CHAPTER 01

Introduction to the Report

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

1.1 Background of the study

Pakistan‟s economy at present is going in depression. The importance of sound banking
system cannot be denied in such critical time to re-stabilize the economy, which must
meet the financial needs of the growing agriculture, industrial and commercial/services
sector.
In the present day world, economy has started dominating every sphere of life and for the
socioeconomic growth of any country, monetary institution is critical. Banking sector is
the backbone of the industrial sectors, trade and commerce of the country hence
providing stimulus to overall development of the economy. Askari Bank 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. Askari Bank
works round the clock to provide services that are unmatched in the region. It has the
experienced, committed team of professionals with diversified expertise. This report has
the aim to cover all operational aspects of Askari Bank and products that it offers.

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1.2 Purpose of the Internship
The primary purpose of the internship is to fulfill the academic requirements of my study.
The purpose of the study also is, to do practical work, in the field and apply the
knowledge of classroom lectures to the real life situations, which thus enables a student
to be a future banking practitioner. Besides this, some other purposes are associated,
which includes
 To gather relevant information then interpret and analyze it in a useful manner
 To define and describe various functions of the bank.
 To highlight the outline facilities and products offered by ABL to its customers.
 To analyze the bank through different techniques i.e. Horizontal, Vertical, and
SWOT analysis.
 To get exposure and to develop the interpersonal communication skill.
 To identify the areas of the bank where there is some room for improvement.
 To present some feasible solutions for the problems pertaining to ABL.
 To apply the knowledge gained in practical field.
 It is also one of the main objectives of internship to practically apply in concepts
learned during my study at COMSATS Abbottabad.

1.3 Merits of the Report

 It is a compulsory requirement for the award of Master‟s Degree in Business
Administration
 The study conducted will benefit the finance students in particular and banking
students in general
 It will help the present and prospective students of the department in making
assignments and writing reports on the ABL, evolution of baking, importance of
banking and different operations.
 The third chapter of this report comprehensively encompasses most of the aspects
of banking, followed by SWOT analysis, conclusion and recommendations.
Furthermore, ABL branch Abbottabad may also benefit from the
recommendations made at the end of the report.
 It can also provide assistance to students seeking financial data for analysis.
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  It can also provide help ABL management in identifying their Strengths,
Weaknesses, Opportunities and Threats.

1.4 Scope of Report

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

1.5 Methodology of the Report

This study involves two types of data for report writing.

1.5.1 Primary Sources

 Interviews and discussion with staff members
 Personal observations

1.5.2 Secondary Sources

 Annual reports of ABL
 Brochures & Manuals.
 Websites
 Newspapers
 Previous Internship Reports.

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 1.6 Limitations of the Report
For a corporate level organization, like Askari Bank Limited, where the span of operation
is too wide, six weeks of time is very limited for complete observation for the purpose of
the complete research of specialized and sensitive institutions. It does not permit to fully
analyze and understand the entire functionality of the bank, and privacy policy of Bank
also limits access to the organizational data and information that is termed as
confidential. Also due to the bank tight schedule and busy schedule of the required staff
complete information could not be collected easily. The information at the branch level is
also not allowed to be accessed. During the study I tried to include only relevant material.
This study was conducted in accordance with the objectives of the study.

1.7 Scheme of the Report

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

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CHAPTER 02

Introduction to Askari Bank Limited

2.1 Early Growth of Banking

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

2.2 Formal Definition of Bank

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

2.3 History of Banking in Pakistan

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

5
companies ordinance, 1947”. “Government of Pakistan inaugurated the State Bank of
Pakistan on July 1, 1948.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.

2.4 Historical Background of Askari Bank Ltd

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

2.5 Vision Statement of ABL

To be the bank of first choice in the region.

2.6 Mission Statement of ABL

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

2.7 Corporate Objectives of ABL

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

 To build and sustain a high performance culture, with a continuous improvement
focus.
 To develop a customer–service oriented culture with special emphasis on
customer care and convenience.

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  To build an enabling environment, where employees are motivated to contribute
to their full potential.
 To maximize use of technology to ensure cost–effective operations, efficient
management information system, enhanced delivery capability and high service
standards.
 To manage the Bank‟s portfolio of businesses to achieve strong and sustainable
shareholder returns and to continuously build shareholder value.
 To deliver timely solutions that best meet the customers‟ financial needs.
 To explore new avenues for growth and profitability

2.8 ABL As Leading Banking Sector entity

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

2.9 Credit Rating

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

2.10 Awards and Achievements

 Recently Askari Bank have been once again been given the “Best Retail Bank in
Pakistan” by The Asian Banker for the 2nd consecutive year.
 Askari Bank has been given the 1st Consumer Choice Award 2004 for the
Commercial Banking Category by the Consumer Association of Pakistan.

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  The bank has also received the Corporate Excellence Award for the financial
sector from the Management Association of Pakistan (MAP) for the years 2002,
2003 and 2004.
 The bank have been declared The Best Bank in Pakistan by the global finance
magazine for the years 2001 and 2002.
 Askari 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.
2.11 Corporate Profile
Corporate body of Askari bank Limited consist if 12 Board of Directors including one
Chairman
1. President
2. Chief Executive
3. Secretary
4. NIT Nominees

Detail of Board of Directors

 Lt. Gen. Imtiaz Hussain Chairman
 Lt. Gen. (R) Zarrar Azim Director
 Brig. (R) Muhammad Shiraz Baig Director
 Brig. (R) Asmat Ullah Khan Niazi Director
 Brig. (R) Muhammad Bashir Baz Director
 Brig. (R) Shaukat Mahmood Chaudhari Director
 Mr. Kashif Mateen Ansari Director
 Mr. Zafar Alam Khan Sumbal Director
 Mr. Muhammad Afzal Munif, FCA Director
 Mr. Muhammad Najam Ali, FCA Director
 Mr. Tariq Iqbal Khan, FCA Director(NIT Nominee)
 Mr. Shaharyar Ahmad President & Chief Executive

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2.11.1 Audit Committee
 Dr. Bashir Ahmad Khan Chairman
 Mr. Ali Noormahomed Rattansey, FCA Member
 Mr. Zafar Alam Khan Sumbal Member

2.11.2 Company Secretary

 Mr. Saleem Anwar, FCA
2.11.3 Auditors
 F. Ferguson & Co.(Chartered Accountants)
2.11.4 Legal Advisors
 Rizvi, Isa, Afridi & Angell

2.11.5 Registered / Head Office

AWT Plaza, The Mall,
P.O. Box No. 1084
Rawalpindi, Pakistan.
Tel: (92 51) 9063000
Fax: (92 51) 9272455
E-mail: webmaster@askaribank.com.pk
Website: www.askaribank.com.pk

2.12 Ethical Values

The intrinsic core values that are corner stones of our corporate behavior are as fallows.
 Commitment
 Integrity
 Fairness
 Teamwork

2.13 Role of 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

9
one of the leading bank overtaking several other older and its competitor banks. The
major contributions the bank has made are:

 Record setting performance and commitment to serve the customers.

 Personalized service and dynamic approach.
 Professional management.
 Modern banking policy.
 Human resources development.
 Small loans or micro credits.
 Utility bills collection.
 Credit cards

2.14 Number of Branches

Askari Bank has expanded into a nationwide presence of 200 Branches/sub-branches
including 20 dedicated Islamic Banking Branches, and whole sale bank Branch in
Bahrain. A shared network of over 2,991 online ATMs covering all major cities in
Pakistan supports the delivery channels for customer service. As on December 31, 2008,
the Bank had equity of Rs.12.97 billion and total assets of Rs.206.19 billion, with over
816,629 banking customers, serviced by 6,496 employees.

2.15 Structure of ACBL

A board of Directors is running the affairs of ABL. The board of Directors consisting of
one president, 04 Directors from ABL, one from Pakistan banking council, one from
Ministry of Finance and additional one who is the sectary of board of managers of
ACBL. Hence the board of directors is 08 member team which takes all-important
decisions relating to the operations and policies of the bank. Second highest authority in
the ABL is Executive Committee consisting 7 members including Chairman/President of
ACBL and sectary of CBL.
Below the general managers are the circle executives who are Senior Vice Presidents or
Vice Presidents (VP). In each zone there are number of branches of ACBL, and each
branch is managed by branch manager.

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Fig 2.1 ABL Organization Structure Chart (Source: Annual report 2008)

President

Senior Executive Vice

–President (SEVP)

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

Additional /Assistant
Vice President
(AVP)

Manager

Assistant Manager

Grade -1

Grade -II

Grade -III

Assistant, Cashier etc

Non –Clerical staff

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CHAPTER 03

Askari Bank Services and Products

3.1 Introduction to ABL Abbottabad Branch

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

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Figure 3.1: Organizational Chart of the Branch

Chief Manager/
(Branch Manager)

Deputy-Chief
Control & Management

Deputy-Chief Deputy-
Deputy-Chief Deputy-Chief
Accountant Chief
Finance Bill and
Cash Remittance

Cash
Deposit Finance Bills and Remittance
Department.
Department. Department. Department.

Foreign
Currency
Accounts
Department.

Source: Annual Report 2008

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3.2 Departmentalization

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. I can rightly say that ABL is a hierarchical system in that it includes other
sub departments and these are integrated to work together.
The ABL‟s existing system includes following departments.

 Account Opening Department

 Remittance Department
 Credit Department
 Cash department
 Clearing Department
 Accounts Department
 Foreign Trade Department

Figure 3.2 Branch systems Hierarchy

ASKARI BANK LIMITED

ASKARI BANK MAIN BRANCH 001
RAWALPINDI
Accounts opening Remittance Department
Department
Credit Department Cash Department

Clearing Department Foreign Trade

Department
Accounts Department Plastic Money

Management Information System

Source: Self made

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3.2.1 Accounts Opening Department
Borrowing funds from different sources has become an essential feature of today‟s
business enterprises. But in the case of a bank borrowing funds from outside parties is all
more vital because the entire banking system is based on it. The borrowed capital of bank
is much greater than their own capital. Banks borrowing is mostly in the form of deposits.
These deposits are lent out to different parties. Such deposit creation is done through
opening an account in the bank.

3.2.1.1 Types of Accounts

In ABL, there are the following types of accounts:

 Current account
 Saving accounts
 Term deposit
 Askari Special deposit Account
 Askari Bachat certificate
 Notice Deposits
 Foreign currency saving Account

3.2.1.1.1 Current account

These accounts are for the current deposits i.e. customer can deposit and withdraw the
amount any time and no profit is paid.” This account is operating through cheques. The
customer is required to maintain a minimum balance in this account. In current account,
there is no profit and interest on the money kept. Current account is mostly opened for
business.

3.2.1.1.2 Saving account (profit and loss sharing)

Pls. saving accounts opened by individuals (single or joint), for charitable institutions,
companies, educational institutions, firms etc. This account can be opened with a very

15
small amount, withdrawals from this account is made through cheques. Return/profit is
paid at flexible rate calculate on six months basis.
3.2.1.1.3 Term deposit
The deposits that can be withdrawn after a specified period of time are known as fixed or
term deposits. In this account person or account holder keeps the money for definite
period of time. The amount deposited is not 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. The term deposit account varies from one
month to 5 years, and the minimum balance requirement is Rs.5000/- for all other nine
accounts.

3.2.1.1.4 Askari Special deposit Account(ASDA)

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

3.2.1.1.5 Askari Bachat certificate

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

3.2.1.1.6 Notice Deposits

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

3.2.1.1.7 Foreign Currency Saving Account

 The Pakistani national as well as the foreigners can open this account.
 The profit is also paid credited to this account depending upon the monthly
products.
 The customer has the facility of withdraw in foreign as well as Pak currency.
 Equivalent Pak rupees are also calculated for the transactions in the FC saving
accounts.
 Monthly and daily revaluation rates of each foreign currency in Pak rupees are
maintained for the correct operation in the FC saving accounts.

3.2.1.2 Account opening procedure

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

3.2.1.3 Letter of thanks

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

3.2.1.4 Stamping “Posted”

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

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 3.2.2 Remittance Department
This department of ABL is concerned with transfer of money from one place to another
place that is transfer of funds

3.2.2.1 Instruments of bills and Remittance Department

The instruments that are handled in the Remittance department are as follows:
 Demand Draft
 Telegraphic Transfer
 Mail transfer
 Pay order
 Pay slip
 OBC
 IBC
3.2.2.1.1 Demand draft
A bank draft is an order by one branch of bank to another branch of the same bank to pay
a certain amount of money on demand to the person named there in. DD is just a check
and is issued when the customer wants to take the draft personally. For the preparation of
a draft, first of all customer has to fill an application form, then the concerned officer fills
the following before delivering the draft to the customer.

3.2.2.1.2 Telegraphic Transfer

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

3.2.2.1.3 Mail transfer

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

3.2.2.1.4 Pay order

It is a cheque drawn by a bank on itself. Pay order is an instrument in which three parties
are involved the purchaser, the bank, and the receiver. It can be purchased by any
customer.

3.2.2.1.5 Pay slip

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

3.2.2.1.6 Outward Bills for Collection

The bills which are sent to their city banks for the local clearing in that city are outward
bills for collection.Cheques are entered in the OBC register, the number is written in the
stamps. The OBC forwarding schedules are prepared for the different branches. Then

19
 respective cheques are attached with the schedule.On clearance the respective banks
send back the OBC‟s along with IBCA(inter branch credit advice). At the end of the
day, contra vouchers are made.

3.2.2.1.7 Inward bills for Collection

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

3.2.3 Credit Department

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

3.2.3.1 Types of Advances Offered By ABL

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

3.2.3.1.1 Demand Finance

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

3.2.3.1.2 Running Finance

This is a type of finance, which meets the day-to-day finance requirements of the
business. The amount is transferred to the debtor‟s current account and can be withdrawn

20
through cheques. The limit on this type of finance is 35000 and the maximum period for
this type of finance is one year and can be renewed by a new application.

3.2.3.1.3 Cash Finance

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

3.2.3.2 Level of Lending

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

3.2.3.3 Financial Products of ABL

3.2.3.3.1 Personal Finance
Personal Finance is a parameter driven product for catering to the needs of the general
public belonging to different segments. One can avail unlimited opportunities through
Askari 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.

3.2.3.3.2 Askari "Mortgage Finance

Askari "Mortgage Finance" offers the convenience of owning a house of choice, while
living in it at its rental value. The installment plan has carefully designed to suit both the
budget & accommodation requirements. It has been designed for enhancing financing

21
facility initially for employees of corporate companies for purchase/ construction/
renovation of house. The maximum financing amount is Rs. 10 million with repayment
tenure up to 20 years.

3.2.3.3.3 Business Finance

In pursuance of the National objectives to review the economy of the country, ABL is
providing loans to small and medium size business enterprises under Askari Bank's
Business Finance Scheme. Their goal is to offer a loan, which enables business
community to receive the financing required by them based on their cash flows.

3.2.3.3.4 Ask Car (Car Finance)

ABL offers the most convenient and affordable vehicle- financing scheme, which
provides their valuable customers an opportunity to own a brand new vehicle of their
choice. With minimum down payment, lowest insurance rates and widest range of
available car makes and models, Ask car offers the best value to our esteemed customers.

3.2.3.3.5 Ask CARD

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

3.2.3.3.6 Travelers Cheques

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

3.2.4 Cash Department

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

3.2.4.1 Calculation of Ending Cash Balance

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

3.2.4.2 Liquidity Maintenance

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

3.2.5 Clearing Department

There is no legal obligation on a banker to collect cheques drawn upon other banks for a
customer. However, it is function of almost every modern bank of collection of cheques
and bills on behalf of the customers. Clearing department services are provided in order
to make arrangements for the economic collection of cheques, DD‟s pay and other
negotiable instruments. A large part of this work is carried on through the clearing house.

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3.8 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 send to head office for reconciliation.
Thus this department will create a link between head office and branch office. The
functions of Accounts department are as follows:

 Preparation of daily bank position Statement

 Checking Bank‟s daily Activity
 Maintenance of book of the accounts of head office.
 Salary disbursement and investment of staff.
 Arrangement of stationary for bank.
 Dealing with disposal of commercial external audit reports and state bank of
Pakistan instructions.
 Pre audit checking of all bank transactions.

3.2.7 Credit card Department

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

3.2.7.1 ABL Offerings

The bank is already offering credit cards like Master cards international in collaboration
with international financial service organizations. Credit card issuing is an important
activity that the most successful and modern banks are doing and are generating profit
from it. Credit cards are of two types

24
  Master Card
 Visa Card
ABL issues three types of Master Cards:

3.9.1.1 Local card

This master card is issued for the amount of Rs. 25000/- and more. This local card
operates on national level.

3.9.1.2 Silver Card

This master card is issued for the amount of Rs. 35000/- and more. This is an
international card which is acceptable all over the world.

3.9.1.3 Gold Card

This master card is issued for the amount of Rs. 2,00,000/- and more. This is an
international card which is acceptable all over the world.
All these three types of cards issued only to those individuals which hold accounts in the
bank. The bank also takes care that a sufficient amount of security, almost 125% of the
amount of credit card.

3.10 Foreign Trade Department

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

25
CHAPTER 04

Financial Analysis of ABL

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

4.2 Purpose of Financial Analysis

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

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

26
4.2.2 Common Size Analysis

Technique for identifying relationship between items in the same financial statement by
expressing all amounts as the percentage of the total amount taken as 100.
For common size analysis two basic techniques are used.

1. Common Size Vertical Analysis

Comparison with base amount with in the same year.
a. Vertical Analysis of Balance Sheet
b. Vertical Analysis of Income Statement

2. Common Size Trend Analysis

Comparison with Base year
a. Trend Analysis of Balance Sheet
b. Trend Analysis of Income Statements

27
4.2.2.1 Trend Analysis of Balance Sheet
Table 4.1 Trend Analysis of Balance Sheet
2006 2007 2008
ASSETS % % %
Cash and Balances with treasury bank 100 89.76 107.7
Balances with other banks 100 47.68 53.93
Lending to financial institutions 100 172 53.93
Investments 100 137.7 124.6
Advances 100 101.6 130
Operating Fixed Assets 100 135 217
Deferred tax assets -- - -
Other assets 100 145 235
Total Assets 100 110 124
LIABILITIES & OWNERS' EQUITY 100
Bills Payable 100 142.8 140.5
Borrowing from Financial Institution 100 117.3 101.5
Deposits & other accounts 100 108.49 127
Sub-ordinated loans 100 99.95 99.91
Financial lease liabilities 100 - -
Deferred Tax Liabilities 100 64 1.76
Other Liabilities 100 123.6 182.82
Total Liabilities 100 109.6 124.65
OWNERS' EQUITY
Share Capital 100 149.9 202
Reserve 100 119.4 131.8
Un-appropriated Profit 100 119.1 17.1
Surplus on Revaluation 100 11.5 65.2
Total Owners' Equity 100 110.9 117
Total Liabilities & Owners' Equity 100 110.4 125.54
Source: Financial Statements of ABL for the year 2006, 2007, and 2008 are used

28
4.2.2.1 Trend Analysis of Balance Sheet

4.2.2.1.1 Percentage Growth in Assets and Liabilities

Again the horizontal analysis shows the same result as of vertical analysis. The total
assets have increased to 110.% in 2006 to 124% in 2008. On the other hand total
liabilities have increased approximately in same ratio as to from 109.6% in 2006 to
124.65% in 2008. The management focus on the non-current assets. The current
liabilities have also increased with a greater proportion compare to long term liabilities.

4.2.2.1.1 Share Capital reserve and total Owner equity

Share capital has increased from 149.9% in 2006 to 202% in 2008 which shows an
increase in the value of bank. Reserves have increased from 119.4% in 2007 to 131% in
2008 which is also good sign. The total owner‟s equity has decreased from 110.9% in
2007 to 117% in 2008 which is not good as it represents the growth of the bank.

29
Figure 4.1 Trend Analysis of Balance sheet of Year 2007

Cash and Balances with treasury

180.00% bank
160.00% Balances with other banks

140.00%
Lending to financial institutions
120.00%

100.00% Investments

80.00% Advances
60.00%
Bills Payable
40.00%

20.00% Borrowing

0.00%
Deposits
2007

Figure 4.2 Trend Analysis of Balance sheet of Year 2008

Cash and Balances with treasury

250.00% bank
Balances with other banks
200.00%
Lending to financial institutions

150.00% Investments

100.00% Advances

Bills Payable
50.00%
Borrowing

0.00%
2008 Deposits

30
4.2.2.2 Trend Analysis of Income Statement

Table 4.2 Trend Analysis of Income Statement

2006 2007 2008
Markup/Return/Interest earned 100% 120% 145%
Markup/Return/Interest expensed 100 124 152
Net Markup/Interest Income 100 114 138
Provision against non-performing loans and 100 29 29
advances
Provision for the impairment in the value of 100 25 74
investments
Bad debts written off directly 100

Net mark-up/ interest income after provision 100 57 82

Non Markup/Interest Income 100

Fee, Commission & Brokerage Income 100 104 122
Dividend Income 100 125 158
Foreign Currency Income 100 112 149
Gain sale of investments-net 100 2088 33
Unrealized gain/loss on revaluation of investments 100 (138) (1790)
Other income 100 104 106
Total Non-Markup/Interest Income 100 213.4 126.5
Non-Markup/Interest Expenses
Administrative Expenses 100 144 177
Provisions/write offs 100 - -

Other charges 100 196 178

Total Non-Markup/Interest Expenses 100 144 177
Profit before taxation 100 69 13
Taxation current year 100 10 2
Prior years 100 -- --
Deferred 100 (-231) 101
Profit after taxation 100 119 17
Source: Financial Statements of ABL for the year 2006, 2007, and 2008 are used

31
4.2.2.2 Trend Analysis Income Statement Analysis

The horizontal analysis of the income statement of Askari Commercial Bank Ltd shows
that the markup income is taken as 100% because it is the primary source and the real
objective of the operations of the bank.

4.2.2.2.1 Markup Expenses

Markup expenses have increased from 124% in 2007 to 152% in 2008 which shows the
management disability control on financial cost.

4.2.2.2.2 Net Mark-Up Income/Gross Profit

The net markup income/gross profit has reduced to 138% in 2008 from 114% in 2007
which is a negative sign and it is due to no control over markup expenses.

4.2.2.2.3 Non Markup/Non Interest Income

Total operating income has decreased from 213.4% in 2007 to 126.5% in 2008 and which
is a negative sign. The total non-markup interest expense has increased from 144% in
2007 to 177% in 2008.

4.2.2.2.4 Net Income

Net income of the bank have shown a steep decline in 2008 as it has drop down to 17%
from 119% in 2007 and it shows a weak performance on the management part.

32
Figure 4.3 Trend Analysis of Income Statement of Year 2007

250%

200% Markup/Return/Interest
expensed
Net Markup/Interest Income
150%
Total Non-Markup/Interest
100% Income
Profit after taxation

50%

0%
2007

Figure 4.4 Trend Analysis of Income Statement of Year 2008

160%

140%
Markup/Return/Interest
120% expensed
Net Markup/Interest Income
100%

80% Total Non-Markup/Interest

Income
60%
Profit after taxation
40%

20%

0%
2008

33
 4.2.2.3 Vertical Analysis of Balance sheet

Table 4.3 Vertical Analysis of Balance sheet

2006 % 2007 % 2008 %
Assets
Cash & Balances with treasury Banks 8.96 7.33 7.77
Balance with other Banks 4.42 1.92 19.1
Lending to Other Financial Institutions 5.05 7.93 2.17
Investments 17.24 21.64 17.3
Advances 59.69 55.32 62.4
Operating Fix Assets 2.29 1.11 4.1
Deferred Tax Assets - - -
Other Assets 2.29 3.04 4.34
Total Assets 100 100 100
Liabilities
Bills Payable 1.11 1.44 1.25
Borrowings 9.01 9.64 7.36
Deposits & other accounts 79.40 78.52 81.3
Sub-ordinate Loans 1.81 1.64 1.45

Financial lease liabilities -- 0.0024 --

Deferred tax liabilities 0.44 0.26 0.0062
Other liabilities 1.57 1.76 2.308

Total Liabilities 93.34 93.27 93.70

Owner’s Equity
Share capital 1.04 1.21 1.96

Reserves 3.50 3.81 3.71

Unappropriated profit 1.3 1.1.8 0.14

Surplus on revaluation of assets- net of tax 0.86 0.09 0.45

Total owner’s equity 6.66 6.73 6.29

Total liabilities & Owner’s equity 100% 100% 100%

Source: Financial Statements of ABL for the year 2006, 2007, and 2008 are used

34
4.2.2.3 Vertical Analysis of Balance Sheet
A vertical analysis of balance sheet of Askari Bank shows that the Bank has financed its
fixed assets more than the current assets. And the assets have been financed mostly be
long term liabilities and a little by capital which goes in the favor of owners.

4.2.2.3.1 Percentage Growth in Assets and Liabilities

Cash and cash Balances with other banks have decreased from 8.96% in 2006 to 77.7%
in 2008. Lending to financial institution has decreased from 5.05% in 2006 to 2.17% in
2008. Investments have almost remained same during the time, 17.24%in 2006 to 17.3%
in 2008.Advances increased to 59% in 2006 to 62% in 2008. On the other hand current
liabilities have increased more than the long term liabilities. Bills payable and borrowings
have increased 1.11% and 9.01% to 1.25 % and 7.36%. Deposits have increased
from79% in2006 to 81.3% in 2008 and subordinate loans have decreased from 1.81%in
2006 to 1.45% in 2008.

4.2.2.3.2 Share Capital reserve and total Owner equity

Share capital has increased from 1.04% in 2006 to 1.96% in 2008 which is good sign
because it represents the increased profitability of the bank. Reserves have increased
from 3.50% in 2006 to 3.71% in 2008 which is also good sign. The total owner‟s equity
has decreased from 6.66% in 2006 to 6.29% in 2008 which is not good as it represents
the growth of the bank.

35
Figure 4.5 Vertical Analysis of Balance Sheet Year 2007

Balances Cash and

Total Owners' 2007 with other Balances with
Share Capital
Equity Reserve banks treasury bank Lending to
3% 1% 4% financial
1% 2%
institutions
Sub-ordinated 4%
loans Investments
1% 11%

Deposits & other

accounts
40% Advances
28%

Borrowing from
Financial Institution Bills Payable
5% 1%

Figure 4.6 Vertical Analysis of Balance sheet Year 2008

Share capital Reserves Total Cash &

1% 2% 2008 owner’s Balances with
equity treasury Banks Balance with
Sub-ordinate Loans 3% 4% other Banks
1% 9%
Lending to Other
Investments Financial
8% Institutions
1%
Deposits &
other
accounts
Advances
38%
29%

Borrowings Bills Payable

3% 1%

36
4.2.2.4 Vertical Analysis of Income Statement

Table 4.4 Vertical Analysis of Income Statement

2006 % 2007 % 2008%
Markup/Return/Interest earned 100% 100% 100%
Markup/Return/Interest expensed 55.38 57.35 57.9
Net Markup/Interest Income 44.62 42.65 42.09
Provision against non-performing loans and 8.95 25.89 20.79
advances
Provision for the impairment in the value of 0.29 0.99 0.0027
investments
Bad debts written off directly 1.34

Net mark-up/ interest income after provision 36.65 16.74 19.95

Non Markup/Interest Income

Fee, Commission & Brokerage Income 8.05 7.08 6.83
Dividend Income 0.86 0.91 0.94
Foreign Currency Income 4.64 4.33 4.74
Gain sale of investments-net 0.89 15.59 0.199
Unrealized gain/loss on revaluation of investments -0.02 0.01 0.12
Other income 2.55 2.24 1.86
Total Non-Markup/Interest Income 16.98 30.15 14.71
Non-Markup/Interest Expenses
Administrative Expenses 26.01 31.62 32.09
Provisions/write offs -- - 0.0024

Other charges 0.05 0.08 0.06

Total Non-Markup/Interest Expenses 26.06 31.70 32.16
Profit before taxation 26.56 15.19 2.50
Taxation current year 7.80 0.65 0.094
Prior years -1.54 -0.27
Deferred 0.89 0.89 0.58
Profit after taxation 17.86 17.70 2.09
Source: Financial Statements of ABL for the year 2006, 2007, and 2008 are used

37
4.2.2.4 Vertical Analysis Income Statement

The vertical analysis of the income statement of Askari Commercial Bank Ltd shows that
the markup income is taken as 100% because it is the primary source and the real
objective of the operations of the bank.

4.2.2.4.1 Markup Expenses

Markup expenses have increased from 55.38% in 2006 to 57.9% in 2008 which is not a
good sign.

4.2.2.4.2 Net Mark-Up Income/Gross Profit

The net markup income/gross profit has reduced to 42.09% in 2008 from 44.62% in 2006
which is a negative sign and it is due to no control over markup expenses.

4.2.2.4.3 Non Markup/Non Interest Income

Total operating income is 16.98% in 2006 and 30.15% in 2007 and 14.71% in 2008,
which is a negative sign. The total non-markup interest expense have increased from
26.06% in 2006 to 32.16% in 2008.

4.2.2.4.4 Net Income

Net income of the bank have shown a steep decline in 2008 as it has drop down to 2.09%
from 17.86% in 2006 and it shows a weak performance on the management part.

38
Figure 4.7 Vertical Analysis of Income Statement Year2007

Profit after
taxation 2007
12%

Total Non- Markup/Return/I

Markup/Interest nterest expensed
Income 39%
20%

Net
Markup/Interest
Income
29%

Figure 4.8 Vertical Analysis of Income Statement Year2008

Profit after
Total Non- 2008 taxation
Markup/Interest 2%
Income
13%

Markup/Return/I
nterest expensed
Net 49%
Markup/Interest
Income
36%

39
4.3 Financial Ratios Analysis
Financial ratio is a ratio of two selected numerical values taken from an enterprise‟s
financial statements. There are many standard ratios that are used to try to evaluate the
overall financial condition of a company. Financial ratios may be used by managers
within a firm, by current and potential shareholders (owners) of a firm, and by a firm‟s
creditors. Security analysis use financial ratios to compare strengths and weaknesses from
various companies.
While conducting the analysis of Askari Bank I will use two set of ratios and will try to
portray the financial health of the bank. The following ratios will be used for analysis
purpose.

 Profitability Ratios

Profitability Ratios
Profitability ratios are a measure that indicates how well a firm is performing in terms of
its ability to generate profit. Here are some ration are given below for the purpose to
make inference on the basis of these rations

40
4.3.1 Profitability Ratios of ABL

Table 4.5 Profitability Ratios of ABL

Profitability Ratios 2006 2007 2008

Net interest margin 5,619,608 6,457,617 7,742,594

Operating profit 26.56% 15.18% 2.50%

margin

Credit to Deposit 75% 70% 76.8%

Ratio
Cost to income 146% 179% 1531%
ratio

Return on 1.35% 1.47% 0.18%

Assets(ROA)
Return on Earning 1.87% 1.71% 0.25%
Assets

Equity to Total 5.79% 6.64% 5.83%

Assets

Earning Assets to 76.97% 76.97% 79.77%

Total Assets
Loan Loss -- -- 1733%
Coverage Ratio

NIM to Average -- 4.819% 5.08%

Earning Assets

Source: Calculated from the Financial Statements of Year 2006,2007, 2008

41
4.3.1.1 Net Interest Margin
Net interest margin is the difference in mark up interest earned and mark up interest
expensed.

Net Interest Margin

10,000,000

8,000,000

6,000,000
Net Interest Margin
4,000,000

2,000,000

0
2006 2007 2008

4.3.1.2Operating Profit Margin Ratio

Operating profit is a ratio of Profit before Taxes and Markup/ return interest earned. It is
also showing reduced performance of the bank. It has reduced from 26.56% in 2006 to
2.50% in 2008.

Operating Profit Margin Ratio

30.00%

25.00%

20.00%

15.00% Operating Profit

Margin Ratio
10.00%

5.00%

0.00%
2006 2007 2008

42
 4.3.1.3 Credit to Deposit ratio
Credit to deposit ratio also depicts the varying performance by the bank. It is ratio of
Advances and Deposits. CD ratio is 75% in 2006 and 76.5% in 2008. It means corporate
customer credibility has increased during time.

Credit to Deposit Ratio

78%
76%
74%
72% Credit to Deposit
Ratio
70%
68%
66%
2006 2007 2008

4.3.1.4 Cost to Income Ratio

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

Cost to Income Ratio

20

15

10
Cost to Income Ratio

0
2006 2007 2008

43
 4.3.1.5 Return on Assets (ROA)
This ratio comparatively gives not a good picture of the bank. It has reduced
tremendously in 2008 to 0.18% from 1.35% in 2006.

Return on Assets(ROA)
2.00%

1.50%

1.00%
Return on Assets(ROA)
0.50%

0.00%
2006 2007 2008

4.3.1.6 Return on Earning Assets

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

Return on Earning Assets

2.00%

1.50%

1.00% Return on Earning

Assets
0.50%

0.00%
2006 2007 2008

44
4.3.1.7 Equity to Total Assets
This ratio is calculated by dividing equity portion of balance sheet to total assets. The
ratio had almost same performance in year 2006 and 2008 i-e 5.79% and 5.83%

Equity to Total Assets

6.80%
6.60%
6.40%
6.20%
6.00% Equity to Total Assets
5.80%
5.60%
5.40%
5.20%
2006 2007 2008

4.3.1.8 Earning Assets to Total Assets

Earning Assets to total assets ratio is calculated for each of the particular year and it is
ratio of two balance sheet items It was almost same in year 2006 and 2007 i-e 77% but
the ratio showed rising trend in 2008 to 79%.

Earning Assets to Total Assets

80.00%
79.50%
79.00%
78.50%
78.00% Earning Assets to Total
77.50% Assets
77.00%
76.50%
76.00%
75.50%
2006 2007 2008

45
4.3.1.9 NIM to Average Earning Assets
Net interest margin to earning assets ratio is calculated by Net mark-up income to
average earning assets of consecutive two years. This ratio has reduced from 2.7% in
2006 to o.25% in 2008.

NIM to Average Earning Assets

5.10%
5.00%
4.90%
NIM to Average
4.80% Earning Assets
4.70%
4.60%
2007 2008

4.3.1.10 Loan Loss Coverage Ratio

This ratio shows asset quality and the level of protection of loans and is calculated as Pre-
tax income + provision for loan losses / debts written off.

loan Loss coverge

1800%
1600%
1400%
1200%
1000% loan Loss coverge
800%
600%
400%
200%
0%
2006 2007 2008

46
4.4 SWOT Analysis
SWOT analysis is one of the most expedient technique or tool used in the Strategic
Management process for conducting the situation analysis of an organization. The proper
analysis of the firm is given in the form of Strengths, Weaknesses, Opportunities and
Threats (SWOT) the company presently facing or can be forecasted for the future. It is a
common approach to make assessments in terms of internal and external environment of
the organization, and to formulate strategies analyzing its internal strengths and
weakness, external opportunities and threats, coming up is the SWOT analysis for the
ABL:

4.4.1 Strengths
Firstly we analyze the Strengths of the ABL that are as follows:

 Computerization
The main strength of Askari Bank Limited is that all of its branches are fully
computerized and they have latest software‟s available to keep the records of their
customers account and other important information up-to-date. It reduces manual work
and provides good customer services.

 Well-knitted branch network

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

 Largest Private Bank

ABL is one of the largest private banks with deposit base of Rs.167.68 billion/- showing
constant growth over the period 1999 till day and with many online branches in major
cities of Pakistan.

 Competent Staff

47
Strength of Askari Bank Limited is that it has staff which is well qualified and capable of
performing the task because of their expertise and training in the field

 Customer’s Feedback
Customers are allowed to give suggestions regarding banking services. If there is any
complaint by the customer the bank authorities investigates the reasons for complaint.
Complaint monitoring system is excellent at Askari Bank that shows bank values more to
its customers.

 International markets
ACBL is actively participating in international markets and has recently introduced credit
cards in UAE, Bahrain and Qatar, being backed by 24 hours call center out of UAE.

 The ABL ATM Switch-Net

I.T group of ABL has been able to create the largest network for secure electronic
financial transactions in Pakistan.

 Information System
Askari Bank has also invested heavily in information technology resources, which has
now allowed bank to develop one of the most comprehensive and advanced system
available. With the help of this system Askari bank has now achieved an “online” status
via real time facilities and features available through nationwide network. With the team
of highly qualified professionals, Askari Bank is able to use its real time system resources
to provide customers with comprehensive account of their transaction on a daily basis.
ABL is one of those few banks who are reaping the benefits of electronic transaction

 Leadership in ATM’s
With over 186 ATMs and 106 online branches ABL is again an undoubted industry
leader with connectivity extended to above than twenty five cities of Pakistan. ABL
ATMs not only serve 24 hours cash convenience but also improve on the counter services
and turnaround time at cash counters.

48
  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.

4.4.2 Weakness
Secondly we analyze the Weakness of the ABL that are as follows:

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

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

49
 ABL as a largest Pvt. Bank can increase it market share by producing good,
market oriented and customer needs satisfying products.
 Askari Bank is now looking into new ways of providing banking services to its
customers. New concept of mobile banking has been introduced by the bank,
which will prove to be remarkable success in the field of consumer banking.

 Customer feedback on different products and accounts have really improved the
bank performance and encouraged the atmosphere for other future policies.

 Askari bank is an active player in the loan business. Its strength in loaning stems
from its ability to forge strong relationships not only with borrowers but also with
bank investors. Bank can capture more markets by introducing new products for
business community, as it is the only group, which can contribute more towards
increasing the assets of the bank.

 Foreign remittances are another area as present worldwide control system over
transfer of currencies through illegal channels has facilitated the area for the
banks.

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

 Now computer literacy rate is increasing and its really big opportunity for Askari
Bank that when public will have more knowledge about computers than they will
be more attractive to the innovative products of Askari bank.
 Increase the product range to fulfill customer requirements and ATM network,
ABL can expend its 24 hours cash facilities to other cities of the country in order
to meet growing market demand.

50
  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
efficiently.

 Due to efficient and experienced management group. ABL can also improve well
and expend its foreign operation successfully.

 Increasing need and potential of leasing in Pakistan provide ABL an opportunity

to utilize its skills and efficiencies in leasing business as well.

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

 As the ABL leading in the domestic commercial banking sector in Pakistan, as

such no any close competitors of ABL but every commercial bank is the
competitors for each other. But mainly these are Habib Bank Limited, Bank Al-
Falah, MCB etc. they are threats for ABL. At any time they can capture the clients
of ABL by providing any benefit more than that.

 Political instability is also threat for the bank because instability leads to lower
business. The same situation is prevailing in Pakistan.

 In our county, the rate of inflation is increasing along with the unemployment. So
due to increase in price of the products, the savings of the nation is decreasing
with passage of time. So it is threat for the banking sector. In the future, the
deposits of the bank will decrease.

 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.

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  Increase in competition due to increasing number of foreign banks offering highly
specialized and attractive services.

 Growing global technological advancements and adaptation of modern style of

management in banking sector.

 Extensive promotional campaigns run by competitors.

 It is always threat for commercial banks. Because SBP is the role authority of
Government, which monitors all commercial banks affairs, whenever it feels any
regulation, it imposes without consideration of commercial banks plans etc.

 Growing concept of Islamic banking in Pakistan economy can be a serious threat

to ABL so they should start their Islamic banking in Abbott Abad branch as well.

The SWOT analysis is a mirror image of the banks present conditions. The management
can elaborate strategic plans for capitalizing the available opportunities.
ABL is continuously introducing new innovative products so as to cope with changing
environment. It has a diversifiable culture. It has been leader of introducing many new
ideas, products which are earning a lot for the bank and this struggle is still continuous
with same acceleration. No bank has given such a comprehensive motive so if we want to
look at the future of Askari bank they are going to touch new horizons of technology.

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CHAPTER 05
Recommendations and Conclusion
Findings and Recommendations are considered to be the most important part of
internship report, without which no report is considered complete and meaningful. This
part of report is based on the previous sections i.e. review and analysis. Moreover, for
bringing suggestions, discussions have been conducted with the staff of ABL officers,
who not only provided the basis for recommendations but also pointed out some areas,
where the change for the development is utmost important.
Realizing the importance of this section, efforts have been made to give feasible
recommendations, which are categorized under the following headings.

5.1 Findings
5.1.1 Employee empowerment
Bank recognizes its employees as the prime asset and key contributors to the performance
of the bank and places great emphasis on the attraction, development, and motivation of
its employees.

5.1.2 Better compensation packages

During the year, the compensation package was substantially improved in order to
Enhance employees‟ motivation and loyalty.

5.1.3 Involvement of Higher Management

Whatever ABL have achieved would not have been possible without the patronage and
support of the manager, which is greatly appreciated and acknowledged.

5.2 Recommendations
5.2.1 Generalization of Procedures
The procedure for opening an account should be simplified. The account opening form
should be self-explanatory and include translation in Urdu for those customers who are
not well read since the fact cannot be ignored that many people do not have a good
understanding of English.

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5.2.2 Human Resource Department
The importance of manpower cannot be denied in any organization. In case of banks it is
the most valuable asset, because the bank is most sensitive organization and to be in
harmony with this sensitivity, need for proper human resource is felt badly.

5.2.3 Basis for Promotion

A sizeable promotion of the officers of ABL, are promoted in without test and interviews
of officers cadre. The promotion policy must be too tight and transparent that no one may
have the chance to promote on criteria other than required qualification, experience and
performance. As for present excess staff, those not found up to the required criteria may
be given GHS etc.

5.2.4 Management Chances On Merit

In ABL, though vary rare fresh recruitment are made, and the bank faces saturation in
personnel, now clipping will be more helpful. The downsizing will leave the ABL with
the staff, to be retained on the basis of ultimate meritocracy with zero tolerance of
incompetence. Now in this remaining workforce, a cultural change right from the top
management down to the frontline, that better suits to present day needs of banking
environment could be included through proper discipline and training.

5.2.5 Needs of Change in Recruitment Policy

It is important to say that the external level market is full of required talent like MBA,
M.COM. But on the country only graduation with simple subjects is still requisite
qualification for officer‟s cadre, which has already worked amply in the devastation of
ABL. Therefore the recruitment qualification to the officers frame work should be
enhanced for simple graduation, to professionally qualified preferably masters in their
respective fields.

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5.2.6 Delegation of Powers
Delegating powers to the department in-charges up to the possible extent will most
certainly reduce the workload on the managers and they would be able to perform well by
taking quick remedial actions where necessary. Besides, the spare time will be spent
dealing with matters of more important nature.

5.2.7 Development of Managerial Leadership

In services industries like banks the need of managerial skill is much more important. It
makes positive contribution towards effective results. Without development of
managerial leadership, the effective utilization of the human resource will be impossible.
ABL should also focus on this area and should avoid deficiencies in managerial
leadership by applying modern style of management.

5.2.8 Computer Trainings

The present conventional and orthodox training programs need to be made more
comprehensive and reinforce with inclusion of computer training process.

5.2.9 Incorporated Marketing Strategy

All the officers in the deposits department should be involved in the marketing and not
just opening accounts and maintaining their records. This can be done through improving
their personal relation skills of visiting the potential customers and convincing them to
open accounts whenever wherever possible.

5.2.10 Change in Appraisal System

To present performance appraisal system is good. However, it needs to be implemented
in true sense. The drawbacks that are obvious like nepotism and favoritism etc., needs to
root out and the culture of ultimate meritocracy in appraising needs be inculcated.

5.2.11 Credits and Advances Department

The defaulted loans have showered the process of development of banking sectors in
Pakistan and have reduced the lending capacities of banks. In result of which economic

55
growth has reduced and rate of industrialization has become lowered. Defaulted loans
being the major cause for this depression, various suggestions and recommendations have
been given with focus on ABL to overcome the drawbacks of this department.

5.2.12 Guidance for Risk Management

Exclusive mandatory training concerning all possible aspects like financial management
and organizational management is required to be develop and designed to achieve
 Risk assessment ability
 Understanding of all legal matters
 Early detection ability
 Ability to develop and suggest sound strategies when needed.

5.2.13 Fake Financial Presentation by clients

Banks should confirm that the provided figures by borrowing organizations are fairly
audited and that the auditors are on the approved list of the bank and they have clear
opinion about the affairs of company and nothing has been made secret.

5.2.14 Poor Management

A large number of industrial units and projects became sick because of poor
management. When a business become sick or fails it is unable to return the loans, it has
taken, and as a result such loans become bad debts, to avoid this, it is the responsibility of
ABL, to ensure that the company to which loan is sanctioned enjoys good management
skills and reputation. This can only be confirmed, if the bank assesses the management of
borrowing party by taking care of

i. Length and type of experience

ii. Qualification and integrity
iii. Management style
iv. SWOT analysis
v. Financial procedures and documentation followed by employees
vi. Span of authority and responsibility

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vii. Decision making skills of employees

5.2.15 Proper Documentation

Loans become irrevocable through court of law in case of default when the bank fails to
prove their claims against delinquent borrower. If documents are obtained clearly as per
terms of the loan it is not difficult for the counsel to get the decree against the defaulter.
For proper documentation all the possible steps must be kept in mind.

5.2.16 Administrative Reforms

 Fast resolving of loan default cases is must.

 The bank should plan to enhance its ATMs and Internet Banking Services with
new features like inter-branch funds transfer, and the payment of utility bills.

 The future focus of the ABL should be to improve the automation of the
accounting processes and enhance the quality and effectiveness of MIS.

 The ABL should increase press coverage and advertising to create effectively
market it‟s corporate as well as product/Brand image.

 The marketing policies and strategies must be clearly written and communicated
to all the staff members. The Branch Managers must make the use of the staff in
pursing the organizational objectives.

 The Bank must reshape its portfolio of business by investing in higher growth
areas, extending and developing its core competencies and moving out of week
and non-core segment.

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5.3 Conclusion
Banking sector has adopted new techniques with the passage of time in order to compete
in this world. ABL is one such bank that is successfully operating in its field. A system of
regional management is in place to ensure the improvement in productivity. They are
alive to the expectations of the customers.
It is moving towards its goals. It has won many awards in the banking world. It achieves
its target and playing active role in social sector as well. It is successfully creating the
relationship with the nation. The performance of the bank is improving with the time. Its
profitability has shown improvement over years, but still it requires improvement in
infrastructure and technology. The bank aims at a prosperous future by “inspiring
relationship” and work for the betterment.

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References

Annual Reports of ABL; 2006-07, 2007-08

Aslam, S (1999); Banking & Finance. Abbottabad.

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

Kutab Khana.

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

Book Co.

Mr. Sardar Arif, Branch Manager, Abbottabad Branch, ABL.

Siddiqui, Asrar H(2007) ; Practice and Law of Banking in Pakistan: 8th edition Royal

Book Company, Karachi.

www.askaribank.com.pk (Accessed December 27, 2009)

www.askaribank.com.pk/Reports (Accessed January 15, 2010)

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 Annexure A

60
 Annexure B

61
 Annexure C

62
 Annexure D

63
Chief
Foreign
Finance
Deputy-
Deputy-
Deputy-
Deposit
Cash
.
Manager/
Currency
Department
Chief
Deputy-
Department
Chief
Chief
Bill
and (Branch
Chief
.Accounts
Accountant
Cash
Finance
.
Manager)
Department
Control &
Remittance
.
Managemen
t

64