Sie sind auf Seite 1von 54


Introduction to the Report

1. Introduction

The Internship report is being compiled and submitted for the requirement of an academic
obligation for Degree of Master of Business Administration to be awarded by Comsats
Institute of information Technology, Abbottabad. The students are required to work in their
own field in which they have done their specialization

The underlying purpose of this report/document is to see the prospects of the banking
sector in Pakistan, complete information about this industry, its role and scope in Pakistan.
Another reason is to give an over view of its growth trends and potential future. I will be
shedding light on my experience and the findings and learning that took place during this
period of my stay with Askari Bank limited Abbottabad

1.1 Background of the Study

Askari Bank limited since 1991 has played a pivotal role in the development of Pakistan.
Like other multinational banks, ABL 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. The internship is followed by a comprehensive report writing, which is
presented to the Department of Management Sciences at CIIT.

1.2 Objective of the Study

The purpose of the internship is to evaluate the overall business opportunity and financial
practices, in corporate world/concerned organization and this was made possible due to my
practical involvement and working in Askari bank. This will enable to become an

The study provides an opportunity to do practical work in the relevant departments and
gain experiences and also apply their knowledge in real situations. Some of the objectives

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

• To define and describe various functions of the bank.
• To highlight the outline facilities and products offered by ABL to its
• To analyze the bank through different techniques i.e. Horizontal, Vertical,
and SWOT analysis.
• To get exposure and to develop the interpersonal communication skill.

1.3 Scope of the Study

The important part of the report is financial analysis and recommendations. The scope of
the study is mainly concerned to give an overview of overall company operations and
running, with particular focus on all the department, its practices and to certain extent to
overall business operations, cost of running the operations. The report provides insight into
the practices and policies that are being followed in the ABL.
Spending Six weeks at Askari bank Abbottabad Branch as an internee I have been able to
understand the nature of general banking activities though my major concern was Finance.
I worked with the departments like cash, clearing, deposits, Remittances, LC, and foreign
exchange etc.

1.4 Limitations of the Study

The report is limited in nature due to the reason that internship was done for a short period
of time i.e. 6 weeks which is a short period to fully analyze and understand the all
functions, policies and procedures prevailing in bank. Moreover some of the data was
confidential and was not made available. Sometimes due to the busy schedule of the bank,

complete information regarding different activities was not provided in time. Latest annual
report for fiscal year 2008-2009 was not available for analysis.

1.5 Methodology of Report

The methods used for data collection are:

• Primary data

• Secondary data

1.5.1 Primary Data

• Formally arranged interview/ discussions with Management, and other members

of the Bank

• Observations

1.5.2 Secondary Data

• Annual report of ABL

• Brochures/ Manuals

• Previous Internship Reports.

• Internet /Websites


Introduction to Askari bank limited

2.1 Evolution of Banking In Pakistan

On 14th August 1947, the partition of the sub-continent came into reality and a new Muslim
country with the name of Pakistan came into being. At this crucial time, the new country

was facing a number of problems including the shortage of financial institutions. “At the
time of independence, the areas, now constituting Pakistan were very rich in producing
various crops and other agriculture Products. There were very nominal industries and those
industries too were in very bad shape but as far as the commercial banking facilities are
concerned, they were fairly well, because there were 487 offices of scheduled banks for
providing banking facilities to this area. For a new country like Pakistan, facing so many
problems and having limited resources, it was very difficult to run its own banking system
immediately. Therefore 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, so that the problem of time and demand liability,
homage, currencies, exchange etc. be settled between India and Pakistan. It was also
decided that Pakistan would take over the management of public debt and exchange control
from Reserve Bank of India on Ist April 1948, and that Indian notes would continue to be
legal tender in Pakistan till 30th September 1948. The Hindus residing in the territories now
comprising Pakistan started transferring their assets to India after the partition of sub-
continent and the banks also followed the same move in order to push the new state into
chaos. By 30th June 1948, the number of offices of scheduled banks in Pakistan declined
from 487 to only 195.

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”.

Pakistan was further pushed into trouble when the imperial bank of India closed down most
of its offices in Pakistan and rejected to accept the token amount of Government of
Pakistan securities. Such circumstances necessitated the control and management of
banking and currencies in Pakistan.

“Government of Pakistan inaugurated the State Bank of Pakistan on July 1,1948, after the
State Bank of Pakistan order was promulgated on May 12,1948. In order to bring the
situation under control “As the central bank of the country. The state Bank of Pakistan
addressed itself with the equally urgent task of creating and developing the Baking system
of the country. To achieve this goal, it provided every help and encouragement to Habib
Bank to expand its network of branches and also recommended to Government, the
establishment of a new bank, which could serve as an agent of the State Bank of Pakistan
in areas where State Bank branches are not present. As a result, the National Bank of
Pakistan came into being in 1940 and by 1952 it became strong enough to take over the
agency functions from the Imperial Bank of India. In order to develop sound banking and
weed out weak institutions, the Banking companies (control) Act was promulgated in 1949,
empowering the State Bank to control the operations of banking companies in Pakistan.
Further The State Bank of Pakistan limited the opening of new branches by foreign banks
in coastal towns or in big cities from where trade was being carried out with foreign
countries, while Pakistani banks were encouraged to open as many branches as possible
within the country”. In order to broaden the scope of banking system in Pakistan, The State
Bank of Pakistan also helped in the establishment of specialized credit institutions in the
fields of agriculture and industry. At the end of June 1958, the number of branches of
Pakistani banks increased from 195 to 307 and, the number of scheduled banks increased to
36 by June 1965. The following figures reflect the rapid development of banking system in
Pakistan from 1948 to 1993.

Table 2.1 Development of banking system in Pakistan from 1948 to 1993.

1948 1993 % increase

Bank Deposit 880m 290,000m 32854
Bank Credit 200m 21,000m 10500
Offices of scheduled banks 81 7,100 8665


During the five years from 1960 to 1965, the number of scheduled bank branches rose form
430 at the end of June 1960, to 1591in June 1965. Two new banks were formed i.e.
Commerce Bank and Standard Bank. A dramatic change in Pakistani banking system took
place when in 1974 the Government of Pakistan nationalized all commercial banks
incorporated in Pakistan. There were 22 scheduled banks with 3525 branches at the end of
December 1973.

The nationalization of banks in Pakistan has brought a new era of development and growth.
It has taken a completely new turn with the induction of interest free Banking system in
January 1981.With the passage of time, the Government of Pakistan realized that the
national economy was being dominated by public sector, areas such as production, trade
and finance were over regulated. This resulted not only in chronic budget deficit, leaving
not much for physical and social infrastructure but also led to developing such conditions
which could not be changed without the privatization of the nationalized and public sector.
Therefore in order to meet the need of the time, the Government of Pakistan introduced
comprehensive economic reforms aimed at deregulation of trade, commerce, industry,
banking and finance, so that the role of the public sector in industrial and commercial
activities is reduced and social sector activities are increased. In order to deregulate the
financial sector under these reforms, a program of privatization of public sector banking
and financial institution was started and various governing laws were amended in 1990 in
which strict criteria for selection of good entrepreneurs as investors was also drawn.

Besides these undertakings, private sector was not only invited but also encouraged to set
up commercial banks and financial institutions in Pakistan. As a result, a number of banks
Modaraba and Leasing companies came into existence and are now actively operating in

private sector. It is hoped that this polish of liberalization and privatization of financial
institutions will make way for the economic development and professional efficiency in

2.2 Askari Bank Ltd

Despite the lackluster performance of the economy in Pakistan, Askari Bank Limited
(ABL) has managed to out perform it’s competitors and maintain its growth momentum
and is now a leading market player in financial sector in the Pakistan economy. The
Marketing & Electronic Technological efforts of the bank are highlighted. The ABL has
been applied different and various latest and modern strategies. The bank has been to grab
significant share in deposit, advances and investments.

While capturing the largest market share amongst new banks, ABL has provided good
value to its shareholders and latest techniques are employed in all spheres of commercial
banking. Electronic Technology has played a pivotal role in meeting customer
expectations, particularly with respect to speed and quality of services. With the used of
modern technology ABL has the significant impact on its advances, deposit, and

2.2.1 History

Askari Bank Ltd (formerly Askari Commercial Bank) was incorporated in Pakistan on
October 9, 1991, as a Public Limited Compan. It started its operations during April 1, 1992.
The bank principally deals with 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

Askari Bank has expanded into a nationwide presence of 150 branches, and an offshore
banking Unit in Bahrain. A shared network of over 1,100 online ATMs covering all major
cities in Pakistan supports the delivery channels for customer service. As on December 31,

2007, the bank had equity of PKR 12.27 billion and total assets of PKR 182.17 billion, with
over 800,000 banking customers, serviced by our 6,808 employees.

ABL is only bank with its Operational Head Office in the twin cities of Rawalpindi &
Islamabad, which have relatively limited opportunities as compared to Karachi & Lahore.
This created it own challenges and opportunities, and forced to evolve an outward looking
strategy in the area of marketing. As a result, the bank developed a geographically
diversified assets base instead of concentration and heavy reliance on business in the major
commercial centers of Karachi & Lahore.

2.2.2 Present Status

Askari Bank has expanded into a network of 200 branches / sub-branches, including 20
dedicated Islamic banking branches, and a wholesale bank branch in Bahrain. A shared
network of 2,991 online ATMs covering all major cities in Pakistan supports the
delivery channels for customer service. As at December 31, 2008, the Bank had equity of
Rs. 12.97 billion and total assets of Rs. 206.19 billion, with 816,629 banking customers,
serviced by our 6,496 employees. Askari Investment Management Limited and Askari
Securities Limited are subsidiaries of Askari Bank engaged in managing mutual funds and
shares brokerage, respectively.

2.2.3 Credit Rating

Credit ratings represent the Bank’s ability to effectively implement its various planned
measures to manage the steadily increasing competition in the banking sector, thereby
helping to protect its relative standing in the sector. Askari Bank has been assigned long
term rating at ‘AA’ and short term rating at ‘A1+’ by the Pakistan Credit Rating Agency
(Pvt) Limited (PACRA). The ratings reflect the Bank’s strong capital structure supported
by sound profitability. Taking a note of the fast changing banking dynamics, the
management has put in place a well conceived strategy to improve the Bank’s
performance and strengthen its risk management framework, ensuring its strong standing
within the sector. According to PACRA “these ratings reflect sustained ability of revenue

growth from core operations while maintaining a low risk profile and also dynamic as
well as efficient fund deployment strategy. Going forward, given the strong technological
platform and enhanced geographical outreach, the Bank is well positioned to maintain its
competitive edge despite an increasingly competitive operation environment.”

2.2.4 Achievement and awards

Over the years, we have received several awards for the quality of our banking services to
individual and corporate. We are declared The Best Bank In Pakistan by the global finance
magazine for the years 2001 and 2002. Also we have been given best consumer internet
bank award for Pakistan by the same magazine for the years 2002 and 2003.As early as
1994,1996 and 1997, we received the Euro money and Asia money awards for The Best
Domestic Bank In Pakistan. Askari bank won the first prize in the Best Corporate Report
awards for the year 2000,2001 and 2002 from the institute of chartered accountants of
Pakistan and the institute of cost and management accountants of Pakistan, for the services
sector. For the past five years ,we have received ranking prizes from the south Asian
federation of Accountants for the Best Presented Annual Accounts for the financial sector,
in the SAARC region. ABL have also won the first prize for the Best Designed Annual
Accounts, from the National Council Of Culture And Arts for each of the years 1997 to

2.2.5 Role of ABL in Banking Sector

The impressive growths in development, which ABL 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.
• Catalyst of changes.
• Professional management.

• Modern banking policy.
• Human resources development.
• Small loans or micro credits.
• Utility bills collection.
• Credit cards.
• Traveler’s cheques.
• Diaries and calendars/received prizes too.
• Promotion of sports.

2.2.6 ABL’s Role in NWFP

ABL is operating very successfully in NWFP. The number of branches in country is 98 and
an offshore banking unit in Bahrain. A shared network of over 800 online ATMs covering
all major cities in Pakistan sports the delivery channels for customer service. ACBL is
playing its part in the socioeconomic development of NWFP with the following objectives:
• To participate in the economic development of the region.
• To pay special attention to the needs of the underdeveloped areas.
• To act as a bridge between the foreign and local entrepreneurs.
• To encourage industry based on locally fabricated machinery and raw material.
• To provide financial and technical assistance for the modernization of existing units
in small and medium sector for setting new units.

2.2.7 Functions of ABL

ABL is a commercial bank, which transacts the business of banking in accordance with the
provisions of BCO, 1962. Section 7 of the Act authorizes banks to engage in the prescribed
form of business. In the light of this section ABL’s functions can be categorized as under:

• Agency services.
• General utility services.
• Underwriting of loans raised by the government.
• Providing specialized services to customers.

2.2.8 Number of Branches

Askari Bank has expanded into a network of 200 branches / subbranches, including 20
dedicated Islamic banking branches, and a wholesale bank branch in Bahrain. A shared
network of 2,991 online ATMs covering all major cities in Pakistan supports the delivery
channels for customer service. As at December 31, 2008, the Bank had equity of Rs. 12.97
billion and total assets of Rs. 206.19 billion, with 816,629 banking customers, serviced by
our 6,496 employees.

Figure 2.1: ABL Organization Structure Chart


Senior Executive Vice

–President (SEVP)

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

Additional /Assistant
Vice President


Assistant Manager

Grade -1

Grade -II

Grade -III

Assistant, Cashier etc

Non –Clerical staff

2.3 Vision Statement

To be the bank of first choice in the region

2.4 Mission Statement

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.

2.5 Corporate Objectives

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

• To build and sustain a high performance culture, with a continuous improvement


• 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

• To maximize use of technology to ensure cost–effective operations, efficient

management information system, enhanced delivery capability and high service

• 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.

2.6 Core Values

The intrinsic values, which are the corner-stone of our corporate behavior, are

• Commitment

• Integrity

• Fairness

• Teamwork

2.7 Strategic Planning

• To comprehensively plan for the future to ensure sustained growth and profitability.
• To facilitate alignment of the Vision, Mission, Corporate Objectives and withthe
business goals and objectives.
• To provide strategic initiatives and solutions for projects, products, policies and
• To provide strategic solutions to mitigate weak areas and to counter threats to
• To identify strategic initiatives and opportunities for profit.
• To create and leverage strategic assets and capabilities for competitive advantage.

2.8 Corporate Profile

Board of Directors
Lt. Gen. Javed Zia

Lt. Gen. (R) Imtiaz Hussain
Mr. Kashif Mateen Ansari, FCMA
Mr. Zafar Alam Khan Sumbal
Mr. Muhammad Riyazul Haque
Mr. Shahid Mahmud
Mr. Ali Noormahomed Rattansey, FCA
Dr. Bashir Ahmad Khan
Mr. Tariq Iqbal Khan, FCA
(NIT Nominee)
Mr. M.R. Mehkari
President & Chief Executive
• Audit Committee
Dr. Bashir Ahmad Khan
Mr. Ali Noormahomed Rattansey, FCA
Mr. Zafar Alam Khan Sumbal
Company Secretary
Mr. Saleem Anwar, FCA
• Auditors
A. F. Ferguson & Co
Chartered Accountants
Legal Advisors
Rizvi, Isa, Afridi & Angell
Shariah Advisor
Dr. Muhammad Tahir Mansoori

2.9 Executive committee

ABL Executive Committee consisting 7 members including Chairman/President of ACBL

and sectary of ACBL. For operational and administrative purpose, there are seven region
i.e. Rawalpindi/Islamabad, Lahore, North, South-I, South-II, East & West. These members
of executive committee except the sectary of ACBL are in-charge of these regions and all
these members are Senior Executive Vice Presidents (SEVP). There are 20 divisions,
which have there own heads SEVP, Executive Vice Presidents (EVP) or Senior Vice
Presidents (SVP).

2.10 Organizational Structure of Bank Branch

A board of Directors is running the affairs of ABL. The board of Directors consists of
chairman, 08 Directors and 01 Director/Secretary, one Director is the nominee of NIT. The

Board of Directors takes all-important decisions relating to the operations and policies of
the bank.

Second highest authority in the bank is Executive Committee consists of Chairman,

President/Chief Executive and Regional Heads. For operational and administrative purpose,
there are seven region i.e. Rawalpindi /Islamabad, Lahore, North, South-I, South-II, East &

In the domestic field of operations, ABL has established its presence all over the country.
Its fields operations are one of the most extensive among the leading banks in Pakistan.
Every province has a provincial chief, usually an SEVP, who overlooks the operations of
ABL in the particular province. Under the provincial chief is the General Manager who is
either EVP or SVP.

The general managers are responsible for either a number of regional areas or in-charge of
various provincial departments such as administration, Recovery, General inspection, Loan
etc. The number of general managers depends upon complexity and extensiveness of the
field operations in the province. Below the general managers are the circle executives who
are Senior Vice Presidents or Vice Presidents (VP).

The circle executives are in-charge of geographical circle areas such as Islamabad circle,
Peshawar North circle, South circle etc. In each circle area, there are number of zones such
as Peshawar cantt zone, Peshawar city zone etc. There is zonal head office for every zone
whose in-charge is either a Vice President (VP) or Additional Vice President (AVP).In
each zone there are number of branches of ABL, and each branch is managed by branch
manager who are Grade 1 or 2 officers.

Product and services at ABL supply branch

Figure: 3.1 Organization Structure of Bank Branch


Control &
& Management

Depety- Depty-Chief
Depty- Depty-
Chief Bill
Bill and
Chief Chief
Accountant Remittance
Finance Cash

Accounts Finance
Finance Department
Department Bills
Bills and
and Remittance
Department Department
Department .. Department.
.. ..


3.1 Departments
The organization of ABL is a complete banking system. This banking system is collection
of interrelated departments that works together to achieve the objectives of the
organization. My learning in different department of bank. One of my job was to deal with
the customers in almost every department. Different customers ask for different things.
Like in the Account opening department, they ask about the procedure, charges, balance
inquiry etc. In the clearing department they ask about the bonus back of cheques and
related things. The ABL’s existing system includes following departments.

• Deposit Department
• Cash Department
• Remittance of bills
• Accounts Department
• Foreign currency accounts system
• Electronic Technology Department
• Credit Department

3.1.1 Deposit Department

In this department ABL accepts money deposits from customers, which provide basic core
of all resources available to a bank. ABL accepts surplus money deposits from individuals,
firms and corporations. In order to attract these funds it has introduced a number of savings
accounts and investment schemes. These schemes may suit to the needs and taste of large
number of depositors. There it is said, “Deposits are necessary for making the branches and
assets are necessary for making banks”. Functions of Deposit Department

Provide guidance to the persons wishing to open an account by assistance of account
opening form and specimen signature (SS) card. Major functions of deposit department in
ABL include:
• To maintain existing accounts.

• To dispatch letters to customers if needed e.g. letter of thanks to introducer and new
account holder.
• Posting of vouchers and cheques in computer and maintain records in form of
• Cancellation of cheques.
• Issuance of cheque book.
• Sorting is also done of accounts to check dormant and inoperative accounts and also
for recovery of incidental charges.
• It also deals in deduction and refund cases of zakat.
• Maintenance and handling of various deposit schemes e.g. PLS, saving and current
• Making stop payments of cheques and noting cautions regarding death, insolvency,
insanity of account holder.
• Transfer and closing of accounts.
• Keeping the records of death/credit balance confirmations and statement of account.
• Provide confidential inquiries to other banks, government departments and other
agencies. Types of Accounts Offered By ABL

• Current deposit account

• Pls. saving accounts
• Pls. term deposit accounts
• Pls. short term deposit account
• Deposit At Call
• Value Plus Account
• Foreign currency saving accounts

19 Rules for Opening an Account
• The customer will get the cheque book when he/she will receive the letter of thanks
from Bank.
• For ATM facility the coustomer will fill the ATM request form.
• The customer will also get the i-net facility. Through which they can access their
account through internet.
• If the account holder is going abroad and he/she will want to give the right to
another person to handle his account. He/She will sign the “third party mandatry”.
• If the customer want to change his mailing address. He/She will fill the “Address
changing form”. The Bank sent one letter on old address and one on new address to
confirm that he/she actually want to change address.
• If the customer do not opreate his account from the last 6 mounths, his account is
dornmant (inactive). To activate the account the customer debit (withdraw) the
money from account.And also write the application to activate the account and sign
on it.

3.1.2 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

3.1.3 Remittance Department

This department of ABL is concerned with transfer of money from one place to another
place. An inland remittance means a transfer of money payable at a certain place within the
country. Inland remittances can be classified as in the following:
• Within Locality

• Outside Locality Within locality
When a branch situated in Abbottabad is required to send drafts of any branch/branches
situated in the same city, the process is known as within locality. For example, the ABL
branch is known as local or with in locality for branches in Abbottabad. Outside locality

Outside locality is an important type of inland remittance. Outside locality means the
transfer of money payable outside the city. For example ABL Abbottabad Branch sends
any draft to a branch situated at Peshawar it is commonly done through:
• Mail Transfer (M.T)
• Telegraphic Transfer (T.T)
• Demand draft (D.D) 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. Telegraphic Transfer

This type of transfer is simple. 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. Demand draft (D.D)

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. The idea behind it is that as
the cash is not safe to be kept along and a check in the shape of a draft is safer and one can
easily get cash by presenting it in the bank, on whose favor it has been made.

Draft is only issued when the customer is known to the bank and the bank has the
confidence that the customer will not do anything wrong with the draft. 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. The forms filled for this
purpose are as follows;

• Demand draft register

• Credit vouchers

3.1.4 Accounts Department

This is one of the most important departments in ABL. 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 sended to head office for reconciliation. The
month ends will summaries of all the monthly statements and profit and loss is determined.
Thus this department will create a link between head office and branch office and above all
maintains disc of all the transaction of current day at home so that in any mishap the
customer benefit is save. The functions of Accounts department are as follows:

• 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.

3.1.5 Foreign Exchange Department

ABL has been authorized by State Bank of Pakistan (SBP) to have dealing in foreign
currency. The foreign exchange department not only provides facility of foreign currency
accounts (FACs) to Pakistani citizen and foreigners but also 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. The foreign currency account facility by ABL is available to
Pakistani citizen and foreigners. Foreign currency system provides the following services
to the customers.

• Foreign Currency Accounts

• Foreign Exchange Remittance Facility
• Import & Export Advances to Importers & exporters

3.1.6 Electronic Technology Department

ABL has an Electronic Technology System at Head Office Rawalpindi. This system
provides services to the individual-to-individual Accounts Holders, information required by
upper Management / State Bank & Government Departments.
The Electronic Technology System provide following services:

• Online Banking
• Internet banking
• Auto Teller Machine (ATM)
• Phone Banking

• Balance Transfer facility
3.1.7 Credit Department
ABL is the profit seeking institution. It attracts surplus balance from customers at lower
rate of interest and makes advances at higher rate of interest. ABL make advances mainly
in two sectors:
• Industry
• Trade and commerce

The main difference between two sectors is the amount. The industrial credit involves a
heavy amount while trade and commerce amounts are low.
The finance system deals with providing finances (loans) and ensuring the guarantees.
Three basic types of finances are:
• Demand finance
• Running finance
• Cash finance

Figure 3.1: System Hierarchy


Branches 024 ABBOTTABAD

Bills and Remittance

Deposit Department
Foreign currency
Credit Department
Accounts Department
Electronic Technology
Cash Department

Control and Management System


3.2 Products of ABL

3.2.1 Consumer Banking Services

Askari Mahana Bachat Account is a Term Deposit facility available to individual customer
with the option of 1 and 3 Years tenure. It has been designed keeping in view savings needs
of individual investors who don’t want to block their funds for longer terms, with a
competitive rate of return paid monthly on the 1st of every month. A financing facility up
to 90% will be available for customers if required.

3.2.2 Islamic Banking Services

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

• Islamic Corporate Banking

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

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

3.2.3 Corporate & Investment Banking Group (CIBG)

As Askari Bank, we understand the unique business requirements of our corporate and
institutional clients, and accordingly, strive to meet their expectations through the provision
of a customized, relationship based banking approach, through the Corporate and
Investment Banking Group (CIBG).

CIBG is a one-window operation that provides all requisite banking services for our
corporate clientele in an efficient, dependable, consistent, and competitive manner – the
objective being to become your “bank of first call” for all your financial needs.
CIBG is specifically structured to provide dedicated banking services and products to its
corporate customers through two key divisions.

• Corporate Banking Division

• Investment Banking Division


Analysis of ABL

This chapter is about the financial and general analysis of ABL based on the observation
during the six week internship period and also from the discussion with the cooperative
staff of ABL.

4.1 Financial Analysis

Financial analysis is the process of identifying the financial strengths and weaknesses of
the firm by properly establishing relationships between the items of balance sheet and
profit an loss account, Financial analysis can be undertaken by management of the firm, or
by parties outsides the firm viz, owners, creditors, investors and others.

The various stakeholders of business are all interested in the analysis of financial
statements. But the focus of interest of all is not the same. For example Trade creditors are
interested in firm’s ability to meet their claims over a very short period of time. Their
analysis will, therefore, confine to the evaluation of the firms liquidity position.

The financial growth of any organization can be measured in terms of the profits it
generates at the end of its financial year. In the case of banks this financial expansion can
further be measured by the increase in its base of equity, deposits and profits. The increase
in its advances to customers as well as its financing of imports and exports emphasizes a
bank’s financial enrichment. These factors give a clear indication of the enlargement and
progression of the bank’s operations.

In this chapter, the general financial analysis of ABL is given to highlight its growth in
2006 by comparison to the previous year’s financial figures. It includes the consolidated
figures from the year 2006-2007-2008. The purpose of this analysis and comparison is to
show the financial growth of ABL over the years, which is attributable to its meticulous

strategies, banking practices and innovative products as was discussed in the previous

Table 4.1.1: Trend analysis of balance sheet for year 2006, 2007 & 2008

Years 2006 2007 2008

Cash & balances 100 % 89 % 107%
with treasury banks
Balances with other 100 % 47.6% 53%
Lending to financial 100 % 172 % 53 %
Investments 100 % 137 % 124%
Advances 100 % 101 % 129%
Operating fixed 100 % 134 % 216%
Deferred tax asset 100 % --- ---
Other assets 100 % 145 % 235%
Total Assets 100% 109% 124%

Bills payable 100 % 142% 140%

Borrowings 100 % 117 % 101%
Deposits and other 100 % 108 % 127%
Subordinate loans 100 % 99 % 99%
Liabilities against 100 % ---- ---
assets subject to
fiancée lease
Deferred tax 100 % 64% 64%
Other liabilities 100 % 109 % 123%
Total liabilities 100% 109 % 109%
Source: self-made

4.1.1 Comments on Trend analysis Common Size Analysis of Balance Sheet (Trend Analysis)

The common size statement gives horizontal %age changes of data without giving the
values in currency. Common size analysis is similar to horizontal of comparative statement
analysis. Percentage Growth in Assets and Liabilities

The common size analysis or trend analysis of balance sheet of Askari Bank shows that
total assets have increased from Rs.109% in 2007 to Rs.124% in 2008. Total Liabilities for
year 2007 and 2008 remains same that is 109%. Share Capital and Debts

Share capital has decreased from in 2007 to 1.34% in 2008, which is not much bad because
mostly banks are financed by debts instead of capita. Conclusion

The overall analysis of the balance sheet of Askari Bank Ltd shows that the financial
strength of the bank is growing gradually.

Table 4.1.2Trend analysis of income sheet for year 2006, 2007 & 2008

Years 2006 2007 2008

Mark- up/ return/ interest earned 100 % 120% 145%
Mark- up/ return/ interest expensed 100 % 124% 152%
Net mark-up / interest income 100 % 114% 138%
Provision against non -performing loan 100 % 29% 29%
Provision for impairment in the value of 100 %
investment 25% 74%
Bad debts written off directly --- ---- ----
Total provision expenses 100 % 347% 360%
Net mark-up / interest income after 100 %
provisions 57% 82%
Non mark-up / interest income
Fee, Commission and brokerage income 100 % 105% 122%
Dividend income 100 % 125% 158%
100% 11
income from dealing in foreign currencies 2% 149%
Gain on sale of securities -net 100 % 210% 33%

Unrealized gain on revaluation of investment

classified as held for trade-net 100 % -74% -969%
100 % 104
Other income % 106%
Total non-markup/ interest income
Non mark-up/ interest expenses
Administrative expenses 100 % 146% 177%
Other provision / Write off 100 %
Other charges 100 % 196% 178%
Total non mark-up expenses 100% 144% 177%
Net non interest income 100% 20% 274%
Profit before taxation 100% 69% 13%
Taxation current year 100% 10% 2%
Prior year --- ---- ----
Deferred 100% -217% 101%

Profit after taxation 100% 119% 17%

Inappropriate profit brought forward 100% 111% 133%
Profit available for appropriation 100% 116% 65%

Basic diluted EPS 100% 119% 88%

Source: self-made

4.1.2 Comments on Profit & loss Statement

The common size statement gives vertical %age of data without giving the values in
currency. Common size analysis is similar to vertical analysis.

The common size 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. Markup Expenses

Markup expenses have increase from 124% in 2007 152% in 2008 which is a bad sign. Net Mark-Up Income/Gross Profit

The net markup income/gross profit has increased to114% in 2007 and 138% in 2008 and it
is a positive sign and it is due to the control of markup expenses. Non Markup/Non Interest Income

Non-markup interest income as compared to 2006 and 2007 is good in 2008 and it is
overall around 57%, which is a good sign. Operating income/profit has increased to
32.83% in 2007 and 54.26% in 2008, which is a good sign, and it is due to decrease in non-
markup expenses. Net Income

Net income of the bank has decreased up to 119% in 2007 and 17% in 2008, which is
doubled as compare to 2006, and it shows a fantastic performance and high degree of
stewardship on the management part.

Table 4.1.3: Vertical analysis of balance sheet for year 2006, 2007 & 2008

Years 2006 2007 2008

Cash & balances
with treasury banks 9% 7.3% 7.7%
Balances with other
banks 4.4% 1.9% 1.91%
Lending to financial
institutes 5.1% 7.9% 2.17%
Investments 17.2% 21.6% 17.3%
Advances 59.7% 55.3% 62.4%
Operating fixed
assets 2.3% 2% 4.1%
Deferred tax asset ---- ----
Other assets 2.2% 3% 4.34%
Total Assets 100% 100% 100%
Liabilities --- ---
Bills payable 1.1% 1.4% 19.9%
Borrowings 9% 9.6% 7.3%
Deposits and other
accounts 85% 78% 85%
Subordinate loans ---- ---- ----
Liabilities against
assets subject to
fiancée lease ----- --- ----
Deferred tax
liability 0.4% 0.25% 6.2%
Other liabilities 1.5% 1.7% 2.3%
Total liabilities 93% 128% 93%
Source: self-made

4.1.3 Common Size Analysis Of Balance Sheet (Vertical Analysis)

The common size statement gives vertical %age changes of data without giving the values
in currency. Common size analysis is similar to vertical analysis of comparative statement
analysis. Percentage Growth in Assets and Liabilities

The common size analysis or 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. Cash and cash have decreased from 9% in 2006 to 7.3% in 2007
and 2008 while the total liabilities have increased from 93% in 2006 to 128% in 2007 and
again decrease to 93% in 2008 which reflects the ability of the bank of pay short term
debts. Share Capital and Debts

Share capital has decreased from 2.03% in 2006 to 1.34% in 2007 and 1.2% in 2008, which
is not much bad because mostly banks are financed by debts instead of capita. Conclusion

The overall analysis of the balance sheet of Askari Bank Ltd shows that the financial
strength of the bank is growing gradually.

Table 4.2.1: Vertical analysis of income statement for year 2006, 2007 & 2008

Years 2006 2007 2008

Mark- up/ return/ interest earned 100% 100% 100%
Mark- up/ return/ interest expensed 55.38% 57% 57%
Net mark-up / interest income 42.6% 42% 42%
Provision against non -performing loan 8.95% 20% 25%
Provision for impairment in the value 0.29%
of investment
Bad debts written off directly --- 1.3 %
Net markup/interest income after 36% 16% 19%
Non mark-up / interest income
Fee, Commission and brokerage 8.05% 7% 6.8%
Dividend income 0.86% 0.9% 0.9%
Income from dealing in foreign 4.64% 4.3% 4.7%
Gain on sale of securities -net 0.89% 15% 0.19%
Unrealized gain on revaluation of 0.02% 0.12% 0.01%
investment classified as held for trade-
Other income 2.5% 2.2% 1.8%
Total non-markup/ interest income 16.9% 30% 14%
Non mark-up/ interest expenses
Administrative expenses 26.01% 31% 32%
Other provision / Write off --- ---- 0.002%
Other charges 0.05% 0.07% 0.05%
Total non mark-up expenses 26.05% 31% 32%
Net non interest income 46.56% 46% 34%
Profit before taxation 26%% 15% 2.5%
Taxation current year 7.80% 0.6% 0.09%
Prior year --- -0.27% -1.5%
Deferred 0.89% -1.6% 0.5%

Profit after taxation 17% 17% 2.0%

Inappropriate profit brought forward -- 11% 11%
Profit available for appropriation -- 29% 13%

Basic diluted EPS -- 0.0004% 0.000005%
Source: self-made

4.1.2 Common Size Income Statement Analysis (Vertical Analysis)

The common size statement gives vertical %age of data without giving the values in
currency. Common size analysis is similar to vertical analysis.

The common size 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. Markup Expenses

Markup expenses have increased from 55.38% in 2006 to 57% in 2007 and holds at 57% in
2008 which is not a good sign. Net Mark-Up Income/Gross Profit

The net markup income/gross profit has decreased from 42.6% in 2006 to 42% in 2007 and
remains at 42% and it is a positive sign and it is due to the no control of markup expenses. Non Markup/Non Interest Income

Non-markup interest income as compared to 2006 16.9% increased to 30% in 2007 and
again reduces to 14% in 2008. Net Income

Net income of the bank has increased up to 17% in 2006 and 17% in 2007, which is
decreased to 2.0% in 2008, and it shows a fantastic performance and high degree of
stewardship on the management part.

4.2 Profitability Ratio

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

4.2.1 Return on Asset:

Formula = Net Profit After Tax

Total Assets

Table 4.2.1 ROA

2006 2007 2008

1.347577168% 1.471693615% 0.187314064%

Graph 4.2.1 ROA

return on assets

1 return on assets

2006 2007 2008


Shows that how the bank is utilizing there assets but the assets utilization of the askari bank
is not good and return is decreasing time to time. The reason for deceasing return on asset

is because the branches are increasing and assets and expenses are also increasing in 2006
only 115 branches, in 2007, 150 braches and now 200 branches are.

4.2.2 Return on investment

Formula = Net income after taxes

Total Assets

Table 4.2.2: ROI

2006 2007 2008

1.347577168% 1.471693615%
Graph 4.2.2: ROI

return on investment

return on

2006 2007 2008
yea r


This ratio indicates the profit earned by the bank on the resources employed. As far as
ASKARI is concerned, we observe decrease in the utilization of the resources. It has

decreased to 1.47 % in the year 2007 from 0.18 % in the year 2008, the reason behind the
decrease in profit may be due to the efforts of the management

4.2.3 Return on Deposit

Formula = Net income before taxes

Total Deposits

Table 4.2.3: Return on Deposit

2006 2007 2008

2.523669528% 1.607828542% 0.275161875%

Graph 4.2.3: Return on Deposit

return on deposits

1.5 return on deposits

2006 2007 2008

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. It is showing decreasing trend in 2008 with high
difference from last year.

4.2.4. Credit to Deposit Ratio

Formula = Advances
Total Deposits

Table 4.2.4 Credit to Deposit Ratio

2006 2007 2008

75.22870361% 70.45755185% 76.82542675%

Graph 4.2.4 Credit to Deposit Ratio

advances on deposits

advances on

70 deposits
2006 2007 2008

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 76% compared with the
last year figure of 70%. 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

4.2.5 Interest Coverage Ratio

Formula = Earning before int. & Tax

Interest Exp.
Table 4.2.5 Coverage Ratio
2006 2007 2008
64.79750151% 45.7602464%

Graph 4.2.5 Coverage Ratio



2006 2007 2008
ye ars


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 in 2007 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 2008 it shows the decreasing trend.

4.2.6 Equity to Total Assets:

Formula= Equity

Total Assets

Eqity= share reserves, share capital & in appropriate assets

Table 4.2.6 Equity to Total Assets:

2006 2007 2008

5.73% 6.64% 5.83%

Graph 4.2.6 Equity to Total Assets


6 Equity To total

2006 2007 2008

4.2.7 Cost of income ratio:

Formula = Total nonmarkup expense

Profit after taxation

Table 4.2.7 Cost of income ratio

2006 2007 2008

140% 170% 700%

Graph 4.2.7 Cost Of income Ratio

Cost Of Incom e
2006 2007 2008

4.2. 8 Earning asset to total asset

Formula= Earning asset

Total asset

Earning asset= advances & investment

Table 4.2.8 Earning asset to total asset

2006 2007 2008

79.97% 76.96% 79.77%

Graph 4.2.8 Earning asset to total asset

Earning asset
to total asset
2006 2007 2008

4.3 SWOT Analysis

SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. It involves
specifying the objective of the business venture or project and identifying the internal and
external factors that are favorable and unfavorable to achieving that objective.

4.3.1 Strengths
Strengths: attributes of the person or company that are helpful to achieving the objective.
analyze the Strengths of the ABL that are as follows:

• Good dividend policy

ACBL gives regular dividend to its equity holders both in the form of cash as well
as bonus dividends. It implies positive sign for the organization.

• Leadership in ATM’s
Askari Bank has expanded into a network of 200 branches / subbranches, including
20 dedicated Islamic banking branches, and a wholesale bank branch in Bahrain. A
shared network of 2,991 online ATMs covering all major cities in Pakistan supports
the delivery channels for customer service. ATMs not only serve 24 hours cash
convenience but also improve on the counter services and turn around time at cash

• Worldwide master card
The ABL 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.

• Largest private bank.

• 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.

• Well-knitted branch network

ABL has a well-knitted and adequately equipped branch networking system that
efficiently covers both the domestic and international markets.

• International market share

• Etical concern and public image

4.3.2 Weakness
Weaknesses: attributes of the person or company that are harmful to achieving the
objective. Now analyze the Weakness of the ABL that are as follows:

• Lack of sound corporate culture.

• Low market value of the bank’s stock.

• Inefficient system of recruiting and selecting personnel. 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.

• Centralization

• Lack of training facility

• ABL has lesser number of branches as compared to many other branches. Due to
this problem, army officers can not avail the benefits of their own bank.
• 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.

4.3.3 Opportunities
Opportunities: external conditions that are helpful to achieving the objective. For analyze
the Opportunities of the ABL that are as follows:

• ABL as a largest Pvt. Bank can increase it market share by producing good, market
oriented and customer needs satisfying products at wider range.

• There is a large pool of free MBA graduates who can be hired to achieve
professionalism on its organizational culture.

• Entering new market segments.

• Customer feed back on different products and accounts has really improved the
bank performance and encouraged the atmosphere for other future policies.

• ABL also has an opportunity to expend its new technological advancement like,
Tele banking and Internet banking facilities in order to serve the customers more

• A large amount of foreign investment is attracted

• Sharp increase in export/import

• Govt. is taking very bold steps to promote IT in Pakistan. ABL 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.
• ABL is surrounded by many competitors. It has an opportunity to do aggressive
marketing to increase its business and attract higher customers.

4.3.4 Threats
Threats: external conditions which could do damage to the objective. Finally we analyze
the Threats of the ABL that are as follows:

• 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.

• ABL 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.

• High employee turnover

• High charges

• Less attractive rate of return

• Stiff competition

• Some other banks have competent taskforce, which is also a threat for ABL.
Because human resource is the most valuable resource.

• Pakistan India relations often create a war danger. This chance of war may cause
army officer and their families to increase the frequency of withdrawals, which
would decrease deposits.


Conclusion and Recommendations

5.1 Conclusion

While working in ABL and having close association with the members of ABL it was
observed that the askari banks are following the traditional style of banking and practices.
This bank has quite a potential and due to the construction boom in the whole world, the
entire world has presented itself as the lucrative market for the banks.

5.2 Recommendations

• New performance measurement approaches like, Management by Objectives

(MBO) and Productivity Measurement & Evaluation System (ProMES) should be

adopted to make the results more accurate as the bank is in growth stage.

• In 3600 Feedback method, there are chances of errors due biasness and halo-factor.

To avoid this error, ‘Rater Error Training’ and ‘Rater Accuracy Training’ should be

given to the employees.

• If possible, bank should arrange externships for some employees in other reputable

banks, to bring up new ideas and more accuracy in ABL.

• Distance Learning is also required to adopt, untill a new training center is opened,

especially for the branch in Bahrin.

• The location plays an important role, as the facility should easily be accessible to
the target customers.

• New machinery should be purchased in order to increase the efficiency and lower
the maintenance cost. Standardized machinery is also recommended ( personal computers)

• Emphasizing on excellent services to its customers such as standardized products

and timely fulfillment without distraction.

• Adapt to the rapid, social, economic and technological changes.

• Hiring of well-trained / experienced staff will add in the efficiency of the facility.

In the banking sector, marketing is considered to be of significant importance while going into the
international market. Some of the marketing promotion activities may include:

• Emphasis on image development and acquaintance across individual private sector.

• Use of catalog marketing techniques.

• Establishment of website that would be user friendly for marketing.

ABL (2008); Annual Report of Askari bank limited for 2008.

Bishop, f & Oliver, B (2004); Corporate Finance, (5th edition). Prentice Hall: Sydney.

Hussain, S, & Shabbir, A (1991); Banking Currency and Finance, Lahore: Ilmi Kutab


Iffland, Charles & Langueton, Pierre (1996); International Banking. New York: Irwin

Book Co.

Siddiqui, A.H; Practice and Law of Banking in Pakistan, (6th edition). (Accessed December 2010) (Accessed December 2010)