate ethics… We are continuously and consistently

striving to address newer challenges with a single motivation:
1.8. Inspiring Customer relationships
"Before we discover, we must explore". Knowing our customers and their needs is the
key to our business success. Our 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. Our
client relationship managers are well equipped and well trained to provide most efficient
and personalized service to each and every customer. 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
1.9. Inspiring employee relationship
"Unusual effort on part of the employees who are apparently ordinary workers is one of
the key indications of a superior enterprise”. Our staff is our most valuable asset. The
human resource philosophy at Askari Bank focuses on multi-talent hiring,
professional grooming, requisite training and meritocracy based reward system. We
lay great emphasis on the development and nurturing of "Askari Culture", a cohesive
team work, where each relies on the strength of the other and together they achieve
common objectives.
1.10. Inspiring technological innovation
"Modern science is not an option, it is an obligation”. Technology is rapidly changing the

way we think, act and do business. It has played a pivotal role in enhancing customer
expectations, particularly with respect to speed and quality of service.We enjoy a
strategic competitive advantage over all domestic players by virtue of our leadership
in technological innovations. We have fully automated transaction processing systems
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for back-office support. Our branch network is connected on-line real-time and our
customers have access to off-site as well as on-site ATMs, all over Pakistan.
Our 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.
We have also pioneered ecommerce venture in Pakistan through a major retail
distributor.
1.11. Inspiring ethical values

"Professionalism without integrity is like a book without pages"
Because the right may not always be obvious, we must be guided in our every action
by a set of well-defined values, governing our decisions. We understand that our
commitment to satisfy customer’s needs must be fulfilled within a professional and
ethical framework. We subscribe to a culture of high ethical standards, based upon
development of right attitudes.
1.12. Corporate citizenship
"The greatest of life's pleasures are shared".Our role as a responsible corporate citizen is
as important to us as the products and services we offer. We have made useful
contributions in the areas of sports, culture, poverty alleviation, health & medical
sciences, education and scientific research We are one of the co-sponsors of the 9th
South Asian Federation Games, now schedule to be held at Islamabad in the Year 2003.
We have also sponsored various sports tournaments at both amateur and professional
level. Our contributions to the NGOs dedicated to the treatment and welfare of the blind
is a ray of hope in the darkness. We have made donations to the drug-addiction control
programs and our efforts to help support Aids Awareness programs and contributions to
the mental and social welfare of women and children have won much acclaim.
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1.13. Inspiring growth
"There is no sin punished more implacably by nature than the sin of resistance to change”.
We live in a moment of history where ever thing is changing so fast that we begin to see
the present only when it is already disappearing. Our 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. We 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 we enjoy a network of 50 outlets,
spread across the country.
1.14. Inspiring corporate achievement
"Winning isn't everything, it's the only thing”. Amidst tough competition, our efforts to go
an extra mile in providing superior services to our 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 us to perform even
better, on the other. We have been honored with the "The Best Bank in Pakistan" award
by the Global Finance Magazine. We won the Euromoney and Asiamoney awards as
early as 1994, 1995 and 1996. We have Al+, the highest possible credit rating, for the
short-term obligations, and our long-term rating stands at AA.
1.15. Code of Business Principles
Our Code of Business Principles is to:
 Deliver solutions that meet customers’ financial needs;

 Build and sustain a high performance culture;
 Build trusted relationships with all stakeholders;
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 Build and manage the Bank’s portfolio of business to achieve strong and
sustainable shareholders returns; and
 Create and leverage strategic assets and capabilities for competitive advantage
1.16. Objectives
• To achieve sustained growth and profitability in all areas of business.

• To build and sustain a high performance culture, with a continuous improvement
focus.
• To develop a customer-service oriented culture with special emphasis on
customer care and convenience.
• To build an enabling environment, where employees are motivated to contribute
to their full potential.
• To effectively manage and mitigate all kinds of risks inherent in the banking
business.
• To maximize use of technology to ensure cost-effective operations, efficient
management information system, enhanced delivery capability and high service
standards.
• To manage the Bank's portfolio of businesses to achieve strong and sustainable
shareholder returns and to continuously build shareholder value.
• To deliver timely solutions that best meet the customers’ financial needs.
• To explore new avenues for growth and profitability.
1.17. Strategic Planning
1. To comprehensively plan for the future to ensure sustained growth and

profitability.
2. To facilitate alignment of the Vision, Mission, Corporate Objectives and
Corporate Philosophy, with the business goals and objectives.
3. To provide strategic initiatives and solutions for projects, products, policies and
procedures.
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4. To provide strategic solutions to mitigate weak areas and to counter threats to

profits.
5. To identify strategic initiatives and opportunities for profit.
6. To create and leverage strategic assets and capabilities for competitive advantage.
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2. DEPARTMENTS
2.1. DEPOSITS DEPARTMENT
Deposit is the functional unit of a Commercial Bank. No bank can run its operations
without deposits. Main function of a commercial bank is to channelize saving from the
savers to the ultimate users of funds. The process of collecting saving is called Deposit
Mobilization.
Two board categories of deposits with reference to time period are:
• Demand Deposit
These are payable on demand. They include current account, sundry deposit (e.g. margin
account) and call deposit receipt. No profit is given on demand deposits.
• Time Deposit
Payable on demand with certain maturity. Attracts profit with respect to time.
2.1.1. TYPE OF ACCOUNTS

There are three types of accounts dealt in the ACBL
2.1.2. PLS Saving Bank Account

Saving deposits were introduction to inculcate and encourage the of saving among people
of small means in order to achieves of Islamisation of the banking system in the country,
the government authorized the banks to accept Saving Deposit on profit and loss sharing
basis. Deposits received under this scheme are invested in non-interest bearing advances
and other avenue so as to eliminate the element of interest.
2.1.3. Current Account

A current account is a running account, which is continuously in operation, by the
customer on all working days of the bank. The customer deposits without the current
deposits without previous notice to the bank.
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2.1.4. PLS Term Deposit

Fixed or term deposits are the major source of funds of a commercial bank. Term
deposits, as the name implies, are deposits kept with a bank for a certain period of time.
They are not payable on demand like the current deposit. The depositor can only
withdraw them after the specified period of time. The persons or firms trust, religious
bodies, which have surplus funds keep the money in fixed deposits with bank.
2.2. REMITTANCE DEPARTMENT

The need of remittance is commonly felt is commercial life particularly and in everyday
life generally. The main function of the remittance department is to transmit money from
one place to another. By providing this service to the customer, bank earns a lot of
income. Also customer is able to meet its day to day financial requirements.
2.2.1. Demand Draft

It is an instrument payable on demand for which value has been received, issued by the
branch of the bank drawn i.e. payable at some other place (branch) of the same bank. If
two banks are involved then the DD is sent to other bank but in other case it is handed
over to the applicant.
2.2.2. Telegraphic Transfer (TT)

It is the quickest way of transfer of funds from one place (Branch) to other place
(Branch) of the same bank. Generally, a mail transfer advice reaches the drawer branch
the next day through courier services. But sometimes, a customer demands that his funds
should be transferred through the quickest means. In such cases, transfer of funds
message is passed through telephone or telegram.
This mode of transfer was used before online. Online system is very effective for this
purpose now-a-days. In Askari Commercial Bank online system is used.
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2.2.3. Pay Order

It is an instrument issued for payment in same city. Pay order issued from on e branch
can only be payable from the same branch. It is normally referred to as banker’s cheque.
It is also called confirmed cheque, because bank issues this on it own guarantee.
2.2.4. Pay Slip

It is an instrument issued by the bank for the settlement of its own payment. It is used for
payment by the bank to anyone (may be employees) in this case only one bank is
involved. He is the issuer as well as the payer.
No Excise Duty
No Commission
2.2.5. Outward Bills for Collection

The bills, which are received by the bank and sent to other cities (branches) for the local
clearing in that city, are called Outward Bills for Collection.
2.2.6. Inward Bills for Collection

The bills, which are received by the bank from other branches out of the city for local
clearing, are called Inward Bills for Collection.
2.2.7. On Line Transaction

Askari Bank has provided the facility of on line transaction. In this case the accounts and
their details in the other branches of ACBL can be displayed on computer which is
connected through server to the computer at the other end. Commission is charged on
providing this service this is beneficial as it takes very little time in the transference of
funds. This facility is available all the branches of Askari Bank except Bhai Pheru
Branch.
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2.3 . 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 draw on each other
within a specified area and thereby secure payment for their client through the clearing
house at specified time” in an efficient way.
Since clearing does not involve any cash etc and the entire transaction take place through
book entries, the number of transactions can be unlimited. No cash is needed as such the
risks of robbery, embezzlements and pilferage are totally eliminated. As major payments
are made through clearing, the banks can manage cash payment at the counters with a
minimum amount of cash in vaults.
2.3..1 Clearing House (National Institution of Facilitation

Technologies)
It is a place where representatives of all scheduled 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 acts as controlling member instead of State Bank of Pakistan.
2.3..2 Procedure of Settlement

Presume that ACBL got the cheques which are drawn on HBL, NBP and MCB for
amounts Rs. 50,000/-, Rs. 15,000/- respectively, its total being amounts Rs.95,000/-, it
means that this amount is to be credited to ACBL A/C with S.B.P. on the other hand the
cheques drawn on ACBL are from HBL, NBP and MCB of Rs.15,000/-, Rs.75,000/- and
Rs.30,000/- respectively, its total being Rs.1,20,000/-, it means that this amount is to be
debited from ACBL account. The difference between Rs.95,000/- credit and debit
Rs.1,20,000/- debit is Rs.25,000/- debit which means the house is against ACBL for
Rs.25,000/-.
Hence ACBL A/C with State Bank of Pakistan will be debited with Rs.25,000/- and the
contra will be other banks accounts respectively. This called as “Debit and Credit Rule”.
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2.3..3 Outward Clearing at the Branch

If an instrument is in order then out bank’s special crossing stamp is affixed across the
face of the instrument. Clearing stamps 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
paying-in-slip and half on counterfoil). The instrument is suitably discharged, where a
bearer cheque does not required any discharge and also an instrument in favor of a bank
need not be discharged. The instrument along with paying-in-slip is retained while the
counterfoil is given to the customer duly signed.
2.3..4 Inward Clearing of the Branch

The particulars of the instruments are compared with the list. The
instruments are detached and sort out department wise. The entry is made
in the Inward Clearing Register (serial number, instrument number,
account number, amount of the instrument is written). The instruments are
sent to the respective departments against acknowledgement in the
Inward Clearing Register. The instruments are scrutinized in each respect
before honoring the same
2.4. Retail Banking Division

Retail banking division is also working separately. Its basic features are the consumer
finance products, among them ACBL Saddar is offering following products only.
2.4.1. Askari Bank’s Personal Finance

• You can avail of unlimited opportunities through Askari’s Bank Personal
Finance. No matter what you need is, Askari Bank has more ways to serve you
than ever before. Askari bank is now offering you Askari’s Bank Personal
finance, a loan that is perfect solution for most of the needs.
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2.4.2. Askari Bank’s Smart Cash

ASKSMART Cash is ideal credit line you need to maximize your financial freedom. No
matter you are a salaried individual or a self-employed businessman or professionals, it is
answer to all financial challenges.
It is not an ordinary personal loan or overdraft facility, rather it is an unmatched flexible
credit line that poses no complications and presents no worries.
2.4.3. Askari Mortgage Finance

Askari Mortgage finance offers the convenience of owing the house of own choice while
living it at its rental value. Customer pay the price of property in affordable installments
for a fixed period of time simply pay rental for residence. The installment plan has been
carefully designed to suit budget and accommodation requirements.
2.4.4. Askari Bank’s Business Finance

Through this loan available up to 60% of the assessed market value of customer
residential property. Customer has to pay only mark up on the daily outstanding loan
balance.
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3 Business and Operations Review

Benefited by the highly conducive economic environment, Askari Bank continued its
growth momentum and posted substantial gains during 2004. The positive economic
trends during the year, particularly the broad based recovery by the manufacturing sector
and the low interest rates led to a record growth in the private sector credit demand,
which increased by Rs. 325 billion during fiscal 2004. Also, net consumer credit grew
strongly by Rs. 75.6 billion during fiscal 2004 as against Rs. 48.6 billion in the previous
year, an increase of 56%. The highest growth in consumer credit was financing for
consumer durables followed by automobiles and personal loans. The increase in
consumer credit also had an expansionary effect on corporate finance, as the demand for
automobiles and consumer durables, particularly electronic items, pushed up production
in these sectors.
Askari Bank was well poised to take advantage of these positive developments in the
country. Corporate business accounted for 59% of the total credit disbursed during the
year followed by SME (21%) and commodity financing (13%). Retail and agriculture
credit accounted for 7% of the total credit disbursed during 2004. In a highly competitive
environment, the Bank continually reviewed its policy pertaining to the sectoral
exposures to derive optimum competitive advantage, maintain the risk profile and
achieve greater customer satisfaction.
3.1. Corporate and Investment Banking

2004 was a challenging year due to historic lows in interest rates, particularly for
corporate business. The Corporate Banking Division (CBD) undertook a number of debt
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 telecommunication, 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
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phase, the capital market desk, based at Karachi, increased the volume of capital market
related transactions. During 2004, as a result of the positive stock market sentiment, the
capital market transactions contributed substantially to the Bank’s earnings. Investment
Banking also participated in various debt and capital raising instruments during the year.
Progress on the setting-up of an Asset Management Company was slow because of
delays in receiving statutory approvals. However, we now see the company becoming
operational in the third quarter of 2005. 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.
3.2. Retail Banking

During the year, the Retail Banking Group registered healthy growth (167%) in its asset
book comprising of auto, mortgage, business, personal and household financing. Keeping
in view the fast growing operations of retail banking, the Group re-organized its
marketing and customer support structure by creating dedicated Retail Banking Units
(RBU) in addition to the Retail Banking Centers (RBC). The 5 RBC’s, in Rawalpindi,
Peshawar, Lahore, Karachi and Quetta are now supported by 19 RBU’s which operate
from the branches in proximity of the RBCs. In addition to the asset book, other retail
banking products showed healthy increases. The Bank’s debt card with the brand name
of ASKCARD registered a growth of 23% in the number of cards issued. Askari Bank
pioneered product of electronic utility bills payment service was further expanded and
now covers electricity bills for Islamabad and Peshawar, and gas bills for the south
regions, in addition to the bills of the largest telephone utility company. The transaction
volume on electronic utility bills payment facility increased more than 5 times during
2004.
3.3. Credit Cards

Amidst strong competition, the credit card business, under the MasterCard brand,
recorded good growth in all areas of operation. Net card issuance increased by 59%
during the year and cards in force (CIF) crossed the 100k mark. Transaction volume
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increased by 39%, while the Credit Cards loan portfolio increased by 34%. NPLs on
account of the loans portfolio remained well within the industry norms. For the first time
in Pakistan, Askari Bank introduced the ‘Platinum Card’ in addition to the existing Gold
and Silver. The ‘Platinum Card’ facility offers certain exclusive leisure and travel related
facilities to its members.
3.4. Treasury and International operations

Conditions in the money market and foreign exchange market were very challenging and
volatile during 2004. The low interest rate environment that dominated the first half of
2004, changed with the rising credit demand in the manufacturing, retail, services and
agriculture sectors, increase in inflation, and rising interest rates in the international
market. Similarly, the Rupee / Dollar exchange rate witnessed a volatile situation,
reflected by the fact that the Rupee started the year 2004 at 57.40 against US Dollar,
reached 61.00 in October and gradually receded to 59.46 in December. The main reasons
for this volatility were the bulging trade deficit, higher oil prices and repayment of
expensive foreign debts by the Government of Pakistan (GoP). Dollar premiums in the
forward were negative in the first half of the year; but gradually shifted to positive in the
second half due to the weakening of the Rupee. Money market remained liquid with
volatility in interest rates. Weighted average yields of 6 months Treasury Bills rose to
3.73% p.a. in November from 1.64% p.a. in January 2004, thus reflecting a net increase
of 209 bps. The intense competition along with the deregulation and liberalization of the
money and foreign exchange markets, has placed the Treasury in a demanding position,
and it is now under pressure to be more innovative in undertaking arbitrage and
derivative transactions to maintain (and increase) its share in the overall earnings of the
banks. The Treasury management has established a Mid Office to measure, manage and
mitigate the risk elements associated with the Treasury activities. The IT system and the
human resource skills have been upgraded so that the Treasury can manage the risk
better, and also advice and services to the branches and their customers. The increase in
overall foreign trade of the country during 2004 also enabled the Bank to achieve a
healthy growth. Bank’s import business increased to Rs. 75.2 billion, i.e. 54% over last
year, while the exports increased by 24% over last year, to Rs. 70.1 billion.
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3.5. Offshore Banking Unit

Askari Bank’s first Offshore Banking Unit (OBU) has started making a positive
contribution to the Bank’s overall earnings. During 2004, OBU completed its first year of
operations and recorded more than four times increase in its asset base to USD 47
million, from USD 11 million last year. The OBU enhances our capability in terms of
offering a wider range of services to our customers and also acts as a look-out for new
business opportunities and relationships in the international markets.
3.6. Advances and Credit quality

The low interest rates and the substantial growth in large scale manufacturing were the
primary factors behind the tremendous increase in private sector credit during the year.
Askari Bank’s credit portfolio increased by 55%, to close at Rs. 71.718 billion. A review
of the securities held against credit limits reveals that the credit portfolio of the Bank is
well collateralized, with about 44% of the exposure being covered by securities of liquid
nature, such as deposits, trade documents, equity or debt instruments, guarantees from
government or financial institutions, etc.
Consequent to substantial recoveries during the year, Bank’s non-performing advances

reduced by 14% to Rs. 1.101 billion, from Rs. 1.278 billion last year. The NPLs ratio as a
percentage of gross advances also reduced from 2.76% to 1.54%. During 2004, Askari
Bank made further provisions of Rs. 277 million in compliance with the revised
provisioning guidelines issued by the State Bank of Pakistan, and also to build up the
general provisions as a measure of prudence. The cumulative provisions increased to Rs.
1.780 billion, thereby increasing the coverage of total provisions to total NPLs to 162%,
against 122% last year.
3.7. Information Technology

In the age of increasing competitive pressures, technology support impacts service
delivery standards and customer satisfaction levels. The value addition from this area has
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made a significant contribution towards successfully expanding and managing the

customer base of the Bank.
During 2004, various technology initiatives were successfully implemented. The

seventeen new branches opened during the year were operational with on-line banking
from day one. A dedicated customer call center, named as the Askari Customer Care
Center, became operational during the year. It aims at providing one window service to
our valued customers in terms of their telephonic enquiries. During the year, Askari
Bank’s co-founded ATM switch, ‘One-Link’, the largest ATM switch in Pakistan, linked
up with M-net, the second largest switch. As a result, the Bank’s customers can now
access their accounts through more than 800 online ATMs throughout Pakistan. Making
crucial, timely, strategic decisions is a must to stay ahead in today’s competitive banking
environment. The Bank’s ‘Data Warehouse’ is a step towards providing the management
with accurate, up-to-date information enabling them to make timely and prudent
decisions. The data warehousing project will also assist the already operational customer
call center to operate more effectively. Askari Bank’s central Electronic Technology
Division was relocated to a custom built premises in Islamabad which offers an excellent
environment to work, and much improved communication links with the various
branches and operating units of the Bank, countrywide.
3.8. Regulatory environment & CAR

The year saw many initiatives on the policy and regulatory front which would have an
impact on the Bank’s business in the years to come. The State Bank of Pakistan (SBP)
issued revised prudential regulations which became effective from January 1, 2004. The
revised prudential regulations have, inter alia, resulted in higher provisioning
requirements against the NPLs. At the same time the new regulations provide greater
flexibility to banks to meet the credit requirements of the consumer, microfinance and
SME sectors. The scope of the capital adequacy ratio (CAR) has been extended and
capital requirement for market risk, in addition to the existing credit risk, has also been
introduced.
SBP has enhanced the minimum paid-up capital requirement for banks from Rs. 1.0
billion to Rs. 1.5 billion by December 31, 2004, and Rs. 2.0 billion by December 31,
21
2005. As of year end 2004, Askari Bank is fully compliant with all the above
requirements and the management of the Bank is fully cognisant of the steps being
introduced to promote good governance practices among banks, and to establish effective
anti-money laundering processes in keeping with international requirements.
3.9. People at ACBL

The Bank fully recognizes its committed and competent work force as the primary asset
in providing value addition to its other stakeholders. Human resource functions are
accordingly being modernized and reviewed in accordance with our strategic direction
and objectives. Staff training and motivation is carried out on a continuous basis
throughout the year, based on the assessed training needs, particularly in the areas of
knowledge enhancement and skills. In-house training courses are conducted at the
Bank’s training center. During 2004, 1337 staff attended various training courses spread
over 222 working days. Staff at the middle and senior levels are frequently nominated for
outside training programs conducted by institutions both locally and abroad. Overseas
training was stepped up during 2004 and as many as 11 staff members attended seminars
and workshops overseas. Additionally, 129 staff attended various courses and training
programs conducted by local training institutions.
22
4. SWOT ANALYSIS
SWOT (Strength, Weaknesses, Opportunities & Threats) analysis of ACBL is described

below:
4.1. Strengths
 ACBL has got a well-developed on-line system in most of its branches.
Remittance Department is working very efficiently in transferring the funds of
people due to this system.
 The bank has also started ATM facility in most of its branches. 24-hour banking
is new trend in Pakistan and ACBL has also started Online Banking transactions
which facilitate the customers in every part of the Pakistan where ACBL has its
branch.
 One distinctive feature of the bank is that it is the only bank working for the
welfare of army officers, which was established by Army Welfare Trust.
 The productivity of the bank is very good. Bank is providing a high quality
service to its customers.
 In a short of Period of time ACBL has taken the attention of the traders of the
Saddar Market and show big addition in its accounts.
 The ACBL has no restriction on any kind of exchange of currency on the

availability of the cash.
4.2. Weaknesses
 ACBL has lesser number of branches as compared to other banks. Now it has
only 78 branches. Due to this problem, army officers can not avail the benefits of
their own bank.
23
 The human resource department is not performing the function of selection and
recruitment very effectively. Selection process is not on merit due to which
competent persons cannot be selected.
 Bank is not introducing new products and new saving schemes. Bank should
boost the product development and increase the range of facilities offered for
customers.
 Bank is weak in its credit management. Bank should lend to very sound parties
and increase its payment rate.
 Currently Branch has no ATM which is also a weakness as compared to other

banks present in the market.
 The Branch has little space which some time may create problem.
4.3. Opportunities
 Govt. is taking very bold steps to promote IT in Pakistan. ACBL has an
opportunity to improve in technology.
 Stock exchange is very volatile and takes immediate effect. So, in the time of
crises, conservative investors return to saving deposits.
 ACBL is surrounded by many competitors. It has an opportunity to do aggressive

marketing to increase its business.
 ISI is situated near the Branch which is a big opportunity for the Branch for its
consumer products like Personal Finance etc.
 Foreign Currency being opened soon by the branch is a big incentive for the
traders of the Saddar market.
4.4. Threats
24
 ACBL has many competitors, which are continuously increasing its products and
marketing aggressively. It may cause its customers to shift to competitors.
 Some other banks have competent taskforce, which is also a threat for ACBL.
Because human resource is the most valuable resources.
 The absence of ATM is a big threat as others banks have their ATMs.
 The Old accounts in other banks of traders are threat for the ACBL
because it increases others turnover.
 Low Salary Package is also threat as compared to others banks like MCB
and Bank Alfalah.
25
5. FINANCIAL ANALYSIS
 BALANCE SHEET & INCOME STATEMENT
 TREND ANALYSIS
 COMMON SIZE ANALYSIS
 RATIO ANALYSIS
BALANCE SHEET
AND
INCOME STATMENT
26
ASKARI COMMERCIAL BANK LIMITED
27
BALANCE SHEET AS ON DEC.31 2007 2007 2006

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
28
ASKARI COMMERCIAL BANK LIMITED

PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31ST DECEMBER, 2007
2007 2006
(Rupees in thousand)
Mark-up/return / interest earned 4,487,206 4,073,715
Mark-up/return / interest expensed 1,117,206 1,379,609
Net mark-up / interest income 3,370,000 2,694,106
Provision against non performing loans and advances 277,398 308,528
Provision 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 2,385,578
NON MARK- UP/ INTEREST INCOME
Fee, commission and brokerage income 649,988 524,775
Dividend income 26,318 37,658
Income from dealing foreign currencies 180,992 112,808
Other income 776,230 278,512
Total non mark-up / interest income 1,633,528 953,753
4,688,057 3,339,331
NON MARK-UP / INTEREST INCOME
Administrative expense 1,845,179 1,436,304
Other provisions / write offs - -
Other charges 138 1,227
Total non mark-up / interest expense 1,845,317 1,437,531
2,842,740 1,901,800
Extra ordinary unusual items - -
PROFIT BEFORE TAXATION 2,842,740 1,901,800
Taxation – Current 876,089 873,639
Prior years - -
Deferred 43,611 (74,904)
919,700 798,735
Profit after Taxation 1,923,040 1,103,065
Inappropriate profit brought forward - -
Profit available for appropriation 1,923,040 1,103,065
APPROPRIATIONS:
Transfer to:
Statutory reserves 384,608 220,613
Capital reserves (reserves for the issue of bonus shares) 251,170 114,168
Revenues Reserves 1,036,092 539,948
Proposed cash dividend 251,170 228,336
1,923,040 1,103,065
Un-appropriated profit carried forward - -
Basic earning per share - (Rupees) 15.31 8.78
29
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
2003 2004 2005 2006 2007

Profitability (Rs in million)
Total Income 3840 5047 5704 5028 6121

Interest income 3213 4251 4858 4074 4487
Interest exp 2274 2902 3017 1380 1117
Fee, comm.
506 677 299 638 831
Exch.Income
Other income 122 119 247 317 802
Spread 939 1349 1841 2694 3370
Operating expenses 680 854 1093 1438 1845
Operating Profit 886 1291 1595 2210 3158
Non performing assets 134 283 351 308 315
Profit b/f tax 752 1008 1244 1902 2843
Taxation 436 458 557 799 920
Profit after taxation 316 551 687 1103 1923
30
The operating expenses of the bank has been increased with sharp margin, the ACBL is
newly born bank of only 21 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.
SHAREHOLDER’S FUNDS
2003 2004 2005 2006 2007

Shareholder’s
(Rs in million)
Funds
Total share holders

2155 2579 4173 5047 6016
fund
Share capital 986 1036 1087 1142 1256
Reserves 1229 1521 1940 2760 4317
Surplus on ROA (60) 22 1146 1145 443
31
TREND ANALYSIS
2003 2004 2005 2006 2007
Shareholder’s
%AGE
Funds
Total share holders

100 119.6 193.6 234.2 279.2
fund
Share capital 100 105.0 110.2 115.8 127.4
Reserves 100 123.7 157.8 224.6 351.2
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.
I. LIABILITIES
32
2003 2004 2005 2006 2007

Liabilities (Rs. in million)
Customers
30360 41200 51732 61657 83319
deposits
Refinance
2882 3222 3392 7329 9777
borrowings
Sub-ordinated
- - - - 1000
loans
Other liabilities 3058 3980 11016 11354 7055
TREND ANALYSIS
2003 2004 2005 2006 2007
Liabilities PERCENTAGE
Customers
100 135.7 170.4 203.0 274.4
deposits
Refinance
100 111.7 117.7 254.3 340.0
borrowings
Other liabilities 100 130.1 360.2 371.3 230.7
33
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.
ASSETS
2003 2004 2005 2006 2007

Assets (Rs. in million)
Advances 17893 23292 30035 44778 69938

Investments 8651 11706 26737 22104 17239
Cash, short funds and
statutory deposits with 10056 13436 10061 15099 15936
SBP
Operating fixed assets 641 723 1663 1980 2595
Other assets 1213 1824 1817 1426 1460
Total assets 38454 50980 70313 85387 107168
34
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
2003 2004 2005 2006 2007

Assets (Rs. in million)
Advances 100 130.2 167.8 250.2 390.9

Investments 100 135.3 309.1 255.5 199.3
statutory deposits with 100 133.6 100.0 150.1 158.4
SBP
Operating fixed assets 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
35
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
2003 2004 2005 2006 2007
Business
(Rs. In billion)
Transacted
Imports 26.2 32.0 40.2 48.7 75.2

Exports 30.6 38.8 47.3 56.8 70.1
Guarantees 4.8 6.2 14.2 14.4 25.3
TREND ANALYSIS
36
2003 2004 2005 2006 2007

Business
(PERCENTAGE)
Transacted
Imports 100 122.1 153.4 185.8 287.0

Exports 100 126.8 154.5 185.6 229.1
Guarantees 100 129.2 295.8 300.0 527.1
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 2003.
COMMON SIZE ANALYSIS

(VERTICAL ANALYSIS)
37
COMMON SIZE 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.
2003 2004 2005 2006 2007

Profitability (Vertical Analysis)
Total Income 100 100 100 100 100

Interest income 83.6 84.2 85.2 81.0 73.3
Interest exp 59.2 57.5 52.9 27.4 18.2
Fee, comm.
13.2 13.4 5.24 12.7 13.6
Exch.Income
Other income 3.18 3.94 4.33 6.30 13.1
Spread 24.4 26.7 32.3 53.6 55.0
Operating expenses 17.7 16.9 19.2 28.6 30.1
Operating Profit 23.1 25.6 27.9 43.9 51.6
Non performing assets 3.49 5.61 6.15 6.12 5.15
Profit b/f tax 19.6 19.9 21.8 37.8 46.4
Taxation 11.3 9.07 9.76 15.9 15.0
Profit after taxation 8.23 10.9 12.0 21.9 31.4
38
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.
The interest expense of the ACBL is 18.2% of the total revenue of the bank in 2007,
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.
39
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)
2003 2004 2005 2006 2007

(Vertical Analysis)
Total share holders

5.29 4.82 5.69 5.65 5.38
fund
Share capital 2.42 1.93 1.48 1.28 1.12
Reserves 3.02 2.84 2.64 3.09 3.86
Customers deposits 74.6 76.9 70.5 69.0 74.5
Refinance
7.08 6.02 4.62 8.21 8.74
borrowings
Other liabilities 7.52 7.43 15.0 12.7 6.31
Total 100 100 100 100 100
40
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)
2003 2004 2005 2006 2007

Assets (Vertical Analysis)
Advances 46.5 45.7 42.7 52.4 65.2

Investments 22.4 22.9 38.0 25.8 16.1
statutory deposits with 26.1 26.3 14.3 17.6 14.8
SBP
Operating fixed assets 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
41
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
42
 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
43
Capital Funds
2007 = 3370000 = 60.47%

5573149
2006 = 2694106 = 69.06%
3901279
2005 = 1638357 = 54.13%
3026550
70
68
66
64
percentage
62
60
58
56
2005 2006 2007
year
INTERPRETATION
This ratio relates the net profits to the amount of capital funds that have been employed
in making that profit.
. 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
44
Total Assets
2007 = 3370000 = 1.79%

5573149
2006 = 1103065 = 1.29%
85386902
2005 = 686994 = 0.98%
70313073
2
1.5
percentag
1
e
0.5
0
2005 2006 2007
year
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 2006 from 0.98 % in the year 2005, It has increased to
1.79 % in the year 2007 from 1.29 % in the year 2006, 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
45
Total risk assets
2007 = 1923040 = 2.75%

69938041
2006 = 1103065 = 2.46%
44777538
2005 = 550051 = 2.36%
23291367
2.8
2.7
2.6
2.5
percentage
2.4
2.3
2.2
2.1
2005 2006 2007
year
INTERPRETATION
This ratio, with some fluctuation in 2006 came up from 2.46% in 2006 to2.75 % in the
year 2007. 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.
46
RETURN ON DEPOSITS
Formula = Net income before taxes
Total Deposits
2007 = 2842740 = 3.41%

83318795
2006 = 1901800 = 3.08%
61657000
2005 = 1244022 = 2.47%
41200466
percentage 2
0
2005 2006 2007
year
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.
47
OPERATING EXPENSES TO NET REVENUE
Formula = Operating Expenses
Net Revenue
(Rs. In million)
2007 = 1845 = 30.1%

6121
2006 = 1438 = 28.6%
5028
2005 = 1093 = 19.2%
5704
35
30
25
20
percentage
15
10
5
0
2005 2006 2007
year
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 2005 to 2007 and giving a bright picture of
48
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
2007 = 69938041 = 83.9%

83318795
2006 = 44778000 = 58.6%
49
61657000
2005 = 30035484 = 72.62%
51731506
100
80
60
percentage
40
20
0
2005 2006 2007
year
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.
50
DUE FROM BANKS TO TOTAL ASSETS
Formula = Due from banks

Total Assets
2007 = 2324839 = 2.17%

107167541
2006 = 5770842 = 6.75%
85386902
2005 = 3414470 = 4.86%
70313073
8
7
6
5
percentag
4
e
3
2
1
0
2005 2006 2007
year
INTERPRETATION
51
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
2007 = 2324839 = 16.87%

13781555
2006 = 5770842 = 36.29%
15903055
2005 = 3414470 = 29.79%
11460394
40
35
30
25
percentage 20
15
10
5
0
2005 2006 2007
year
52
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
2007 = 13781555 = 16.54%

83318795
2006 = 15903055 = 25.79%
61656607
2005 = 11460394 = 22.15%
51732003
53
30
25
20
percentage 15
10
5
0
2005 2006 2007
year
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 2007. 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.
54
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.
2007 = 4688057 = 2.54 times

1845317
2006 = 3339331 = 2.32 times
1437531
2005 = 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.
55
CAPITAL ADEQUACY RATIOS
CAPITAL FUNDS TO TOTAL ASSETS RATIO
Formula = Capital Funds

Total Assets
2007 = 5573149 = 5.20%

107167541
2006 = 3901279 = 4.57%
85386902
2005 = 3026550 = 4.30%
70313073
6
5
4
percentage 3
2
1
0
2005 2006 2007
year
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.
56
Capital Fund to Risk Assets Ratio
Formula = Capital Fund

Risk Assets
2007 = 5573149 = 7.97%

69938041
2006 = 3901279 = 8.71%
44777538
2005 = 3026550 = 10.07%
30035484
12
10
8
percentage 6
4
2
0
2005 2006 2007
year
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.
57
5. PERSONAL EXPERIENCE
“Good Judgement comes from experience. Experience comes from bad judgement”
58
One of the most important aims of the student life is to express himself / herself correctly
and adequately. This was the belief 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 , Saddar Branch in the early morning of July 18,
2005.
I stepped up the branch with the passion for learning and full commitment. The first thing
that impressed me was the layout of the branch. . Apart from me, a no. of other interns
have also joined the bank for internship. Being a student of Finance, Financial
Institutions are the interest of any finance student. Bank is also one of them. The rapid
expansion of Banking network across the Pakistan is getting attention of the most of
young and fresh graduates who want to enter in the Banking Sector. My experience in the
bank was a unique. I came across to know different aspects of the banking business and
how it is being run. Pakistani banks have done remarkably good progress for a last few
years. The reason behind this was the good credit facilities given to the customers,
progress of Private Sector Banks, flexible policies of the State Bank of Pakistan. Internal
environment of the Bank has quite different as it looks, where every one has to be alert,
agile and ready to face all the challenges. Sometimes for me it seems to me a useless
work just doing nothing and showing you are the busiest person. This is strategy being
implemented by most of employees in most of the organizations just to pass the time or
wasting time. Another thing which came to in my experience was that staff if cooperative
to only customers not to each other. That is the big thing which I observed because it
affects on their performance appraisals, which form the basis of promotions.
The first week I spent on the Accounts Opening Department, where I came across to
know different aspects of customer dealing and satisfying their queries.
The Next two weeks I spent in the clearing department to closely observe how the
clearing is done for inward and outward, and also the role of NIFT (National Institution
of Facilitation Technologies), how IBCA (Interbank credit Advice) are made a processed
and I must say in the middle of my internship, clearing department helped me lot in
learning new things.
59
The fourth week I spent in the Remittance Department for me here to learn there were
not ample opportunities because of limited operations in Remittance here in ACBL.
Although I got awareness about the computerized system UNI Bank, they are using.
The last two weeks I spent in the Accounts department, perhaps this is the most
challenging department in term of work in ACBL Saddar Branch. Here the moments of
relaxation are very less and all the time you have to do the work. The major task included
checking all the vouchers of previous day sort them and arrange them in proper heads
and file them along with the Computer generated reports. Here the basic thing which I
learnt is the chart of accounts ACBL is using for different expenses and revenue
accounts, etc.
On the whole it was good experience for me that it helped me to think other aspects that
how can I avail other opportunities as after doing the Bank’ internship for getting job the
banking sector would be the my last choice.
6. FINDINGS
• The ACBL Saddar branch is a new branch with just five months of existence and
it has to do a lot to take attention of people and shop keepers in Saddar Branch.
Because Banks like Habib Bank and Muslim Commercial bank has been serving
for a long time. The ACBL has to set new standards in this regard just to sustain
and maintain its image.
• The bank has little space and small staff so it has to follow certain strategies,
among one of them is that it is not entertaining the Salary Accounts because for
the branch like Saddar it is a burden and handle such accounts because the
amount stays in account for only two or three days.
• Credit Department is not currently present and it is a difficult task for the branch
to have because of small space built in future if it will be in pipeline it will be a
big opportunity for the bank to have because Saddar is a market where the clients
for credit are present.
60
• Although branch is not dealing in credit cards, there is at least drop box for credit
card payments just to facilitate the customers.
• The Selection of staff for a new branch is not properly done because for a new
branch to commence you need energetic, well trained people to handle daily
affairs.
7. RECOMMENDATIONS
• The ATM machine should be installed as soon as possible because the no of card
holders is continuously increasing and it will save customers extra charges for
utilizing others ATMs.
• In order to earn more revenue ACBL has to attract corporate customers from the
Saddar Market.
• Currently ZTBL has been doing term financing in ACBL and it has to attract
more corporations for term financing in order to earn more revenue.
• The ISI which is situated very near to branch should be a major target for the
branch, although the staff here is giving consideration to it, but the branch
authorities has not a master plan to attract all the major account holders because
bank is present to facilitate armed forces and its associated offices.
• Salary Package of the employees should be revised and it should be such enough
that it will satisfy employees and boost their motivation level and commitment to
the work.
• Retail banking division in the branch currently not showing good performance it
has to make certain efforts to promote its operation and increase its business.
• The Staff should be trained enough to meet the current standards of the customer
dealing and satisfaction as implemented by other banks like Bank Alfalah.
61
---------------
References:
• Annual Report of Askari Commercial Bank Limited

• Financial Review of Banking Sector by State Bank of Pakistan
• Askari Commercial Bank Website
• Standard Operating Procedures of Askari Commercial Bank
• Help of Bank Staff of Askari Commercial Bank AWT Plaza Saddar.
62

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Table of Contents

1.1. Askari Commercial Bank Limited (Brief History)

Incorporated in Pakistan on October 09, 1991. The bank obtained business

1.2. Awards & Achievements

• Commercial Bank of the Year

• Best Domestic Bank of Pakistan

• The Best Bank in Pakistan

• Best Consumer Internet Bank in Pakistan

• Best Corporate/ Institutional Internet Bank in Pakistan

• Best Corporate Report

By Institute of Chartered Accountants of Pakistan (ICAP) & Institute of Cost and

• Best Presented Accounts

1.3. The Vision

1.4. The Mission

“To be the leading private sector bank in Pakistan with an international

1.5. Core Values

1.6. Corporate Philosophy

1.7. Inspiring Relationships

stake-holders value to practicing corporate ethics… We are continuously and consistently

1.8. Inspiring Customer relationships

1.9. Inspiring employee relationship

1.10. Inspiring technological innovation

"Modern science is not an option, it is an obligation”. Technology is rapidly changing the

1.11. Inspiring ethical values

1.12. Corporate citizenship

1.13. Inspiring growth

1.14. Inspiring corporate achievement

1.15. Code of Business Principles

Our Code of Business Principles is to:

 Deliver solutions that meet customers’ financial needs;

• To achieve sustained growth and profitability in all areas of business.

1.17. Strategic Planning

1. To comprehensively plan for the future to ensure sustained growth and

4. To provide strategic solutions to mitigate weak areas and to counter threats to

2.1. DEPOSITS DEPARTMENT

2.1.1. TYPE OF ACCOUNTS

2.1.2. PLS Saving Bank Account

2.1.3. Current Account

2.1.4. PLS Term Deposit

2.2. REMITTANCE DEPARTMENT

2.2.1. Demand Draft

2.2.2. Telegraphic Transfer (TT)

2.2.3. Pay Order

2.2.4. Pay Slip

2.2.5. Outward Bills for Collection

2.2.6. Inward Bills for Collection

2.2.7. On Line Transaction

2.3..1 Clearing House (National Institution of Facilitation

2.3..2 Procedure of Settlement

2.3..3 Outward Clearing at the Branch

2.3..4 Inward Clearing of the Branch

2.4. Retail Banking Division

2.4.1. Askari Bank’s Personal Finance

2.4.2. Askari Bank’s Smart Cash

2.4.3. Askari Mortgage Finance

2.4.4. Askari Bank’s Business Finance

3 Business and Operations Review

3.1. Corporate and Investment Banking

3.2. Retail Banking

3.3. Credit Cards

3.4. Treasury and International operations

3.5. Offshore Banking Unit

3.6. Advances and Credit quality