Chapter 1 Introduction of Organization 1.1.

Introduction Of Organizations Business Sector

Organization main business sector is banking. Banks are financial intermediaries. Financial sector in Pakistan posses a wide spectrum of financial institutions, commercial banks, specialized bank, national saving schemes, insurance companies, development financial institutions, investment banks and Islamic banking etc. Banks are described as a nation's economic engine, in part because they provide financial intermediation functions between savers/investors that are looking for safety and growth.

1.2.

Brief History of Askari Commercial Bank

Askari Bank Limited was incorporated in Pakistan on October 9, 1991 as a public limited company, and is listed on the Karachi stock exchanges. The registered office of the bank is situated at AWT plaza, The Mall Rawalpindi. The bank obtains its business commencement certificate on February 26, 1992, and started operations from April 01, 1992. Army welfare trust directly and indirectly holds a significant portion of the banks equity at the year-end. The bank is a scheduled commercial bank and is principally engaged in the business of banking as defined in the banking companies ordinance, 1962. Askari bank ltd has received an A1+ rating for the short term (which is the highest in the category) and an AA+ for the long term, from the Pakistan Credit Rating Agency (Pvt.) Ltd. (PACRA), an affiliate of IBCA Ltd. UK. ABL is the first Private Sector Pakistani Bank to voluntarily obtain a rating from PACRA. Askari Commercial Bank is the only Private Sector bank that has been approved by the World Bank as a Participating Financial Institution for the US$ 200 million Line of Credit sanctioned (authorized) to the Government of Pakistan for the Financial Sector Deepening and Intermediation Project. Askari Bank is the only bank with its operational Head Office in the twin cities of Rawalpindi-Islamabad, which have relatively limited opportunities as compared to Karachi and Lahore. This created its own challenges and opportunities, and forced us to evolve an outward-looking strategy in terms of our market emphasis.

Historically, Askers core marketing focus for its asset base has been the middle and upper middle business house (including wholesalers and manufacturers) operating in the large urban centers of Pakistan, which are primarily oriented towards foreign trade. This segment constitutes significant revenues to the bank. The Liability side remains focused on the middle and the upper middle class retired and serving government and the armed forces personal and mid-size business houses. Re Branding in July 2008 History has shown that change is the only constant and that with time, change always comes. Just like innovation brings improvement, and progress offers the promise of perfection. The bank is evolving, and the desire to grow with time coupled with a firm commitment to maintaining excellent standards of banking quality and services has enabled the bank to realize that they need to evolve from within. The recent re-branding of the bank was a part of the same evolution process. The New Logo It is said that the shorter, smarter name, crisper new colours and fresh new look are an insight to the views on banking. The bank aims to provide innovative financial solutions to its customers, with the security of knowing they are dealing with one of the strongest financial institutions in the country.

The new slogan

The new slogan of the bank reflects the customer service philosophy We are Askaris bank and ask us.

1.3.

Vision And The Mission Statement

Vision Statement
To be the bank of first choice in the region.

Mission Statement
To be the leading private sector bank in Pakistan with an international presence, delivering quality service through innovative technology and effective human resources management in a modern and progressive organizational vulture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all our stake-holders, and contributing to society.

1.4.

Core values

Commitment: Passionate about our customers success and delighting them with quality of our service Integrity: A distinctive investment delivering outstanding performance, return and value Fairness: Exemplary compliance, governess and business ethics Teamwork: Caring for our people and helping them to grow Service: Dedication towards social development and improvement in quality of life. Professionalism without integrity is like a book without pages Because the right may not always be obvious, Askari must be guided in every action by a set of well-defined values, governing Askari decisions. Askari understand that its commitment to satisfy customers needs must be fulfilled within a professional and ethical

framework. Askari subscribe to a culture of high ethical standards, based upon development of right attitudes.

1.5.

Corporate objectives

As Askari Bank looks ahead to the future by moving through the decade of the 1990'sits efforts are guided by a broad framework of corporate objectives, which are as follows: To achieve sustained growth and profitability in all areas of business. To build and sustain high performance culture, with a continuous improvement focus. To develop a customer-service oriented culture with special emphasis oncustomer care and convenience. To build an enabling environment, where employees are motivated to contribute to their full potential. To effectively manage and mitigate all kinds of risks inherent in the banking business. To maximize use of technology to ensure costeffective operations, efficientmanagement information system, enhanced delivery capability and high service standards. To deliver timely solutions that best meets the customers financial needs. To explore new avenues for growth and profitability.

1.6.

How Challenge Be Delivered

These objectives and guiding mission will be achieved through Focused objective Winning as a team Excellence in delivery Relentless quality Upward rising sales

1.7.

Code Of Business Principles

Askari code of business principles is to:

Deliver solutions that meet customers financial need; Build and sustain a high performance culture; Build trusted relationships with all shareholders; Build and manage the banks portfolio of businesses to achieve strong and sustainable shareholder returns; and Create and leverage strategic assets and capabilities for competitive advantage.

1.8.

Corporate Philosophy

The challenge to bring... to bring a dream to life From knowing Askari customers' requirements to understanding employee needs,from utilizing modern technology to making responsible social contributions, from enhancing stake-holders' value to practicing corporate ethics, Askari is continuously and consistently striving to address newer challenges with a single motivation. The power to inspire and be inspired. Organizational goal and strategy define the purpose and competitive techniques that set it apart from others organizations. Goals are often written down as an enduring statement of company intent. A strategy is the plan of action that describes the resource allocation and activities for dealing with the environment and for reaching the organizational goal. Goals and and strategies define the scope of operations and the relationship with employees, clients and competitors.

1.9.

Awards And Achievements Best Retail Bank in Pakistan by the Asian Banker. Ist Consumer Choice Award by the Consumer Association Of
Pakistan.2004

Corporate Excellence Award by the management Association of

Pakistan (MAP), 2002, 2003 and 2004.

The best Bank in Pakistan by Global Finance magazine, 2001 and

2002.

 Best Consumer Internet Bank Global Finance magazine, 2002 and

2003.

Euromoney and Asiamoney Awards 1994, 1996 and 1997.

Best Presented Annual Accounts by (ICAP) and (ICAMP). 2000, 2001 and 2002.
The

Best Presented Annual Accounts by south Asian Federation of

Accounts (SAFA), in the SAARC region.

The Best Consumer Banking Award 2006 by the consumer

Association of Pakistan. 2007

The Best Retail banking Award 2008 by Pakistan Guarantee Export

Corporation Ltd. 2008

Best Corporate Report Award for the year 2008 by ICAP and
ICMAP. 2008

The best Annual Report Award for the year 2010 by ICAP and
ICMAP.

The best Presented accounts Award 2010-2nd Runner Up-joint by

South Asian Federation of Accountants.

Over the years, Askari Bank has proved its strength as a leading banking sector entity, by achieving the following firsts in Pakistani banking. i) First Pakistani Bank to offer on-line real-time banking on a country-wide basis ii) First Bank with a nation-wide ATM network iii) First Bank to offer Internet Banking services iv) First Bank to offer e-Commerce solutions

1.10. Corporate information 1.10.1. Board of Directors

Lt.Gen. Javed Iqbal HI (M) ............................................. Chairman Board of directors Lt.Gen. Tahir Mahmood .................................................. Chairman Executive Committee Mr. Zafer Alam Khan Sumbal ............................................... Director Dr. Bashir Ahmed Khan ........................................................ Director Mr. Shahid Mahmud .............................................................. Director Mr. Muhammad Riyazul Haqu.............................................. Director Mr. Ali Noormahomed Rattansey .......................................... Director Malik Riffat Mahmood ........................................................... Director Mr. Wazir Ali Khoja (Nominee NIT ) .................................... Director Khawaja Jalaludin Roomi ...................................................... Director Mr. Muhammad Rafiquddin Mehkari .................................. President & Chief Executive Mr. M. A. Ghazali Marghoob ................................................ Company Secretary

1.10.2.

Executive Profile

Mr. Tahir Aziz .................................................................... Senior Executive Vice President Group Head-Corporate and Investment Banking Mr. S. Suhail Rizvi ............................................................. Senior Executive Vice President Group Head-Business Transformation Mr. Javed Iqbal ................................................................... Senior Executive vice President C.I.O Electronic Technology Division Mr. Imtiaz Ahamd Sheikh ................................................ Senior Executive Vice President Electronic Technology Division
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1.10.3.

Audit Committee

Khuwaja Jalaludin Roomi ................................................................................. Member Mr. Ali Noormahomed Rattansey ..................................................................... Member Mr. Wazir Ali Khoja .......................................................................................... Member Dr. Bashir Ahmad Khan .................................................................................... Chairman

1.10.4.

Auditors

KPMG Taseer Hadi & Co. Chartered Accountants 6th Floor, State Life Building # 5 Jinnah Avenue Islamabad

1.10.5.

Legal Advisors

Rizvi, Isa, Afridi & Angell, Legal Advisors 68, Nazimuddin Road Sector F-8 Islamabad

1.10.6. Registrar & Share Transfer Office M/s THK Associate (private) Limited Ground Floor, State Life Building # 3, Dr. Ziaddin Ahmed Road, Karachi 75530 ,P.O. Box No 8533, Karachi.

Tel : (021) 5689021 , 5686658, 5685681 Fax : (021) 5655595 UAN : 111-000-322

1.10.7.

Registerd Office/Head Office

AWT Plaza The Mall, P.O. Box 1084, Rawalpindi Pakistan.

Tel: (051) 9063000 Fax: (051) 9272455 Web: www.askaribank.com.pk

1.10.8.
Figure 1-1

Organogram

BOARD OF DIRECTORS

Executive Committee

Internal Audit

President and Chief Executive

Corp. Banking & Fin. Inst. Group

Operating and credit group

Regions Rawalpindi/ Islamabad North

Retail Banking Group

Credit Cards

International

Credit Electronic Technology Systems and Operations

Asset Products Investment products

Planning and Corporate affairs Human Resource

Treasury Corporate and Merchant Banking

Lahore

Finance

Data Reporting

East

Legal Affairs

South I

South II

West

Chapter 2 Introduction to Products and Services 2.1. Products and Services

The product & services of Askari commercial bank limited are developed keeping in view the customers needs & wants, & the expectation that the customer attaches with its financial institutions. A product ACBL includes all those services which customer normally required for effectively managing his business. ACBL offers the following financial services to its customers. 2.1.1. Products In term of deposit accounts 2.1.2. Products and services

2.1.1. Deposits
One of the basic functions of commercial banking is to receive deposits. ACBL accepts deposits in both local & foreign currency. 2.1.1.1. 2.1.1.2. 2.1.1.3. 2.1.1.4. 2.1.1.5. 2.1.1.6. 2.1.1.7. Current Deposit Account PLS (profit and loss sharing) Saving Account PLS term Deposit Account PLS short term Deposit Account Deposit At Call or Call deposit Value Plus Account Foreign currency saving accounts

2.1.1.1. Current Deposit Accounts 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.

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Current account can be opened with an initial deposit of not less then Rs.5,000. The amount of initial deposit should be mentioned on AOF. In current account there is no interest on it. It is for only transaction purposes. They are paid on demand. When a banker accepts a demand deposit, he incurs the obligation of the paying all cheques drawn against him to the extended of the balance in the account.As there is no profit paid on this account it is also called chequing account because cheques can be drawn on it. Current account is mostly opened for business. 2.1.1.2. PLS (profit loss sharing) saving Account 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 however, withdrawals of limited amount are generally allowed only twice a week. The customer has to give a notice of about two weeks before the withdrawals of large amounts. Though individuals open such accounts for saving purpose, persons belonging to Armed forces and different military institutions are free to use this account on current basis. 2.1.1.3. PLS Term Deposit Account 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 withdrawn able 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. A term deposit is a deposit that is made for a certain periods of time at the end of the specific period. The customer is allowed to with draw the Principle amount. The amount of profit is given to depositors in three ways: By cash By sending a bank Draft to depositors Home address or Officers or whichever is specified as mailing Address.

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The amount is credited in any one of the checking Accounts of the depositor. 2.1.1.4. PLS Short Term Deposit Account The short-term deposit account is opened for the period of 7 days notice or 30 days notice. All other conditions for opening, closing and operating conditions are same as described in pls. Term short deposit account. 2.1.1.5. Deposit at Call or Call Deposit A person opens an account, by depositing money in the favor of some company, person or organization .So that the amount can be given to that organization, person, or company who is given Call Deposit Receipt by account holder, without any reference to account holder. 2.1.1.6. Value plus Account This type of account is same in nature as current account .Its opening; closing, depositing and withdrawing facilities are same as in current account. But the profit is also paid on this account at the end of month on daily basis. Calculation of Profit This account is checked after each month. Profit is given on daily product basis from 7th of a month to the end of that month .If minimum average balance in the month is greater than or equal to the minimum limit specified for this account then the account is eligible for sharing the profit. 2.1.1.7. Foreign Currency Saving Account The Pakistani national as well as the foreigners can open this account. The constraints for opening, closing, Cheque-book issue, depositing, withdrawing are the same as in the Pls saving account. This account is also checked for the minimum monthly balance. 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.
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Monthly and daily revaluation rates of each foreign currency in Pak rupees are maintained for the correct operation in the FC saving accounts.

2.1.2. Products and Services

2.1.2.1. 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 Bank's Personal Finance. With unmatched finance features in terms of loan amount, payback period and most affordable monthly installments, Askari Bank's Personal Finance makes sure that one gets the most out of his/her loan. Once a good credit history is established, the door to opportunity opens much wider. 2.1.2.2. 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. 2.1.2.3. 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 Bank's Business Finance Scheme. Our goal is to offer a loan, which enables business community to receive the financing required by them based on their cash flows. Ore valued customers can enjoy the convenience of getting financing on attractive terms with the minimum processing turnaround time. 2.1.2.4. Training and Development Program ACBLs management believes in developing the potential of the Banks employees to the fullest extent. Training Academy has been established in Rawalpindi and two more are being set up, one at Lahore and one at Karachi. The center is responsible for providing multi level

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high quality training programs to all staff members in the areas of operational aspect as well as customer service and marketing. Courses on the following are offered to employees:

General banking Foreign trade Credit management Soft skills (e.g. team building, customer care)

It is obligatory for each staff member of the bank to attend at least four days training in a year. 2.1.2.5. Foreign Trade and Correspondent Banking Inspired by a challenging spirit and an unyielding desire to create a sound and reliable networking of correspondent relationships, the bank has placed great emphasis towards it growth. Accomplishing something for the first time requires a special focus. It demands foreseeing possibilities. 2.1.2.6. Consumer Banking As financial institutions offer diversified and attractive products and service packages for the consumers, consumer banking in Pakistan is becoming a challenging industry. However because of the prudent financial policies and clear understanding of the market scenario, ACBL has been able to maintain its position among the leaders in consumer banking in Pakistan. 2.1.2.7. Electronic Banking

Phone banking Online banking ATMs

ACBL through its commitment to provide superior and improved services to its valued customers, has unveiled a nationwide network of ATMs. For convenience, customers can access to instantaneous cash availability, 24 hours a day, 7 days a week.

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ATM network is geared up to exploit the latest technology, and is equipped to meet the highest standards of security and efficiency 2.1.2.8. 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. 2.1.2.9. Traveler cheques The range of our products and value added services enhances with introduction of Rupee Travellers Cheques (RTCs) launched in March 2002. In spite of our constraint on issuing higher denomination of RTCs against restrictions imposed by the Central Bank of Pakistan we have been striving to attain our shares with sizeable portfolio. Total volume handled by the department during the year 2004 is Rs. 798 Million. 2.1.2.10. Value Plus

The first liability product launched by this unit is showing a remarkable acceptability in the market. The growth of this product is witnessed by its share, which has presently reached at Rs. 1,079 Million even after lowering down the profit rates due to sufficient liquidity in the market. Askari Bank leads the way, yet again ... with the introduction of Askari Bank's Value plus, rupee deposit account, which promises greater financial freedom and security, in an unmatched way. Invest as little as Rs.10, 000/- in a value plus savings deposit and you are entitled to earn monthly returns, while still enjoying the flexibility of a normal checking account. Advantages

Partial liquidity offer on all time deposits Monthly return 24hours world-wide protection plan ASKCARD (Debit Card)
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2.1.2.11.

Investment Certificates

Askari Bank's Investment Certificates are being offered as a part of Retail Banking. Investment Products Unit efforts to provide the best possible services to Askari Bank's existing and potential customers to enjoy the reputation of being the most convenient shortterm investment and cash substitute for all types of business transactions. Askari Bank's Investment Certificates not only provide the added security, investment and monthly return to the customers but also provide opportunity to the bank to generate lowinterest bearing float, innovative and competitive solutions to banking needs. These certificates are negotiable and can be transferred to third party. These can be issued to individuals, who can sign in the firms signature and cannot be issued to minors or in joint names. Askari Bank's Investment Certificates can be issued for a period of 3 months and profit is payable on monthly basis through pre-printed tear-off coupons. The profit will payable on each denomination from the date of issuance mentioned on the face of the instrument. Amount of profit will also be mentioned on each coupon at the time of issuance, as per declared rate of profit. Deduction of withholding tax (es) and Zakat shall be applicable as per GOP rules.

2.1.2.12.

Askari master card

No joining fee

When you successfully apply for an Askari MasterCard, we will not charge you any Joining Fee. Its almost like you are getting it for FREE! Global acceptability

Your card provides you with service at thousands of locations in Pakistan, and at over 23 million establishments worldwide. As an added convenience, you will have the benefit of receiving your monthly billing in Pak Rupees, regardless of the currency of purchase. 24-Hours customer service

With Askari MasterCard, you are always a phone call away from the assistance you need. To speak to one of our friendly Customer Service representatives, please call our UAN 111-000787 for Karachi, Lahore or Rawalpindi/ Islamabad.
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Low service charges

Your Askari MasterCard provides you the experience of revolving your spending at comparatively low service charges. In addition, the same rate also applies to cash advance obtained on your Askari MasterCard Zero loss Liability

Please report loss or theft of your Askari MasterCard immediately at our Customer Services UAN 111-000-787 for Karachi, Lahore and Rawalpindi/Islamabad. Once you have registered the loss of your credit card, your liability against its fraudulent use will be limited and we will send a replacement card within 48 hours of reporting. Cash advance facility

Cash advance facility is available for Askari MasterCard holders. You can get up to 80% of your sanctioned credit limit as cash advance in Pakistan or anywhere else in the world. The facility is available at all ATMs displaying the Cirrus logo around the world and in Pakistan. You may also avail this facility at designated branches of Askari Commercial Bank, during banking hours. Balance Transfer facility

With Askari MasterCard, you can avail an incredible offer of a Balance Transfer at the exclusive rate of just 1.5%* per month. Free travel insurance

Just purchase your travel tickets on Askari MasterCard and you are automatically covered under our Travel Insurance Plan (in case of personal accident resulting in death or permanent disablement) for up to Rs.8,000,000/- on a Gold Card and Rs.4,000,000/- on a Silver Card. No Joining Fee: When you successfully apply for an Askari MasterCard, we will not charge you any Joining Fee. It's almost like you are getting it for FREE Worldwide Acceptability: Your card provides you with service at thousands of locations in Pakistan and over 14 million establishments worldwide. As an added convenience, you will have the benefit of receiving your monthly billing in Pak Rupees, regardless of the currency of purchase.

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Traveling Safety Net

Just purchase your travel tickets on Askari MasterCard and you are automatically covered under our Travel Insurance Plan (in case of personal accident resulting in death or permanent disablement) for up to Rs.8,000,000/- on a Gold Card and Rs.4,000,000/- on a Silver Card. Low Service Charges

Your Askari Master Card provides you with the facility of revolving your spending at comparatively low service charges. In addition, the same rate also applies to cash advances obtained on your Askari Master Card. 2.1.2.13. Agriculture Banking

The role of agriculture in Pakistan economy is of pivotal nature. Due to diverse geographical and climatic conditions the country has tremendous potential for growth and development in agriculture. However, adequate and timely financial assistance to the farmers will improve production potential of agriculture sector in the country. The modern concept of agricultural credit envisages establishment of an efficient institutional credit system to serve as a package of credit, supplies and knowledge for the overall strength of the farmers who at present suffer from low productivity and financial insecurity. A successful credit evaluation system, therefore, should have the basic ingredients to provide adequate amount at the right time and in the right form to help farmers in making a productive use of loan funds. Products Askari Kissan Ever Green Finance Askari Kissan Livestock Development Finance Askari Kissan Farm Mechanization Finance Askari Kissan Farm Transport Finance

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Chapter 3 Introduction of Askari banks main departments

Three main departments which work in Askari Bank and mostly all the banks are mention below: 3.1. General Banking Department 3.2. Credit Department 3.3. Foreign Exchange Department

3.1.

General Banking Department

General banking departments are as follows: 3.1.1. Account Opening 3.1.1.1. Account Opening Procedure

3.1.2. Clearing 3.1.3. Cash 3.1.4. Remittances

3.1.1. Account Opening

As soon as a person opens an account with the bank, the banker customer relationship is established. In such situation this is advisable the banker should not open new accounts of unknown persons unless references regarding the integrity and responsibility of the purposed persons are obtained from respectable parties. Failure to exercise this care may result in serious consequences not only for the banker concerned but also for the other bankers and general public. It is not sufficient to obtain the reference but its genuineness must also be verified. Accounts may be divided into following three classes. These three classes are: Personal accounts Real or property accounts
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Nominal or proprietary account

Personal accounts:

Accounts relating to a person or firms are called personal accounts. They can take the following forms. Natural persons accounts:

For example: any person account. Artificial persons and body of persons account:

For example: Khyber Banks account, Oil Mills Limited account or any institution or any clubs account. Representative personal account

When an account represents certain person or persons then it is called a representative personal account. Account of the same nature and many in number, the amount standing against these accounts are added and put under one common title. For example: Outstanding Salaries account .In which amount due to the employees will be added and put under that title. Real or property accounts

Accounts of property and things are those, which keep record of properties or things owned by a trader. For example Machinery account, Land account, Furniture account, Building account. These accounts have existence and they are tangible, therefore called real accounts. Nominal or proprietary accounts:

Accounts of gains and losses are those account those record expenses, gains and losses such as Salary account, Wages account etc. These accounts have no existence mere in name and therefore called nominal. They are called proprietary being related to the proprietor of business.
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3.1.1.1.

Account Opening Procedure

For the checking accounts (C/A, ASDA, SAVING), there are different types of account holders are required for all these types of account holders. The operation /procedure requirement that is needed for " Individual Account " differ greatly from " Joint account " proprietorship "Partner ship ,"Limited Company" and "Club society or Association " as explained below. Individuals Account

When a single man or women opens an account in his/her own name and has the right to operate it is called individual Account. Documentation Requirement For literate person copy of National Identity Card is required as a primary requirement. For illiterate person and Veiled Women, along with the copy of National Identity Card requirement he or she must come in person for opening the account. Operation The person place a "Check Mark in the type of account and type of Operation required: He/She fills in part-I of the form , a fix his / her either two or four similar signature (or thumb expression in the signature space and get it introduced and signed by a person who already has an account with the bank and write his account no in the specific rows in a specific space. The person fills in "next of Kin " position where he/she father, mother, husband/wife or any other relative's name, his/her address, phone no and affix his/her signature to certify this requirement. This requirement is needed because in his/her absence bank can have correspondence with the specific person. The person put her /his signature (" or thumb expression) on the signature Specimen Card (SS CARD) similar in the area on the form. One the back of S.S card mailing address, telephone no, Person to contact and introducer space is filled in. These entire requirements are

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necessary for future the person deposits the initial amount for opening account on to the cash counter. The person put his signature on form-A (check book requisition) on two places in "authorized signature" and fills in the "Title of Account space by writing his name. If the person on put his signature in Urdu or any language other than English, he signed a "Vernacular form" where under take that affixed signature are original and his own signature and two postal size photos are needed. The next day is the opening of account. Joint Account

When two or more persons, neither partners, nor trustees, open an in their name is called joint Account. Husband and wife or two persons of same sex can open joint account. Documentation For joint account copy of National Identity Card of all the persons is obtained other things remaining same as in individuals account. Operation The person checks the type of account and type of operation required in the respective box on the form. The persons fill in the Part-I and part-II in the form. Signatures of both persons are obtained on the form in the area specified for signature and S.S. Card. In the title of account space names of all the persons are mentioned. Accounts holder specified in the form that they will operate the form singly or jointly. Proprietorship Account

When an owner of a firm operating singly, opens an account in his firm name, this account is called a proprietorship Account the proper himself liable for all his acts. Documentation required For this kind of account, an application for opening the account on the firm letter -pad (having the firm name) is required along with the N-I-C Card of proprietor. Operation

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Al l operation remains the same except that the firm name is written in the "Title of the Account" area and signature of the proprietor are affixed in the S.S. Card and the area specified for signatures on the form. Partnership Account

The account is opened in the firm name and all partner designate one two persons to act on behalf of the partnership firmer all acts on behalf of firm. The partners in the partnership firm are liable for the acts of the firm jointly and severely. Every partner has in a firm has an implied authority bind his co. partners by drawing and enclosed cheques. Documentation Copy of N.I. card of all partners Application to open the account on the firm letter pad. Partnership deed in case registered partnership firm. Letter showing the implied Authority of one or more partners to act on behalf of the firm. In case of non-registered partnership firm, understanding on behalf of the firm to remain liable for all acts of the firm. Name, address of all partners is written on the pad. Operation All other requirement remain same except that the form is dully signed by all partners cards are signed by all those partners who will act on behalf of the firm and along filling part-I, Part-Iv is also filled. This account is for limited companies. In order to facilitate their transaction with outside parties, bank provides many facilities. Documentation Required Memorandum of Association. Articles of the Association Resolution of the Board of Director. Certificate of Incorporation. Certificate of commencement of business
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N-I-C Operation The persons authorized in the Resolution of the Board of Directors put their signatures on S.S Cards. Next of kin "requirement is not need in case of a Limited Company. After completing each and every formality, introducer signature is verified by S.S card and is stamped "Verified" customer signatures are admitted by stamping "Admitting" near signature and again signatures on S.S card are admitted in the same way. The same process of verification and admission of the signatures is repeated on Form-A and next of Kin area. After completing each and every formality, Accountant is open in the computer by writing name, address, A/C Number etc. Letter of Thanks

At the start of the letter 2nd day, ACBL issues letter of thanks to "Account Opener" and "Account Introducer" for the trust they have on ACBL. Other Responsibilities

Cheque book Issuing Check books are issued only for checking account such as current Account, saving Account and ASDA Account. They are not issued for other fixed and term deposits because of their Long term Accounts nature. Issuing Procedure

Signatures on cheque book requisition are verified by matching with signatures on SS.Cheque Book leaves number, account number, account holders name are mentioned in the cheque- book is made by mentioning the and the total of sum of excise duty and provincial tax. The name of A/c holder and date of cheque book issuance is written on cheque book requisition the account-opening officer puts his initials on requisition leave.

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A/c number is stamped over the leaves of cheque book and finally authorized person affix his signature over the debit voucher and cheque book is handed over to the customer.

Receiving Inward Cheque

Another responsibility and function of account Opening Department is to receive Inward cheques for collection of other Banks as well as of ACBL. Then these cheques are sent to clearing official who clears these checks at SBP from other banks. Inward bills from collection opposite are IBC number, their OBC number. Lodge in clearing cheques pending on realization. Cleared cheques are credited in the bank account. Encashment of Cheque

Issuance of Token After scrutinizing the apparent tenor of cheque a token is issued to the account holder. Verification of Signature After affixing the two stamps i.e. paid stamp and branch stamp, a cheque is sent to the accountant for the verification of signature from signature specimen card. After authentication a cheque is sent to cash department Encashment of Cheque Cashier pays the amount to token holder after getting back the token from him. Deduction of Zakat Form the profitable accounts zakat is deducted at the rate of Rs. 2.5 %. Annually on the outstanding balance of accounts on the first day of every valuation date i.e. first day of Ramzan. The Central zakat Authority (CZA) fixes minimum balance for the deduction of zakat before the valuation date Exemption from Zakat The accounts of foreigners (including Muslims of other nations) and Pakistani non-Muslims are exempted from (lie compulsory deduction of Zakat. The accounts of the followers of
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Fiqah-e-Jafria sect are also exempted from the deduction of Zakat after the submission of affidavit on a legal stamped paper. Withholding Tax Whenever a profit is paid on any deposit it is subjected to the withholding tax @ 10% annually. ATM card

ATMCards are only issued to Account Holder. Any account holder of ACBL (current Saving Value plus Saving Account) can obtain ATM card from ACBL within 15 days. Maximum limit of daily cash withdrawal is Rs.10000.
Issuing Procedure

1. The person, first open the account within the blank. 2. Then he fills the ATM application form in which name of account holder, account number, address, phone number are mentioned. 3. Then on the same application form bank officer guides branch code, application number and signatures are verified by the bank. Bank manager puts his signatures. 4. After completing this process, the application package is sent to card centre. 5. Card along with pin code is sent to the branch from the head office. ACBL head office takes a period of 3-4 weeks for preparing and processing of ATMcards. First, list of card holder is issued and then after 15 days cards are sent to ACBL issuing branch. The card and list are not sent simultaneously in order to avoid any mishandling. You can deposit money withdraw get balance inquiry transfer the fund 24 hours a day at any branch of ACBL which has ATM facility. ACBL has shared ATM net work with ABN AMRO and HBL.

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3.1.2. Clearing
Meanings: The word clearing has been derived from the word Clear and is defined as a system by which banks exchange cheques and other negotiable instruments drawn on each other within a specific area and thereby secure payment for their clients through the Clearing House At specified time in an efficient way. Advantages of Clearing: 1. Since clearing does not involve any cash etc and the entire transaction take place through book entries, the number of transactions can be unlimited. 2. No cash is needed as such the risks of robbery, embezzlements and pilferage is totally eliminated. 3. As major payments are made through clearing, the banks can manage cash payment at the counters with a minimum amount of cash in vaults. 4. A lot of time, cost and labor are saved. 5. Since it provides an extra service to the customers of banks without any service charger or costs, more and more people are inclined and attracted towards banking. Clearing House: It is a place where representatives of all scheduled banks sit together and interchange their claims against each other with the help of controlling staff of State Bank of Pakistan and where there is no branch of State Bank of Pakistan the designated branch of National Bank of Pakistan acts as controlling member instead of State Bank of Pakistan. Working of clearing house: All the bank which are the member of clearing house maintain accounts with State Bank of Pakistan by debit and credit to which the clearing settlements are made. If on a particular day, a bank delivers cheques and other negotiable instruments worth more than the total amount of Cheque received by it that banks accounts with State Bank of Pakistan will be credited with the differential amount. If on the other hand the total amount of cheques and other negotiable

27

instruments draw on a certain bank by other bank is more than the total amount receivable by it from other banks, then this banks account will be debited on that day. The cheque delivered to the representatives of other banks for clearing are called outward clearing, whereas cheques received from the representatives of other banks for payment are called inward clearing.

3.1.2.1.

Outward Clearing at the Branch:

The following points are to be taken into consideration while an instrument is accepted at the counter to be presented in outward clearing: 1. The name of the branch appears on its face where it is drawn on 2. It should not be stale or post dated or without date 3. Amount in words and figures does not differ 4. Signature of the drawer appears on the face of instrument 5. Instruments is not mutilated 6. There should be no material alteration if so, it should be properly authenticated 7. If order instrument, suitably endorsed and last endorsees account being credited 8. Endorsement is in accordance with the crossings if any 9. The amount of the instrument is same as mentioned on the paying-in-slip and counterfoil 10. The title of account on the paying-in-slip is that of payee or endorsee (with the exception of bearer cheque). 3.1.2.2. Inward Clearing of the Branch: 1. The particulars of the instruments are compared with the list 2. The instruments are detached and sort out department wise 3. The entry is made in the Inward Clearing Register (serial number, instrument number, account number, amount of the instrument is written).
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4. The instruments are sent to the respective departments against acknowledgement in the Inward Clearing Register. 5. The instruments are scrutinized in each respect before honoring the same

3.1.3. Cash
The cash department is the most important department of the bank. It receives cash from customers and then deposits it into the accounts of the customers and maintained their balances. All physical movement of cash in the bank is made through the cash department. Normally cash department performs following functions Receipt Payments Act according to any standing instructions Transfer of funds from one account to another Handling of ATM Verification of signatures Posting Handling of prize bond

Deposit Cash in Customers Account When the customer want to deposit amount in his account at opening of account or after that then he has to fill a deposit slip that shows the amount and the account in which the cash will be deposited. Then teller will receive amount and credit the customers account that shows increase in customers bank account. Make Payments from Customers Account When the customer draws a cheque on the bank to pay a certain amount then teller will debit the customers account that shows reduction in his account balance.
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3.1.4. Remittances
Deposits: Deposit is a life blood of a commercial bank. Main function of a commercial bank is to channelize the saving from the savers to the ultimate user of funds. The process of collecting saving is called Deposit mobilization. Two broad categories of deposit with reference to time period are: Demand Deposits: They are payable on demand. They include current account, sundry deposit (e.g., margin account) and call deposit receipt. No profit is given on demand deposits Demand Draft: It is an instrument payable on demand for which value has been received, issued by the branch of the bank drawn i.e. payable at some other place (branch) of the same bank. In case of agency arrangements -Demand draft can also be issued by one branch of the bank payable to other branch of the other bank e.g. DD issued by the ABL payable by MCB. The instruments that are handled in the department are as follows: 3.1.4.1. 3.1.4.2. 3.1.4.3. 3.1.4.4. 3.1.4.5. Demand Draft. Pay order. Pay slip. OBC. IBC.

3.1.4.1.

Demand Draft

A demand draft is an instrument, which is drawn by one bank upon another bank for a specific sum of money payable on demand. It is made by the bank and given to the purchaser against cash or cheque. If two banks are involved, then one bank sends a DD to another bank. But in customer - Bank case the customer sends his DD to the receiver. Issuance Procedure
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A demand draft application to given to the customer, he fills in a relevant information and signs it. The Officer in charge then checks the information form. The charges such as commission, excise duty, postage is charged as per effective schedule of charges. Tax is exempted if he is taxpayer and knows his No. 3.1.4.2. Payorder

It is a cheque drawn by a bank on itself. Pay order is an instrument in which the parties are involved the purchase, the bank and the receiver. It can he purchased by any customer. It is usually made by govt. Bodies. A single bank is included in this case. Issuance procedure The standard form is given to the customer; he fills in the detail and signs it. The concerned staffs check the form. Charges as per effective schedule are applied. The cash of the pay order is received. A cost memo is signed, stamped and handed over to the applicant as a receipt. Then the pay order receipt is filled accordingly. Counter foil is also filled. An entry is made in the pay order issued register. Then the authorized office after checking the pay order signs it. The pay order is then handed over to the application after obtaining his Signature on the P.O form. A voucher is also made and posted at the computer Cr bills payable account P.O issued. 3.1.4.3. Pay Slip

It is an instrument used by the bank s for its payment. The slips are issued to the employees of the banks their bills & invoices. The bills are transferred payments. In this case only one bank is involved. He is the issuer as well as the payer. Procedure prescribed for P.O for issuance and payment is followed for payment is followed for pay slips with the following expectations. 1. Pay slips are the issued by the bank for the settlements of this down payment. 2. No excise duty is applicable on P.S. Issuance Procedure A credit voucher is sent from the accounts dept. to the b debt. According to the b debt. The P.S books is taken out & filled according to the credit voucher. It is entered in the P.S. /P.O

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register. It is signed by, an authorized officer, Operational Manager. The pay slips is handed to the customer. A voucher made and posted payment. The P.S. is received on the counter, clearing or transfer. On receiving the P.S. if it is transferred in the P.S. register. The payment is made and the P.O. is posted at the computer. Dr. Bills payable P.S. issued. If Askari branch is in that city, the OBC forwarding schedule in sent to that Askari Branch. Otherwise it is addressed to the particular Branch to whom the cheque belongs. 3.1.4.4. OBC (outward bills for collection)

The bills, which are sent to their cities banks for the local clearing in that city, are called outward bills for collection. Procedure The cheques that are banks in other cities are separated. They are entered in the OBC register, the number is written on the stamps. The OBC forwarding schedules are prepared for the different branches. The respective cheques are attached with the schedule. Two authorized officers sign the schedule. The office copy is filled and the original schedule is mailed. On clearance the respective banks send back the OBCS along with IBCA. Inter branch credit advice. The OBC no are checked for the OBC register and the received any entry is made. Charges i.e. commission charges and postages charges are deducted from the A/C. 3.1.4.5. IBC (Inward Bills for Collection)

The bills are received from other banks out of city for the local clearing are called inward bill for collection. Procedure The OBC of the other branches will be the IBC s 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. The cheques are lodged for clearing. After realization, an IBCA is prepared and mailed to the branch. At the end of the day two contra vouchers are made & posted.

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3.2.

Credit Department

Although the study of money is important for the understanding of the way in which our economic system operates, we must recall this point that most exchange transactions in this system are carried on today without the use of actual money, i.e., .Those are carried on by means of credit and credit instruments rather than money. While money still forms the basis of credit and deferred payments, it is necessary to examine the nature of credit operations, and the instruments and institutions trough which these operations are carried on, in considerable detail. Types of Credit: The varieties of credit may be classified in numerous ways: 1. Public and Private Credit 2. Band Credit 3. Investment Credit 4. Commercial credit 5. Consumers credit and producers credit.

To give credit is to finance directly or indirectly the expenditure of others against future payment. Lending or financing is one of the basic functions of banks of all categories, through which they gain major part of their profits. A bank accepts deposits of money and repays cash to its depositors on demand. But this is not to say that; bank gives this service for nothing. Bank borrows money at a lesser rate of interest and lends to the borrower at higher rate of interest. And the difference between these two is the profit of the bank. Credit department deals with all the activities related to giving credit to customers. FUND BASED LOAN: In this type of loan, funds are directly involved.

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RUNNING FINANCE: (R/F) It is popularly known as overdraft. It is offered for working capital requirement of the customer. It is created in current account adjustment from time to time finally on expiry date. This facility is normally issued against hypothecation of immovable property. It is allowed to the borrower under a pre-sanctioned limit. A current account is opened and the conduct of this account is kept under review for a period of three to six months. The borrower can draw cheque on his account maximally up to the amount of limit sanctioned to him. The amount outstanding against the borrower is mark-up will be changed on the basis of the amount outstanding. This facility is issued on revolving basis repayment should be completed by the maturity date. Repayment in monthly installments is not required. CASH FINANCE: (C/F) It is also offered for the working capital requirement of the customer. It is the type of loan in which client is given cash in lump sum it is offered against the pledge of moveable property or stock of borrower. In majority of the cases this finance is allowed against pledge of stock. The amount of finance is credited to borrowers CD account and he/she utilizes it for business purposes. Repayment is not made by monthly installments. Adjustments are linked with delivery of goods kept under banks pledge. Goods are pledge when the payment is done on delivery order of the bank. Goods released are equivalent in value to the repayment amount and remaining goods are stills kept in pledge with bank for further recovery. Goods are released on the Delivery Order (DO) by the bank to the Go down Officer. TERM FINANCE: (T/F) Term finance is offered to client for investment in any project or business. It is issued for fixed time period. The amount of finance is credited to borrowers personal account by debiting the Term Finance Account. The amount of finance is credited to borrowers personal account by debiting the Term Finance Account. The amount of Finance is disbursed in lump sum. Partial transactions are not allowed in the Term Finance account. The repayment of Term Finance is usually in installments and with other documents a letter of installments is taken from the borrower at the time of disbursement. By that letter, the borrower binds him to pay the installments at regular intervals. Monthly repayment amount is calculated by dividing the principal amount by time period plus mark-up.

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3.3.

Foreign Exchange Department

The term "foreign exchange" is used to denote either a foreign currency or the rate at which one currency is converted into another currency and methods by which one currency is exchanged for another. Thus foreign exchange is concerned with the settlement of international indebtedness, the methods of effecting the settlements and the instruments used in this connection, and the variation in the rate of exchange at which settlement of international indebtedness is made. 3.3.1. Foreign currency account 3.3.2. Foreign Remittance 3.3.3. Exports 3.3.4. Imports

3.3.1. Foreign Currency Account (FCA) Mainly this account deals in individual, personal and companies account. Criteria for Opening FCA A depositor can open account in US Dollar, Pond, Japanese Yen and Euro with nominated branches. For opening of account a Form is provided to the person/party, introduction of the new account holder or by the Officer of the Bank. Procedure of opening foreign currency accounts is same as other accounts. There are not hard and fast rules for becoming the Foreign Currency Account holder. Bank wants only introduction of the Client and very little about the background. I.D card is also not necessary, if someone has; well and good, otherwise no restriction will be there for him. Features of Foreign Currency Accounts There will be legal protection for the account holders. According to foreign exchange rules and regulation every citizen of Pakistan, either within the Pakistan or outside the Pakistan, can open the foreign currency account. Resident firms and Resident Companies including investment Banks can open Foreign Currency Accounts. All foreign nationals and foreign Companies in Pakistan or abroad can

35

open Foreign Currency Accounts. Opening of Foreign Currency Accounts in the joint names of residents/non-residents is permissible. Foreign Currency can be deposited by: Remittance received from abroad Foreign Currency Notes There will be no restriction and questioning to him about the currency, which he wants to deposit that from where he got that money. No Zakat will be deducted on these accounts; no Income Tax deduction, no Wealth Tax deduction will be there. These incentives reinforce and motivated the people to invest in foreign currency accounts rather to keep the foreign currency idle. Foreign currency accounts can easily be transferred from one person to another, one place to another, with in the ACBL Branches or in other Bank. The account holder can transfer the funds freely, in any currency to any part of the world. Foreign currency Accounts can be used for payment of purchases at Duty Free shops. Facilities This account provides following facilities: Travelling quota Out ward remittances In ward remittances receiving

3.3.2. Foreign remittance Bank also operates in Foreign Currency accounts. In accordance with instructions of SBP, foreign currency accounts are opened in these currencies: US Dollar, Pond, Japanese Yen, and Euro. Funds are transferred abroad by Foreign Telegraphic Transfer Swift MT-100 is used for this transfer. Askari Commercial Bank has its agency arrangements in those countries, where its own branches are not established. Its agency arrangements with Citi Bank, American Express, ABN Amro, Standard Chartered Bank.

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3.3.3. Export The international trade transaction in which one country sells its goods to other country is called Export. The controlling body of export in Pakistan is Export Promotion Bureau; it gives different incentives to the businessmen for enhancing the exports and reducing the Balance of payment deficit. It restricts the export of some goods and reinforces export of other. Mainly export deals in: Negotiation of documents Sending the documents for collection Remittance against agent commission Forward covered booking

3.3.4. Import The international trade transaction, in which one country buys goods from other country, is called import. The import trade in Pakistan is governed by import and export Act of 1950. Previously, the regulating body of imports was controller of Import and Export. But this function has been shifted to Export Promotion Bureau. Foreign Exchange Departments of all banks are restricted to word under the rules and regulations of government. Import License and Registration: The individuals and firms who desire to import goods from the foreign countries are required to obtain import license. Import licenses are a type of artificial restraint on the import trade of a country. To acquire import license, the importer has to submit applications to the licensing authority. The importers can only get their merchandize cleared from the custom authorities if they have the import license duly issued in their names. The import licenses issued by the Import Trade Controller are required to be registered with the State Bank of Pakistan.

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Chapter 4 Plan of internship program 4.1. Brief Introduction of branch

I did my internship in Askari commercial bank haripur branch situated at Shah rah-e-Hazara haripur. It was the first step of my professional life. This site is situated in very busy area of the city.

4.2. Starting and Ending date of My Internship

From June 11, 2012 To July 24, 2012

4.3. Name Of Department The following are the departments in Askari bank haripur branch where I was given duties. In all departments I approx. spend 5 to 6 days as my duration of internship was 6 weeks. 4.3.1. Account opening department 4.3.2. Foreign Exchange department 4.3.3. Cash and Clearing department 4.3.4. Account department 4.3.5. Credit department 4.3.6. Agri. Finance department

4.3.1. Account opening Department

I take start of my training in Askari bank from account opening department. Where I learned how different types of accounts opened, what are their requirements etc. through this department I also learned how to deal with our new customers and also how guide new and existing customers.

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4.3.2. Foreign Exchange Department

When my second week of internship started I decided to go in foreign currency department instead of clearing or cash department. In this department I was guided how to open foreign currency accounts and how to manage online cash receivings and sendings. What were banks charges and what requirements a customer had to fulfill. I also learned how to fill a receipt for online transactions and types of currency trade Askari bank handle.

4.3.3. Cash and Clearing department

In third week of my internship I advised to go in Cash department. In cash department I learn how to fill cash receipts and what is the procedure of cash payments. Cash receipts depositors use to deposit cash in their accounts. The cash officer check the cash receipt that whether its title, amount in words and figure is matched, and date is also written correctly. And then cash is received and receipt is stamped from back side. Cash payments procedure I also learn and I want to write some steps briefly here. Cash payment procedure starts when cheque is presented to by the account holder to cash payment officer. Then officer confirms the particulars of cheque. Two signature of drawer is taken on back of the cheque and then cheque is handed over to the officer cash department for inspection, where cheque amounts, endorsement crossing if any and signature of account holder. Than cheque is then given to cash officer for payment. In clearing department I was guided how cheques are prepared to deliver for clearance and how banks internal cheques are checked. One day cheques are sent and then next day morning they again returnd to bank after clearing process. A clearing house is a place where representatives of all banks sit together and interchange their claims against each other with the help of controlling staff of SBP and if there is no branch of SBP the designated branch of NBP act as controlling member. I was assigned duty to perform clearing process for two or three days, and I did it well. There are two types of clearing inward and outward clearing in this week I entered the cherub lodged for inward clearing in clearing register as their cherub no and name of account holder and amount and bank name amount to be paid.

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Secondly in this week I prepared outward clearing for next day. Same as entered cherub number account holder name amount and bank name.

4.3.4. Accounts department

My fourth week of internship was in account department. Here I was guided how bank overall activity which was recorded in form of cherubs, cash receipts, vouchers etc. handled and how I had to arrange all the activity of previous day. Here also I learned the codes of different accounts. For example asda 061, cd 010, savings 0100, etc. Account department is responsible for budgeting and account opening all the transaction that are take place in the bank and their physical prove are match to the computer generated report and sace it as a physical that these transaction are taken place in the bank. Secondly account is responsible for budgeting and also record daily expense incurred by the bank. This department directly reports the operational manger and vice president preparing the banks annual accounts and coordinating external audit is also a direct function of the finance division. In account department all activity is arraigned as in every branch of Askari bank have limit to store only store data for one year then whole data is sent to head office.

4.3.5. Credit department

Fifth week of my internship completed in Credit department. Due to transfer of officers of credit department I spend most of time in clearing department. Here I learn basics about loan what activity this department perform. This department handles loans only. Credit department deals with arrangement by which a buyer can take ownership of something now and pay for it late or overtime credit department perform duties like personal finance, mortgage finance, business finance etc.

4.3.6. Agri. Finance Department

The Sixth week was last week of my internship. In this department I was guided about what are the terms and conditions for applying a loan, etc. briefly. Askari bank haripur branch gives loan only for farms development, loan for cattle etc.

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Chapter 5 Financial Statement Analysis

Financial statement analysis refers to the assessment of a business to deal with the planning, budgeting, monitoring, forecasting, and improving of all financial details within an organization. The most common methods used for financial analysis are given below: 5.1. Trend Analysis/Horizontal Analysis 5.2. Vertical Analysis 5.3. Ratio Analysis 5.4. Financial Review

5.1. Horizontal Analysis

Its a Procedure in which Analysts compare ratios or line item in companys financial statement over a certain period of time. Its useful in comparing the performance of company.

5.1.1. Horizontal Analysis of Financial Position

Table 5-1 Horizontal Analysis of Assets
2009 Rupees in millions Assets Cash And balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Other assets 19,386 8,364 4,614 67,046 135,034 9,846 10,036 254,327 22,565 3,785 9,172 102,260 152,784 9,988 14,190 314,745 26,168 6,235 1,592 133,757 150,711 9,349 15,945 343,756 100 100 100 100 100 100 100 100 116.3984 45.25347 198.7863 152.5221 113.1448 101.4422 141.391 123.756 134.984 74.54567 34.50368 199.5003 111.6097 94.95226 158.878 135.163 2010 2011 2009 Horizontle Analysis 2010 (%) 2011

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Table 5-2 Horizontal Analysis of Liabilities

Liabilities Bills payable Borrowings Deposits and other accounts Subordinated loans Deferred tax liabilities Other liabilities Net Assets 2009 2,946 19,300 205,970 5,995 334 4,833 239,378 14,949 2010 3,090 25,555 255,937 5,993 86 8,081 298,740 16,004 2011 2,756 17,273 291,503 6,990 83 7,374 325,980 17,776 2009 100 100 100 100 100 100 2010 104.888 132.4093 124.2594 99.96664 25.7485 167.2046 2011 93.55058 89.49741 141.5269 116.5972 24.8503 152.576 118.911

100 124.7984 136.1779 100 107.0573

Horizontal analysis of assets sides of Askari bank shows gradual increase in assets from 2009 to upcoming years. This represents banks good management also. Liabilities of bank in 2011 increases also but overall performance of bank is better as compared to 2009 and 2010.

5.1.2. Horizontal Analysis of Profit and Loss Statement

Table 5-3 Horizontal analysis of Profit and Loss statement 2009 List of items Markup revenue Markup / return Net markup / Gross Profit Provision and bad debts Net markup income
Total nonmarkup interest income

2010 27,952 17,937 10,016 2,139 6,951 2,177 9,128 7,855 1,273 330 943

2011 32,766 22,700 10,067 1,630 69,160 2,903 11,138 8,726 2,413 833 1,628

Rupee in Millions

Net Income Total nonmarkup expenses Profit before taxation Taxation Profit after taxation

22,662 13,629 9,033 2,324 6,118 2,555 8,672 7,030 1,632 562 1,108

2009 2010 2011 Horizontal analysis (%) 100 123.343 144.5856 100 131.6091 166.5566 100 110.8823 111.4469 100 92.03959 70.13769 100 113.6156 1130.435 100 85.20548 113.6204 100 105.2583 128.4363 100 111.7354 124.1252 100 78.00245 147.8554 100 58.71886 148.2206 100 85.1083 146.9314

Horizontal analysis of profit and loss statement shows sound performance like during 2011, Askari bank financial performance showed marked improvement over the previous year. Profit before and after taxation rose by 78.002 and 85.108 percent respectively.

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5.2. Vertical Analysis

Vertical analysis is also a method of financial statement analysis. The main advantages of analysis are that the balance sheet of all sizes can easily be compared. It also makes it easy to see relative annual changes within one business.

5.2.1. Vertical Analysis of Financial Position

Table 5-4 Vertical Analysis of Assets

% change in vertical Analysis 2011 Assets Cash with balances with treasury Balances with other banks Lending to financial institutions Investments Advances Operating fixed Assets Other Assets 8 2 0 39 44 3 5 100 7 1 3 32 49 3 5 100 8 3 2 26 53 4 4 100 2010 2009

Figure 5-1 Vertical Analysis of Assets year 2011

2011
3% 5% 8% 2% 0% cash & treasury balance balance with other banks 43% 39% lending to financial insitutions

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Table 5-5 Vertical Analysis of Liabilities

% change in Vertical Analysis Liabilities Bills Payable Borrowings Deposits and other Accounts Sub-Ordinate loans Liabilities against Assets subject Deferred tax liabilities Other liabilities Total Liabilities 2011 1 5 89 2 0 0 2 100 2010 1 9 86 2 0 0 3 100 2009 1 8 86 3 0 0 2 100

Figure 5-2 Vertical Analysis of Liabilities year 2011

liabilites 2011
1% 2%2% 5% Bills payable Borrowings Deposits & accountss Sub ordinates loan other liabilities 90%

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5.2.2. Vertical Analysis of Profit and Loss Statement

Table 5-6 Vertical Analysis of Profit and Loss Statement

% change in vertical Analysis List of Items Mark up revenue Mark up expense Gross Profit Provisions and bad debts Net Mark up Income Total non Mark up Income Total Income Total Non Mark up Expense Profit before Tax Taxation Profit after Tax 2011 100 69 31 6 25 9 34 27 7 2 5 2010 100 66 34 11 23 10 33 29 5 1 3 2009 100 60 40 13 27 11 38 31 7 2 5

Figure 5-3 Vertical Analysis of Profit And Loss statement 2011

Income statements 2011

5% Mark up expense 20% 19% 52% provision for debts Net mark up income Non mark up Expense Profit before tax 4%

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5.3. Ratio Analysis

Ratio Analysis is a tool which is widely used to interpret the financial statement so that the strengths and weakness if the firm as well as the historical performance and current financial condition can be determined.

5.3.1.

Return on equity (ROE)

Formula: Net Income / stock holder Equity *100 Table 5-7 Return on Equity Name Of Ratio ROE 2011 1628/17776*100 = 9.15 % 2010 2009

974643.6/16004000*100 1107793/14949072*100 = 6.09 % = 7.94 %

Figure 5-4 ROE

10 8 6 4 2 0 2009 2010 2011 Return on

Askari bank is always being a good choice from the investor point of view because according to above data it is clear that Askari bank is providing greater return in year 2009 and upcoming years.

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5.3.2.

Return on avg. Assets

Formula: Net Income/Avg. Earning Asset*100 Table 5-8 Return on Avg. Asset Ratio Name Return Asset on 2011 1628/343756*100 = 0.49 % 2010 2009

894701/271121343*100 1107793/215058852*100 = 0.33 % = 0.48 %

Figure 5-5 ROA

0.5 0.4 0.3 0.2 0.1 0 2009 2010 2011 Return on Average

Return on Avg. Assets is highest in year 2011 which means that the Askari bank is able to use its avg. Assets effectively to generate income as compared to year 2010 and 2009.

5.3.3.

Earning Asset To total Asset

Formula: Earning Assets/Total Assets*100 Table 5-9 Earning Assets to Total Asset Ratio Name Earning 158152364/182171885 271121343/31474500*100 215058852/254327446*100 Assets to Total Assets *100 = 86.05 % = 86.14% = 85.71% 2011 2010 2009

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Figure 5-6 Earning Assets to total Asset

86.2 86.1 86 85.9 85.8 85.7 85.6 85.5 85.4 2009 2010 2011

Earning Assets to

The ratio of earning to total assets in 2011 is 86.05 and in 2009-08 85.71 and 85.14. As return on total Assets is increased in 2010 as compare to 2009-08 which is favorable for bank.

5.3.4.

Return on Earning Asset

Formula: Net Income/Avg. Earning Asset Table 5-10 Return on Earning Asset Ratio Name Return on 2011 10950330/271121343 = 0.404 2010 2009

1107793/215058852 386225/172930565 = 0.51 = 0.22

earning asset

Figure 5-7 Return on Earning Asset

0.6 0.4 Return on Earning 0.2 0 2009 2010 2011

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Return on earning assets decreased in 2011 as compared to previous year, due to certain causes may be unfavorable management of ACBL, showing unfavorable trend.

5.3.5.

Operating Cost to Income Ratio

Formula: Operating cost/Net Income Table 5-11 Operating Cost to Income Ratio Name of Ratio Operating cost to Income ratio 2011 1139143/1095330 = 1.04 2010 1642241/1107793 = 1.07 2009 461382/386225 = 1.02

Figure5-8 Operating cost to Income Ratio

1.07 1.06 1.05 1.04 1.03 1.02 1.01 1 0.99 2009 2010 2011

Operating Cost To

Operating Cost to income ratio decreased as compared to 2010 which shows bank efficiently managed his non interest cost and its favorable for bank because that effect on net income with positively.

5.3.6.

Net Interest Margin

Formula: Net Interest/interest Earned (Table 5-12 Net Interest Margin) Ratio name Net interest Margin 2011 2010 2009

10016000/28142736*100 9032658/22661754*100 7742594/18393313*100 = 35.59 % = 39.85 % =42.09 %

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Figure 5-9 Net Interest Margin

44 42 40 38 36 34 32 2009 2010 2011 Net Interst/Intrest

This ratio examines how successful a firm's investment decisions are compared to its debt situations. In 2011 interest margin ratio deceased as compared to 2009 which is favorable for the bank, because investment decisions are well planned.

5.3.7. Current Ratio

Formula: Total Current Assets/Total Current Liabilities Table 5-13 Current Ratio Name of ratio Current Ratio 2011 26168/6235 = 4.19 2010 22565/3785 = 5.96 2009 19386/8364 = 2.31

Current Assets Cash and balances with treasury banks Balances with other banks Total Current Liabilities Bill Payable Borrowings Total

2011 26168 6235 32403

2010 22565 3785 26350

2009 19386 8364 27750

2756 17273 43029

3090 25555 28645

2946 19300 22246

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Figure 5-10 Current Ratio

6 5 4 3 2 1 0 Current Ratio

2009 2010 2011

In financial analysis current ratio is used to give an idea of companys ability to pay back its short term liabilities with its short term assets. The current ratio of Askari bank in year 2010 and 2011 is good as compared to 2009 and shows better results that bank is able to pay its short term obligations. So Askari bank shows a sound position in years 2010 and 2011

5.3.8 Net Profit Margin

Formula: Net Profit after Taxation/Net Earning*100 Table 5-14 NPM Ratio name NPM 2011 1628/32766*100 = 4.96 % 2010 943/27329*100 = 3.45 % 2009 1108/22587*100 = 4.90 %

Figure 5-11 NPM

5 4 3 2 1 0 Net Profit Margin 2009 2010 2011

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Net profit margin of askari bank remains the same approx. in years 2009 and 2011 but decreased in year 2010.

5.3.9. Earnings per Share

Earnings per share are calculated by dividing profit After Taxation available to share holder by the average no of share outstanding during the year. Table 5-15 EPS Ratio name EPS 2011 1628/707018334 = Rs 2.30 2010 943/642743940 = Rs 1.46 2009 1108/5073467 = Rs 2.18

Figure 5-12 EPS

2.5 2 1.5 1 0.5 0 Earning per share 2009 2010 2011

Earning per share reflects profit after taxation generated per share. If we observe above figure it clearly shows that the earning per share in year 2009 and 2011 sounds good as compared to 2010.

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5.4. Financial Review

Profit

During 2011 operating profit of the bank remained under stress and this is because of suspension against NPLs and growth in operating expense. However profit before and after taxation registered a healthy growth. Non Markup Income

Despite slow down of trading activities the bank posted an increase about 4 percent in non mark up income. Earnings Per Share

The EPS for the recorded 2.30 rupee again 1.34 of the last year reflecting an increase due to 72 % increase in profit after taxation of bank year 2011. ROA

Return on avg. Assets of the bank for the year 2011 increase to 0.49% mainly due to increase in profit after taxation 73 percent over the last year.

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Statement of Financial Position

As at DECEMBER 31, 2011
2009 2010 2011

Rupees in millions Assets Cash And balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Other assets 67,046 135,034 9,846 10,036 254,327 Liabilities Bills payable Borrowings Deposits and other accounts Subordinated loans Deferred tax liabilities Other liabilities 2,946 19,300 205,970 5,995 334 4,833 239,378 Net Assets Presented by Share Capital Reserves Unappropriated profit 5,073 7,183 886 13,143 Surplus on revaluation of assets net of tax 14,949 16,004 17,776 1,806 6,427 7,691 702 14,821 1,184 7,070 8,136 1,302 16,509 1,267 14,949 3,090 25,555 255,937 5,993 86 8,081 298,740 16,004 2,756 17,273 291,503 6,990 83 7,374 325,980 17,776 102,260 152,784 9,988 14,190 314,745 133,757 150,711 9,349 15,945 343,756 8,364 4,614 3,785 9,172 6,235 1,592 19,386 22,565 26,168

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Statement of Profit and Loss (As at Dec 31, 2011)

2009 2010 Rupee in Millions 22,662 27,952 13,629 9,033 2,324 431 77 2,915 6,118 17,937 10,016 2,139 383 297 3,064 6,951 2011 32,766 22,700 10,067 1,630 122 44 1,831 69,160

Markup / return / interest earned Markup / return / interest expensed Net markup / interest income Provision against nonperforming loans and advances Impairment loss on AFS investments Provision for impairment in the value of investments / Rev repo Bad debts written off directly Net markup / interest income after provisions Non markup/interest income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of investments net Unrealized gain on revaluation of investments classified as held for trading net Other income Total nonmarkup / interest income Non markup/interest expenses Administrative expenses Other charges Total nonmarkup / interest expenses Profit before taxation Taxation current prior years deferred Profit after taxation Basic / diluted earnings per share Rupees

1,308 163 538 144 (2)

1,217 210 13 213 (0)

1,194 289 772 307 -

404 2,555 8,672 6,996 34 7,030 1,632 562 120 (147) 534 1,108 1.76

470 2,177 9,128 7,813 42 7,855 1,273 330 0 330 943 1.46

340 2,903 11,138 8,639 87 8,726 2,413 833 (48) 785 1,628 2.30

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Chapter 6 Swot Analysis

Swot analysis is analyzing of the threats and opportunities that are part of external environment and strengths and weaknesses of the organization which are part of internal environment. Swot analysis gives a good analysis of what the firm is, what it wants and what can it do to get better then it is at the same time indicating the factors that could lead to a havoc. I described the Swot analysis of Askari commercial bank below: 6.1. Strengths 6.2. Weaknesses 6.3. Opportunities 6.4. Threats

6.1. Strengths
1. Parking Facility for employees and customers as well is strength of askari bank as in haripur mostly banks have very less area. 2. Asakris online banking for their customers. This service available in approx all branches. Its upgraded infrastructure provides unique services system with higher and efficient to do customers. 3. Askari bank has the largest ATM network cross the country. ATM facility in most of its branches. The customer of Askari commercial bank withdraw access their funds any time at all the ATM sites with Askcash logo. 4. Askari commercial bank management is quite sensitive to showing concern for the people, ethics, and environment enjoy good public reputation. 5. Askari bank is the only bank working for the welfare of Army which was established by Army welfare trust. 6. Operations performed in Askari bank are highly automated that result in assurance for the customers. 7. Most of the import and export done is handled by Askari bank.

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8. Another prominent strength of askari is it international branches in UK and Middle East etc. 9. Askari providing high quality services to its customer in a vast range.

6.2. Weaknesses
1. Main weakness during my internship I observe was the short numbers of employee in each depart one and hardly two employee working. If any one employee is absent then bank face difficulty, or bank arrange employee from other branch if employee is on long leave. 2. The decision making is centralize. 3. Askari bank is not much performing well in advertisement and sales promotion. 4. For a particular task a certain level of education should be set.

6.3. Opportunity
1. Askari bank promote Islamic in its all branches, as few branches are providing Islamic banking. 2. Askari has opportunity to steady increase customer deposit by launching new schemes and promoting the existing. 3. Askari bank has opportunity to expand its branches in rural areas. 4. Opportunity to adopt new technologies of business as Govt. is promoting IT. 5. Stock exchange volatile behavior force investor to return to saving deposit in time of crises.

6.4. Threats
1. Askari bank haripur branch is surrounded by many new and existing competitors who are launching new schemes and marketing continuously. 2. The critical situation of Pakistan can affect Askari bank as most of accounts in bank are Army officers. 3. A strong threat for Askari bank is higher charges for example transfer of money to another branch. 4. Bank should adopt flexible policies as prices of products and services are increasing high and high and also unemployment is increasing rapidly. 5. Political instability.
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Chapter 7 Conclusion and Recommendations

7.1. Conclusion
After the completion of my overall Analysis and Studies of Askari Bank Haripur Branch performance and banking system, interacting with employees, I come to conclusion the Askari Bank Is leading bank of Pakistan, but there are some weakness I which I observed also some of them I mentioned below. Out of the three Ms i.e. Man, money, machine, probably the human is the most important dimension, it is necessary for Askari bank Haripur branch to hire employee means increase number of employee in branch as I observe the shortage of employee in the branch. Bank is fully equipped with modern technologies, and giving much importance to employee training and development. For this purpose management launch several programs as new bank technology introduced. In Askari bank Haripur branch staff is very co-operative and branch environment is very friendly. Where one can easily got guidance easily. Finally I conclude that Askari bank has a good and successful present and future and the people at bank realize that innovation, creativity, services and there execution are the key ingredients for their future growth.

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7.2. Recommendations
According to my point of view Askari bank has not much need of improvement as its one of the leading bank of the Pakistan, but still I have some suggestions in my mind which I want to mention as its fact that nothing in universe is perfect. Askari bank is not taking much interest in Marketing and advertisement they should emphasis on advertisement to compete their competitors as competitors are increasing. A department should be established which that collect feedback of customers and general public as well. Efficiency in services should be improved and prevent customers from waiting for too long and this problem can be solved by increasing the number of qualified staff in bank. Charges should be decrease in providing service to the customer and it will result in increase of customers. Decentralization management rather than centralized management should be adopted it be more motivated and when employee will involved this will result in overall effectiveness of the bank activities.

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References
Askari Commercail bank haripur branch www.askaribank.com.pk Fundamentals of financial Management (13th Edition) James C. Van Horne (Stanford University) John M. Wachowicz, Jr (The University of Tennessee)

www.askaribank.com.pk/financial_report.php

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