1.

Overview of the Organization

Brief history of Askari bank Ltd:
Askari Bank Limited (ABL) works as a Unit of Army Welfare Trust was established for the Welfare of Army Officials. The office of Army Welfare Trust is situated at AWT Plaza, Rawalpindi. AWT offers the AWT Saving Scheme to the army officials only. AWT has its units as under: 1. Askari Associates. 2. Askari Leasing. 3. Askari General. 4. Private Business. 5. Textile Mills. 6. Cement Industry. 7. Askari Bank Limited. Incorporated in Pakistan on October 09, 1991. The bank obtained business commencement certificate on February 26, 1992 and started operations from April 1, 1992, as public limited company, and has since expanded into a nation-wide presence of 51 branches, supported by a network of online ATMs. The Bank is listed on the Karachi, Lahore and Islamabad Stock Exchanges and the initial public offering was oversubscribed by 16 times. Askari bank limited is scheduled Bank and is principally engaged in the business of banking as defined in the Banking Companies Ordinance 1962. Askari Bank limited continues to scale new heights in all areas of its operations. The safety and security of depositors funds, high productivity and optimum use of technology are the hallmarks of its corporate strength. While capturing the largest market share amongst the new banks, Askari bank limited has provided good value to its shareholders. Share price of AKBL has remained approximately 12% higher than the average share price of quoted banks during the last four years. Askari bank limited is the only bank with its operational Head Office in the twin cities of Rawalpindi-Islamabad, which have relatively limited opportunities as compared to Karachi and Lahore. This created its own challenges and opportunities, and forced us to evolve an outward-looking strategy in terms of our market emphasis. As a result, we developed a 1

geographically diversified assets base instead of a concentration and heavy reliance on business in the major commercial centers of Karachi and Lahore, where most other banks have their operational head offices. 1.1. Askari Bank Today: Askari bank limited will continue to innovate, competitive and distinctive new products, services and systems to meet the needs of a growing customer base and strive to achieve a level which is a benchmark for excellence in premiere banking. Chairman:
Lt. Gen. Nadeem Taj

President & CEO: Mr. M.R. Mehkari Branches: 235 Entity Rating: Askari Bank has the following Entity Ratings from the Pakistan Credit Rating Agency Limited (PACRA): Short Term Long Term A1+ AA

Awards & Achievements:

Over the years, AKBL have received several awards for the quality of our banking service to individuals and corporate. AKBL have been declared The Best Bank in Pakistan by the Global Finance magazine for the years 2001 & 2002. Also, AKBL have been given the Best Consumer Internet Bank award for Pakistan by the same magazine for the year 2002. In 1994, 1996 and 1997, ABL received Euro money and Asia money awards. Askari has A1+ rating for short-term obligations the highest possible for the category, while the long-term rating stands at AA. Askari Bank won the prestigious Best Presented Annual Accounts awards for 2000 and 2001 from the Institute of Chartered Accountants of Pakistan and the Institute of Cost and Management Accountants of Pakistan, for the services sector. For the past four years, AKBL have received prizes from the South Asian Federation of Accountants for The Best Presented Annual Accounts for the financial sector, in the ASSRC region. Over the years, Askari Bank Limited has proved its strength as a leading banking sector entity, by achieving the following firsts in Pakistani banking. 2

I. First Pakistani Bank to offer on-line real time banking on a countrywide 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

Vision:
To be the Bank of First Choice in the Region.

Mission Statement:
Askari Bank Limited defines it mission as, 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.

Core Values of Askari:

They understand that their commitment to satisfy customers needs must be fulfilled within a professional and ethical framework. They subscribe to a culture of high ethical standards, based on the development of right attitudes. They believe in the 'core values' as the essential and enduring tenets of the organization - the very small set of guiding principles that have a profound impact on how everyone in the organization thinks and acts. They have an intrinsic value for them and bear significant importance to all their employees. They are the few extremely powerful guiding principles; the soul of the organization - the values that guide all their actions. The intrinsic values, which are the corner stones of their corporate behavior, are:

Commitment. Integrity. Fairness. Team-work. Service.

Brief Introduction of the Askari Baghban pura Branch Lahore:

Askari Bank Limited Baghban pura branch Lahore was established in October 31, 2004. It is located on Shalimar link road near Shalimar Garden Lahore. The location is connected to all the main trade centers of area. It is a prosperous branch streaming towards great achievements. At the time of its establishment the factored that were considered are as follows: Large population area. Educational Institution.

The total strength of staff in AKBL Baghban pura is 17. They are dedicated to their work. The branch is progressing rapidly, under the dynamic leadership of Vice President Mr. Muhammad Aslam Bhatti and Operational Manager Mr.Zulfiqar Haider. Now, AKBL Baghban pura branch has the importance of backbone for Askari Bank. It has high volume of deposits and has led to huge profits. So, I have been much lucky that I got an opportunity for working in this branch for six weeks, and confronted with enough exposure and opportunities to learn.

1.2. Nature of the Organization

It is a service organization. Along with the social activities, Askari Bank Limited has also been a good banking institution to be compared with other commercial Banks. It is providing the modern services of banking such as: Deposit Banking. Financing & Credit. Remittance facilities. Government Treasury business. Government Receipts and Payments. Sale and Purchase of Government Securities, Bonds and other certificates. Foreign Exchange Business. Collection of Utility bills. Issue Guarantees. E-banking Services. Agency Services.

1.3. Business Volume:

Business volume of askari bank in terms of revenue, deposits, advances, investment etc. for the last five years.

Revenue:
Table no. 1 Particulars Fee, Commission and Brokerage income Dividend Income Income from dealing in foreign currencies Gain on sale of Securities Interest income other income Total Revenues 2010 2009 2008 2007 2006 Rs in ,000 Rs in, 000 Rs in, 000 Rs in, 000 Rs in, 000 1271467 209992 13011 212527 10015546 471707 12194250 1382346 162537 528159 143717 9048020 409191 11673970 1144894 145602 22345 117780 8254637 345678 10030936 1072868 137079 1728 655761 6457617 336809 8661862 1013660 71782 112474 109326 5619608 230877 7157727

Source: Askari Bank Limited Annual Report 2010. Comments: Revenues increased in throughout the period from 2006 to 2010. They were 11673970 Rs. in 2009 and 12194250 Rs. in 2010 i.e. 4.26% increase in 2010 as compared to 2009.

Table no. 2 Description Total Assets Deposits Advances Investment Profit Earnings per share * In per Rupee * 2010 in billions 315 256 168 52 4.34 1.79 2009 in billions 254 206 148 44 4.55 1.48 2008 in billions 224 188 110 35 3.88 0.95 2007 in billions 182 131 100 39 2.68 8.92 2006 in billions 166 99 28 1.25 1.12 7.48

Total Assets:

Source: Askari Bank Limited Annual Report 2010. Analysis: The total assets are 315 billion in 2010 that is an increase of 24% over Rs.254 billion. Total assets have increased from 2006 to 2010. That is a healthy sign.

Deposit:

Source: Askari Bank Limited Annual Report 2010. Analysis: Customer deposits reached Rs. 256 billion from 206 billion at end 2009, an increase of 24.3%. During the year fixed term deposits, which include recently launched new products of the bank, remained a preferred choice showing an increase of 40.4%. Another reason for the increase in fixed deposits was the addition of deposit base of (ALL) which stands amalgamated with the bank on March 2, 2010.

Advances:

Source: Askari Bank Limited Annual Report 2010.

Analysis: By end 2010, gross advances increased to Rs. 168 billion from Rs. 148 Billion, an increase of 14.1%, or 8.1% on a comparable basis, i.e. excluding the addition of advances of erstwhile ALL. The bank continued to exercise effective credit risk management and remained watchful of the impact of advances growth on its capital adequacy ratio.

Investment:

Source: Askari Bank Limited Annual Report 2010 Analysis: In 2010 investment increased from 44 billion to 52 billion. This is an increase of 1.18%. Investments have increasing trend throughout the period from 2006 to 2010.

Profits:

Source: Askari Bank Limited Annual Report 2010. Analysis: The operating profit (i.e. profit before provisions and taxation) of the bank stood at Rs. 4.34 billion; slightly below last year. The above figures indicate that the proposition of profit has seen increase over the years. So it is a healthy sign for bank.

Earnings per share:

Source: Askari Bank Limited Annual Report 2010. Analysis: EPS decreased from Rs. 1.79 per share of last year to Rs. 1.48 per share for the year 2010. The decrease is mainly due to less than expected increase in net increase in net interest income and increase in operating expense.

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1.3.2. Overall Organizational Structure Figure no. 1

Source:
Askari bank official website, www.askaribank.com.pk/Corporate information

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1.3.3. Head Office: AWT Plaza, The Mall, P.O.Box 1084, Rawalpindi. Tel: (051) 9063000 Fax: (051) 9272455 1.3.4. Branches: Domestic Branches 235 1.3.5. Regional Network: Region North Central South Cities Islamabad, Rawalpindi, Peshawar Lahore, Sahiwal, Faisalabad, Multan Karachi, Hyderabad, Quetta

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1.3.6. Management Hierarchy

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1.3.7. Reporting Lines:

As shown above the management hierarchy the AKBL has following reporting lines: The main head of the bank is Senior Executive Vice President (SEVP) or President who manage the all matters of the bank through at higher level like investment at national and international level, corporate affairs etc. He is also the member of the Board of Directors (BOD) of the bank. He is the major person who has the direct liaison with the management of the bank and higher level employees. Executive Vice President (EVP) reports to the SEVP for his duties and responsibilities assign to him. He has the liaison with the SEVP and SVPs. EVPs handles various matters of their concerned departments. Senior Vice Presidents mostly work at divisional level and they received the report and data from the different branches under their divisions. The numbers of branches are varied in the different divisions. Vice Presidents and Assistant Vice Presidents normally are the branch managers and they work at branch level. In the far areas the branch manager are AVPs and in the urban areas the VPs. All the other staff works in their different job responsibilities and report to their heads for their duties. In a branch all the staffs are reportable to the branch manager for their job descriptions. Although in the big branches there are different departs and they have their heads like accounts, audit, remittances, clearance, credit and many others, here the reporting style has change but the branch manager is responsible for all others.

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1.4. Employees

Cadre Baghban Pura Branch Lahore:

Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Name Mr. M. Aslam Bhatti Mr. Zulfiqar Haider Mr. Ajmal Hussain Mr. Amjad Iqbal Mr. Salman Murtaza Mr. Ahmad Jamal Mr. Syed Sajid Raza Mr. Muhammad Ahmad Ms. Yasmin Tahira Ms. Nimra Munawar Ms. Rashida Ghouri Ms. Mussarat Muhammad Ali Mr. Imran Siddique Mr. Mushtaq Mr. Khalid Mughal Mr. Rana Zaheer Mr. Atif Bhatti

Designation Branch Manager Manager Operations Incharge General Banking Incharge Credits Incharge Accounts Incharge Foreign Trade Incharge Check book s issuance Customer Services Officer Incharge Account Opening Clearing Officer Incharge CD Chief Cashier IT Officer Cashier BDO Agri Credit Officer Agri Credit Officer

1.4.1. Directors:
Name 1. Lt. Nadeem Taj 2. Mr. M. R. Mehkari 3. Maj. Gen ( R ) Imtiaz Hussain 4. Brig ( R ) Asmat Ulaah Khan Niazi 5. Brig.Muhammad Bashir Khan 6. Brig.Shaukat Mehmood Chudhry 1.4.2. Company Secretary: 1.4.3. Audit Committee: Mr. Bashir Ahmad Khan Chairman Designation Chairman President & Chief Executive Director Director Director Director Mr. M.A. Ghazali Marghoob, FCA

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1.4.4. Auditors: KPMG Taseer Hadi & Co. 1.4.5. Legal Advisor: Rizvi, Isa, Afridi & Angel Chartered Accountant

1.5. Product Line of Organization

1.5.1. Deposit Products:
Askari Bank introduced following deposits accounts: Current account. Saving Account. Askari Special Deposit Account. Unique Account. Term Deposit. Current Account: 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 checking account because cheques can be drawn on it. Current account is mostly opened for business purpose. Saving Account: The purpose of this account is to induce the habit of saving individuals in the neighborhood. The profit is on the basis of 5% per 6 month. The minimum deposit for opening the account is Rs.2500/-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. Askari Special Deposit Account: ASDA account is an interest bearing current account interest is paid. The payment of return is monthly, where as the rate of return with aspect to the amount of minimum deposit clear from deposit schedules in following table). It is also checking account because cheques can be drawn on it. It is necessary for this account that the client must maintain a minimum balance of Rs. 50,000 at the end of the month. Thats why it is similar to current account. It is mostly opened by businessmen but individuals also open this account.

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Askari Bachat Certificate:

ABCs 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. 25000/- and maximum balance requirement is Rs. 1.0 Million. If ABC is for 3-years, the rate of return for 3-years is 7.0 % if ABCs is for 5-years the rate of return is 8.0 %. Because in such account the balance is kept for either '3' or '5'years within the Bank no cheque is drawn on it. Thats why it is not a checking account. Return is made monthly. Term Deposit: 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 .AKBLs Term deposits are of types clear in the deposit scheme in the table). One of them is "Askari" Advantage one month. The rate of return on this account is 4.0 %. The term deposit account varies one month to 5 years and the min balance requirement is Rs.5000.

1.5.2. Consumer Financing:

The consumer banking service group (CBSG) is dealing in consumer finance and it have following products: Platinum, Gold, Silver Credit Cards. Zarai Credit Card. Balance Transfer Facility. Flexible Credit Plan. AskCard (Debit / ATM card). AskPower (Prepaid Card). Askari Bank's Mortgage Finance (Home Loans). Askari Bank's Business Finance (Business Loans). Askari Bank's Personal Finance. Smart Cash (running finance facility for consumers). I-Net Banking (internet Banking solutions. Askcar (auto loans).

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 Askari Touch 'N' Pay (on-line utility bill payment services). Rupee Traveler Cheques. The detail of few of these products is given as under: Personal Finance:

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 Banks 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. Mortgage Finance:

Askri "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. Auto Financing: Yet another of askari bank limiteds products, Askar offers the most convenient and affordable vehicle- financing scheme, which provides 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. Askari Bank Limited offers you the most convenient and affordable vehicle financing scheme "Askar" to help you own your favorite brand new car. Askers "No eligibility" clause automatically qualifies you to own a new car of your choice. Business Finance:

In pursuance of the National objectives to revive the economy of the country, AKBL 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. Our valued customers can enjoy the convenience of getting financing on attractive terms with the minimum processing turnaround time.

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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. Travelers Cheques: The range of our products and value added services enhances with introduction of Rupee Travelers 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. Value plus Deposits: 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.

1.5.3. Offshore Banking Service:

Products: Running Finance. Cash Finance. Term Finance. Staff Finance. Finance Against Foreign Bills (FAFB). Finance Against Packing Credits (FAPC). Payment Against Documents. Finance Against Trust Receipt. Finance Against Imported Merchandise. Letters of Credit (local/international). Letter of Guarantees.

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1.5.4. Agriculture Products: In its fourth year of launching the Bank's Agriculture Credit Finance programmed continued to receive an overwhelming response from the farming community. The positive outlook was the reflection of credit quality, expertise, and impressive performance in outreach and lending volumes. The customer base increased by 70% and overall portfolio size by 50% as compared to last year. Products: Askari Kissan Evergreen Finance. Askari Kissan Tractor Finance. Askari Kissan Transport Finance. Askari Kissan Livestock Development Finance. Askari Kissan Farm Mechanization Finance. Askari Kissan Aabpashi Finance. Green House & Tunnel Finance. Farm Storage Finance. Model Dairy Finance. Gold Fish Finance. White Pearl Finance. Murghban Finance. Samar Bahisht Finance. Gulban Finance. Asaan Mali Sahulat. Zarai Credit Card.

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The detail of few products is given as follow: Kissan Ever Green Finance:

Askari Bank has launched this program with the sole motive to provide dignity, prosperity and freedom to the tiller of the land. The program is designed to help small, medium and large farmers in meeting their short-term input requirements against one time sanction and automatically renewable up to 3 years subject to its stipulated utilization/periodical adjustment. The credit line is sanctioned in the light of available cash flows and input requirements i.e. Seeds, Fertilizer & Pesticides etc. Kissan Aabpashi Finance: Agriculture farming is impossible without adequate water. We can combat the prevalent water scarcity by harnessing more natural resources. Increased use of mechanical means thus provides a ready alternative. Keeping in view the scarcity of water, which is the lifeblood of arable lands, Askari Bank has started a program for farmers, to finance installation of TubeWells (electric, diesel and solar energy units) water management equipments and water channel development etc., which will help farmers to make optimum use of limited water resources. Kissan Farm Mechanization Finance: Beside Power at the farm i.e. Tractor, the benefits / advantages of power are maximized with the use of Mechanical Support i.e. modern and improved equipments which essentially complement one another due to their cost effectiveness and time efficiency. Askari Bank has launched an Askari Kissan Farm Mechanization Finance for the assistance of the small farmers and provides finance for farm equipment, trailer, thresher, drills & rotavators etc. Kissan Live Stock Development Finance: In order to supplement the income of the farmer, Askari Bank has launched a program enabling the farmer to purchase Mulch Animals, Goats, Sheep, Poultry and Fisheries without incurring extra expenditure because of availability at his farm. He will be able to get milk, meat and eggs etc., which normally do not form part of his diet. This program has the added advantage that besides fulfilling his own familys consumption needs he will be able to market the surplus and earn additional income. This will further improve their cash flows to repay their other Loans / Revolving Credit on due date.

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Kissan Tractor Finance:

Traditional modes of cultivation via Bullocks, Camels, horses etc can no longer keep pace with the demands of present times due to manifold increase in the population. Power in the form of modern technology is therefore the need of the hour. To meet this emergent requirement, Askari Bank has launched an Askari Kissan Tractor Finance to bring power to the fields. Kissan Farm Transport Finance: A grave handicap that afflicts our farmers is their inability, due to lack of proper facilities, to take their produce to the market through efficient means of transportation. This adversely affects the freshness, quality of the product and denies them the desirable Price-Fetching opportunity. Conversely, they lack mobility to acquire much needed inputs essential for their farming needs. One can safely conclude that if provided with appropriate and speedy transport, the farmer can benefit by enhancing his selling ability and thus increase his income / cash flow. It is pertinent to mention that a number of Banks, Leasing Companies and Private Agencies have geared their marketing efforts to concentrate on and have mainly captured the urban markets. There is no support provided to cater to the transport needs of deserving rural farmers community. Askari Bank true to its commitment has taken the lead to launch Askari Kissan Farm Transport Finance.

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2.

ORGANOGRAM of
BAGHBANPURA BRANCH LAHORE As On 31.12.2011
Branch Manager M. Aslam Bhatti VP

Receptionist/Greeter

PABX/Admin/HR Imran Siddique SG-II

Peon Muhammad Rasheed Peon Sheeraz

ACO Rana Zaheer Contractual ACO Atif Bhatti Contractual

BDO Khalid Javed Mughal Contractual

In charge Credit Amjad Iqbal Asst Manager Officer Import/Export Ahmad Jamal OG-I

Manager Operations Syed Zulfiqar Haider

Driver Nadeem Iqbal

In charge General Banking Ajmal Hussain Asst Manager

Chief Cashier Shafiq Amir Chishti Asst Chief Cashier Cash Officer Amil Nazir Chohan COG-I Cash Officer Mussarat Muhammad Ali COG_II

In charge Accounts Salman Murtaza OG II Officer Account opening Yasmin Tahira OG-II Remittance Officer Nimra Munawar OG-IIi

2.1 Comments on the Organizational Structure:

The organizational structure of Askari Bank Baghban pura Lahore portrays that the tasks are assigned to different sections to let them know to whom they report to. The hierarchy of the baghban pura reflects the organizations objectives and the strategies chosen. The structure of Askari bank baghban pura Lahore consists of: Span of Administration. Unity of Command. Objective Setting. Authority & Responsibility. Span of administration: The number of subordinates in an administration to be handled efficiently and effectively is called span of administration. It reflects the overall objectives of the organization. The hierarchy of Askari Bank Limited Baghban pura branch Lahore, have both flat and tall span of administration. Manager is responsible to the top position. While the Operations Manager being the head of all concerned departments. 23

Unity of Command: Measures are taken to ensure unity of commend and this phenomenon generally prevails all over the bank. Generally there are no conflicts regarding unity of command in Baghban Pura Branch. However sometimes problems arise when a manager passes order or information directly down the line without intimating the concerned department in-charge.

Objective setting: Management by objective approach has been adopted to define and set the objective of each and every individual in the organization. Askari bank limited baghban pura is adopted the management by objective as a tool for performance management and appraisal. During the assigning objectives it is ensured that these objectives are in line with the organization policy and are not harming the specific interest of the organization.

Authority and responsibility: The Operations Manager is responsible for day to day branch activities. The Manager is responsible for business development and overall compliance of branch functions with the policy of the Bank.

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2.2. Departments of Askari Bank Limited:

Corporate & Investment Banking Group (CIBG). Islamic Banking Group. Financial Accounts Division. Finance Division. Audit Department. Human Resource Department. Marketing Department. Asset Management Division. Consumer Banking Group. Credit Administration Department. IT Department.

Corporate & Investment Banking Group (CIBG):

As Askari Bank, we understand the unique business requirements of our corporate and institutional clients, and accordingly, strive to meet their expectations through the provision of a customized, relationship based banking approach, through the Corporate and Investment Banking CIBG is a one-window operation that provides all requisite banking services for our corporate clientele in an efficient, dependable, consistent, and competitive manner the objective being to become your bank of first call for all your financial needs. CIBG is specifically structured to provide dedicated banking services and products to its corporate customers through two key divisions. Corporate Banking Division. Investment Banking Division.

Corporate Banking Division (CBD):

CBD is your long-term business partner that is geared to help you in meeting your business growth objectives. The business is managed by a team of professionals who understand your requirements and can firmly stand by your side. Dedicated relationship managers for each of our corporate clients ensure your satisfaction, which is our top priority. Our relationship oriented outlook focuses upon providing complete array of tailored financing solutions that are practical and cost effective, some of which include:

Working Capital Facilities. 25



Term Loans. Structured Trade Finance Facilities. Letters of Guarantee. Letters of Credit. Fund Transfers / Remittances. Bill Discounting. Export Financing. Receivable Discounting.

Investment Banking Division:

IBD provides value-added, specialist services and products through a dedicated team of professionals, with world-class skills, to provide customized solutions to help our clients meet their strategic objectives. IBD is responsible for seamlessly originating, executing and distributing all forms of investment banking transactions ranging from syndicated loans to complex structured and project financing transactions. Some examples of products offered by IBD include:

Strategic Advisory. Privatization Advisory. M & A Advisory. Balance Sheet Restructuring. Syndications. Project Finance. Structured Finance. Islamic Finance. Private Placements of Debt and Equity. Issuance and distribution of Term Finance Certificates, Sukuk Bonds, and Commercial Paper. Underwritings. Capital Market Hybrid Products.

Islamic Banking Group:

Islamic Banking was launched under the brand 'Askari Islamic Banking', by opening 6 dedicated Islamic Banking branches in major cities of the country. Further expansion is planned with improved capabilities for offering products conforming to the Shariah principles. 26

Askari Islamic Banking opens the doors for Halal banking solutions. Our objective is to put in place an efficient banking system supportive to economic justice and welfare of society in line with Shariah standards. A comprehensive range of Islamic Banking products and services is being offered, in order to meet customer's demand of Shariah Compliant Banking, in the following areas:

Islamic Corporate Banking Islamic Investment Banking Islamic Trade Finance Islamic General Banking Islamic Consumer Banking

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

Financial Accounts Division:

Financial Accounts Division performs the following functions as under: Preparation of Annual Financial Statements Accounting Polices for the bank. Preparation of Weekly Statement of Affairs for issuance in the Government Gazette as Provided in the State Bank of Pakistan Act, 1956. Quarterly profit updates to the Central Board of Directors. Maintenance of GL to provide information for right decision-making. Monitoring of contraction and expansion of Currency operations. Consolidation of Departmental Budgets. Preparation of daily balance position and communication thereof to the Federal Finance Decision and Provincial Finance Departments. To make annually accounts of the bank according to the regulations and procedure of the state bank of Act, 1956.

Finance Division:
The finance department is responsible for policies, planning, mobilization and administration of the Banks financial resources, the department manages the Banks financial relations with the objectives of providing loans to borrowing member countries on a cost-effective basis, while maintaining at the banks long term and short term ratings of AA+ and A1+ and safeguarding its resources. 27

Main Responsibilities:

Achieving cost-effective Treasury operations. Managing the Banks liability portfolio. Providing proactive financial policy, timely strategic financial planning and risk management. Ensuring that all financial obligations are met and collections made. Producing prompt and accurate financial reporting and producing audited financial statements for the Banks Annual Report. Performing Loan Management functions to administer monitor and control the Banks loan and technical cooperation portfolios, including management of the Operational Framework for Lending in Local Currency. To see the total liability of the bank and ensure that all obligation are made on timely basis.

Marketing Department:
The marketing department handles the activities regarding the promotional activities that are held time to time and making agreements with different retailers for getting factory prices of their products in order to make their products more attractive to the customers by cutting down prices on buying from their credit cards, like special discount on purchase from credit card.

Human Resource Department:

HR Division is responsible for attracting, selecting and recruiting the right people from the market. Askari bank is proud of its highly professional, transparent and objective approach in its recruitment and selection processes. After applying the eligibility criteria, which depends on the Job grade, a series of selection procedures are applied before hiring employees. Normally the candidates go through the process of test, group discussion and interview. The Interview is conducted by a team of internal as well as external professionals of the related area. Sophisticated recruitment and selection tools like oracle based data management system; online application and behavioral based interviewing techniques have been introduced. Human resource department has a check on the entire system and make sure that the employees are performing their best. Some activities performed by HR department are: Hiring new employees. Contract Renewals. 28

 Performance Appraisals Increment in salaries Bonuses Decisions Leaves

Audit Department:
The Board of Audit Committee (BAC) comprising three members meets every quarter and is function and systems for monitoring compliance. Internal audit procedures include routine branch and business function audit as well as special surprise audits. There is also a dedicated compliance division mainly to follow up on the recommendations advised by the audit team. The deliberations of BAC however reflect concern regarding the overall control environment. The audit and inspection department has been highlighting issues with regard to operational control weaknesses at the branch level. While most of these are routine in nature, further emphasis on HR training may help in improving the control environment.

Assets Management Division (AMD):

Assets management Division is responsible for the following functions as under: Assets capitalization, assets transfers and overall responsibility to manage and maintain assets physical inventory, keeping track of physical location of assets. Maintaining the financial information of the assets, cost evaluation and retirements. To ensure the smooth and unhampered running of the Fixed Assets management function. To record all the expenses regarding repair/maintenance and rent taxes for building and equipments. To take into running position, if any assets are excess in the business.

Consumer Banking Group:

The Consumer Banking Group provides financial facilities to individuals through a diverse product line. Its success depends on the design of versatile and effective products and comprehensive communication and marketing strategies. Agility in monitoring the portfolio and following up with its customer base, which is wholly comprised of Individuals, is also an essential requirement. 29

This group operates in nearly all major cities of Pakistan. This group offers Products such as home loans, personal loans, auto loans, business loans, and credit card facilities, etc Consumer banking requires regular training of its workforce and the need for imparting basic product knowledge to sales staff is highly pronounced in this group as they are in direct contact with the customer base. This group conducts business based on structured products that fit into the needs of its target market. Product process manuals are developed for these products and are provided with the Credit Policy and Procedure guidelines. Risk management for the consumer has to play a dominant role in formulation and revision of credit policies, monitoring of portfolio quality and devising effective strategies aimed at minimizing the inherent risk.

Credit Administration Department:

The responsibility of providing administrative support for the lending activities of the Bank, and day-to-day monitoring of credit-exposure, is vested in the Credit Administration Department (CAD). Functional Responsibilities: The main responsibilities of this department are as under: Implementation of credit facility and their maintenance according to terms of credit approved. Ensure that standard loan documentation for each credit facility is maintained and the correctness & completeness of such documentation and also responsible for custody of all credit files. Maintain the safe custody of all collateral as per banks standard operating procedures; undertake periodic evaluation and inspection of hypothecated/ pledged inventories in accordance with the terms of credit. Ensure compliance with Institutional credit policies & procedures Local regulatory requirements.

Prepare various portfolio composition reports and other documentation for submission to GRMs & RMs.

Information Technology Department:

Operations of Askari bank have been significantly streamlined post-privatization, however further plans for improving operational efficiency are under-way. Currently the bank is using Oracle Flex Cube software. As all daily banking transactions are stored at the 30

respective branches, consolidation at the head office takes place at day end. A disaster recovery center has also been created in another bank-owned premise with provisions for real-time data application to ensure minimal down-time even in case of a major disaster. AKBL has also introduced the now concept of Online Banking. There are now all branches linked through this system and they can transact with each other directly using computer systems at their own branches. Now customers do not have to wait long for their transactions and can operate their account through all the online branches.

31

3. Structure and Functions Of The

ACCOUNTS / FINANCE DEPARTMENT

3.1. Organizational Chart: (Finance Department):

CFO

Regional Heads

Managers Officers Officers

Unit Head Financial Reporting

Unit Head Taxation

Managers Officers Officers

Managers Officers Officers

Unit Head Budgeting

Unit Head SBP Reporting

Managers Officers Officers

32

3.2. My Learning as an Internee:

As the aim of the internship is to learn some practical work in a reputable organization, which result in an increase in the knowledge and worth of the student. During my internship in Askari Bank worked in diverse department and gain some practical experience in the organization. The duration of my internship in Askari Bank was from November 2011 to February 2012. During the internship, they rotated me to different departments of the bank which explains my experience department wise. Account Opening On the greeter desk Accounts/ Finance department Clearing Remittance department Foreign currency department Credit department Agricultural department

As my specialization is in banking and finance. So, I will focus on finance / accounting department here.

3.3. Finance & Accounting Operations:

Accounts Department is responsible to record and process each & every business transaction taking place during the working day. This Department consolidates the position of the branch at the day end in the shape of Assets, Liabilities, Revenues and Expenses. This position is daily sent to the Finance Department of Head Office which consolidates all these Statement of Affairs bank wise. This position is sent to the State Bank of Pakistan (SBP) and SBP publishes on weekly basis overall consolidated Statement of banks in business news papers. The main function of Finance Department of Head Office is to maintain smooth liquidity of bank by arranging funds from SBP and other banks if required. This Department is also responsible for making physical investment on behalf of bank into government securities and other corporate securities.

33

Activity:
I start to sort the vouchers head vise and account number vise. There are two basic reports for the activity purpose. 1. general/ ledger report 2. customers account report After sorting the vouchers I start ticking the vouchers one by one by checking the following; Account number Date Signatures on the cutting of the customer Stamp of transfer/clearing/cash Amount on the voucher and in the report

Voucher of Expenses:
The voucher of debit and credit of the expenses are also prepared by the accounts department. One head is debited and one credited to make the balance entries. After the preparation of voucher get post the vouchers and get them signed by the operational manager and chief manager.

34

3.4. The Role of Financial Manager:

Who Is Financial Manager? The person which manages the financial resources of a business is called financial manager. Role & Duties of Financial Manager: Financial activities of a firm is one of the most important and complex activities of a firm. Therefore in order to take care of these activities a financial manager performs all the requisite financial activities. A financial manger is a person who takes care of all the important financial functions of an organization. The person in charge should maintain a far sightedness in order to ensure that the funds are utilized in the most efficient manner. His actions directly affect the profitability, growth and goodwill of the firm. Financial Institutions such as commercial banks, savings and loan associations, credit unions, and mortgage and finance companies, employ additional financial managers who oversee various functions, such as lending, trusts, mortgages, and investments, or programs, including sales, operations, or electronic financial services. These managers may be required to solicit business, authorize loans, and direct the investment of funds, always adhering to Federal and State laws and regulations. Role of Branch Manager: Branch manager of financial institutions administers and manages all of the functions of a branch office, which may include approving loans and lines of credit, establishing a rapport with the community to attract business, and assisting customers with account problems. The trend is for branch managers to become more oriented toward sales and marketing. It is important that they have substantial knowledge about all types of products that the bank sells. Financial managers who work for financial institutions must keep abreast of the rapidly growing array of financial services and products.

3.4.1. Accounts Management:

Being the manager of the askari bank limited it is the duty of the branch manager to properly manage the accounts that are deposited in the respective branch. Main duties of branch manager of askari bank limited regarding accounts management is: To ensure that the Accounts Officer is maintaining proper books of account including basic accounting controls like daily verification of cash in hand, daily

35

entry of cash & bank vouchers, Bank Reconciliation statements, accounting of Receipts / Payments correctly. To supervise and maintain the Assets Records of branch including obsolescence / Sale through auction or otherwise, conducting physical verification of assets annually and reporting variations. To prepare the Annual Programme and Budget (APB) and Annual Report of the Branch with the help of the Accountant/Statistical Assistant and concerned unit heads. The reports generated on this system should review on daily basis by Branch Manager under his signatures and also by the Area Manager and a complete record of these reports in date order should be filed. 3.4.3. Credit Management: Being a manager of askari bank limited, he is responsible for: Controlling bad debt exposure and expenses, through the direct management of credit terms on the company's ledgers. Maintaining strong cash flows through efficient collections. Ensuring an adequate Allowance for Doubtful Accounts is kept by the company. Monitoring the Accounts Receivable portfolio for trends and warning sign Determine credit ceilings. Setting credit-rating criteria. Setting and ensuring compliance with a corporate credit policy. Obtaining security interests where necessary. Common examples of this could be letters of credit or personal guarantees. Initiating legal or other recovery actions against customers who are delinquent. 3.4.2. Cash Management: Branch manager of askari bank limited is not only responsible for mobilization of deposits for the bank but also to generate foreign exchange and other business for the bank. He also cares that customers of bank are properly served & their problems are immediately solved. He is also responsible for cash management & credit management. Main branch of a bank (Askaribank) which is custodian of cash. All excess cash in the branch is deposited with this branch & whenever any branch needs cash to pay off to the depositors, the Branch Manager is required to make requisition to this Main Branch & the Main Branch provides the required cash accordingly. 36

Other responsibilities of manager of askari bank limited include: Develop strong, internal control of cash receipts and disbursements. Develop solid professional relationships with local bankers and other members of the investment community. Analyzing cash flow and preparing a budget. Suggestions for improving cash flow.

37

3.5. Use of electronic data in decision-making:

Askari bank is using the eight steps for decision making. These steps are very helpful for electronic decision making. These are: 1. Identifying the problem 2. Making alternatives 3. Making criteria for alternatives 4. Weight to alternatives 5. Analysis of alternatives 6. Selection of alternatives 7. Implementation of alternatives 8. Evaluation of alternatives In todays banking new devices have been introduced for efficient & courteous service to the client. Like Online Banking, Net Banking, Mobile Banking, Auto Teller Machines (ATMs) & Electronic Cashiers. In Askari bank most of the decisions are made after getting approval from authority using electronic data. Now - a - days Statements of Accounts are not dispatched to the account holders. Instead they have been given option to get their Statements printed while using Net Banking moreover, customers can gave all types of instructions in respect of their transactions through E-mails, Net & Mobile Banking. So we can say that electronic data is very widely used in todays banking. Different types of softwares used by Askari bank: The information technology infrastructure of the bank is undergone a major overhaul under a project initiated in 2008. This involves replacement of the core banking system of the bank as well implementation of a number of other applications with the aim of enhancing the banks capability to have a better control over its operations, enhance its MIS and to improve its customer services. Askari bank is using following softwares: Uni Sign. Oracle People Software. Remittance Application. CREAM. Oracle Flex Cube.

38

Uni Sign:

This software is used for customer related transactions. It is also used for checking customers balance. Posting cheques and other instruments. And accounts related data is also posted in uni sign. Now it is replaced by oracle flex cube. Oracle People Software: This web based system provides expanded online services for staff on human resource related matters. The advance module of the system automates many processes relating to selection and recruitment, training and development, performance management and career and succession planning. It has following characteristics: Having employees data (Personal and Official) Time of reporting Benefits Learning and development Performance management Employees data:

Reviewing and updating employees personal information. Home and mailing address Phone numbers E-mail id, s Time of reporting: Benefits: Report and review employees time, schedules, request, absences and more. Askari bank provides benefits to its regular employees like gratuity, pension, insurance of employees, medical allowance, petrol allowance etc. Learning and development: Training and development team of the bank pursuit for quality training policy. Training goals were determined in light of the well defined training need assessments (TNA) procedures, as envisaged in the overall strategic plan of the bank. Our in-house training facilities conducted a record number of 526 courses, workshops, and skill development clinics in the disciplines of service and attitude, management and communication, IT, credit and finance, international trade, domestic banking operations, risk management and

39

on other subjects including a series of leadership development programs for senior management of the bank. Performance management: Performance management checks the appraisals of the employees. Appraisals are prepared on the basis of employees performance. Each employee makes his goal setting and targets and gives weight age to their targets and according to these appraisals their performance are evaluated. Remittance Application: This software is used for making pay orders and demand draft. It have a proper format of P/O, DD. You have to give just command and this application star working. This application have all the particulars regarding pay orders and demand draft. This format provides two prints, one for sending the beneficiary and second is retained by the customer. Credit Risk Environments Administration & Management System (CREAMS): Askari bank is from few Pakistani Banks which keeps centralized information system. A CREAM is one of them. CREAM is highly customizable and parameterizes able software. CREAM is developed with the ideology that it can operate in all parts of the world. Certainly there are different operational, monitoring and regulatory requirements depending upon the region where the bank is operating. Furthermore; a single bank may operate in more than one region of the world. Parameterization lets CREAM behave according to the requirement of the region. This customization is a onetime initiative and once CREAM has the requisite information, it will behave according to the banks requirement. This section will explain the all CREAM setup screens one by one. It must be noted the once the Parameterization phase is completed by bank then bank must lock this section. That is only authorized person (Mostly Credit Head & MIS Officer) can enter to this section, not everyone who is using CREAM application. CREAM provides end to end automation of Credit Risk Environment i.e. credit risk origination, analysis and assessment, measurement, pricing and management together with credit risk review, administration and monitoring, all this in accordance with banks credit risk policy. Thus CREAM becomes a unique product that provides complete and most flexible credit risk management solution. It fully supports the pillars of BIS/BASEL II and the Risk Environment and assesses the credit risks in trading and banking 40

books. It is the most comprehensive risk management tool available. Oracle Flex Cube: Oracle Flex Cube is a advance form of software than Uni sign. Askari bank used this software in replacement of Uni sign. It performs the same function as performed by Uni sign, but it is in advance form and have better contents as compared to Uni sign. Its distinct features make work easier for employees. Each employee having their id login from their system. It contains all types of reports, account info, budget schedules etc. As it is new software, so, it implemented only in few branches. The bank has also initiated an exercise with the objectives of aligning new softwares capabilities with business and operations for optimal utilization of the core banking software, and extensive training programs for existing and potential users of the core banking software.

Reports Being Produced For Management Use:

To maintain and exercise and better controls on operations, Askari bank provides controls in the shape of daily override/exceptions reports to the branch manager & respective staff. The exceptions include the following: Description of what they are Statement of condition report Over ride confirmation report General Ledger Assets and Liabilities report Amount in Foreign currency , Amount in Local currency report (Subsidiary ledger printing) Transfer Register report Customer ledger + Pricing report For non financial transactions e.g. issuance of cheque book. For financial transactions. Daily Customer Movement Ledger Interest and accrued interest report Non- financial transactions report

Reports No. Report 100 Report 27 Report 113 Report 110 Report 80 Report 170 Report 62 Report 52 Report 51 Report 48 Report 50

These reports are reviewed by the Manger of the branch and also by the Area Manager which helps them in decision making.

41

3.6. Sources of Funds:

Sources of funds refer to organizations needs of funds. These are necessary to run the operations of business. For this organization make financing decisions through debt and equity. 1. Debt Financing: In 000, Years
Debt Financing 2010 4011345 2009 1976543 2008 1234567 2007 8765432 2006 1130114

Comments: In askari bank debts are 4011345 during year 2010. These are much higher than year 2009 i.e. 1976543. And debt financing is increasing from year 2006 to 2010 continuously. This shows that bank is doing debt financing to overcome its payables. 2. Equity Financing: In 000, Years
Equity Financing 2010 6911345 2009 5576543 2008 4058774 2007 3006499 2006 2004333

From above figures equity level is going high in year 2010 as compared to previous years. This shows that management wants to equity financing than debt financing.

3.7. Generation of Funds:

Askari generate funds through deposits that is one of the main head of generation of funds. Bank also receives fees, commission, interest on loans, interest on investment, brokerage income, gain on sale of securities and other income etc.
Particulars Fee, Commission and Brokerage income Dividend Income Income from dealing in foreign currencies Gain on sale of Securities Interest income other income 2010 Rs in , 000 1271467 209992 13011 212527 10015546 471707 2009 Rs in, 000 1382346 162537 528159 143717 9048020 409191 2008 Rs in, 000 1144894 145602 22345 117780 8254637 345678 2007 Rs in, 000 1072868 137079 1728 655761 6457617 336809 2006 Rs in, 000 1013660 71782 112474 109326 5619608 230877

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Comments: All these figures show upward trend. Bank has gained much income through commission and interest income. In 2010 bank has received interest income 100 millions that is higher than in 2009. Dividend income also increased year by year. But there is a mix trend in income from dealing foreign currencies. Gain on sale of securities has also an increasing trend. The bank performed was well in these five years from 2006 to 2010 so this was the reason that bank concludes healthy figures in the corresponding years. Deposits: Deposits are one of the major sources for a bank to generate funds. So, well discuss it in detail now:

Deposits Fixed Deposits Savings Deposits Current accounts Special Exporter's Account Margin Accounts Remunerative Deposits Non-Remunerative Deposits Others Total Deposits

2010 66943251 132035332 53040333 103746 3067234 437397 4617 276239 255908149

2009 47689401 110245202 44335822 21743 1853597 1494658 4417 268063 205912903

2008 23142344 9230897 4704610 2899 523326 118896 3345 149462 169872880

2007 26328636 15088460 4348803 1877 691888 345660 2765 224712 143030924

2006 10454747 12441498 4322078 1944 638786 22345 2443 124605 131006502

Comments: I. Last five years the deposits have the increasing trend throughout the period from 2006 to 2010. Total deposits from customer come to Rs.255. 90 billions in 2010 from Rs. 131 billion of 2006. This was due to healthy campaigns for funds generation from customers by offering attractive and profitable products of various types like deposit accounts for different terms, profit availability on monthly basis etc. Deposits from customers include fixed and saving deposits, current accounts, margin accounts and others. II. Deposit from financial institutions is two types remunerative and non-remunerative deposits and they have also increasing trend throughout the period. The figure was at

43

Rs. 7.24 billion in 2010 as compared to 2006 where it was at Rs.3.18 billions which shows the healthy position of the bank.

3.8. Allocation of Funds:

The most important function of the bank is allocating the resources and make portfolio for profitability. Askari bank allocates its fund in different areas. Following are the areas in which askari bank allocate its resources. 1. Investment 2. Lending to Financial Institutions 3. Advances 1. Investment Investments (In Securities): 2010
Investment by segments Federal Government Securities Market Treasury Bills Pakistan Investment Bonds Sukuk Certificates Total Federal Government Securities Fully Paid-up Ordinary Shares Listed companies Unlisted companies Total Fully Paid-up Ordinary Shares 240,438 271,785 240,279 524,598 222,746
174,758 65,680 206,105 65,680 174,599 65,680 508,918 15,680 207,066 15,680 70,313,741 87,632,18 37,807,03 37,428,97 611,53,69 61,75,08 901,82,32 618,98,31 32,45,60 600,86,61 639,10,89 22,34,59 494,83,86 66,304,17 18,766

2009

2008

2007

2006

(Rupees in000).

17,788,858

11,276,202

15,208,063

12,400,470 11,578,803

Term Finance Certificates, Debentures Term Finance Certificates Listed Unlisted

252,130 1,786,911 80,239 506,838 330,832 373,297 1,011,223 239,043 173,659 305,965

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Total TFCs Other Investments Mutual Fund Units Preference Shares -Listed -Unlisted Investment in Associate Shares Repo Total Other Investments

2,039,041

587,077

704,129

1,250,266

479,624

54,543 44,538

88,907 65,000 50,000 75,000 75,605 354,513 2009

1,713,907 65,000 50,000 75,000 80,432 1,984,339 2008 18,136,810 (91,311) 18,045,499

1,591,307 65,000 50,000 75,000 93,697 1,875,004 2007 16,050,338 (98,609) 15, 951, 72

122,709 65,000 50,000 60,000 143,544 441,253 2006 12,722,426 (150,145) 12,572,281

75,000 74,910 295,495 20010

Total Invests at Cost 20,363,832 13,489,576 Provision for diminution In the value of investment (85,137) (78,993) Investment (net of Provision) 20,278,695 12,410,583 Unrealized gain on revaluation of investment classified as held-for-trading 69 Deficit on revaluation of Held for trading investment Deficit on revaluation Of available-for-sale Investment (99,435) (398,350) Total Investment 102,259,757 67,046,0333

(1,310)

(5,962)

(185,020) 27,859,169

(243,285) 15,702,482

(107,704) 12,464,577

Comments: Market value of held to maturity securities as at December 31, 2010 is Rs. 5,112,366 thousands. (2009 Rs. 4,483,052 thousand). Federal Government Securities are invested in HBFC, Karachi Shipyard and Engineering works, SNGPL and WAPDA. Investment in listed company shares include Adamjee Insurance Company Ltd, Allied bank Ltd, Arif habib securities ltd. So, you can say investment in listed company shares include Different sector like IT, banking, fertilizers, auto and telecommunication sector etc. This investment is increased in 2009 as compared to 2010. Investment in term finance also increased in 2010 as compared to previous years. Invest in Askari associates are one of the major cause to increase investment. Investment in 5 million (2009: 5 m illion) cumulative shares of Rs.10 each issued by Chenab 45

Limited. These preference shares with put and call option are non-voting in nature and enjoy preference over ordinary shares in case of payment of dividend and liquidation and carry preferred dividend at the rate of 9.25% per annum on the issue price. Investment in 1.5 million (2009: 1.5 million) cumulative preference shares of Rs.10 each issued by Masood Textile Mills Limited. These preference shares with call option are nonvoting in nature and enjoy preference over ordinary shares in case of payment of dividend and liquidation and carry preferred dividend at the rate of 6 months KIBOR plus 200 bps per annum on the issue price. So, total investment is increased in 2010 i.e. Rs.102,259,757. And Rs. 67,046,0333, Rs.27,859,169, Rs. 15,702,482, Rs.12,464,577 i.e. in 2009, 2008, 2007 and 2006 respectively.

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2. Lending To Financial Institutions:

2010 2009 2008 2007 2006

....(Rupees in000) Call money lending Repurchase agreement Lendings Purchase under resale arrangement of equity securities
8,349,938 200,000 100,000 3,866,733 630,000 839,959 1,957,500 2,790,067 3,160,000 5,671,063 -

8,549,938

4,496,733 100,000 4,496,733

839,959 839,959

4,747,567 4,747,567

8,831,063 8,831,063

Funded trade finance Others

770,730 9,320,668

Less: Provision against reverse repo Total lendings to financial Institutions

(148,482)

(82,674)

9,172,186

4,614,059

839,959

4,747,567

8,831,063

Comments: Call money lendings carry mark-up at nil to 12.6% per annum. Securities held as collateral against repurchase agreement landings includes the Market Treasury Bills and Pakistan Investment Bonds. These have been purchased under the resale agreements at markup rates of 12.2% per annum (2009: Nil) with maturities up to January 2011.These have been purchased under the resale agreements at markup rates of Nil (2009:12% to 13.2% per annum) with maturities up to January2010. Funded trade finance mark-up rate is 4.62% per annum maturing on January 31, 2011.

47

3. Advances:
Loans, cash credits, running finance etc. In Pakistan Outside Pakistan Bills discounted and purchased (excluding government treasury bills) Payable in Pakistan Payable outside Pakistan 8,428, 437 7,501,252 15,929,689 9,582,481 8,027,833 17,610,314 379,855 444,386 824,241 1,001,502 256,335 1,257,837 236,691 585,451 822,142 2010 2009 2008 2007 2006 89,317,248

. (Rupees in 000)
126,657,007 100,591,574 95,789,90

142,637,979

142,637,979

126,657,007

100,591,574

95, 789, 90 89,317,248

Financing in respect of Continuous funding system Advances - gross Provision against advances Specific General

168,435,880

147,633,745

116,415,815

479,333

494,408

101,527,073 100,633,798

(8,490,158) (44,467,9) (8,494,604)

(7,089,770) (17,82,49) (7,100,019) 135,039,901

(5,518,434) (22,41,20) (5,540,846) 112,874,972

(2,477,406) (27,693) (2,505,099)

(2,093,293) (26,778) (2,120,071) 99,513,727

Advances Net Provision

152,784,254

100,021,974

Source: Five years annual reports. Comments: The total advances net of provisions shows the figure of Rs 152.78 billion in 2010 and this were at Rs. 99.513 billion in 2006, an increase of Rs. 53.26 billions was seen in this portion of balance sheet. It generates the healthy mark-up / interest income for the bank which added value of the revenues of the bank in the corresponding periods.

4. Critical Analysis of the Theoretical Concepts Relating To Practical Experiences:

1.1. Financial Analysis 48

Balance Sheet of Five Years

ASSETS Cash and balances with treasury bank Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets Total Assets LIABILITIES Bills payable Borrowing from financial institution Deposits and other accounts Deferred tax Liabilities Subordinate loans Liabilities against assets subject to finance lease Other liabilities Total Liabilities Net assets Represented By : Share capital Reserves Unappropriate Profit Surplus on revaluation of assets-net of tax Total Liabilities and S+A4hare capital 6,427,440 7,712,855 679,638 14,848,661 1,183,564 16,032,225 314,780,129 5,073,467 7,287,041 803,716 13,181,487 1,806,384 14,987,871 254,353,438 4,214,560 7,045,679 2,298,765 11,789,047 1,876,540 13,456,780 224,356,780 3,006,499 6,948,336 2,144,810 12,099,645 166,342 12,265,187 182,171,885 2,004,333 5,814,754 1,799,979 9,619,066 1,434,164 11,053,230 166,033,588 3,089,984 25,554,777 255,908,149 85,507 5,992,500 5,556 8,111,431 298,747,904 16,032,225 2,945,670 19,300,163 205,912,903 333,925 5,994,900 11,543 4,866,463 239,365,567 14,987,871 2,756,789 16,788,965 169,875,437 397,865 3,895,609 _ 3,809,765 183,456,908 13,456,780 2,677,051 17,553,525 143,036,707 471,519 2,997,300 _ 3,219,796 169,905,898 12,265,987 1,839,077 14,964,087 131,839,283 736,298 2,998,500 _ 2,603,113 154,980,358 11,053,230 2010 Rs in 000, 22,565,190 3,787,538 9,194,186 102,100,063 152,784,254 14,264,476 10,084,422 _ 314,780,129 2009 Rs in 000, 19,385,850 8,374,640 4,649,059 66,858,617 135,039,901 10,686,010 9,332,361 _ 254,353,438 2008 Rs in 000, 16,938,567 3,923,964 1,593,657 56,723,457 112,345,670 6,460,983 9,262,345 _ 224,356,780 2007 Rs in 000, 13,356,055 3,497,054 1,444,414 39,431,005 100,780,164 5,128,428 5,535,038 _ 182,171,885 2006 Rs in 000, 14,879,230 7,333,002 8,392,950 28,625,915 99,179,372 3,810,331 3,812,788 _ 166,033,588

Profit & Loss Account for Five years

2010 Rs. In, 000 27,952,162 17,936,616 2009 Rs. In, 000 22,590,230 13,542,210 2008 Rs. In, 000 18,143,561 9,885,656 2007 Rs. In, 000 15,143,241 8,685,624 2006 Rs. In, 000 12,596,921 6,977,313

Mark-up / return / interest earned Mark-up / return / interest expensed

49

Net mark-up / interest income Provision for diminution in value of investments net Provision against loans and advances net Bad debts written off directly Net mark up / return / interest income after Provisions Non Mark up / Interest Income Fee, Commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities net Unrealized gain/(loss) on revaluation of investments Other income - net Total non mark-up / return / interest income Total Income Non Mark-up / Interest Expenses Administrative expenses Other provisions / (reversal) net Other charges Total nom mark-up / interest expenses Extra ordinary / unusual items Profit Before Taxation Taxation-current -prior years -deferred Profit After Taxation Unappropriated profit brought forward Profit available for appropriation Basic and diluted earnings per share (Rupees)

10,015,546 296,530 2,319,280 _ 3,064,382 6,951,164 1,271,467 209,992 13,011 212,527 -354 471,707 2,177,043 9,128,207 7,812,618 _ 42,453 7,855,071 1,273,136 _ 1,273,136 329,617 _ 342 329,959 943,177 833,511 1,776,688 1.48

9,048,020 76,784 2,324,377 _ 2,914,893 6,133,127 1,382,346 162,537 528,159 143,717 -1,918 409,191 2,625,545 8,758,672 6,995,857 _ 34,368 7,030,225 1,631,955 _ 1,631,955 562,099 119,827 -147,478 534,448 1,097,507 309,980 1,406,487 1.79

8,254,637 44,561 4,367,892 _ 2,876,543 3,987,654 1,144,894 145,602 22,345 117,780 -405 345,678 2,365,478 7,689,023 5,678,902 _ 23,456 5,678,903 1,098,763 _ 1,087,639 456,789 _ 2,348 445,678 3,678,234 678,901 2,531,567 0.95

6,457,617 1,501 3,920,240 _ 3,921,741 2,535,876 1,072,868 137,079 1,728 655,761 -2,361 336,809 4,565,496 7,101,372 4,789,536 _ 12,051 4,801,587 2,299,785 _ 2,299,785 98,535 -233,950 -245,812 -381,227 2,681,012 179,979 4,480,991 8.92

5,619,608 376 1,128,137 _ 1,128,513 4,491,095 1,013,660 71,782 112,474 109,326 -584,344 230,877 3,217,580 2,139,254 3,277,353 _ 6,141 3,283,494 3,346,855 _ 3,346,855 983,875 _ 113,006 1,096,881 224,997 1,617,597 3,867,571 7.48

4.1.1. Ratio Analysis:

What is Ratio?

50

A ratio is a simple mathematical expression of the relationship of one item to

another. Following are some important ratios which we will calculate: 1. Net Profit Margin 2. Net Interest income to Gross income Ratio 3. Operating Expense Ratio 4. Administrative Expense Ratio 5. Total Asset Turn over 6. Return on Assets 7. Return on equity 8. Non- interest income to total assets 9. Non- interest expenses to total assets 10. Risk asset turnover ratio 11. Advances to total deposit ratio 12. Demand deposit to total asset ratio 13. Interest coverage ratio 14. Total financing funds to deposit and borrowed funds ratio 15. Quick assets to deposit ratio 16. Due from bank to due to bank ratio 17. EPS

1. Net Profit Ratio:

Net Profit after Tax X 100 Sale

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2010 943177 x 100 18765427 = 33.55%

2009 1197507 x 100 16543234 = 28.90%

2008 2007 3678740 x 100 2681012 x 100 14899034 15143241 =24.69% = 17.70%

2006 224997x 100 12596921 = 15.78%

Interpretation: Net Profit Ratio is a more specific measure of sales profit ability. It is used to measure overall profit ability and hence it is very useful to proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall not be able to achieve a satisfactory return on its investment. Comments: The above ratio indicates that the proposition of profit has seen increase over the years. So it is a healthy sign for bank.

2. Net Interest Income to Gross Income Ratio:

Net mark up / interest income x 100

52

Gross income Where gross income = net interest income + non mark up income

2010 5569874x100 10023654 =55.56%

2009 4672876x 100 9543216 =48.96%

2008 3456789x 100 8765432 =39.43%

2007 2535876x 100 7101372 = 35.70%

2006 4491095x 100 4812853 =33.31%

Comments: Net interest income to gross income increased year by year. In 2006 it was 33.31% and till 2010 it is increasing with the ratio of 0.59%. It is showing a good trend.

3. Operating Expense Ratio: Non -Mark up Expense X 100 Gross Income 53

Where gross income = net interest income + non mark up income 2010 7855071x100 10023654 =78.36% 2009 7030225x 100 9543216 =73.66% 2008 5578922x 100 8765432 =63.64% 2007 4801587x 100 7101372 = 69.61% 2006 3283494x 100 4812853 = 68.22%

Comments: Internationally accepted bench mark is 60%. Operating expense ratio is increasing from 2006 to 2010. But in 2008 it was decreased by 5.97% as compared to 2007. In 2009 it was 73.66% and in 2010 it is 78.36%.

4. Administrative Expenses to Total Deposit Ratio: Administrative expenses X 100 Total deposit 54

2010 7812618x 100 295987654 =2.64%

2009 6995857 x 100 255076543 =2.74%

2008 5678902 x 100 199789077 =2.84%

2007 4789536x 100 143036707 = 2.48%

2006 3277353x 100 108839283 = 3.01%

Interpretation: The administrative expense to total deposit ratio, measures banks ability to cove administrative expenses by spreading over large number of depositors. Total deposits have been used as base as they are main business activity of bank. A declining trend is desirable. Comments: The above trend has shown increasing capacity to absorb administrative expenses. In 2010 bank is in most efficient position, but in 2007 it somehow in decreasing side again .However in 2006 they are on rising side.

5. Total Asset Turn Over Ratio:

Interest- markup- return earned Total Assets

55

2010 17854329 254353438 =9.2

2009 1989567 314780129 =8.9

2008 18865430 224356780 =8.40

2007 15143241 182171885 = 8.31

2006 12596921 166033588 = 7.58

Interpretation: This ratio indicates the efficiency with which total assets have been utilized to generate net interest income. If a bank has return on asset on a higher side but the relation of net interest income to total assets is not very significant, this may translate into the fact that bank is relying on sources of income other than interest income which is not a healthy sign. The mainstream activity of a bank is borrowing from and to general public and the mainstream income of the bank should be interest income. Comments: It is increasing which is favorable. It means bank is able to utilize its assets efficiently in generating its main stream income.

6. Return on Assets:
Net profit after tax x 100 Total assets

56

2010 224997 x 100 254353438 =1.77%

2009 445678 x 100 314780129 =1.72%

2008 3678740 x100 224356780 =1.63%

2007 2681012x 100 182171885 = 1.47%

2006 224997x 100 166033588 = 0.13%

Interpretation: ROA is the most comprehensive measure of banks earning capacity. Net profit margin ignores efficiency concept while total asset turn over ignores earning perspectives. ROA takes both perspectives into account. Thats why it is most widely used indicator for representing the earnings of bank over time period. Higher it is better it is. An increasing trend of this ratio signifies increased efficiency of management of a bank to improve upon its earnings capacity. Comments: It is showing a rising trend. In 2006 it was below internationally accepted bench mark (1.25% and above). In 2007 bank has improved it significantly. And then from year 2007 to year 2010 this is going to increase. This is showing banks efficiency to utilize assets.

7. Return on Equity:
Net profit after tax x 100 Capital fund Where capital fund = head office capital account+ unmerited profit + reserve

57

2010 943177x 100 18456770 =29%

2009 1097507 x 100 19989545 =27.65%

2008 3678234x100 14435680 =25.48%

2007 2681012x 100 12099645 = 24.15%

2006 224997x 100 9619066 = =23.39%

Interpretation: ROE is another measure of overall performance of bank. This ratio is of great importance to the present and prospective shareholders as well as the management of the company. As the ratio reveals how well the resources of a firm are being used, higher the ratio better it is. Comments: Bank is showing steady increase in ROE which is very healthy sign.

8. Non- Interest Income to Total Assets: Non- interest income x 100 Total asset 58

2010 2177043 x 100 254353438 =2.88%

2009 2625545 x 100 31478012 =2.67%

2008 2365478 x100 224356780 =2.59%

2007 4565496x 100 182171885 = 2.50%

2006 321758x 100 166033588 = 1.93%

Bench mark: The ratio of non- interest income to total asset must be 1 % to 2%. Interpretation: Non- interest income represents fees, commission, brokerage, and other income and extra ordinary or unusual items if they represent income. Non- interest income is also an important source of banks earnings. While analyzing this ratio the trend of non interest income to total assets should be considered. Whether the bank has maintained this ratio at a reasonable level or are there any significant changes over time? If this ratio increases significantly, then there is a problem with the bank in generating revenue from its mainstream activities. But on the other hand, high non- interest income can also represent a positive point for a bank. This income represents a diversification from earnings generated from the taking and placement of money, which is subject to interest rate and credit risk. An emphasis on fee income is another global trend along with the growth of capital and rising ROA's. Comments:

59

As for as trend is concerned it is showing steady growth which is healthy. The ratio is also according to bench mark standard. This increase actually justifies decrease in total asset turn over. It shows that bank has turned to non- interest income to sustain its earnings.

9. Non- Interest Expense to Total Assets:

Non -markup expense Total assets x 100

2010 7855071 x 100 254353438 =2.08%

2009 7030225x 100 31478012 =2.27%

2008 5678903 x100 224356780 =2.39%

2007 4801587x 100 182171885 = 2.63%

2006 3283494x 100 166033588 = 1.97%

Bench mark: Acceptable ratio is 1.5% to 4% analysis

Interpretation: Non- interest expenses represent operating expenses such as administrative expenses, staff salaries and other charges plus extra ordinary and unusual items if they represent expense. 60

Lower this ratio better it is for the bank. If the level of non interest expense to total assets is high this will also distort the ROA of the bank. Non -interest expense is a very critical number. If the number is high as compared to other banks, it should be ascertained if it is due to such factors as high salaries or high fixed asset costs or due to special onetime factor such as settlement of litigation. Comments: Non- interest expenses are low in 2006. But higher in 2007 that is showing inefficiency of bank. But from onward 2007 it is to going lower that is a healthy sign for the bank. In 2010 it is 2.08% and in 2009 it was 2.27% that is higher than 2010.

10. Risk Asset Turn over Ratio:

Net mark up after provision Risk assets

2010 6951164 99179372 =0.07

2009 6133127 100780164 =0.06

2008 3987654
112345670

2007 2535876 100780164 = 0.025

2006 4491095 99179372 = 0.045

=0.035

Interpretation: Advances are the main use of banks assets. So it is necessary that bank earns sufficient value of income on its investment of risk assets. So a steadily rising trend is desirable. 61

Comments: We observe a favorable trend in ratio which indicates bank is efficiently turning over its risk assets. So, earning prospects are bright. A major increase in 2010 has been caused by substantial decrease in mark up expenses on deposits. In 2006 it has increasing trend again. In 2007 it is going to decrease. But again in 2008 it is going to increase.

11. Advances to Total deposits:

Advances x 100 Deposits

2010 152784254 x100 255908149

2009 135039901x100 205912903

2008 112345670x100 169875437

2007 100780164x 100 143036707

2006 99179372x 100 131839283

= 59.70%

= 65.58%

= 66.13%

= 70.45%

= 75.22%

Interpretation: This is perhaps the most important ratio as far as financial analysis of a bank is concerned. Advances represents lending to general public and deposits represent amount borrowed from 62

general public. Both these items represent core activities of a bank. A bank is there to accept deposits and lend to general public. Deposits represent source of banks funds and advances are use of funds. This ratio compares the major source of a bank's funds with the major use of it. It signifies that how much deposits the bank has mobilized from general public and to what extent has made use of these deposits. Comments: We can analyze results from the two points of views; liquidity (risk) & return. Advances are risk assets of bank, decreasing trend shows over time bank is improving liquidity position however as there is trade-off between risk and return bank may be sacrificing return.

12. Demand deposits to total deposit ratio:

Demand deposit Total deposits 2010 87779080 x 100 166234567 = 52.88% 2009 66896543 x 100 119457865 = 56% 2008 57654998 x 100 88906234 = 64% 2007 15890 x 100 41216239 = 65% 2006 46123917 x 100 39747903 = 81.7%

Interpretation: Ratio shows proportion of the deposits that can be called at any time. Demand deposits include current account and saving accounts. They can be encased at any time with no prior 63

notice. No excuse is available for the bank to refuse payments. In order to maintain liquidity, decreasing trend is desirable. It is better that bank maintains higher amounts of deposits in fixed forms because it is not obligatory for bank to make payment before maturity. Comments: In 2006, ratio increased and in 2007, it decreases onwards 2010. It gives positive sign on bank to be more liquid.

13. Interest coverage ratio:

Earnings before interest and tax Financial charges

2010 Mark up interest return earned Non mark up income Total income Provisions reversal of provision Non mark up expenses Integration cost EBIT 7855071 _ 49431763 2177043 9128207 2319280 27952162

2009 22590230

2008 18143561

2007 15143241

2006 12596921

2625545 8758672 2324377

2365478 7689023 4367892

4565496 19708737 3920240

321758 2918679 1128137

7030225 _ 43329049

5678903 _ 38244857

4801587 _ 10986910

3283494 _ 1492952

2010 49431763 9147780

2009 43329049 10233562

2008 38244857 9765332

2007 10986910 8685624

2006 1492952 6977313

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= 4.88

= 4.23

= 3.91

= 1.26

= 0.21

Interpretation: This ratio measures banks ability to pay financial charges. Interest expense is main expense of bank just like cost of goods sold. So higher the ratio better is the ability of bank to pay this compulsory obligation and hence better is the liquidity potential of bank. Comments: We observe a rising trend which is favorable. In 2006 to pay Rs. 1 of interest bank has Rs. 0.21 of EBIT. Banks increasing potential to cover financial chargers is mainly due to decreasing trend of interest rate on deposits and borrowing. So we see actually EBIT has decreased in 2006 and ratio has increased only due to lower finical expenses. We see deposits have increased in 2007 to 2010 and interest expense on these deposits is higher by 0.21%.

14. Total financing funds to deposits and borrowed founds ratio: Lending to financial institutions + advances 65 x 100

Borrowing from financial intuitions + deposits

2010 161978440 x100 118146292 =137%

2009 139688960 x100 125213066 = 111%

2008 128282248 x100 116664402 = 109%

2007 115224307 x 100 122590232 = 93.99%

2006 107572322 x 100 146803370 = 73.27%

Interpretation: This ratio compares sources of funds with uses of funds. Bank finances advances and lending to financial intuitions through cash generated by deposits and borrowing from fanatical intuitions bank cant uses all its sources. It has to keep some cash to meet demands. Another important use of fund is investment. Comments: We observe a decrease in this ratio in 2006. This decrease has been mainly due to decreased lending. As we know from advances to deposit ratio, in 2010, more amount has been advanced.

15. Quick assets to deposits ratio: Quick assets x 100 66

Deposits Quick assets = current assets - short term advances

2010
44511640 99179372

2009
41933127 100780164

2008 39966754
112345670

2007 39097543 x 100 143036707 = 29.23%

2006 38917248 x 100 131839283 = 25.51%

= 44.87%

= 41.60%

= 35.55%

Interpretation: Where, this ratio shows how much of the deposits are secured by the quick assets of the bank. It is calculated for the purpose to find out that if all the customers cash out their deposits, how much the bank can pay to each of them through its quick assets. As it is measure of rare situation it is not very necessary to maintain quick asset equal to its deposits. Comments: This ratio has increased in 2007 from 25 to 29% .Apparently it is good from liquidity point of view.

16. Due from bank to due to bank:

67

Lending to financial Institutions x 100 Borrowing from financial Institutions

2010 9194186 x 100 25554777 = 35.47%

2009 4649059 x 100 19300163 = 24.08%

2008 15936578 x 100 16788965 = 94.92%

2007 14444143 x 100 17553525 = 42.28%

2006 8392950x 100 14964087 = 56.08%

Interpretation: It shows the relationship between what the bank owes from other banks and what is due to it. This ratio is important from two perspectives. a) It highlights banks liquidity position. If it is less than 1 (or 100%), it means bank is facing liquidity problem and it is borrowings more than it is lending to financial institutions. b) It highlights banks ability to use most secured and liquid form of uses of funds. If it is greater than 1, it shows banks liquidity position is strong and has enough funds to lend to others institutions so as to enjoy earning as well as liquidity.

Comments:

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Trend shows substantial downfall trend in 2007. In 2007, bank has not borrowed. But again 2008 bank facing liquidity problem and again borrowed. In 2009 and 2010 bank is again in lending position.

17. Earnings per Share:

Earnings available to common share holders Number of shares outstanding

2010 943177 107123990 = 1.48

2009 1097507 101469326 = 1.79

2008 3678234 100216620 = 0.95

2007 2681012 105227450 = 8.92

2006 224997 49731555 = 7.48

Interpretation: Share holder use earning per share ratio to compute return on shares held by them and compare with earnings per share of the same type of organization in market. High EPS leads to high market price and results to better capital gain. Comments: EPS decreased from Rs. 1.79 per share of last year to Rs. 1.48 per share for the year 2010. The decrease is mainly due to less than expected increase in net interest income, drop of 14% in non markup income and 12% increase in operating expenses.

4.1.2. Horizontal Analysis:

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4.1.2.1.1. Horizontal Analysis of Five Years Balance Sheet: ASSETS Cash and balances with treasury bank Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets Total Assets LIABILITIES Bills payable Borrowing from financial institution Deposits and other accounts Deferred tax Liabilities Subordinate loans Liabilities against assets subject to finance lease Other liabilities Total Liabilities Net assets Represented By : Share capital Reserves Unappropriate Profit Surplus on revaluation of assets-net of tax Total Liabilities and share capital 2010 51 -48 9 256 54 274 164 _ 89 68 70 94 -88 99.5 100 211 86 45 220 32 -62 54 -17 45 89 2009 2008 2007 Figures in Percentage % 30 13 -10 14 -46 -52 -44 -81 -82 133 98 37 36 13 1 180 69 34 144 142 45 _ _ _ 53 35 9 60 28 56 -54 99 100 86 54 35 153 25 -55 37 25 35 53 49 12 28 -45 29 _ 46 18 21 110 21 27 22 30 21 35 45 18 8 -35 1 _ 23 9 10 49 19 19 25 -88 10 9 2006 100 100 100 100 100 100 100 _ 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Comments on Horizontal Analysis of Five Years Balance Sheet:

70

Comments with Respect to Assets side of Balance Sheet: have increasing trend throughout the period from 2006 to 2010. The previous figures are obtained by considering the 2006 as base year and these were 20%, 30%, 49% and 66% in 2007, 2008, 2009 and 2010. Now we see that what assets items conclude these figures and on what basis in the following interpretation:

I. The horizontal analysis of the balance sheet shows that the total assets of the bank

II. Cash and bank balances with treasury banks decreased in 2007 by -10%, and in 2010 increased by 13%, but stable in 2008 with the figure of 30%. This head includes the cash and bank balances in hand in local and foreign currency, with State Bank of Pakistan, with National Bank and in shape of prize bonds. The movements in these accounts conclude changes in the net figures and net cash and bank balances increased 51% for the period. III. Lending to financial institutions calculations shows that they have the decreasing tendency in the period and were at (82%) in 2006, (81%) in 2007, (44%) in 2009 and increasing trend in 9 in 2010. In this period bank doesnt gains a big share of market so that the lending to financial intuitions head have the increasing trend. IV. Investment was at 37% in 2007 and in 2008 there was increasing trend in 2008 and till 2009-2010 there is huge margin in investment and bank make too much invest in different sectors. The major reasons for change are movements in investment in federal government securities, term finance certificates, debentures, bonds and participation term certificates and other investments. V. The change in advance showing increasing trend from 2007 to 2010. And according to horizontal analyses the figures were 1%, 13%, 36% and 54% from the 2007 to 2010 respectively. This change was due to change in loans, cash credits, running finance etc, in and outside Pakistan, net investment in finance lease and bills discounted and purchased payable in and outside Pakistan. VI. Operating fixed assets also have the increasing trend according to horizontal analyses and figure jumped to 274% in 2010 from 45% in 2007 due to increasing network of branches of the bank throughout the country with advanced technological equipments. VII. Other assets also increased and were at 274% in 2010 as compared to 2007 which was 34%. The great change occurred due to movements in income / mark-up accrued on

71

advances and investments, advances, deposits, advance rent and other prepayments, unrealized gain on derivative financial instruments and receivable from pension fund. VIII. The above observation by horizontal analyses concluded the final figures of the movements in the total assets of the organization for the period and they are in good and strong position. Comments with Respect to Liabilities side of the Balance Sheet: increasing tendency throughout the period. In 2007 total liabilities were 9% and jumped to 86% up to 2010 while the figure were at 18% in 2008 and 54% in 2009 during the period. The following discussion will help us to understand the reasons which conclude these figures. II. Bills payable increased in the period and have increasing trend and were at 45% in 2007, 49% in 2008, 60% in 2009, and 68% in 2010. These bills were payable in and outside Pakistan. III. Borrowings figure were at 12% % in 2008 as compared to 2007 which was 18% through horizontal analyses. It also have increasing trend in 2010 was at 70% as compared to 2009 which was at 28%. This is because of secured borrowings from the SBP under export refinance scheme and long term financing under export oriented projects have increased. IV. The deposit figure of the bank also have increasing trend according to the horizontal analysis was at 8%, 28%, 56%, 94%, in 2007, 2008, 2009, 2010. This increase was due to increase in fixed and saving deposits, current accounts and margin accounts. V. Other liabilities include markup / return / interest payable in local currency and foreign currency, accrued expenses and unrealized loss on derivative financial instruments etc. these have also increasing trend. These were the reasons which cause to conclude the final figure of total liabilities by making comparisons through the techniques of horizontal analyses. Comments with Respect to Total Share Capital: (Owners Equity): profit. Total figure of share capital was at 220% in 2010 as it was at 49% in 2007. The reasons for this gape for the period are change in share capital which was at 49% in 2007 and at 110% in 2008 and 153% in 2009. This increase occurred due to issuance of bonus shares and right shares to the shareholders of the bank. 72 I. Share capital or owners equity includes the share capital, reserves and unappropriated I. The horizontal analyses of liabilities side of the balance sheet shows that the

II. Reserves analyses show that there was increasing trend from 2007 to 2010. They were at 19%, 21%, 25% and 32 % in 2007, 2008, 2009 and 2010 respectively. These changes were occurred due to movement in share premium, exchange translation reserves, statutory reserves and general reserves. III. Unappropriated profit also increases during the period and were 19% in 2007, 27% in 2008 but there is decrease of (55) % in 2009 and (62) % in 2010. The reasons for this change non-interest income declines and administrative expenses also increased. These were reasons which observed through horizontal analyses of the balance sheet for the last five years. The detailed discussion helped to understand the financial position of the organization.

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4.1.2.1.2. Horizontal Analysis Of Five Years Profit & Loss Account:

2010 Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision for diminution in value of investments net Provision against loans and advances net Bad debts written off directly Net mark up / return / interest income after Provisions Non Mark up / Interest Income Fee, Commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities net Unrealized gain/(loss) on revaluation of investments Other income net Total non mark-up / return / interest income Total Income Non Mark-up / Interest Expenses Administrative expenses Other provisions / (reversal) net Other charges Total nom mark-up / interest expenses Extra ordinary / unusual items Profit Before Taxation Taxation Profit After Taxation Inappropriate profit brought forward Profit available for appropriation Basic and diluted earnings per share (Rupees) 121 157 78 78864 105 _ 171 54 25 192 -88 94 -100 104 -32 326 138 _ 591 139 -61 _ -61 -70 319 -48 -54 -80 2009 2008 Figures in Percentage % 79 44 94 41 61 39 20421 106 _ 158 36 36 126 369 31 -100 177 -18 309 113 _ 459 114 -51 _ -51 -51 387 -80 -63 -76 11851 287 _ 154 -12 12 102 -80 7 -100 49 -26 259 73 _ 281 72 -67 _ -67 -59 1634 -58 -68 -87 2007 20 24 14 299 247 _ 247 -44 6 90 -98 499 -100 45 41 231 46 _ 96 46 -31 _ -31 -134 1191 -88 15 14 2006 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

74

Comments on Horizontal Analysis of Five Years Profit & Loss Account:

Horizontal analysis of last five year profit and loss account shows that there are major changes in the all the sectors of the statement of income. The overview shows that mark-up / return / interest earned reached at 121% after changes as compared to base year 2006. 1. In 2007 the mark-up / return / interest earned at 20% and with the positive change comes to at 44% in 2008. 35% increase as compare to previous year lead the figure to 79% in 2009 and further increase of 42% in 2010 show the figure of 121% as compare to 2006. All changes represent the high fluctuations in the interest rates of the industry which affect the profits of the bank. These changes were due to mark-up / interest earned on loans and advance to customers and financial institutions, on investments for sale securities. 2. Mark-up / return / interest expenses shows that they were at 24% in 2007, 41% in 2008, 94% in 2009 and 157% in 2010. There are gradual changes in the last five years period but abnormal movements in 2009 and 2010 which shows the high interest rates in the market which bank paid on its borrowing from financial institutions and on the deposits from customers in different ways. On the other hand to meet the liquidity shortage the banks increase their debts and paid high mark-up rates. 3. Net mark-up / interest income obtained by subtracting mark-up / return / interest expenses from mark-up / return / interest earned for the periods so the movements are the same as in the mark-up incomes and mark-up expenses. There is an increasing trend seen in the figure for the five years and figures were 14%, 39%, 61% and 78% in 2007, 2008, 2009 and 2010 respectively. 4. Non mark-up / interest income is at 41% in 2007 and decrease by -26% in 2008. A decrease of 14% is seen in 2010 as compared to previous year. These movements were due to decrease in fee, commission and brokerage income which was at 36% in 2009 and comes to 25% in 2010 as compared to previous year. 5. Although dividend income have increasing trend throughout the period and have following figures at different period at 90%, 102%, 126%, 192% in 2007, 2008, 2009, 2010 respectively. 6. Income from dealing in foreign currencies which negative in 2007 and 2008. But in 2009 income from foreign currency is quite positively.

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7. Other income is the combination of rent of lockers, net profit on sale of property, import income on sales purchase of bills and recovery of bad debts. It was at 45% in 2007 and increase year to year till 2010. 8. Non mark-up / interest expenses were in minus at 46 % in 2007 and there is increase come of 26% in 2008 were at 72%. After that there is also increase of 114% in 2009 and in 2010 the non markup expenses also increase at 139% due to appointment of new employees. 9. Other charges include the penalties of SBP, VAT and others. They also increased from the period to period. 10. Profit before taxation is showing a negative trend. Because of high administrative cost. 11. Taxes decreased throughout the period from 2007 to 2010. The figures were -31 %, -61%, -51% and -70% in 2007, 2008, 2009 and 2010 respectively. 12. The bank has the healthy figures in respect of profit after taxation. In the financial year of 2010 as compared to 2009 the figure was 4191%. The figure was at 387% in 2009 that was a decrease in profit after taxation as compared to 2010 and 2008. The net change for the period is seen that was the reason market price of the share of the AKBL jumped at very high level in the last five years. This position is very attractive for the investors. 13. Earnings per share increases in 2007 by 14% but decreases throughout the period till 2010. This is because of decrease in non markup income and increase in non-markup expenses. The above all discussion on the figures obtained through horizontal analyses of the profit and loss account of the Askari bank for the last five years in which we analyze the source of earnings and ways of expenses of the bank in the different periods. Although these analyses are not final criteria to examine the financial statements but a way to understand the different movements and changes in the different periods. So, most of the investor invests their money after analysis of profit & loss accounts statement.

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4.1.3. Vertical Analysis:

4.1.3.1.1. Vertical Analysis Of Five Years Balance Sheet:

ASSETS Cash and balances with treasury bank Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets Total Assets LIABILITIES Bills payable Borrowing from financial institution Deposits and other accounts Deferred tax Liabilities Subordinate loans Liabilities against assets subject to finance lease Other liabilities Total Liabilities Net assets Represented By : Share capital Reserves Unappropriate Profit Surplus on revaluation of assets-net of tax Total Liabilities and Share capital

2010 7.1 1.2 2.9 32.43 48.53 4.53 3.2 _ 100 0.98 8.11 81.29 0.02 1.9 1.76 2.57 94.9 5.09 2.04 2.45 0.21 4.71 0.38 5.09 100

2009 2008 2007 Figures in Percentage % 7.6 7.5 7.33 3.29 1.75 1.91 1.82 0.71 0.79 26.28 25.28 21.64 53.09 50.07 55.32 4.2 2.87 2.81 3.66 4.1 3.03 _ _ _ 100 100 100 1.15 7.58 80.95 0.13 2.35 4.53 1.91 94.11 5.89 1.99 2.86 0.31 5.18 0.71 5.89 100 1.22 7.48 75.71 0.17 1.7 _ 1.7 81.77 5.99 1.88 3.14 1.02 5.25 0.83 5.99 100 1.4 9.63 78.51 0.25 1.64 _ 1.76 93.26 6.73 1.65 3.81 1.17 6.64 0.09 6.73 100

2006 8.9 4.41 5.05 17.24 59.73 2.29 2.29 _ 100 1.1 9.01 79.41 0.44 1.8 _ 1.56 93.34 6.65 1.21 3.5 1.08 5.79 0.86 6.65 100

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Comments on Vertical Analysis of Five Years Balance Sheet:

The vertical analyses of last five years balance sheet from 2006 to 2010 shows that total assets come to at Rs.314.78 million in 2010 from Rs.166.033 million in 2006. Total liabilities were Rs.298.74 million in 2010 as compared to 2006 that was at Rs. 154.98 million. The share capital, reserves and unappropriated profit also have increasing trend and total equity was Rs. 148 million in 2010 while it was Rs. 96 million in 2006. An increasing tendency is seen in the whole period of five years analyses. Now we will discuss the changes of this increase in details: Comments with Respect to Total Assets: with other banks, lending to financial institutions, investments, advances, fixed asset and other assets. The major change is seen in investments which were at 17.24% in 2006 and comes to 32.43% in the year of 2010 with the increasing change of (15.19%). The reason for increase is the good capital market conditions so, the values of investments (securities, bonds etc.) increased. II. Advances were at 48.53% in 2010 as compared to 2006 which was at Rs. 59.73%. So there is huge fluctuation in advances. So, after 2006 advances of the bank come to reduce and it was 55.32%, 50.07%, 53.09%, 48.53% in 2007, 2008, 2009 and 2010 respectively. This decrease is due to decrease in loans, cash credits, running finance in and outside Pakistan and net investment in finance lease. III. The operating fixed assets also increased as the new branches opened throughout the country and figure comes to at 3.2% in 2010 from 2.29% in 2006. Other assets also show the increasing movements for the period of five years and figure comes to at 4.53% in 2010 from 2.29% of 2006 with the change of 2.24%. Increase in mark-up accrued in local and foreign currencies is the reason of this change. Comments with Respect to Total Liabilities: liabilities has the increasing trend from 2006 to 2007 and but decrease in 2008 was at 81.77%. The figures were 93.34%, 93.26%, 81.77%, 94.11%, and 94.9% from 2006 to 2010 respectively. II. The reason for this change is decrease in bill payables, deposits and subordinate loans. III. The figure of borrowings shows that this was increased in 2007. But decreased in 2008 and 2009. But again increase in 2010. 78 I. The vertical analyses of the five years balance sheets shows that the portion of I. The bank total assets includes cash and bank balances with treasury banks, balance

IV. Deposits and other accounts also increased in the period 2006 but decrease in 2007and 2008 and come to 75.71 from 78.51%. But an increase of (5.24%) is seen in 2009 as compared to previous years. In 2010 it is 81.29. The reason of this increase is due to increase in fixed deposits and amalgamation of Askari Leasing Limited. V. The other liabilities are increased from period to period. Increase in markup / interest payable in local currencies, accrued expenses, unclaimed dividend, and security deposit received in respect of finance lease are the reasons for change in this portion of the balance sheet. Comments with Respect to Owners Equity or Share Capital: Owners equity or share capital consists of share capital, reserves and unappropriated profit. In the vertical analyses of this portion an increasing trend is seen in share capital but decreasing trend in reserves and unappropriate profit. I. The unappropriated profit of the bank have decreasing trend from 2006 to 2010 and figures was 1.08%, %, 1.17%, 1.02%, 0.31%, 0.21% in 2006, 2007, 2008, 2009 and 2010. II. The reserves were at 3.5% in 2006 and come to 2.45% in the year 2010 with the decrease of (1.05) % in this period.

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4.1.3.1.2. Vertical Analysis Of Five Years Profit & Loss Accounts: 2010
Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision for diminution in value of investments net Provision against loans and advances net Bad debts written off directly Net mark up / return / interest income after Provisions Non Mark up / Interest Income Fee, Commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities - net Unrealized gain/(loss) on revaluation of investments Other income net Total non mark-up / return / interest income Total Income Non Mark-up / Interest Expenses Administrative expenses Other provisions / (reversal) net Other charges Total nom mark-up / interest expenses

100 64.16 35.83 1.06 8.29

_

2009 Figures in Percentage % 100 59.94 40.05 0.33 10.28

_

2008 100 54.48 45.49 0.24 24.07

_

2007 100 57.35 42.64 9.91 25.88

_

2006 100
55.38 44.61

2.98
89.75 _ 8.95 8.95

10.96 24.86 4.5 0.75 0.04 0.76 -1.26 1.68 7.78 32.65 27.94
_

12.9 27.14 6.11 0.71 2.33 0.63 -1.56 1.81 11.62 38.77 30.96
_

15.85 21.97 6.31 0.8 0.12 0.64 -2.23 1.9 13.03 42.37 31.29
_

25.88 25.89 7.08 0.9 0.01 0.88 -0.01 2.22 30.14 46.89 31.62
_

8.04 0.05 0.89 0.86 -4.63 1.83 25.54 16.98 26.01 _ 0.048 26.06 26.56

0.15 28.11 4.55 _ 4.55 1.18 3.37 2.98 0.63

0.15 31.12 7.22 _ 7.22 2.36 4.85 1.37 6.22

0.129 31.29 6.05 _ 6.05 2.4 20.27 3.7 11.2

0.079 31.7 15.18 _ 15.18 2.51

17.7

Extra ordinary / unusual items

Profit Before Taxation

_
26.56 8.7 17.86 12.84 30.7

Taxation
Profit After Taxation Unappropriated profit brought forward Profit available for appropriation

1.1 29.59

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Comments on Vertical Analysis of Five Years Profit & Loss Accounts:

The comparison of vertical analyses of the last five years profit and loss account shows that the following changes occurred during the period. 1. Markup / return / interest expensed have increased from 2006 to 2010. Net markup / interest income have increased but this increase is less than that is in 2009 and 2010. In 2009 interest income is 40.05% while this percentage is 35.83% in 2010. Although in 2009 interest income is increased as compared to 2010 but decreased as compared to 2006, 2007 and 2008 i.e. 44.61% , 42.64% and 45.49%. This decrease is due to banking crises in Pakistan. 2. Net markup / return / interest income after provisions have also increased but this increased is slow as compare to 2007 and 2009. Because in 2010 it have declining trend. This increase was due to decrease in provision for diminution in value of investments and provision against loans and advances. The values of investments decreased due to bad condition of capital markets. 3. Total income has also increased from 2006 to 2007 but this ratio of increasing trend is slow in 2010, 2009 and 2008. This decrease is due to major decrease in fee, commission and brokerage income, dividend income and other income. Administrative expenses have increased from 2006 to 2010. This increase in administrative expenses due to increase in personnel cost, premises cost and other operating cost. 4. Profit before taxation is 4.55% in 2010, while this percentage is 26.56% in 2006. While profit after tax has a mix up trend of increase and decrease. 5. In 2007 profit after tax has decreasing trend. But in 2008 is increased as compared to 2006 and 2007, even 2009 and 2010 too. This percentage is 20.27% in 2008 but 4.85% and 3.37% in 20009 and 2010. 6. As the world financial crises hit all over the world and also due to bad circumstances in Pakistan economy is in crises, the AKBL bank also effected and its net profit after taxation also affected. All the sources of income effected due to these crises which cause to decrease in the figure of profit after taxation. The above observations and results shows that bank has the sound position in the market although the financial crises effected its performance but the internal and external controls through good decision making of management can stable the growth even in this bad situation. 81

4.2. Organizational Analysis: (Comparison with Other Banks)

Askari bank Comparison with Bank Alfalah and Faysal bank: Particulars Sr. # 1 2 3 4 5 6 Deposits Advances Net Profit After Tax Earnings Per Share Branches* Employees* Askari bank AKBL
255,908,149 152,784,254 943,177 1.48 235 4,473

Bank Alfalah BAL

(Rupees in 000) 354,015,311 207,152,546 968,452 1.63 380 7,571

Faysal Bank FBL

195,315,204 133,706,769 1,190,329 0.72 226 3,582

*Figures in Numbers. All Banks are facing immense competition as well as challenges to provide better customer services and to serve their customers for derivative Banking products and services. Askari Bank is facing a strong competition by its major competitors; Faysal Bank and Bank AL-Falah. Business of these Banks is also growing with very high pace. So Askari Bank has been performing very well in the presence of unstable political and economic situation but this uncertainty is a continuous threat for the bank. Bank is facing intense competition from other private commercial and foreign Banks. Although it is ahead of many Banks but Banks like Alfalah are a constant threat to Askari Bank. The above figure shows the comparison of Askari bank, Bank Alfalah and Faysal bank. We observe that BAL is a big banking group as compare to both AKBL and FBL. Deposit wise BAL is in front of AKBL and FBL. Although deposits of AKBL are less as compare to BAL but more than as compared to FBL. The advances figure also greater in the column of AKBL As compared to FBL but less than BAL. In next level of comparison net profit after tax provide the lead to FBL on AKBL and BAL. The Earning per Share (EPS) of AKBL greater than as compared to FBL but less than BAL.. Branches of AKBL are greater than FBL but less than BAL.AKBL has greater number of employees as compared FBL but less than BAL. These figures show that AKBL and BAL are in much better position than FBL. The Bank's long term and short term ratings are AA + and A1+ as assigned by the PACRA which support its stable outlook and denotes good credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The shortterm rating is A1+, which denotes the highest certainty of timely payment. Short-term liquidity, including internal operating factors and / or access to alternative sources of funds, is 82

outstanding and safety is just below risk free Government of Pakistan's short-term obligations. The risk management within Askari bank collectively ensures that the banks risk profile is actively monitored and adjusted according to the banks strategy and the operating environment in a manner which ensures protection to the depositor and value to the share holder. The bank is increasing resource mobilization through regular deposit campaigns and accelerating the process of recovery of outstanding advances and non-performing assets. The Bank is making every effort to meet the up-coming challenges through strategic planning and making the best use of the resources at its command. These financial figures and improving condition of the bank shows that AKBL is among the leading commercial banks of Pakistan.

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4.3. Future Prospects of the Organization:

With disciplined technological advancement, Askari bank is aiming to unlock the value of time, unlock the value of systems, allowing and enabling multi opportunities, multi-tasking, multi-benefits and multi-success. The bank is continuing to invest further in banking innovations which include Islamic banking, leasing, SME, home loans and other areas of product development to provide higher levels of services and value to its corporate and consumer clients. Management believes that their business process reengineering initiative supported by their customized core banking technology platform will also help them to compete more effectively in the changing landscape of the Pakistani banking sector. Banks Credit Risk Environmental and Monitoring system which is in its final stages of implementation is expected to assist them in more effective post disbursement monitoring. They expect their efforts in this area to show positive results in the coming months. Macro economic and political instability, going forward, will continue to impact growth and profitability of the banking sector. Management believes that political reconciliation will result in renewed attention to economic management and hence improvement in the operating environment.

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5. Short Falls / Weaknesses Of The Organization:

Following are the weaknesses of the Askari bank Limited; Profit after taxation decreased in 2010. Due to economic crises in Pakistan. Earnings per share also decreased in 2010 as compared to previous years i.e. Rs.1.48/ per share in 2010 and Rs. 1.79/ per share in 2009. This is due to increase in operating expenses. Advances managements have been distorted by providing non performing loans to consumer and commercial customers and the amount of non-performing loan increasing. Operating expense ratio is increased from 73% to 78% in 2010. The inventory management is not up to the mark. During the Year 2010 weaknesses identified in the Internal Control System by the auditors. Gross spread ratio also decreased from 39.99% in 2009 to 35.83% in 2010. Rate of bonus issue also decreased in 2010. High administrative cost is affecting the performance of bank. Promotions and transfer from departments is a political issue.

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6. Conclusion:
Askari Commercial Bank is a class of its own. Askari Bank has been one of the leading banks in the country for over a number of years now and has constantly come up with new services for its valued customers; its vision is to be the bank of first choice in the region. To be the leading private sector bank in Pakistan with an international presence, delivering quality service through innovative technology and effective human resource management. The bank believes the way it manage its people set them apart. They identify individual's talents and then give them plenty of room to grow. This approach makes good business sense. It also makes Askari Bank 'Great Place to Work'. Askari bank is the diverse, challenging and fast moving, yet also personal and friendly. This diversity means they can offer you a wide variety of ways to fulfill your potential. Unlike many of their competitors, its a bank where you can have a personal impact and really make a difference. Its the future that really excites them, as they continue to grow their business by making acquisitions and launching new products. Its objectives are to develop a customer-service oriented culture with special emphasis on customer care and convenience. To maximize use of technology to ensure cost-effective operations, efficient management information system, enhanced delivery capability and high service standards. The bank encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. All powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the Chief Executive Officers, have been taken by the Board. Its comprehensively plan for the future to ensure sustained growth and profitability. To create and leverage strategic assets and capabilities for competitive advantage. Askari Bank seeks to maintain high standards of service and ethics enabling it to be perceived as impartial, ethical and independent Presence of a corporate culture that seeks to create an environment where all persons are treated equitably and with respect. Askari Bank is committed to provide innovative and competitive solutions to your banking needs in a more efficient and personalized manner. The members participated in orientation courses to apprise them of their duties and responsibilities. Employees are the most important assets for any organization as the success of any organization lye in their hands, therefore there is a need the group to focus on the needs of their employees. The bank has to overcome its weaknesses and should avail the opportunities available in the industry, because 86

competition is very intense particularly in the banking sector these days the organization which offers far better services to its customers than its rivals will succeed ultimately. Askari bank can be compared to other leading banks. Because of its long-standing presence in many markets around the globe, it has strong relationships with the local financial and corporate communities. So far Askari bank has successfully managed to keep pace with the latest operations and developments that have taken place globally. I conclude this with these words Askari Bank is doing banking in its different way to excel. I wish Askari Bank to prosper and lead the banking sector. I have made an honest attempt to generate an original piece of writing that could serve as a vivid proof. I truly hope that this report also certifies the fact that all of my worthy teachers performed their duties of academic guidance and moral mentoring with utmost efficiency and effectiveness.

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7. Recommendations:
So far Askari bank has successfully managed to keep pace with the latest operations and developments that have taken place globally. But at the same time the bank must adopt certain measures for its improvement. Operating expenses should be controlled, so, that earning per share could be increase. Markup/interest income should be increase, so, it may cause to increase profit. Management ensures the efficient and effective Internal Control System by risk assessment, identifying control objectives, reviewing pertinent policies / procedures, establishing relevant control procedures and monitoring. All policies and procedures are monitored, reviewed and compared with existing requirements and necessary amendments are made accordingly. Management took steps to effectively monitor control environment of the bank, resulted in improvement in the overall working of the branches and departments. Administrative cost should be controlled for better performance of bank. Askari bank does not provide job security to the employees. Mostly people are hired on Contractual basis. More people must be employed on permanent basis, providing job Security and satisfaction. New advertising campaigns should be launched especially in the electronic advertisement areas. Politics should be discouraged in such an environment. Internship should be paid, because the bank staff take lot of work from interns and they work there as staff and work with honesty and hardworking.

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8. References:
All of the references and sources from where the data gathered for this report are mentioned herewith for your kind concern.

Reports:
Annual Reports, (2006-2010). Askari bank limited.

Web Portals:
State bank of Pakistan, official website, http://www.sbp.com.pk. http://www.ehow.com/list_6536020_bank-branch-managerresponsibilities.html#ixzz1yRjUEzSa Global finance and banking, http://www.thebankers.co Ministry of finance, http://www.finance.gov.pk. www.managementstudyguide.com/role-of-financial-manager.htm
www.masscta.com/TreasurersManual/chapter11.php

Books:
Practice and Law of Banking in Pakistan by Dr. Asrar H. Siddiqui. Fundamentals of Financial Management by James C. Van Horne & John M. Wachowicz, JR. Investment and Securities Management by Charles P. Jones. Bank Management and Financial Services by Rose Hudgins. Principles of Managerial Finance by Lawrence J. Gitman.

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9. Annexes:

Management Hierarchy

90

Branch Hierarchy

91

ORGANOGRAM of
Askari Bank Baghban pura Branch Lahore As On 31.12.2011

Branch Manager M. Aslam Bhatti VP

Receptionist/Greeter

PABX/Admin/HR Imran Siddique SG-II

Peon Muhammad Rasheed Peon Sheeraz

ACO Rana Zaheer Contractual ACO Atif Bhatti Contractual

BDO Khalid Javed Mughal Contractual

In charge Credit Amjad Iqbal Asst Manager Officer Import/Export Ahmad Jamal OG-I

Manager Operations Syed Zulfiqar Haider

Driver Nadeem Iqbal

In charge General Banking Ajmal Hussain Asst Manager

Chief Cashier Shafiq Amir Chishti Asst Chief Cashier Cash Officer Amil Nazir Chohan COG-I Cash Officer Mussarat Muhammad Ali COG_II

In charge Accounts Salman Murtaza OG II Officer Account opening Yasmin Tahira OG-II Remittance Officer Nimra Munawar OG-IIi

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Structure and Functions Of The ACCOUNTS / FINANCE DEPARTMENT Organizational Chart: (Finance Department)

CFO

Regional Heads

Managers Officers Officers

Unit Head Financial Reporting

Unit Head Taxation

Managers Officers Officers

Managers Officers Officers

Unit Head Budgeting

Unit Head SBP Reporting

Managers Officers Officers

93

List of Illustrations
Words Askari Bank Limited Army Welfare Trust Annual Program Budget Auto Teller Machines Abbreviation

AKBL AWT
APB ATM

Information Technology Steering Committee

Branch Manager Credit Administration Department Earnings Before Interest And Taxes Certificate of Deposit Chief Executive Officer Chief Financial Officer Commercial Banking Continuous Funding System Corporate Banking Group Credit Administration Department Credit Analyst Reporting System Asset Liability Management Committee Credit Information Bureau Credit Risk Environments Administration & Management System Customer Relationship Manager Development Financial Institution Disbursement Authorization Certificate End Service Benefits Financial Institution Financial Manager Global Address List Inter Bank Credit Advice Head Office

ITSC
BM CAD EBIT COD CEO CFO CB CFS CBG CAD CARS

ALCO
CIB CREAMS CRM DFI DAC ESB FI FM GAL

IBCA
HO

94

Words

Abbreviation

Cash Reserve Requirement

Investment Banking Group Islamic Banking Karachi Interbank Offered Rate Management Information System Market Treasury Bills Muslim Commercial Bank Business Development Officer Risk Management Committee Audit Committee Relationship Manager Board Of Directors Rupee Travelers Cheque Pakistan Credit Rating Agency Security And Exchange Commission Of Pakistan State Bank of Pakistan Term Deposit Receipt Term Finance Receipt Gross Domestic Produce Officer Grade

CRR
IBG IB KIBOR MIS MTB MCB

BDO RMC AC
RM BOD RTC

PACRA
SECP SBP TDR TFCs

GDP OG I-NET VP

Internet Banking Vice President

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