Internship Report on

ASKARI COMMERCIAL
BANK LIMITED

Submitted by: Wajiha Mubarik Kayani

Registration # Fa08-MBA-086

Supervised by: Sir Jamil Anwar

Department of Management Sciences

COMSATS Institute of Information Technology
Abbottabad

July 2010

I
 Internship Report on
ASKARI COMMERCIAL
BANK LIMITED

Submitted by: Wajiha Mubarik Kayani

Registration # Fa08-MBA-086

Supervised by: Sir Jamil Anwar

This internship report is submitted in partial fulfillment of the requirements

for the degree of Master of Business Administration awarded by the
COMSATS Institute of Information Technology, Abbottabad.

Department of Management Sciences

COMSATS Institute of Information Technology
Abbottabad

July 2010

II
 Department of Management Sciences
COMSATS Institute of Information Technology
Abbottabad
Approval Sheet

Approval Committee

1. External Examiner
Mr.____________________________ Signature_____________

2. Supervisor
Mr._____________________________ Signature_______________

3. Head of Department
Mr._______________________________ Signature _______________

III
 DEDICATIONS
All the efforts in compiling this report are dedicated
To
My Beloved Parents,Friends
&
My Honourable Faculty Members of CIIT,
As they helped me in this Achievement

IV
Abstract
This report comprehends basic information about ASKARI COMMERCIAL BANK
LIMITED general and its branches in particular. Then it includes ACBL’s history,
structure, hierarchy structure, its role in economy and product and services that it provide
to its valued customers. Data in the compilation of report is collected through primary
sources (interviews and observations) and secondary sources ( annual reports, websites,
brochures and manuals)
The main focus of the report is over the analysis of ACBL’s organizational, business, and
financial structure, the common size analysis and ratio analysis reflects a slide downturn
in financial performance over the last three years but SWOT analysis still reveal ACBL
as having strength in providing innovative financial solutions to the customers.
Recommendations at the end mainly covering ACBL’s product and services strategies,
managerial and financial performance to let the management know about immediate
problems and forged them to take remedial measures to prove the bank as one of the
leading private sector bank.

Table of Content

V
 Acknowledgements ....................................................................................................VIII
List of Abbreviations.....................................................................................................IX
Executive Summary .......................................................................................................X
CHAPTER 01.....................................................................................................................1
Introduction........................................................................................................................1
1.1 Background of the study............................................................................................1
1.2 Purpose of the Internship...........................................................................................2
1.3 Merits of the Report...................................................................................................2
1.4 Scope of Report..........................................................................................................3
1.5 Methodology of the Report........................................................................................3
1.5.1 Primary Sources..................................................................................................3
1.5.2 Secondary Sources..............................................................................................3
1.6 Limitations of the Report...........................................................................................3
1.7 Scheme of the Report.................................................................................................4
CHAPTER 02.....................................................................................................................5
Introduction to Askari Commercial Bank Limited........................................................5
2.1 Early Growth of Banking...........................................................................................5
2.2 Formal Definition of Bank.........................................................................................5
2.3 History of Banking in Pakistan..................................................................................5
2.4 Historical Background of Askari Commercial Bank Ltd..........................................6
2.5 Vision Statement of ACBL........................................................................................6
2.6 Mission Statement of ACBL......................................................................................6
2.7 Corporate Objectives of ACBL.................................................................................6
2.8 ACBL As Leading Banking Sector entity.................................................................7
2.9 Credit Rating..............................................................................................................7
2.10 Awards and Achievements......................................................................................7
2.11 Corporate Profile......................................................................................................8
2.11.1 Audit Committee...............................................................................................8
2.11.2 Company Secretary...........................................................................................8
2.11.3 Auditors.............................................................................................................8
2.11.4 Legal Advisors..................................................................................................8
2.11.5 Registered / Head Office...................................................................................8
Askari Commercial Bank Services and Products.........................................................12
3.1 Introduction to ACBL Abbottabad Branch..............................................................12
3.2 Departmentalization.................................................................................................13
3.2.1 Accounts Opening Department.........................................................................13
3.2.2 Remittance Department....................................................................................16
3.2.3 Credit Department.............................................................................................18
3.2.4 Cash Department...............................................................................................21
3.2.5 Clearing Department.........................................................................................22
3.2.7 Credit card Department.....................................................................................23
CHAPTER 04...................................................................................................................25
Financial Analysis of ACBL...........................................................................................25

VI
 4.1 Introduction..............................................................................................................25
4.2 Purpose of Financial Analysis.................................................................................25
4.2.1 Analysis.............................................................................................................25
4.2.2 Common Size Analysis.....................................................................................26
.......................................................................................................................................38
4.3 Financial Ratios Analysis........................................................................................39
4.4 SWOT Analysis.......................................................................................................43
4.4.1 Strengths...........................................................................................................43
4.4.2 Weakness..........................................................................................................45
4.4.3 Opportunities.....................................................................................................45
4.4.4 Threats...............................................................................................................46
CHAPTER 05...................................................................................................................48
Findings and Recommendations ...................................................................................48
5.1 Findings....................................................................................................................48
References......................................................................................................................51

VII
Acknowledgements
God Al-Mighty is Worthy of all acknowledgements Whose Grace has no limits and Who
gave me the strength and will to complete this report.
I am thankful to my parents who supported me morally and financially for the last two years
despite of their limited resources and social pressures.
Special thanks to my internship supervisor Sir Jamil Anwar for his kind co-operation,
guidance and support to compile this report.
I would like to pay special thanks to Mr.Zulfiqar Kayani(Branch Manager ACBL Abbottabad
Branch) for his constant guidance and motivation, the entire staff at ACBL, for being very
cooperative and courteous with me and providing me with the congenial environment at the
bank during my six weeks stay at ACBL.
My gratitude to all my honor ACBL teachers who taught me different courses during the
last two years with addict zeal and zest. My special gratitude to Sir Qasim Shah for his
guidance. Finally, keeping the tradition alive as well as fulfilling social and ethical
responsibility, my dedications will always go to my dear Parents & Family and Friends.

VIII
 List of Abbreviations
ACBL Askari Commercial Bank Ltd.
ATM Auto Teller Machine
ADBP Agricultural Development Bank of Pakistan
BTF Balance Transferred Facility
DD Demand Draft
EBIT Earnings Before Interest and Taxes
ETD Electronic Technology Department
FDD Foreign Demand Draft
FC Foreign Currency
HRM Human Resource Management
IDBP Industrial Development Bank of Pakistan
L/C Letter of Credit
MT Mail Transfer
MIS Management Information System
NIT National Investment Trust
NPL Non Performing Loans
PLS Profit & Loss Sharing
SBP State Bank of Pakistan

IX
Executive Summary
Banks play a significant role in mobilizing savings thus taking great part in capital formation
process. Their role in development of a country has increased, with the advent of modern
technology. The intense competition, among banks, the privatization of the financial
institution and financial liberalization in general are gradually and continuously making the
banking sector efficient and effective.
Because of the reasons mentioned above banking has always been the main field of interest
for most of the students of business administration. It is also an academic requirement to
undergo internship therefore the main purpose behind this report is partial fulfillment of
requirements, for the degree of MBA. The report is categorized into the following chapters:
In the first chapter introduction to the report, background of study, scope of the study, merits,
limitations and scheme of the study are given.
The second chapter is about history of banking, banking in Pakistan, introduction to the
organization, its historical background, role and functions of organization, its core values,
and miscellanies topics related to banking.
The third chapter is the major portion of the report. It covers the organizational structure of
ACBL, the different departments working at ACBL and the different financial products of
ACBL.
The fourth chapter of the report covers the analysis of report and the findings, which have
been observed. It includes the financial analysis. Furthermore it analysis in detail strengths,
weaknesses, opportunities and threats of the organization. SWOT analysis no doubt acts as a
mirror for the management to know the strengths and weaknesses so that it can take
appropriate corrective actions. The management should develop elaborate plans for
capitalizing on the available opportunities.
The end of the report is about recommendations based on the analysis in chapter four. It
mainly focuses on the recommendations pertaining to management/administration, to let
ACBL capitalize on the opportunities and overcome the weaknesses by using its
strengths.

X
 CHAPTER 01

Introduction
This Internship report is aimed at studying and analyzing Askari Commercial Bank
Limited (ACBL) in general and its branch office at Abbottabad, in particular. The
main purpose of the internship is to prepare and submit a report as a partial fulfillment
for the award of MBA degree from COMSATS Institute of Information Technology
Abbottabad. This report has the aim to share my knowledge and experience that I
have gathered during my academics and practical training at Askari Commercial
Bank.being the world-class bank, Askari Commercial Bank has maintained the world-
class standards in all aspects including financial standards. This report has covered the
financial strategies and practices that are being followed in Askari Commercial Bank.

1.1 Background of the study

Pakistan’s economy at present is going in depression. The importance of sound
banking system cannot be denied in such critical time to re-stabilize the economy,
which must meet the financial needs of the growing agriculture, industrial and
commercial/services sector.
In the present day world, economy has started dominating every sphere of life and for
the socioeconomic growth of any country, monetary institution is critical. Banking
sector is the backbone of the industrial sectors, trade and commerce of the country
hence providing stimulus to overall development of the economy. Askari Commercial
Bank since 1991 has played a pivotal role in the development of Pakistan. Like other
multinational banks, ACBL has adopted a customer-oriented approach, in order to
provide quality products according to customer needs and stands as a role model for
the other banks. Askari Commercial Bank works round the clock to provide services
that are unmatched in the region. It has the experienced, committed team of
professionals with diversified expertise. This report has the aim to cover all
operational aspects of Askari Commercial Bank and products that it offers.

1
1.2 Purpose of the Internship
The primary purpose of the internship is to fulfill the academic requirements of my
study. The purpose of the study also is, to do practical work, in the field and apply the
knowledge of classroom lectures to the real life situations, which thus enables a
student to be a future banking practitioner. Besides this, some other purposes are
associated, which includes

• To gather relevant information then interpret and analyze it in a useful manner

• To define and describe various functions of the bank.
• To highlight the outline facilities and products offered by ACBL to its
customers.
• To analyze the bank through different techniques i.e. Horizontal, Vertical, and
SWOT analysis.
• To present some feasible solutions for the problems pertaining to ACBL.
• To apply the knowledge gained in practical field.
• It is also one of the main objectives of internship to practically apply in
concepts learned during my study at COMSATS Abbottabad.

1.3 Merits of the Report

• It is a compulsory requirement for the award of Master’s Degree in Business

Administration.
• The study conducted will benefit the finance students in particular and
banking students in general.
• It will help the present and prospective students of the department in making
assignments and writing reports on the ACBL, evolution of baking,
importance of banking and different operations.
• The third chapter of this report comprehensively encompasses most of the
aspects of banking, followed by SWOT analysis, conclusion and
recommendations. Furthermore,ACBL branch Abbottabad may also benefit
from the recommendations made at the end of the report.
• It can also provide help ACBL management in identifying their Strengths
Weaknesses, Opportunities and Threats.

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1.4 Scope of Report

• Banking has a very broad scope. In only six weeks of internship, it is very
difficult to understand each and every aspect of bank.
• Due to the barriers of limited time and space, the scope of work is usually
confined. However this study of ACBL will help the management to identify
their weaknesses and threats and overcome them by using their strengths and
capitalizing on the opportunities.
• This internship report will be source of financial data for all those who are
interested in financial statement analysis of ACBL.

1.5 Methodology of the Report

This study involves two types of data for report writing.

1.5.1 Primary Sources

• Interviews and discussion with staff members

• Personal observations

1.5.2 Secondary Sources

• Annual reports of ACBL

• Brochures & Manuals.
• Websites
• Newspapers
• Previous Internship Reports.

1.6 Limitations of the Report

• For a corporate level organization, like Askari Commercial Bank Limited,

where the span of operation is too wide, six weeks of time is very limited for
complete observation for the purpose of the complete research of specialized
and sensitive institutions. It does not permit to fully analyze and understand
the entire functionality of the bank, and privacy policy of Bank also limits
access to the organizational data and information that is termed as
confidential.

3
 • Also due to the bank tight schedule and busy schedule of the required staff
complete information could not be collected easily. The information at the
branch level is also not allowed to be accessed. During the study I tried to
include only relevant material. This study was conducted in accordance with
the objectives of the study.

1.7 Scheme of the Report

This internship report is divided into five chapters as:
• Chapter one includes background, purpose, scope, limitations, methodology,
and scheme of the report.
• Chapter two includes background and history of banking in Pakistan,
background of ACBL, roles, functions and branches.
• Chapter three includes organizational structure of ACBL, organizational
charts and departments of ACBL.
• Chapter four includes financial, SWOT analysis and findings based on work in
chapter three. This will stick to the branch where I have worked.
• Chapter five includes recommendations of the study based on the analysis in
the previous chapter.

4
 CHAPTER 02

Introduction to Askari Commercial Bank Limited

2.1 Early Growth of Banking

“Banking in fact is as ancient as human society. For ever since man came to realize
the importance of money as a medium of exchange. Perhaps these were the
Babylonians who developed banking system as early as in 2000B.C. It is evident that
the temples of Babylon were used as banks because of the prevalent respect and
confidence in the clergy.

2.2 Formal Definition of Bank

“A financial institution that is licensed to deal with money and its substitutes by
accepting time and demand deposits, making loans, and investing in securities. The
bank generates profits from the difference in the interest rates charged and paid.”
These are the following types of banks
• Central Bank
• Commercial Bank
• Industrial Bank
• Exchange Bank
• Saving Bank

2.3 History of Banking in Pakistan

On 14th August 1947, a new Muslim country with the name of Pakistan came into
being. In accordance with the provision of Indian Independence Act of 1947, an
expert committee was appointed to study the issue. The committee recommended that
the Reserve Bank of India should continue to function in Pakistan until
30th September 1948,at this time there were 19 foreign banks with the status of small
branch offices and only two Pakistani institutions i.e. Habib Bank, and the Australasia
Bank. To rebuild the confidence of the people in these banks, the then Government
promulgated the banking companies ordinance, 1947”. “Government of Pakistan
inaugurated the State Bank of Pakistan on July 1, 1948.At the end of June 1958, the

5
number of branches of Pakistani banks increased from 195 to 307 and, the number of
scheduled banks increased to 36 by June 1965.

2.4 Historical Background of Askari Commercial Bank Ltd

ACBL was incorporated in Pakistan on October 09, 1991, as a Public Limited
Company. It commenced operations on April 1, 1992 and is principally engaged in
the business of banking, as defined in the Banking Companies Ordinance, 1962. The
Bank is listed on the Karachi, Lahore & Islamabad Stock Exchanges and its shares are
currently the highest quoted from among the new private sector banks in Pakistan.
The Head office of Askari Commercial Bank, Limited is located at AWT Rawalpindi.

2.5 Vision Statement of ACBL

To be the bank of first choice in the region.

2.6 Mission Statement of ACBL

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 stake-holders, and contributing to society.

2.7 Corporate Objectives of ACBL

• 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 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.

6
 • To deliver timely solutions that best meet the customers‟ financial needs.
• To explore new avenues for growth and profitability

2.8 ACBL As Leading Banking Sector entity

Over the years, Askari Commercial Bank has proved its strength as a leading banking
sector entity, by achieving the following firsts in Pakistani Banking:
• First Bank to offer on-line real-time banking on a country-wide basis.
• First Bank with a nation-wide ATM network.
• First Bank to offer Internet Banking Services
• First Bank to offer e-commerce solutions.

2.9 Credit Rating

The Pakistan Credit Rating Agency (PACRA) as given in Annual Report
2008maintained both ACBL long term and short term ratings at „AA‟ and „A1+‟.
The rating specifies a very high credit quality and very strong capacity for timely
payment of financial commitments.

2.10 Awards and Achievements

• Recently Askari Commercial Bank have been once again been given the “Best
Retail Bank in Pakistan” by The Asian Banker for the 2nd consecutive year.
• Askari Commercial Bank has been given the 1st Consumer Choice Award
2004 for the Commercial Banking Category by the Consumer Association of
Pakistan.
• The bank has also received the Corporate Excellence Award for the financial
sector from the Management Association of Pakistan (MAP) for the years
2002,2003 and 2004.
• The bank have been declared The Best Bank in Pakistan by the global finance
magazine for the years 2001 and 2002.
• Askari Commercial Bank won the first prize in the Best Corporate Report
awards for the year2000, 2001 and 2002 from the institute of chartered
accountants of Pakistan and the institute of cost and management accountants
of Pakistan, for the services sector.

7
2.11 Corporate Profile
Corporate body of Askari Commercial Bank Limited consist if 12 Board of Directors
including one
Chairman
1. President
2. Chief Executive
3. Secretary
4. NIT Nominees

2.11.1 Audit Committee

• Dr. Bashir Ahmad Khan Chairman

• Mr. Ali Noormahomed Rattansey Member
• Mr. Tariq Iqbal Khan Member

2.11.2 Company Secretary

• Mr. Saleem Anwar, FCA

2.11.3 Auditors

• KPMG Taseer HADI & Co Chartered Accountants

2.11.4 Legal Advisors

• Rizvi, Isa, Afridi & Angell

2.11.5 Registered / Head Office

AWTPlaza,TheMall,
P.O.BoxNo.1084
Rawalpindi,Pakistan.
Tel:(9251)9063000
Fax:(9251)9272455
E-mail:webmaster@askaribank.com.pk
Website: www.askaribank.com.pk

8
2.12 Ethical Values
The intrinsic core values that are corner stones of our corporate behavior are as
fallows.
Commitment
• Integrity
• Fairness
• Teamwork
2.13 Role of ACBL in Banking Sector
The impressive growths in development, which ACBL achieve, make this bank
undoubtedly the most dynamic and progressive. In a very short period of time it
became one of the leading bank overtaking several other older and its competitor
banks. The major contributions the bank has made are:
• Record setting performance and commitment to serve the customers.
• Personalized service and dynamic approach.
• Professional management.
• Modern banking policy.
• Human resources development.
• Small loans or micro credits.
• Utility bills collection.
• Credit cards
2.14 Number of Branches
Askari Commercial Bank has expanded into a nationwide presence of 200
Branches/sub-branches including 20 dedicated Islamic Banking Branches, and whole
sale bank Branch in Bahrain. A shared network of over 2,991 online ATMs covering
all major cities in Pakistan supports the delivery channels for customer service. As on
December 31, 2008,the Bank had equity of Rs.12.97 billion and total assets of
Rs.206.19 billion, with over816,629 banking customers, serviced by 6,496
employees.
2.15 Structure of ACBL
A board of Directors is running the affairs of ACBL. The board of Directors
consisting of one president, 04 Directors from ACBL, one from Pakistan banking

9
council, one from Ministry of Finance and additional one who is the sectary of board
of managers of ACBL. Hence the board of directors is 08 member team which takes
all-important decisions relating to the operations and policies of the bank. Second
highest authority in the ACBL is Executive Committee consisting 7 members
including Chairman/President of ACBL and sectary of ACBL. Below the general
managers are the circle executives who are Senior Vice Presidents or Vice Presidents
(VP). In each zone there are number of branches of ACBL, and each branch is
managed by branch manager.

10
Fig 2.1 ACBL Organization Structure Chart (Source: Annual report 2009)

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 CHAPTER 03

Askari Commercial Bank Services and Products

3.1 Introduction to ACBL Abbottabad Branch

Askari Limited Bank, Abbottabad branch was established at 1999 with amount of
resources. The Banks branch building is located in Supply Bazaar. With the passage
of time the number of customers increased and there was need of more advanced
departments with all the new technology. Askari Commercial Bank expanded its
departments into a three story buildings dealing with different needs and facilities to
the customers.
The branch deals with four main departments i.e credit, bills and remittances,
accounts and deposits department. Apart from Islamic banking a separate Leasing
department is working to cater the needs of growing Islamization in the region. In
short Askari Commercial Bank Abbottabad is one the renowned bank in the city.

Figure 3.1: Organizational Chart of the Branch

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3.2 Departmentalization
The organization of ACBL is a complete banking system. This banking system is
collection of interrelated departments that works together to achieve the objectives of
the organization. I can rightly say that ACBL is a hierarchical system in that it
includes other sub departments and these are integrated to work together.
The ACBL existing system includes following departments.
• Account Opening Department
• Remittance Department
• Credit Department
• Cash department
• Clearing Department
• Accounts Department
• Foreign Trade Department
Figure 3.2 Branch systems Hierarchy

3.2.1 Accounts Opening Department

Borrowing funds from different sources has become an essential feature of toady’s
business enterprises. But in the case of a bank borrowing funds from outside parties is
all more vital because the entire banking system is based on it. The borrowed capital
of bank is much greater than their own capital. Banks borrowing is mostly in the form

13
of deposits.These deposits are lent out to different parties. Such deposit creation is
done through opening an account in the bank.
3.2.1.1 Types of Accounts
In ACBL, there are the following types of accounts:
• Current account
• Saving accounts
• Term deposit
• Askari Special deposit Account
• Askari Bachat certificate
• Notice Deposits
• Foreign currency saving Account

3.2.1.1.1 Current account

These accounts are for the current deposits i.e. customer can deposit and withdraw the
amount any time and no profit is paid.” This account is operating through cheques.
The customer is required to maintain a minimum balance in this account. In current
account, there is no profit and interest on the money kept. Current account is mostly
opened for business.
3.2.1.1.2 Saving account (profit and loss sharing)
Pls. saving accounts opened by individuals (single or joint), for charitable institutions,
companies, educational institutions, firms etc. This account can be opened with a very
small amount, withdrawals from this account is made through cheques. Return/profit
is paid at flexible rate calculate on six months basis.
3.2.1.1.3 Term deposit
The deposits that can be withdrawn after a specified period of time are known as fixed
or term deposits. In this account person or account holder keeps the money for
definite period of time. The amount deposited is not withdrawnable by cheques. After
the maturity of account, account holder receives the actual money along with the
profit given after each six months during deposited period. The term deposit account
varies from one month to 5 years, and the minimum balance requirement is Rs.5000/-
for all other nine accounts.

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3.2.1.1.4 Askari Special deposit Account(ASDA)
• It is a special scheme known as “ASKARI Special Deposit Accounts”. Amounts in
these accounts are accepted as prescribed by bank from time to time. The deposits are
subject to PLS rules/regulations and invested by the bank on the same basis.
• The profits on ASDA is payable as determined by the bank in the basis of profit and
loss sharing arrangements.
• The profit as determined by the bank shall be final binding on the account holder.
• Profit shall be paid every six months on declaration of actual rate of profit on such
deposits by H.O.

3.2.1.1.5 Askari Bachat certificate

ABC’s are long term fixed deposit for 3 and 5 years. These are not term deposits
because payment of return is on monthly basis rather than on maturity of deposits.
The minimum balance requirement is Rs.25, 000/- and maximum balance requirement
is Rs.1.0 million.
If ABC is for 3 years, the rate of return for 3 years is 12%; if ABC is for 5 years the
rate of return is 13%. This is not a chequing account; no cheque is drawn on it only
payment of return is made monthly.

3.2.1.1.6 Notice Deposits

Notice deposits are kind of fixed deposits. The minimum balance requirement for
opening the account is Rs.5000/- and payment is drawn on maturity.

3.2.1.1.7 Foreign Currency Saving Account

• The Pakistani national as well as the foreigners can open this account.
• The profit is also paid credited to this account depending upon the monthly
products.
• The customer has the facility of withdraw in foreign as well as Pak currency.
• Equivalent Pak rupees are also calculated for the transactions in the FC saving
accounts.

15
• Monthly and daily revaluation rates of each foreign currency in Pak rupees are
maintained for the correct operation in the FC saving accounts.

3.2.1.2 Account opening procedure

For the chequing accounts (C/A, ASDA, SAVING), there are different account
holders required for each type of these accounts. The operation/ procedure
requirement that is needed for “ Individual Account” differ greatly from “joint
Account” “proprietorship” “Partnership” “Limited company” and “Club Society or
Association” as explained below.

3.2.1.3 Letter of thanks

At the 2nd day of account opening, ACBL issues letter of thanks to “account opener”
and “account introducer” for the trust they have on ACBL.

3.2.1.4 Stamping “Posted”

After completing all this process. The forms are signed from manager of the branch
after which the forms are stamped across as “POSTED” on one corner of the front
side of the form. Then they are posted in the respective “account opening file”. The
very next day cheque book is issued to the customer.

3.2.2 Remittance Department

This department of ACBL is concerned with transfer of money from one place to
another place that is transfer of funds

3.2.2.1 Instruments of bills and Remittance Department

The instruments that are handled in the Remittance department are as follows:
• Demand Draft
• Telegraphic Transfer
• Mail transfer
• Pay order
• Pay slip
• OBC

16
• IBC

3.2.2.1.1 Demand draft

A bank draft is an order by one branch of bank to another branch of the same bank to
pay a certain amount of money on demand to the person named there in. DD is just a
check and is issued when the customer wants to take the draft personally. For the
preparation of a draft, first of all customer has to fill an application form, then the
concerned officer fills the following before delivering the draft to the customer.

3.2.2.1.2 Telegraphic Transfer

A telegraphic transfer is a fastest and safest way to transfer money. After filling the
application form, the concerned officer fills the telegraphic form. This telegram is sent
to the required bank. Which on receiving it immediately makes the payment to the
customer and afterwards the vouchers are sent to the bank by ordinary mail.

3.2.2.1.3 Mail transfer

When a customer requests the bank to transfer his money from this bank to any other
bank or the branch of the same bank in the city/ outside the city or outside the
country, the first thing he has to do is to fill an application form in which he states that
I want to transfer the money from this bank to another bank. If the customer is the
account bolder of bank, then the bank will debit his account. The concerned office
will fill the different forms to make the mail transfer complete. Three forms used for
this purpose are listed below:
• Debit voucher
• Credit voucher
• Mail transfer register
If the customer is not the account holder of bank, then firstly he has to deposit the
money and then the above said procedure will be adopted to transfer his money.
3.2.2.1.4 Pay order
It is a cheque drawn by a bank on itself. Pay order is an instrument in which three
parties are involved the purchaser, the bank, and the receiver. It can be purchased by
any customer.

17
3.2.2.1.5 Pay slip
It is an instrument used by the banks for its payment. The slips are issued to the
employee of the banks their bills and invoices. The bills are transferred to pay slips .
In this case only one bank is involved and that is the issuer as well as the payer.
• Procedure prescribed for P.O for issuance and payment is followed for pay slips
with following exceptions.
• Pay slips are issued by the bank for settlement for this own payment.
• No excise duty is applicable on P.S.

3.2.2.1.6 Outward Bills for Collection

The bills which are sent to their city banks for the local clearing in that city are
outward bills for collection.Cheques are entered in the OBC register, the number is
written in the stamps. The OBC forwarding schedules are prepared for the different
branches. Then respective cheques are attached with the schedule.On clearance the
respective banks send back the OBC‟s along with IBCA(inter branch credit advice).
At the end of the day, contra vouchers are made.

3.2.2.1.7 Inward bills for Collection

The bills received from other banks out of city for the local clearing are called inward
bills for collection.The OBC of the other branches will be the IBCc of this branch. So
an OBC forwarding schedule is received by mail. The cheques are entered in the IBC
register. The IBC numbers are allotted to them.After realization, an IBCA is prepared
and mailed to the branch

3.2.3 Credit Department

The earnings of commercial banks are chiefly derived from interest charge on loans
and discounts. It attracts surplus balance from customers at lower rate of interest and
makes advances at higher rate of interest.The finance system deals with providing
finances (loans) and ensuring the guarantees.

18
3.2.3.1 Types of Advances Offered By ACBL
ACBL Credit department deals with all the advances, which are made to the
customers.Advances are important for the banking business because it gives the bank
interest on the amount loaned. ACBL is also very active in advancing loans to
customers, thus helping the economy of the country in its development. It provides
the following finances:

3.2.3.1.1 Demand Finance

Demand finance is one of the long-term loans and is allowed against fixed assets. It
can also be short term. Usually businessmen avail this facility for the purchase of
machinery and other installations.

3.2.3.1.2 Running Finance

This is a type of finance, which meets the day-to-day finance requirements of the
business. The amount is transferred to the debtors current account and can be
withdrawn through cheques. The limit on this type of finance is 35000 and the
maximum period for this type of finance is one year and can be renewed by a new
application.

3.2.3.1.3 Cash Finance

Cash finance is also called working capital. It is a short-term loan. Probably the most
popular form of providing funds to the clients in the banking sector is the Cash
Finance system. In this, the bank lends money to borrowers against tangible security.
The total amount of loan, which is granted, is not paid in one installment. The
borrowers have to pay markup on the amount borrowed.

3.2.3.2 Level of Lending

3.2.3.2.1 The structure for lending in ACBL has four levels
1. Branch credit committee
2. Credit committee at Head office
3. Executive committee

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4. Board

3.2.3.3 Financial Products of ACBL

3.2.3.3.1 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 Commercial Bank's Personal Finance. With unmatched finance features in
terms of loan amount, payback period and most affordable monthly installments,
Askari Commercial 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.

3.2.3.3.2 Askari "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 repayment tenure up to 20 years.

3.2.3.3.3 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
Commercial Bank's Business Finance Scheme. Their goal is to offer a loan, which
enables business community to receive the financing required by them based on their
cash flows.
3.2.3.3.4 Ask Car (Car Finance)
ACBL offers the most convenient and affordable vehicle- financing scheme, which
provides their 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, Ask car offers the best value to our esteemed
customers.

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

3.2.3.3.6 Travelers Cheques

The range of their products and value added services enhances with introduction of
Rupee Travelers Cheques (RTCs) launched in March 2002.

3.2.4 Cash Department

The main function of this system is Receipts & payments to the customers, on behalf
of their account, through Cheques or any other negotiable instruments. All those
transactions, which are held on the counter on cash basis lies under the cash
department.
The cash system mainly deals with following areas:
• Receipts
• Payments

3.2.4.1 Calculation of Ending Cash Balance

The official time for receiving deposits and payments is till 5 pm. However some
important customers is accommodated afterwards.
• The cash in hand is counted. It contains the cash at the counter and cash in the
strong room.
• The opening balance is taken i.e. ending balance of previous day
• The receipts are added
• The payments are deducted
• This daily cash position is written down on daily cash position book.

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3.2.4.2 Liquidity Maintenance
ACBL has to maintain 35% liquidity at SBP. Every branch maintains 5% of its
deposits at the local SBP. But this 30% is kept in the form of Approved securities. For
example: Foreign Investment Bills and Treasury Bills.

3.2.5 Clearing Department

There is no legal obligation on a banker to collect cheques drawn upon other banks
for a customer. However, it is function of almost every modern bank of collection of
cheques and bills on behalf of the customers. Clearing department services are
provided in order to make arrangements for the economic collection of cheques, DD’s
pay and other negotiable instruments. A large part of this work is carried on through
the clearing house.
3.8 Accounts Department
This is one of the most important departments in ACBL. The bank daily transactions
are recorded in computers, nowadays, so the function of this department is to get a
summary of all the transactions. The credit and debit vouchers are arranged and saved
for the record purpose. It also indicates, head office entries as clearing, transfer
delivery etc. On the weekend it has to prepare the extract which is send to head office
for reconciliation.
Thus this department will create a link between head office and branch office. The
functions of Accounts department are as follows:
• Preparation of daily bank position Statement
• Checking Banks daily Activity
• Maintenance of book of the accounts of head office.
• Salary disbursement and investment of staff.
• Arrangement of stationary for bank.
• Dealing with disposal of commercial external audit reports and state bank of
Pakistan instructions.
• Pre audit checking of all bank transactions.

22
3.2.7 Credit card Department
Credit card, card that identifies its owners as one who is entitled to credit when
purchasing goods or services from certain establishments. When a credit card is used,
the retailer records the name and account number of the purchaser and amount of the
sale, and forwards this record to the credit card billing office. At intervals, usually
monthly,the billing office sends a statement to the card holder listing all the charged
purchases and requesting payments immediately or installments‟.

3.2.7.1 ACBL Offerings

The bank is already offering credit cards like Master cards international in
collaboration with international financial service organizations. Credit card issuing is
an important activity that the most successful and modern banks are doing and are
generating profit from it. Credit cards are of two types
• Master Card
• Visa Card
ACBL issues three types of Master Cards:
3.9.1.1 Local card
This master card is issued for the amount of Rs. 25000/- and more. This local card
operates on national level.
3.9.1.2 Silver Card
This master card is issued for the amount of Rs. 35000/- and more. This is an
international card which is acceptable all over the world.
3.9.1.3 Gold Card
This master card is issued for the amount of Rs. 2,00,000/- and more. This is an
international card which is acceptable all over the world.
All these three types of cards issued only to those individuals which hold accounts in
the bank. The bank also takes care that a sufficient amount of security, almost 125%
of the amount of credit card.

23
3.10 Foreign Trade Department
ACBL has been authorized by State Bank of Pakistan (SBP) to have dealing in
foreign currency. The foreign exchange departments provide facility of foreign
currency accounts (FCA) to Pakistani citizen and foreigners and facilitate its clients in
foreign trade. This facility is provided in shape of letter of credit (L.C), and guarantee
by the bank to the exporters and importers.

24
CHAPTER 04

Financial Analysis of ACBL

4.1 Introduction
The importance of financial statement analysis lies in their utility to satisfy the
question in the mind of stakeholders. Different classes of people are interested in the
financial statements with a view to assessing the economic and financial position of
any business or industrial concern in term of profitability, liquidity or solvency etc.
Financial statements among other things include balance sheet and income statement.
Balance sheet presents assets and liabilities of the business at a given date. Besides
showing the ability of the business to service the loans on the strength of its financial
structure and its profitability, helps in judging the impact of financial and fiscal
support.

4.2 Purpose of Financial Analysis

The analysis of Financial Statements (FS) is to examine past and current financial
data so the companys performance and financial position can be evaluated and future
risk and potentials can be estimated. The analysis can yield valuable information
about Horizontals and relationship, the quality of a companys earnings, and its
financial strengths and weaknesses.

4.2.1 Analysis
The financial data of ACBL is analyzed in the following two ways
• Common Size Analysis
• Ratio Analysis
Common size analysis and ratio analysis are techniques that can be used to identify
Horizontals in financial statement; common size analysis is also useful in comparative
analysis, and some source of industry data.

25
4.2.2 Common Size Analysis
Technique for identifying relationship between items in the same financial statement
by expressing all amounts as the percentage of the total amount taken as 100.
For common size analysis two basic techniques are used.
1. Common Size Vertical Analysis
Comparison with base amount with in the same year.
a. Vertical Analysis of Balance Sheet
b. Vertical Analysis of Income Statement
2. Common Size Horizontal Analysis
Comparison with Base year
a. Horizontal Analysis of Balance Sheet
b. Horizontal Analysis of Income Statements

4.2.2.1 Horizontal Analysis of Balance Sheet

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Table 4.1 Horizontal Analysis of Balance Sheet
2007 2008 2009
Assets % % %
Cash & Balances with treasury 100 107.7 145
bank
Balances with other banks 100 53.93 239
Lending toFinancial Institutions 100 53.93 31.94
Investments 100 124.6 170
Advances 100 130 133
Operating Fixed Assets 100 217 191
Deferred Tax Assets 100 - -
Other Assets 100 235 181
Total Assets 100 124 139
Liabilities & Owners Equity
Bills Payable 100 140.5 112
Borrowings 100 101.5 109
Deposits & Other Accounts 100 127 143
Subordinated Loans 100 99.91 200
Financial Lease Liabilities 100 - -
Deferred Tax Liabilities 100 1.76 70.81
Other Liabilities 100 182.82 150.01
Total Liabilities 100 124.65 121
Owners Equity
Share Capital 100 202 168
Reserves 100 131.8 103
Un-appropriated Profit 100 17.1 41.3
Surplus On Revaluation 100 65.2 1085
Total Owners Equity 100 117 121
Total Liabilities & Owners 100 125.54 139.60
Equity

4.2.2.1 Horizontal Analysis of Balance Sheet

4.2.2.1.1 Percentage Growth in Assets and Liabilities
Again the horizontal analysis shows the same result as of vertical analysis. The total
assets have increased to 124% in 2008 to 139% in 2009. On the other hand total
liabilities have increased approximately in same ratio as to from 124.65% in 2008 to
139.60% in 2009. The management focus on the non-current assets. The current
liabilities have also increased with a greater proportion compare to long term
liabilities.

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4.2.2.1.1 Share Capital reserve and total Owner equity
Share capital has decreased from 202% in 2008 to 168% in 2009 which shows a
decrease in the value of bank. Reserves have dereased from 131.8% in 2008 to 103%
in 2009. The total owners equity has increased from 117% in 2008 to 121% in 2009
which is a good sign as it represents the growth of the bank.

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4.2.2.2 Horizontal Analysis of 2007 2008 2009

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Income Statement
Markup/Return/Interest earned 100% 145 149
Markup/Return/Interest expensed 100 152 156
Net Markup/Interest Income 100 138 139
Provision against Non performing 100 29 59
Loans & Advances
Provision for impairment in value of 100 135 5115
Investments
Bad debts written off directly 100 - -
Net Markup/Interest Income After 100 82 241
Provisions
Non Markup/Interest Income
Fee Commission 100 122 121
Dividend Income 100 158 118
Foreign Currency Income 100 149 82
Gain on Sale of Investments 100 33 6.08
Unrealized gain/Loss on revaluation 100 (1790) 110
of Investments
Other Income 100 126 120
Total Nonmarkup/Interest Income 100 126.5 146
Non Markup/Interest Expense
Administrative Expenses 100 177 146
Other Provisions/Writeoffs 100 - -
Other Charges 100 178 285
Total Nonmarkup/Interest Expenses 100 177 146
Profit Before Taxation 100 13 71.4
Taxation-Current Year 100 2 2.4
Prior Years 100 - 51.2
Deferred 100 101 59.9
Profit After Taxation 100 17 41.3

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4.2.2.2 Horizontal Analysis Income Statement Analysis
The horizontal analysis of the income statement of Askari Commercial Bank Ltd
shows that the markup income is taken as 100% because it is the primary source and
the real objective of the operations of the bank.
4.2.2.2.1 Markup Expenses
Markup expenses have increased from 152% in 2008 to 156% in 2009 which shows
the management disability control on financial cost.
4.2.2.2.2 Net Mark-Up Income/Gross Profit
The net markup income/gross profit has increased to 139% in 2009 from 138% in
2008 which is a positive sign and it is due to control over markup expenses.
4.2.2.2.3 Non Markup/Non Interest Income
Total operating income has increased from 126.5% in 2008 to 146% in 2009 which is
a positive sign. The total non-markup interest expense has decreased from 177% in
2008 to 146% in 2010.
4.2.2.2.4 Net Income
Net income of the bank have increased from 17% in 2008 to 41.3% in 2009 and it
shows a good performance on the management part.

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32
4.2.2.3 Vertical Analysis of Balance sheet

2007 2008 2009

% % %
Assets
Cash & Balances with treasury 7.33 7.77 7.6
bank
Balances with other banks 1.92 19.1 3.2
Lending to Financial Institutions 7.93 2.17 1.8
Investments 21.64 17.3 26
Advances 55.32 62.4 53
Operating Fixed Assets 1.11 4.1 3.8
Deferred Tax Assets - - -
Other Assets 3.04 4.34 3.9
Total Assets 100 100 100
Liabilites & Owners Equity
Bills Payable 1.44 1.25 1.15
Borrowings 9.64 7.36 7.5
Deposits & Other Accounts 78.52 81.3 80.9
Subordinated Loans 1.64 1.45 2.3
Financial Lease Liabilities 0.00024 - -
Deferred Tax Liabilities 0.26 0.0062 0.13
Other Liabilities 1.76 2.308 1.9
Total Liabilities 93.27 93.70 93.90
Owners Equity
Share Capital 1.21 1.96 1.99
Reserves 3.81 3.71 2.8
Un-appropriated Profit 1.18 0.14 0.34
Surplus On Revaluation 0.09 0.45 0.71
Total Owners Equity 6.73 6.29 12.1
Total Liabilities & Owners Equity 100% 100% 100%

33
4.2.2.3 Vertical Analysis of Balance Sheet
A vertical analysis of balance sheet of Askari Commercial Bank shows that the Bank
has financed its fixed assets more than the current assets. And the assets have been
financed mostly be long term liabilities and a little by capital which goes in the favor
of owners.
4.2.2.3.1 Percentage Growth in Assets and Liabilities
Cash and cash Balances with other banks have decreased from 7.77% in 2008 to 7.6%
in 2009. Lending to financial institution has decreased from 2.17% in 2008 to 1.8% in
2009. Investments has increased from, 17.3% in 2008 to 26% in 2009.Advances
decreased to 62.4% in 2008 to 53% in 2009. On the other hand current liabilities have
increased more than the long term liabilities. Bills payable have decreased 1.25% to
1.15% and borrowings decreased from 7.36% in 2008 to 7.5% in 2009. Deposits
have decreased from 81.3% in 2008 to 80.9% in 2009 and subordinate loans have
increased 1.45% in 2008 to 2.3% in 2009.
4.2.2.3.2 Share Capital reserve and total Owner equity
Share capital has increased from 1.96% in 2008 to 1.99% in 2009 which is good sign
because it represents the increased profitability of the bank. Reserves have decreased
from 3.71% in 2008 to 2.8% in 2009. The total owners equity has increased from
6.29% in 2008 to 12.1% in 2009 which is a good sign.

34
35
4.2.2.4 Vertical Analysis of Income Statement
2007 2008 2009
Markup/Return/Interest earned 100% 100% 100%
Markup/Return/Interest expensed 57.35 57.9 60
Net Markup/Interest Income 42.65 42.09 39.8
Provision against Non performing 25.89 20.07 10.2
Loans & Advances
Provision for impairment in value 0.99 0.0027 0.33
of Investments
Bad debts written off directly - 1.34 -
Net Markup/Interest Income After 16.74 19.95 26.9
Provisions
Non Markup/Interest Income
Fee Commission 7.08 6.83 5.7
Dividend Income 0.91 0.94 0.71
Foreign Currency Income 4.33 4.74 2.37
Gain on Sale of Investments 15.59 0.199 0.63
Unrealized gain/Loss on revaluation 0.01 0.12 0.008
of Investments
Other Income 2.24 1.86 1.78
Total Nonmarkup/Interest Income 30.15 14.71 11.27
Non Markup/Interest Expense
Administrative Expenses 31.62 32.09 30.8
Other Provisions/Writeoffs - 0.0024 -
Other Charges 0.08 0.06 0.15
Total Nonmarkup/Interest Expenses 31.70 32.16 31.0
Profit Before Taxation 15.19 2.50 7.2
Taxation-Current Year 0.65 0.094 2.4
Prior Years -1.54 -0.27 -0.52
Deferred 0.89 0.58 0.65
Profit After Taxation 17.70 2.09 4.8

36
4.2.2.4 Vertical Analysis Income Statement
The vertical analysis of the income statement of Askari Commercial Bank Ltd shows
that the markup income is taken as 100% because it is the primary source and the real
objective of the operations of the bank.
4.2.2.4.1 Markup Expenses
Markup expenses have increased from 57.9% in 2008 to 60% in 2009 which is not a
good sign.
4.2.2.4.2 Net Mark-Up Income/Gross Profit
The net markup income/gross profit has reduced to 39.8% in 2009 from 42.09% in
2008 which is a negative sign and it is due to no control over markup expenses.
4.2.2.4.3 Non Markup/Non Interest Income
Total operating income decreased from 14.71% in 2008 to 11.27 % in 2009 which is a
negative sign. The total non-markup interest expense have decreased from 32.16% in
2008 to 31.0% in 2009.
4.2.2.4.4 Net Income
Net income of the bank has increased from 2.09% in 2008 to 4.8% in 2009.

37
38
4.3 Financial Ratios Analysis
Financial ratio is a ratio of two selected numerical values taken from an enterprise’s
financial statements. There are many standard ratios that are used to try to evaluate
the overall financial condition of a company. Financial ratios may be used by
managers within a firm, by current and potential shareholders (owners) of a firm, and
by a firm’s creditors. Security analysis use financial ratios to compare strengths and
weaknesses from various companies. While conducting the analysis of Askari
Commercial Bank I will use two set of ratios and will try to portray the financial
health of the bank. The following ratios will be used for analysis purpose.
• Profitability Ratios
Profitability Ratios
Profitability ratios are a measure that indicates how well a firm is performing in terms
of its ability to generate profit. Here are some ration are given below for the purpose
to make inference on the basis of these rations

4.3.1 Profitability Ratios of ACBL

Profitability Ratios 2007 2008 2009
Operating Profit Margin 15.18% 2.50% 7.24%
Credit to Deposit Ratio 70% 76.8% 65.56%
Cost to Income Ratio 179% 1531% 496%
Return On Assets (ROA) 1.47% 0.18% 0.43%
Return On Earning Assets 1.71% 0.25% 0.87%
Equity To Total Assets 6.64% 5.83% 5.16%
NIM to Average Earning 4.819% 5.08% 4.8%
Assets

39
4.3.1.1Operating Profit Margin Ratio
Operating profit is a ratio of Profit before Taxes and Markup/ return interest earned. It
is also showing reduced performance of the bank. It has increased from 2.50% in
2008 to 7.24% in 2009.

4.3.1.2 Credit to Deposit ratio

Credit to deposit ratio also depicts the varying performance by the bank. It is ratio of
Advances and Deposits. CD ratio is 76.5% in 2008 and 65.56% in 2009. It means
corporate customer credibility has decreased during time.

40
4.3.1.3 Cost to Income Ratio
Cost to income ratio is showing an increased tendency. The cost is increasing in a
greater proportion as compare to income.

4.3.1.4 Return on Assets (ROA)

This ratio comparatively gives a good picture tremendously increases from 0.18% in
2008 to 0.43% in 2009.

41
4.3.1.5 Return on Earning Assets
This ratio of Return on Earning Assets is calculated by dividing Net Income by
Average Earning Assets. Earning Assets include Loans, Leases, Investment securities
and money market assets. It excludes cash and non-earning deposits and fixed assets.

4.3.1.6 Equity to Total Assets

This ratio is calculated by dividing equity portion of balance sheet to total assets. This
ratio increased from 5.83% in 2008 to 5.16% in 2009.

42
4.3.1.7 NIM to Average Earning Assets
Net interest margin to earning assets ratio is calculated by Net mark-up income to
average earning assets of consecutive two years. This ratio has increased from 5.08%
in 2008 to 4.8% in 2009.

4.4 SWOT Analysis

SWOT analysis is one of the most expedient technique or tool used in the Strategic
Management process for conducting the situation analysis of an organization. The
proper analysis of the firm is given in the form of Strengths, Weaknesses,
Opportunities and Threats (SWOT) the company presently facing or can be forecasted
for the future. It is a common approach to make assessments in terms of internal and
external environment of the organization, and to formulate strategies analyzing its
internal strengths and weakness, external opportunities and threats, coming up is the
SWOT analysis for the ACBL:

4.4.1 Strengths
Firstly we analyze the Strengths of the ACBL that are as follows:
• Computerization
The main strength of Askari Commercial Bank Limited is that all of its branches are
fully computerized and they have latest softwares available to keep the records of
their customers account and other important information up-to-date. It reduces manual
work and provides good customer services.
• Well-knitted branch network
ACBL has a well-knitted and adequately equipped branch networking system that
efficiently covers both the domestic and international markets. ACBL has the largest
branch networking in Pakistan.

43
• Largest Private Bank
ACBL is one of the largest private banks with deposit base of Rs.167.68 billion/-
showing constant growth over the period 1999 till day and with many online branches
in major cities of Pakistan.
• Competent Staff
Strength of Askari Commercial Bank Limited is that it has staff which is well
qualified and capable of
performing the task because of their expertise and training in the field
• Customer’s Feedback
Customers are allowed to give suggestions regarding banking services. If there is any
complaint by the customer the bank authorities investigates the reasons for complaint.
Complaint monitoring system is excellent at Askari Commercial Bank that shows
bank values more to
its customers.
• International markets
ACBL is actively participating in international markets and has recently introduced
credit cards in UAE, Bahrain and Qatar, being backed by 24 hours call center out of
UAE.
• The ACBL ATM Switch-Net
I.T group of ACBL has been able to create the largest network for secure electronic
financial transactions in Pakistan.
• Information System
Askari Commercial Bank has also invested heavily in information technology
resources, which has now allowed bank to develop one of the most comprehensive
and advanced system available. With the help of this system Askari Commercial Bank
has now achieved an “online” status via real time facilities and features available
through nationwide network. With the team of highly qualified professionals, Askari
Commercial Bank is able to use its real time system resources to provide customers
with comprehensive account of their transaction on a daily basis. ACBL is one of
those few banks who are reaping the benefits of electronic transaction

44
• Leadership in ATM’s
With over 186 ATMs and 106 online branches ACBL is again an undoubted industry
leader with connectivity extended to above than twenty five cities of Pakistan. ACBL
ATMs not only serve 24 hours cash convenience but also improve on the counter
services and turnaround time at cash counters.
• Worldwide master card
The ACBL ATMS Master Card has become a global service furthering the
convenience to the customers. Traveling customers can access their accounts from a
large number of internationally deployed ATMs and point of sale unit.

4.4.2 Weakness
Secondly we analyze the Weakness of the ACBL that are as follows:
• Due to risks such as political economy and legal the bank has suffered losses the
main reason was piling up to of large amount of irrevocable debts.
• The bank still has traditional ways of operations in this advance technological
environment. For example account opening registers, manual checking of vouchers.
• Accumulated losses pushed the bank to cut down its promotional activities in order
to reduce expenses for last few years.
• Although the bank has computerized accounting system, but still bankers make
their entries in accounting register manually.
• In Askari Commercial Bank the individual difference has strong impact on the
organization’s performance due to wrong criteria of selection of employees. So with
the passage of time individual differences start increasing which undermine the
goodwill of the organization.
• The advertising media used by Askari Commercial Bank for publicity include
mostly newspapers and journals. But the most powerful and effective media is of
television through which people in Pakistan as well as outside Pakistan can have
instant information about new products and developments of ACBL
• No availability of sophisticated equipment’s in branches and lengthy credit
processing and documentation procedures.

4.4.3 Opportunities
Thirdly we analyze the Opportunities of the ACBL that are as follows:

45
• ACBL as a largest Pvt. Bank can increase it market share by producing good,
market oriented and customer needs satisfying products.
• Askari Commercial Bank is now looking into new ways of providing banking
services to its customers. New concept of mobile banking has been introduced by the
bank, which will prove to be remarkable success in the field of consumer banking.
• Customer feedback on different products and accounts have really improved the
bank performance and encouraged the atmosphere for other future policies.
• Askari Commercial Bank is an active player in the loan business. Its strength in
loaning stems from its ability to forge strong relationships not only with borrowers
but also with bank investors. Bank can capture more markets by introducing new
products for business community, as it is the only group, which can contribute more
towards increasing the assets of the bank.
• Foreign remittances are another area as present worldwide control system over
transfer of currencies through illegal channels has facilitated the area for the banks.
• There is a large pool of free MBA graduates who can be hired to achieve
professionalism on its organizational culture.
• Now computer literacy rate is increasing and its really big opportunity for Askari
Commercial Bank that when public will have more knowledge about computers than
they will be more attractive to the innovative products of Askari Commercial Bank.
• Increase the product range to fulfill customer requirements and ATM network,
ACBL can expend its 24 hours cash facilities to other cities of the country in order to
meet growing market demand.
ACBL also has an opportunity to expend its new technological advancement like,
Tele banking and Internet banking facilities in order to serve the customers more
efficiently.
• Due to efficient and experienced management group. ACBL can also improve well
and expend its foreign operation successfully.
• Increasing need and potential of leasing in Pakistan provide ACBL an opportunity
to utilize its skills and efficiencies in leasing business as well.

4.4.4 Threats
Finally we analyze the Threats of the ACBL that are as follows:

46
• As the ACBL leading in the domestic commercial banking sector in Pakistan, as
such no any close competitors of ACBL but every commercial bank is the competitors
for each other. But mainly these are Habib Bank Limited, Bank Al-Falah, ACBL etc.
they are threats for ACBL. At any time they can capture the clients of ACBL by
providing any benefit more than that.
• Political instability is also threat for the bank because instability leads to lower
business. The same situation is prevailing in Pakistan.
• In our county, the rate of inflation is increasing along with the unemployment. So
due to increase in price of the products, the savings of the nation is decreasing with
passage of time. So it is threat for the banking sector. In the future, the deposits of the
bank will decrease.
• ACBL is giving higher rate of return to their clients on various certificates like,
Defense saving certificate etc. Being a private commercial bank it should earn more
than that of nationalized banks.
• Increase in competition due to increasing number of foreign banks offering highly
specialized and attractive services.
• Growing global technological advancements and adaptation of modern style of
management in banking sector.
• Extensive promotional campaigns run by competitors.
• It is always threat for commercial banks. Because SBP is the role authority of
Government, which monitors all commercial banks affairs, whenever it feels any
regulation, it imposes without consideration of commercial banks plans etc.
• Growing concept of Islamic banking in Pakistan economy can be a serious threat to
ACBL so they should start their Islamic banking in Abbottabad branch as well. The
SWOT analysis is a mirror image of the banks present conditions. The management
can elaborate strategic plans for capitalizing the available opportunities. ACBL is
continuously introducing new innovative products so as to cope with changing
environment. It has a diversifiable culture. It has been leader of introducing many new
ideas, products which are earning a lot for the bank and this struggle is still
continuous with same acceleration.

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CHAPTER 05

Findings and Recommendations

Findings and Recommendations are considered to be the most important part of
internship report, without which no report is considered complete and meaningful.
This part of report is based on the previous sections i.e. review and analysis.
Moreover, for bringing suggestions, discussions have been conducted with the staff of
ACBL officers, who not only provided the basis for recommendations but also
pointed out some areas, where the change for the development is utmost important.
Realizing the importance of this section, efforts have been made to give feasible
recommendations, which are categorized under the following headings.

5.1 Findings
The overall financial position of ACBL is favorable for past three years, the growth,
the improvement in IT sector, branch network and infrastructure development has
been very encouraging. Considering the profitability shows the mix trend, though
profits increase from 2008 to 2009, liabilities are more than the assets but the income
generation has been encouraging. The efficiency of the bank, it shows a positive sign,
indicating that ACBL has been efficient in managing its assets and growing overtime
and takes risk in managing its assets.
There is an increasing trend in some items of balance sheet including the advances
and deposits and decreasing in few others like lending to financial institutions and
direct investment. Similarly the horizontal analysis of income statement shows the
declining trend in income and profits overtime from 2008 to 2009 and there is an
increase in expenses of ACBL for past years.
ACBL have more customers as compare to other banks and largest banking network
but more attention towards customer retention and branch maintenance is required
From the quantum of the profit and its financial data it can be easily judged that the
performance of ACBL bank has been encouraging but profits does not ensure this, the
reason may be the economical and political changes of the country.
Branch performance as compared to overall is not very favorable in terms of credit
facility and lending as ACBL branch does not operate with the assets directly and
comparing the deposit base the performance has been very encouraging and the

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efficiency measure shows that branch is contributing to increase the number of
customers for ACBL.
5.2 Recommendations

5.2.1 Improvement in Bank’s operations and banking

There is a need to take measures to further strengthen the Bank’s corporate
governance, modernize its operations, and improve efficiency and service quality.
More focus should be given to retail banking in order to improve the environment and
processes of each branch, and to build better relationship with customers.

5.2.2 Improvement in infrastructure at branch level

Efforts should be made to increase the market share. Unproductive branches in remote
areas should be closed down to reduce the administrative costs and the branches that
are facing losses should be given special attention to improve overall efficiency.
Further, improvement in MIS system is needed, as automated system for reports
generation is needed.
Talking about ACBL branch, there is a need of improving the infrastructure in terms
of environment and dealings with customers, moreover the branch have not yet
installed an ATM which is needed in this area.

5.2.3 Proper Introduction of New Schemes and Policies

Employees of an organization must be well conversant about the schemes and policies
introduced by the bank. If they are well informed, they will be able to guide their
customers well and this will facilitate the selling process.

5.2.4 Steps for Market Research

Askari Commercial Bank does not involve in market research, the bank need to
engage in research and development in order to better understand the demand, the
needs and feedback of customers. It an allow ACBL bank to grab more opportunities.

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5.2.5 Focus on increasing expense:
Looking at the trend of cost to income ratio, ACBL is needed to focus on its
increasing expenses with the increase in income due to increase in employees, the
administration cost is also increasing, moreover the new facilities being offered to
customers are also taking in lots of cost, ACBL has to take few steps in order to
control these cost so that they can not effect the profits.

5.2.6 Focus on Increased deposit base:

The deposit base increased in past three years because of low cost for customers and
more customization, but deposits being the liabilities increase the total liabilities and
hence effected the CAR to decrease, so ACBL needs to take few steps to control the
deposit base, large employee base and customer base is needed but similarly some
cost and loss bearing activities are also needed to focus, as the interest rate increase
the NPLS increased which can effect the liabilities to be not fulfilled.
Moreover ACBL branch has to focus on deposit base as with comparison to its
advances, the balance between both is not favorable, and can improve it services by
offering more consumer finance products.

5.2.7 More focus on small customers

ACBL needs to pay more attention to its customers with small accounts as this non-
attention can leads to the switching of customers to other banks, ACBL needs to focus
small account customer and facilities and services for these customers must also be
incorporated. Same is the true for ACBL Branch.

5.2.8 Requirement for products and services

Products and service should be available through out the country and even link should
be made with foreign branch like RTC is only useable in Pakistan, it is required that
services like credit cards and RTC are useable in foreign countries as well especially
for businesses.

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References
Aslam, S (1999); Banking & Finance. Abbottabad.
Hussain, S; Rana,K & Shabbir, A (1991); Banking Currency and Finance. , Lahore:
Ilmi Kutab Khana.
Iffland, Charles & Langueton, Pierre (1996); International Banking. New York: Irwin
Book Co.
Siddiqui, Asrar H(2007) ; Practice and Law of Banking in Pakistan: 8th edition Royal
Book Company, Karachi.
Annual Reports of ACBL; 2006-07, 2007-08
www.askaribank.com.pk (Accessed April 26, 2010)
www.askaribank.com.pk/Reports (Accessed May 10, 2010)

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