Internship Report on

Askari Bank Limited

 DECLARATION
This internship report submitted to the department of Management Sciences,
Lahore College for Women University, Lahore in partial fulfillment of the
requirement of the degree of BBA.

1
 DEDICATION
I dedicate my report to my beloved parents and sisters for their endless love,
support and encouragements who supported me and always believed in me.

1
 ACKNOWLEDGEMENT

Countless thanks to Almighty Allah (The most merciful the mos t beneficial) the
onl y creator of universe, who enabled me to complete this report in spite of
various difficulties. All respects to the Holy Prophet (P.B.U.H) who enable us
to recognize our greater and whose spiritual teaching guides us in every matter of
the life. I would like to express m y gratitude to the Department of Business
Administration for giving me the opportunit y and arranging such an extensive
internship program. I would like to thanks my teachers for the knowledge they gave me and
their guidance. I would also like to thank my parents who provided me love, support, and good
knowledge.

1
 Preface
The main purpose of the internship is to fulfill the academic requirements of my study. It
encourages learning with emphasis on assigned projects. Besides this, the other purpose is to give
a comprehensive review of AKBL. The most important point in an Internship after the
completion of internship program, internship report has been prepared just in
accordance with the practical exposure. This report is about my internship that I have
undergone at Askari Bank. During my internship I am able to learn practical aspect of business,
and get good working experience.

1
.

1
Chapter No.1

1
Introduction:

1.1 History and Background

1.2 Business Philosophy

1.3 Vision and Mission goals

1.4 Market Standing

1
 Chapter no. 1

Introduction

A bank is a financial institution licensed to receive deposits and make loans. Banks may also
provide financial services, such as wealth management, currency exchange, and safe deposit
boxes.Banking in Pakistan first formally started in Pakistan during the period of British
colonialism in the South Asia. After independence from British in 1947, Muhammad Ali Jinnah
took actions to establish a central bank in Pakistan which resulted in the new founding of the State
Bank of Pakistan, with its headquarters to be based in Karachi.As per State Bank of Pakistan data,
there are 50.565 million bank accounts in Pakistan, giving a penetration rate of 24.34%. In
addition, there are 15,053 bank branches, 14,148 ATMs, and 53,269 POS machines active in the
country.

1.1 History of Askari Bank Limited:

Askari Bank was founded in 1991, as a public limited company. The bank acquired its license
under s.27 of Banking Companies Ordinance, 1962 from State Bank of Pakistan on 13 February
1992. Since inception, the bank has concentrated on growth through improving service quality,
investment in technology and people, utilizing its extensive branch networks which include Islamic
and Agricultural banking. Creating the new identity on 11th June, 2007, the management and board
of directors of the bank decided to change the name of the bank from Askarl Commercial Bank
Limited to simply Askari Bank Limited.

Under the aegis of the Fauji Group since June 2013, the Bank has almost doubled the number of
branches across Pakistan. Askari Bank commenced its operations in April 1992, and has expanded
into a nationwide presence of 150 branches, including 14 dedicated Islamic Banking branches
connected online and supported by a shared network of over 2,670 online ATMs covering all major
cities in Pakistan supports the delivery channels for customer service. Askari Bank also has an
Offshore Banking Unit in Bahrain.

1
It is the leading private sector bank in Pakistan, delivering quality service through innovative
technology. In the success story of ASKARI BANK, one of the most important factors, apart from
its dynamic management and prudent approach, is the QUALITY of its SERVICES, which gives
it a great edge over its competitors. ASKARI BANK has always strived to facilitate its customers
by introducing various high quality hi-tech services for the first time in Pakistan.Their products
and services are as diverse as their market segments. Technology has played a pivotal role in
meeting customer expectations, particularly with respect to the speed and quality of services.

The bank has been the first bank to introduce PTCL and WAPDA utility bills payment
electronically through ATM and Internet on an Online-Real-Time Basis. For the first time in
Pakistan, they have introduced Mobile ATMs to provide banking facilities at the doorsteps of their
customers. Askari bank's mobile ATMs first in the banking history of Pakistan, now four in
number, continue to serve customer needs. The bank remains focused on using technology for
improving customer service standards and expanding the range of products being offered and other
technology based solutions.

1.2 Business Philosophy:

The philosophy of any business serves as its blueprint for operation. This statement outlines the
overall purpose of the business, along with its goals. A business philosophy might also list the
company values that are important to the founders, executives, and employees. Askari code of
business principle is:

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

 To build and sustain a high performance culture, with a continuous improvement focus.
 To develop a customer–service oriented culture with special emphasis on customer care
and convenience.
 To build an enabling environment, where employees are motivated to contribute to their
full potential.
 To effectively manage and mitigate all kinds of risks inherent in the banking business.

1
  To optimize use of technology to ensure cost–effective operations strengthened controls,
efficient management information system, enhanced delivery capability, and high service
standards.
 To manage the Bank’s portfolio of businesses to achieve strong and sustainable shareholder
returns and to continuously build shareholder value.
 To deliver timely solutions that best meets the customer’s financial needs.
 To explore new avenues for growth and profitability.
 To provide strategic initiatives and solutions for projects, products, policies and
procedures.
 To provide strategic solutions to strengthen weak areas and to counter threats to profits.
 To identify strategic initiatives and opportunities for profit.
 To create and leverage strategic assets and capabilities for competitive advantage.

1.3 Vision / Mission Statement:

The vision and mission statements play an important role in the organization as these
statements define the purpose of the organization and instill a sense of belonging and identity to
the employees. Vision and Mission Statement of Askari Bank is stated below:

Vision:

To be the bank of first choice

Mission:

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

1.4 Market Standing:

1
Market standing is the term used in relation to business; it refers to the ranking of a company in an
industry in comparison to its competitors. Market standing also includes awards and achievements
of an organization.
Askari Bank continues its success in competition. Recently they have been given the "Best Retail
Bank in Pakistan" by The Asian Banker for the 2nd consecutive year. Askari Bank has been given
the 1st Consumer Choice Award 2004 for the Commercial Banking Category by the Consumer
Association of Pakistan. They have also received the Corporate Excellence Award for the financial
sector from the management Association of Pakistan (MAP) for the years 2002 and 2003. They
have been given "The Best Bank in Pakistan" award by Global Finance magazine twice for the
years 2001 and 2002. They have been given the "Best Consumer Internet Bank" award by Global
Finance magazine for the years 2002 and 2003. They won the Euromoney and Asiamoney awards
as early as 1994, 1996 and 1997.
They won the prestigious "Best Presented Annual Accounts" award from the Institute of Chartered
Accountants in Pakistan (ICAP), and The Institute of Cost and Management Accountants in
Pakistan (ICAMP), for the Services Sector, for the year 2000.
They have also received ranking prizes during the last six years from the South Asian Federation
of Accountants (SAFA) for "The Best Presented Annual Accounts" for the financial sector, in the
SAARC region. In 2007 Askari bank won "The Best Consumer Banking Award 2006" for the third
consecutive year from the consumer Association of Pakistan. In 2008, Askari Bank has been given
"The Best Retail Banking Award 2008" by Pakistan Guarantee Export Corporation Ltd.

The bank recorded growth in its interest and non-interest incomes alike which surged to Rs. 5.7
billion and Rs. 1.3 billion respectively. Earnings per share for the current year went up and were
reported at Rs. 1.45 as against Rs. 1.10 last year. In 2018, profit after taxation declined by 15.9
percent to Rs. 4.4 billion primarily due to a net aggregate provision charge amounting to Rs. 1.5
billion on the bank’s portfolio of equity investments and certain non-performing loans and
advances.

Chapter No.2

1
2.1 Organizational Chart
2.2 Corporate Profile
2.3 Management Hierarchy
2.4 Policy Formation Process
2.5 Managerial Policies
2.6 Credit Rating

1
 Chapter no. 2

2.1 Organizational Chart

An organizational chart is a graphic representation of the structure of an organization showing the

relationships of the positions or jobs within it. In Askari bank the head is called
“Chairman” and after Chairman there are six boards of directors. Askari bank has eleven
groups which control the working of the divisions, wings, department section and regional of the
Askari bank.

1
2.2 Corporate Profile:

A company profile is part of a company's business plan that provides an overview of the company
to potential customers and investors. It generally includes the name of the founder(s) and the names
and titles of the key members of the company. Askari Bank’s corporate profile is following:

Board of Directors:

Lt Gen Syed Tariq Nadeem Gilani, HI (M) (Retd) Chairman / Non-Executive Director

1
Lt Gen Javed Iqbal, HI (M) (Retd) Non-Executive Director

Lt Gen Tariq Khan, HI (M) (Retd) Non-Executive Director

Dr. Nadeem Inayat Non-Executive Director

Mr. Rehan Laiq Non-Executive Director

Mr. Manzoor Ahmed Non-Executive Director / NIT Nominee

Mr. Kamal A. Chinoy Independent Director

Syed Ahmed Iqbal Ashraf Independent Director

Mr. Mushtaq Malik Independent Director

Mr. Abid Sattar President and Chief Executive

Audit Committees:

Syed Ahmed Iqbal Ashraf – Chairman

Dr. Nadeem Inayat

Mr. Rehan Laiq

Mr. Manzoor Ahmed

Human Resource and Remuneration:

Lt Gen Javed Iqbal, HI (M) (Retd) - Chairman

Dr. Nadeem Inayat

Syed Ahmed Iqbal Ashraf

Mr. Mushtaq Malik

Risk Management:

1
Mr. Manzoor Ahmed – Chairman

Dr. Nadeem Inayat

Mr. Rehan Laiq

Brig. Saleem Ahmed Moeen, SI (Retd)

Mr. Abid Sattar

Information Technology:

Brig. Saleem Ahmed Moeen, SI (Retd) – Chairman

Dr. Nadeem Inayat

Mr. Abid Sattar

Auditors:

M/s A. F. Ferguson & Co. Chartered Accountants

Legal Advisors:

M/s RIAA, Barker Gillette Advocates & Corporate Counsellors

Shariah Board:

Mufti Muhammad Zahid - Chairman Mufti Ismatullah – Member

Dr. Muhammad Tahir Mansoori - Resident Shariah Board Member

Company Secretary:

Mr. Shahid Abbasi, FCA

1
2.3 Management hierarchy

Management hierarchy is a workplace leadership structure in which authority is assigned in

ranks and employees take directions from their superiors. Following is the management
hierarichy of AKBL:

1
2.4 Policy Formation Process

The policy formation process refers to the actions taken by the leaders, its decisions that are
intended to solve problems and improve the quality of life for its citizens. A policy established and
carried out by the government goes through several stages from inception to conclusion. Following
is the chart which shows the policy formation process of AKBL:

Executive summary

Defining the features

Virtual testing

Removing flaws (if any)

Approval by board of directors

 Executive summary: Bank defines new summary.

 Defining the features: Bank defines the features of policy and also tells why this policy is
necessary for the bank.

 Virtual testing: Bank test the policy to see the results of the policy on one or more
branches of AKBL as a sample.

 Removing flaws: If the policy gives the result, bank then remove the flaws (if any) or if
not gives the desired results, revisit the policy from start.

 Approval by board of directors: An effective policy is approved by the board of directors

of AKBL. Board of directors saw every clause and result that bank achieve through this

1
 policy. When the policy gets the approval from board of directors, bank then introduce this
policy in all branches of AKBL across the country.

2.5 Managerial Policies

Managerial policies are the process of creating, communicating and maintaining policies and
procedures within an organization because the process of managing policies can be expensive and
time consuming. Major policies that have been made and implemented at Askari bank are:

Financial policy:

The financial policies of any bank are the most important policies through which the whole
banking activity is conducted. These policies are primarily conducted on:

 Source of Funds: Askari bank finance policy is acquiring funds from the following
sources:

• Deposits of account holders.

• Interest on advances and loans granted to the borrowers.

• Income and commission from the services provided by the bank.

• Bank opens various types of accounts for its customers Services are provided for earning.

• Interest income and commission bank providing the services to its customers.

 Utilization of Funds: After the acquisition of the funds their acquisition becomes
necessary. The bank seeks the best way for making investment to get more profit with the
maximum security. The bank has an investment portfolio in which it allocate its funds for
crediting to borrowers, investment in the stock market, investment in the real estate
property etc.

1
Consumer banking policy:

The bank’s policy regarding consumer-banking policies includes the development through the
electronic consumer banking operations. It has created a niche for itself in the marketplace.

Lending policy:

The bank pursues a conservative yet dynamic credit policy. This strategy has enable the bank to
have a high quality risk portfolio. Bank prefers finance exporters because of less risk involved. It
manages the credit risk, liquidity risk, market risk and other operational risks very efficiently. For
this purpose Askari bank has got an effective credit line proposals system to be sanctioned to the
clients on demand.

Trade policy:

Askari bank focus on Foreign Trade as its primary market of business. It maintains high emphasis
on enlarging its correspondent banking network besides aiming to enhance the scope and level of
cooperation with existing correspondents. The Trade finance department has efficiently done
management of the changing trade policies by the central bank.

Personnel policy:

Personnel policies have an important role in the success of any organization. AKBL have its proper
personal policies. Good Personnel policies motivate the employees towards hardworking.
Following are the main personnel policies of AKBL:

1. Selection of employees on merit.

2. Selection of capable employees.

3. Attractive salary package for motivation of employees.

4. Every employee must have certain set of clearly defined duties.

1
5. To train and develop the future management of the bank.

6. Effective communication at all levels of the organization.

2.6 Credit rating:

A credit rating is a quantified assessment of the creditworthiness of a borrower in general terms or

with respect to a particular debt or financial obligation.

PACRA Maintains Entity Ratings of Askari Bank Limited

Entity
Rating Type Current Previous
(28-Jun-2019) (27-Dec-2018)

Action Maintain Maintain

Long term AA+ AA+
Short term A1+ A1+
Outlook Stable Stable
Rating - -
watch

During the year, the Bank’s entity ratings were maintained at ‘AA+’ by Pakistan Credit Rating
Agency Limited (PACRA). Askari Bank has shown stable growth rate over the years. This has
ensured its relative profitability to remain intact. The bank has a strong brand image, flanked by
its affiliation with one of the strongest conglomerate, Fauji Foundation Group. The ownership
structure has proven itself a strong backing, as reflected by Askari Bank's history. The Bank has
continued the growth trajectory during 2018. The net spread has improved on the back of
significant improvement in asset yield amidst slightly higher cost of funds. Volumetric increase in
earning assets, led by loan portfolio augmentation, provided support to profitability; but was
negatively impacted due to higher provisioning expense on mark-to market loss of investment and
NPL provisioning.

1
 Chapter No. 3

Marketing Mix (4p’s)

3.1 Product
3.2 Price
3.3 Place
3.4 Promotion

1
 Chapter no. 3

Marketing Mix:

The marketing mix (also known as the 4Ps) is a foundation model for businesses. The marketing
mix has been defined as the “set of marketing tools that the firm uses to pursue its marketing
objectives in the target market”. Askari bank also uses marketing mix to satisfy their customers,
to develop strengths, to strengthen the competitiveness and there adaptability, to make the internal
department of the bank work closely together and avoid weaknesses.

3.1 Product:

Product refers to a good or service that a company offers to customers. Ideally, a product should
fulfill a certain consumer demand or be so compelling that consumers believe they need to have
it. There are some basic divisions in AKBL according to product and services that are offered by
the bank which include:

Askari Bachat Account:

Askari Mahana Bachat Account is a term deposit product for individual and corporate customers
with a medium term investment appetite. It offers individual customers the option of investing for
one and two years tenures, while corporate customers can invest for two years. It is designed to
cater to the saving needs of customers who want profit on a monthly basis with the option of
availing financing facility of upto 90% of the principal amount.

Value Plus Current Account:

Askari Value plus Current Account offers financial freedom and security with unmatched
flexibility. Customers (individuals) can open this account to avail the benefits of free life insurance
coverage of upto Rs. 2 Million, debit card with two supplementary cards, I-Net facility, SMS alerts,
issuance of cheque books and bankers’ cheques – all with no minimum balance requirements.
Value plus Current (Business Account) is specially designed to cater to the diversified needs of
business community.

1
Current Account:

Current Accounts cater to a variety of financial needs of our diverse customer base with added
benefits of free cheque books, issuance of bankers’ cheques and much more.

Saving Account:

Saving accounts offered by the Bank to both individual and institutional customers include Askari
Special Deposit and normal savings account based on profit and loss sharing. Askari savings
deposit offer attractive features and competitive returns.

Askari Asaan Account:

Askari Bank offers Asaan Account to unbanked / under-banked individuals. The facility is
available in current and savings account categories. As per the name of this product, its hassle-free
account opening and operating procedure helps the lower income groups to fulfill their banking
requirements with ease and comfort.

Askari Waqaar Account:

Askari Waqaar Account caters to the banking needs of senior citizens (55 years and above) looking
for monthly profits, high returns and short term investment opportunities. Askari Waqaar Account
offers two variants; Term deposit (one year) and savings account. The customer has the option to
choose any or both of these variants

Askari Special Deposit Account:

ASDA account is an interest bearing current account in which interest is paid. It is also chequing
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. That is why it is similar to
current account. It is mostly opened by businesses but individuals can also open the account.

Askari Pasig Munafa Term Deposit:

1
This unique type of account is there to cater to the investment needs of individuals who need profits
right away on their medium term investments and in doing so the customer receives the
entire profit of their investment straight away at the time of placement. This account too is made
strictly for Pakistani nationals. It requires a minimum deposit of Rs.100, 000 or in multiples of 1
million for tenure of 15 months

Investment Certificates:

Like investment certificates from any reputable institution, the investment certificates from Askari
Bank not only offer added security and the option of monthly profits but are also completely
transferable and can be transferred to any third party. These are issued for a period of three period
and the profit is paid on a monthly basis. These are issued and encashed free of cost while an
existing account is not mandatory. While there is no penalty on pre-mature encashment there is no
maximum limit on the purchase of these certificates and these can be encashed at any branch of
Askari Bank anywhere in Pakistan and they also offer great security because in case of theft or
loss there is always the option of replacement / refund to the original purchaser.

Askari Little Champs Account:

Askari Little Champs Account is designed specifically for minors (individuals below the age of 18
years). It introduces the concept of saving to the children and helps them understand the value of
money at an early age. The account offers two variants i.e. current and savings accounts.

Rupee Traveler Cheques

These cheques are issued to eliminate the risk of carrying cash while travelling. These are for an
amount of Rs.10,000 and are completely valid until encashed. These can be purchased and
encashed at any branch of Askari Bank Limited and are enchased after the original purchaser signs
the front of the RTC while a commission of Rs.30 is charged per RTC for holding it for 30 days
or more.

Ask4Car

1
It is an auto financing product for new, used, and imported vehicles at a competitive markup and
easy and quick processing without any hidden costs.

Term Deposit Receipt (TDR)

The Bank issues receipt (Term Deposit Receipt - TDR) for amounts kept in each fixed
deposit account. Askari Bank offers TDRs for the following tenures:

 1 month
 2 months
 3 months
 6 months
 1 year
 2 years
 3 years
 5 years

Personal Finance

With unmatched financing features in terms of loan amount, payback period and affordable
monthly installments, Askari Bank’s personal finance makes sure that their customer gets the most
out of their loan. The product tenure ranges from one to five years and is designed primarily for
salaried individuals.

Mortgage Finance

Askari Mortgage Finance helps their customers in the purchase and construction of the house as
well as renovation of old houses with flexible home loans, balance transfer facility also available.
Houses plus apartments are covered under this particular type of financing. Flexible home loans
are available for individuals in urban areas of Pakistan aged between 23-65 years.

Agricultural Banking

1
Agricultural banking products and services are specifically designed for Pakistan’s farming and
rural business segment. This function of the Bank aims to extend credits on softer terms to farmers,
both on revolving as well as term basis. The Bank has set up a vibrant program for fresh lendings
under revised parameters, enabling farmers to avail financing in an easy, accessible and affordable
manner.

• Kissan Ever Green Finance

• Kissan Tractor Finance

• Kissan Livestock Development Finance

• Kissan Farm Mechanization Finance

• Kissan Aabpashi Finance

3.2 Price:

Pricing is the one of the four Ps of the marketing mix. Price is the only revenue generating element
amongst the 4ps, the rest being cost centers. AKBL see the nature of product and charge price
according to product if the product is innovative it charge higher margin before launching the new
product the top management must see and analyze the demand of product and estimate its costs
analyzing competition cost price and offer and then choose a pricing strategy according to
company objective.

Product Price
(Interest rate)

Askari bachat account 10.50% per annum.

Savings account 11.25% per annum.
Askari Little Champs account 11.25% per annum
Askari Waqaar account 12.25% per annum

1
Askari Asaan account 11.25% per annum
Askari Pasig Munafa Term Deposit 7.5% per annum
Investment Certificates The expected rate of return of
investment certificates for three month
are 6.10 and 6.25% for the life of the
certificate
Askari Special Deposit Account 10.25% per annum
(ASDA)
Term deposit
One month 8.90 %
Two months 9.00 %
Three months 9.35 %
One year
Below Rs 5000M 10.95 %
From Rs 5000 to Rs 19.999 M 11.50 %
From Rs 20000 to Rs 49.999 M 12.00 %
From Rs 50000 to Rs 99.999 M 12.50 %
Rs 100,000M and above 13.00 %
Two years 13.10 %
Three years 13.20 %
Five years and above 13.50 %

3.3 Place:

1
The objective of Askari bank has always been to expand its branch network to meet clients’ needs.
Bank is well positioned and geographically poised to cater for increased business demands, from
its existing potential clientele. The bank has almost 422 conventional branches spread all over
Punjab covering major business centers and principle cities. At present, it has opened all its
branches at commercial and business areas or near to commercial areas so that the customers or
clients face no problem in reaching the bank.

Conventional Branches 422

North region 144

Central region 139

South region 139

Islamic Branches 94

North region 35

Central region 35

South region 24

3.4 Promotion:

Promotion is a form of corporate communication that uses various methods to reach a

targeted audience with a certain message in order to achieve specific organizational
objectives. Under the concept of Integrated Marketing Communication, Askari Bank
Limited attempts to develop a unified promotional strategy involving the coordination
of many different types of promotional techniques. The objective of promotion strategy is

1
to getting customers to buy an organization’s product and, in most cases, to remain a loyal
long-term customer.

The purpose and objectives for marketing promotions of Askari Bank Limited include the
following:

 Askari Mobile Application has a promotions screen; a very convenient way for the
customers to view current offerings and promotions by Askari Bank.
 It has an internationally recognized website, containing comprehensive information
on Askari Bank and its products. The website was developed in-house and has
received several awards.
 Bank has established its Data Warehouse and Customer Care Centre, a dedicated
customer call center to provide one window service to their valued customers in
terms of their telephonic enquires.
 The bank gives ads on newspaper to attract customers and to promote their product
and services.
 It also uses billboard, magazines, posters etc for their promotion.

1
 Chapter no. 4

Financial Statement Analysis

4.1 Horizontal Analysis

4.2 Vertical Analysis

4.3 Ratio Analysis

1
 Financial Statement Analysis

Financial statement analysis is the process of identifying financial strengths and weaknesses of the
firm by properly establishing relationship between the items of the balance sheet and income
statement.

Three techniques may be used in evaluating financial statements data:

 Horizontal analysis
 Vertical analysis
 Ratio analysis

Balance Sheet:

A balance sheet is a financial statement that reports a company's assets, liabilities and shareholders'
equity at a specific point in time, and provides a basis for computing rates of return and evaluating

its capital structure.

Consolidated Balance Sheet

Five years statement of Balance Sheet
For the year ended December 31

Particular 2018 2017 2016 2015 2014

Assets
cash & balances with treasury 49,187,645 44,239,325 42,568,141 29,685,228 19,130,113
banks
Balances with other banks 4,093.402 3,193,835 5,845,748 8,295,724 7,068,111
Lendings to financial - 2,250,000 6,836,584 812,898 3,427,753
institution
Investments 260,233,987 314,956,748 295,846,254 268,020,706 217,214,247
Advances 343,107,147 258,693,086 235,163,922 199,930,812 170,677,294

1
Operating fixed assets 12,791,827 10,728,827 11,019,555 9,230,010 8,299,488
Assets held for sale 741,361 80,720 261,762 - 53,703
Deferred tax assets 3,773,779 100,755 - - 875,335
Other assets 32,522,174 22,465,073 21,597,227 19,891,336 20,336,501
706,451,322 656,708,369 619,139,193 535,866,714 447,082,545
Liabilities
Bills payable 15,512,880 10,769,262 8,579,227 6,094,885 6,855,020
Borrowings 52,702,323 71,587,311 89,261,788 57,323,250 13,742,030
Deposits & other Accounts 573,596,926 525,808,308 472,811,335 433,172,205 387,586,620
Sub-ordinated loans 9,993,600 4,992,800 4,994,800 4,996,800 7,992,800
Liabilites against assets subject - - - - -
to finance lease
Deferred tax liabilities 3,773,779 - 526,430 96,404 -
Other liabilities 21,178,476 11,115,197 10,388,081 7,330,227 7,199,014
672,984,205 624,272,878 586,562,243 509,013,771 423,375,484

Net Assets 33,600,361 32,435,491 32,576,950 26,852,943 23,707,061

Owner’s Equity
Share capital 12,602,602 12,602,602 12,602,602 12,602,602 12,602,602
Reserves 15,588,694 11,948,415 8,670,686 6,445,888 4,823,738
Unappropriated Profit 3,710,867 2,849,878 4,084,206 2,763,314 1,862,223
31,902,163 27,400,895 25,357,494 21,811,804 19,288,563
Surplus on revaluation of 1,654,920 5,034,596 7,219,456 5,041,139 4,418,498
assets-net of tax
33,600,361 32,435,491 32,576,950 26,852,943 23,707,061

706,451,322 656,708,369 619,139,193 535,866,714 447,082,545

Income Statement:

1
 An income statement (also referred to as a profit and loss statement) is one of the financial
statement that shows the company’s revenues and expenses during a particular period. The
purpose of the income statement is to show managers and investors whether the company made
money (profit) or lost money (loss) during the period being reported.

Consolidated Income statement

5 years Statement of Income

For the year ended December 31

Particular 2018 2017 2016 2015 2014

Mark-up/return/interest 43,669,883 36,267,220 35,408,195 36,592,093 34,604,210
earned
Mark-up/return/interest 25,059,925 20,071,965 20,496,757 21,690,386 22,710,924
expensed
Net Mark-up/interest 18,609,958 16,195,255 14,911,438 14,901,707 11,893,286
income
Reversal of provision against 3,116,070 (1,189,533) (729,441) 315,840 (83,198)
non-performing loans and
advances-net
Impairment loss on available 231,312 30,047 22,565 217,243 207,669
for sale investments
Provision for diminution in 1,596,027 108,351 48,052 345,969 197,507
the value of investments-net
Reversal of provision against - (153,958) - - -
assets held for sale
Bad debts written off directly - - - - -

1
 1,460,575 (1,205,093) (658,824) 879,052 321,978
Net Mark-up/interest 15,891,521 17,400,348 15,570,262 14,022,655 11,571,308
income after provisions
Non mark-up/ interest
income
Fee, commission and 3,116,070 2,706,794 2,438,914 1,732,140 1,435,180
brokerage income
Dividend income 231,312 302,894 304,850 302,721 348,726
Income from dealing in 1,596,027 843,032 639,827 834,956 1,102,565
foreign currencies
Gain on sale of securities-net 260,103 2,055,293 3,526,687 3,246,294 1,803,844
Unrealised gain /(loss) on
revaluation of investments - - - - -
classified as held for trading-
net
Other income 418,081 347,470 300,195 573,477 744,134

Total non-markup / interest 5,621,593 6,255,483 7,210,473 6,689,588 5,434,449

income
24,231,551 23,655,483 22,780,735 20,712,243 17,005,757
Non mark-up/ interest
expenses
Administrative expenses 16,240,514 14,948,796 14,078,992 12,014,237 11,051,692
Other provisions/ write offs 1,460,575 21,832 3,260 49,671 46,956
Other charges 191,067 193,401 221,535 216,639 125,696
Total non-markup/ interest 15,891,521 15,164,029 14,303,787 12,280,547 11,224,344
expenses
8,340,030 8,491,802 8,476,948 8,431,696 5,781,413
Extra ordinary / unusual items - - - - -

1
Profit before taxation 6,879,455 8,491,802 8,476,948 8,431,696 5,781,413
Taxation – current (2,448,177) (2,265,570) (2,129,263) (2,329,796) (1,013,637)
- Prior years’ 4,431,278 (243,344) (266,425) (416,000) -
- deferred (2,659) (715,001) (860,625) (642,481) (752,844)
(2,448,177) (3,223,915) (3,256,313) (3,388,277) (1,766,481)

Profit after taxation 4,431,278 5,267,887 5,220,635 5,043,419 4,014,932

4.1 Horizontal Analysis:

Horizontal analysis (also known as trend analysis) is a financial statement analysis technique that
shows changes in the amounts of corresponding financial statement items over a period of time. It
is a useful tool to evaluate the trend situations.

Formula: Current year amount-base year amount/base year amount*100

Balance Sheet

2018 2017 2016 2015

Assets
Cash & balances with treasury banks 49 44 43 55
Balances with other banks 28 -45 -30 17
Lendings to financial institutions - -67 741 -76
Investments -17 6 10 23
Advances 33 10 18 17
Operating fixed assets 29 -3 19 11
Assets held for sale -12 -69 0 0

1
Deferred tax assets 3645 0 0 -100
Other assets 14 4 9 -3
7 6 16 20
Liabilities
Bills payable 44 26 41 -11
Borrowings -26 -20 56 317
Deposits & other Accounts 12 11 9 12
Sub-ordinated loans 0 0 0 -37
Liabilites against assets subject to finance lease 0 0 0

Deferred tax liabilities - - 446 0

Other liabilities 24 7 42 2
7 6 15 20
Net Assets 3 -0.4 21 13
Owner’s Equity
Share capital 0 0 0 0
Reserves 30 37 35 34
Unappropriated Profit 37 -30 48 48
17 8 16 13
Surplus on revalution of assets-net of tax -67 -30 43 14
3 -0.4 21 13

7 6 16 20

Interpretation:

Total assets of Askari bank have been slightly increased in 2018 from the previous year. The main
reason for this increase is that Cash & balances with treasury banks increase in 2018 with an

1
 amount of 49%. Another reason for increase in assets of bank is the large amount of balances with
other banks.

Banks liabilities have been increased in 2018 as compared to 2017 which means that a large
amount of debts have been taken by a bank in this year. Another reason is of this increase is that
the bills payable have been increased by 44% in 2018.

There is no increase or decrease in share capital in year 2018 if compared to the share capital of
year 2017 and 2016. The share capital of banks should be increased by increasing its earning as
whether bank has maintained its stability still in order to grow bank should increase share capital.

Income Statement

2018 2017 2016 2015

%
Mark-up / return / interest earned 20 2 -3 6
Mark-up / return / interest expensed 25 -2 -6 -4
Net Mark-up/interest income 14 9 1 25
Reversal of provision against non-performing loans - 63 331 480
and advances-net
Impairment loss on available for sale investments - 33 -90 5
Provision for diminution in the value of 125 -86 75
investments-net -
Reversal of provision against assets held for sale 0 0 0 0
Bad debts written off directly 0 0 0 0
- 82 -175 173
Net Mark-up / interest income after provisions 15 12 12 21
Non mark-up / interest income
Fee, commission and brokerage income 15 11 24 21

1
Dividend income -23 -1 1 -13
Income from dealing in foreign currencies 89 32 -23 -15
Gain on sale of securities-net 0 -42 9 80
Unrealised gain / (loss) on revaluation of investments 0 0 0 0
classified as held for trading-net
Other income -87 16 -16 -23

Total non-markup / interest income -15 -13 6 26

8 4 10 23
Non mark-up / interest expenses
Administrative expenses 6 6 17 10
Other provisions/ write offs 203 569 -93 6
Other charges -10 -13 2 72
Total non-markup / interest expenses 9 6 16 11

Extra ordinary / unusual items 0 0 0 0

Profit before taxation 16 0 1 46
Taxation – current 7 6 -9 130
- Prior years’ 0 -9 0 0
- deferred 24 -17 34 -15
2 -1 -4 92
Profit after taxation 1 1 4 26

Interpretation:

1
 Owing to increase in the net mark up interest income, net income of Askari Bank has been
increased in 2018 by _____. An increase in the banks’ deposits can be witnessed in the current
year, thereby, leading to the increase in the lending capacity and interest income.

Net income of askari bank has been increased with a large amount in 2018 as compared to previous
years.the main reason for this increase is that the net mark up interest income is increased in2018
by 14%. Another reason for this increase is increase in net mark up interest earned by a bank. Total
non mark up interest income has been decreases in 2018. Expenses done by a bank in these years
shows that in 2018 bank has done low expenses due to which its income increased. Bank’s
administration expenses didn’t increase and remain same in 2018 and 2017.

4.2 Vertical Analysis:

Vertical analysis is the propositional Analysis of a financial statement, each line item on a financial
statement is listed as a percentage of another item. Vertical analysis is also useful for timeline
analysis, to see relative changes in accounts over time, such as on a comparative basis over a five-
year period.

Formula: Individual item of financial statement/total of item head*100

Balance Sheet

2018 2017 2016 2015 2014

%
Assets

cash & balances with treasury banks 7 7 7 6 4

Balances with other banks 1 0 1 2 2
Lendings to financial institutions 0 0 1 0 1
Investments 37 47 48 50 49
Advances 49 39 38 37 38
Operating fixed assets 2 2 2 2 2
Assets held for sale 0 0 0 0 0

1
Deferred tax assets 0 0 0 0 0
Other assets 5 3 3 4 5
100 100 100 100 100
Liabilities
Bills payable 2 2 1 1 2
Borrowings 7 11 14 11 3
Deposits & other Accounts 81 80 76 81 87
Sub-ordinated loans 1 1 1 1 2
Liabilites against assets subject to finance lease 0 0 0 0 0
Deferred tax liabilities 0 0 0 0 0
Other liabilities 0 2 2 1 2
95 95 95 95 95
Net Assets 5 5 5 5 5
Owner’s Equity
Share capital 2 2 2 2 3
Reserves 0 2 1 1 1
Unappropriated Profit 1 0 1 1 0
5 4 4 4 4
Surplus on revalution of assets-net of tax 0 1 1 1 1
5 5 5 5 5
100 100 100 100 100

Interpretation:

Vertical analysis Askari Bank’s balance sheet shows that Investments and advances covers the
major part of balance sheet. The share capital remained same that means there is no fresh issuance
of bond. The borrowing of bank constitutes to liabilities which have been declining rapidly every
year that is a good sign that they have less liability to account for. The liability of borrowing is 7%
in 2018, 11% in 2017 and 14% in 2016. Decrease in borrowing results in decrease in interest
expenses. Deposits and other accounts constitute the largest portion of liabilities overtime and in

1
 year 2018 their portion is 81%, in 2017 is 80% and in 2016 is 76% of total liabilities. Deposits and
other accounts increased from 2016 to 2018 continuously. There is a slight difference in 2016 and
2018. The bank has not pay return or interest on this deposit. So their larger portion is good for the
bank.

Income Statement

2018 2017 2016 2015 2014

%
Mark-up/return/interest earned 100 100 100 100 100
Mark-up/return/interest expense 57 55 58 59 66
Net Mark-up/interest income 43 45 42 41 34
Reversal of provision against non-performing loans 0 -3 -2 1 0
and advances-net
Impairment loss on available for sale investments 0 0 0 1 1
Provision for diminution in the value of investments- 0 0 1 1
net 0
Reversal of provision against assets held for sale 0 0 0 0 0
Bad debts written off directly 0 0 0 0 0
- -3 -2 2 1
Net Mark-up/interest income after provisions - 48 44 38 33
Non mark-up/ interest income
Fee, commission and brokerage income 7 7 6 5 4
Dividend income 1 1 1 1 1
Income from dealing in foreign currencies 4 2 2 2 3
Gain on sale of securities-net 1 6 10 9 5
Unrealised gain /(loss) on revaluation of investments 0 0 0 0 0
classified as held for trading-net
Other income 1 10 1 2 2

1
Total non-markup / interest income 13 17 20 18 15
55 65 64 57 49
Non mark-up/ interest expenses
Administrative expenses 37 41 40 33 32
Other provisions/ write offs 0 0 0 0 0
Other charges 0 1 1 1 0
Total non-markup/ interest expenses 36 42 40 34 32

Extra ordinary / unusual items 0 0 0 0 0

Profit before taxation 16 23 24 23 17
Taxation – current -6 6 -6 -6 -3
- Prior years’ 0 1 -1 -1 0
- deferred - 2 -2 -2 -2
- 9 -9 -9 -5
Profit after taxation 10 15 15 14 12

Interpretation:

On the total mark up interest earned, larger part is contributed by net markup interest expense
which is 57% in 2018. Profit after taxation is lower in 2018 as compared to previous year, because
of more expenses and payment of taxes by the bank in this year. According to the vertical analysis
of income statement the net markup / interest income has decreased again in year 2018 the reason
is the increase in markup / return / interest expenses this year.

4.3 Ratio Analysis

A ratio analysis is a quantitative analysis of information continued in a company’s financial

statements. Ratio analysis is the comparison of line items in the financial statements of a business.

1
 Ratio analysis is used to evaluate a number of issues with an entity, such as its liquidity, efficiency
of operations, and profitability. Following are the types of ratio analysis:

•Liquidity ratio

•Debt ratio

•Profitability ratio

Liquidity Ratio:

Liquidity ratio is the ratio between the liquid assets and liabilities of bank or other institution. It
indicates whether a company's current assets will be sufficient to meet the company's obligations
when they become due.

The following financial ratios are considered to be liquidity ratios:

 Current ratio
 Quick ratio or acid test ratio

Current Ratio:

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations
or those due within one year. It tells investors and analysts how a company can maximize
the current assets on its balance sheet to satisfy its current debt and other payables.

Formula: Current assets / Current liabilities

Year 2018 2017 2016 2015 2014

Current assets 706,451,322 623,332,994 586,260,649 506,745,368 501,587,140
Current 672,984,205 613,157,681 575,647,732 417,517,518 416,176,470
liabilities
Ratio 1.04 1.01 1.02 1.21 1.21

1
 1.4

1.2

0.8

Series 1
0.6

0.4

0.2

0
2018 2017 2016 2015 2014

Interpretation:

Askari bank’s current ratio analysis for 2018 is 1.04; it means current assets are slightly more than
current liabilities. In 2017 it was 1.01. As compared to previous year the ratio of 2018 is increased.

Debt Ratio:

Debt ratio is a solvency ratio that measures a firm’s total liabilities as a percentage of its total
assets. The debt ratio shows a company’s ability to pay off its liabilities with its assets.

Formula: Total Debt/ Total assets*100

Years 2018 2017 2016 2015 2014

Total liabilities 673,023,135 624,272,878 586,562,243 509,013,771 423,375,484
Total assets 706,532,042 656,708,369 619,139,193 535,866,714 447,082,545
Ratio 95 95 95 95 95

1
 100

90

80

70

60

50
Series 1
40

30

20

10

0
2018 2017 2016 2015 2014

Interpretation:

The ratio has remained same from 2014-2018 which means bank total debt has been increasing in
the same ratio every year.

Time interest earned ratio:

The times interest earned ratio is a measure of a company's ability to meet its debt obligations
based on its current income.

Formula: Earning before income tax/ Interest

Year 2018 2017 2016 2015 2014

Earnings before 24,231,551 23,655,831 22,780,735 20,712,243 17,005,757
income tax
Interest 15,891,521 15,164,029 14,303,787 12,280,547 11,224,344
Ratio 1.52 1.55 1.59 1.69 1.52

1
 1.8

1.6

1.4

1.2

1
Series 1
0.8

0.6

0.4

0.2

0
2018 2017 2016 2015 2014

Interpretation:

The ratio have been decreased in 2018 as compared to previous years this means fewer earnings are
available to meet interest payments of the bank.

Profitability Ratio:

Profitability analysis of a firm indicates the overall efficiency of the management. Without profit
a company cannot attract the outside capital. Profitability analysis includes:

•Return on total assets

•Return on equity

• Earning per share

Return on total assets:

Return on assets is a profitability ratio that provides how much profit a company is able to generate
from its assets. Return on assets measures how efficient a company's management is in generating
earnings from their economic resources or assets on their balance sheet.

1
 Formula: Earning available for common stockholders/ Total assets*100

Years 2018 2017 2016 2015 2014

Earnings 12,791,827 9,352,093 7,983,949 6,905,642 2,432,306
available for
common stock
holders
Total assets 706,451,322 656,708,369 619,139,193 535,866,714 447,082,545
Ratio 2 1 1 1 0.5

2.5

1.5

Series 1
1

0.5

0
2018 2017 2016 2015 2014

Interpretation:

The ratio is increased in 2018 as compared to previous years that show that the bank used its assets
efficiently to generate its income which increased.

1
 Return on equity

Formula: Earning available for common stockholders/Common stock equity*100

Years 2018 2017 2016 2015 2014

Earnings available for 12,791,827 9,352,093 7,983,949 6,905,642 2,432,306
common stock holders
Common stock equity 33,600,361 32,435,491 32,576,950 26,852,943 23,707,061
Ratio 38 28 24 26 10

40

35

30

25

20
Series 1
15

10

0
2018 2017 2016 2015 2014

Interpretation:

The ratio increases in 2018 as compared to previous year. In year 2017 it is 28% and in 2016 it
was 24%.This shows that the return on equity isn’t inconsistent that makes it unattractive to
become a stockholder of Askari Bank.

1
 Chapter no 5

SWOT Analysis

5.1 strengths

5.2 Weaknesses
5.3 Opportunities

5.4 Threats

1
 Chapter no. 5

SWOT Analysis:

SWOT analysis indicating towards the organizations strengths, weaknesses, opportunities and
threat. SWOT analysis is very important for the management in retaining the strength, overcoming
the weaknesses, capitalizing market opportunities, and aware to threat and overcoming it.

5.1 Strengths:

 Askari bank has extensive training &development programs for employees to enhance their
capabilities like no other bank can.
 The bank provides various compensation benefits to their employees which boosts their
morale.
 In addition to “Oracle Financial Services Software”(OFSS) (previously flexcube) as the
core banking software, the Bank is also implementing “Oracle Financial” as MIS and
Supply Chain Management software, “PeopleSoft” as Human Resource Management
software, “Reveleus” as Risk management software and “Siebel” as Customer Relationship
Management software. These software will be fully integrated with OFSS and collectively
strengthen the product and service delivery capacity while improving the overall
operational and internal control standards.
 It delivers timely solutions that best meet the customer’s financial needs and places special
emphasis on customer care and convenience.
 The bank has credit ratings of AA for Long term andA1+ for Short term by PACRA. These
are high credit ratings which support highest quality for timely repayment of financial
commitments.
 The bank management ensures ethical practices of business and enjoys good public
reputation. The customers are valued and are provided with excellent services.

1
5.1 Weaknesses:
 The degree of centralization is high because all the decisions are made by the board
members and employees are not made part of decision making process at any level.
 The bank has many employees which are working for over two decades now and who have
blocked the way for career growth of competent junior employees.
 Human Resource Management is the most difficult challenge faced not only by the bank
but by all the organizations across the world. Even though the people have been sacrificed
in the new organizational developments, it is becoming clear that the true lasting
competitive advantage comes through human resources and how they are managed. AKBL
seems less focused on this highly critical issue as the job satisfaction level of the employees
working at AKBL, is pretty low.
 The team-work culture is not prevalent due to the functional structure of the Bank.
 Although the bank has computerized system yet registers are used to maintain the
information about accounts, atms, cheque books and clearing etc.
 The employees are under pressure most of the times because of the tough targets set by the
top management and feel exhausted and less productive.

5.3 Opportunities:
 Askari Bank promotes Islamic banking in all the branches to make it convenient for the
customers because it is not possible to open separate branches in every area. It is external
opportunity for Askari bank to avail it and take a competitive edge and create a strong
identity country wide.
 The bank can introduce a special account for students in which it can not only save but also
make small investments of its savings with the proper investment consultation service of
AKBL.
 The bank can expand its business in rural areas along with Islamic banking services and
met unmet segment in geographical areas and promote its business.
 Askari bank limited may get the advantage of technical improvement to cope up with the
business world requirements and standards.

1
5.4 Threats:
 Many employees have left the bank and went for other banks because they feel there career
in threat as they are appointed on contract bases.
 As per Askari Bank’s Schedule of Charges, it is apparent that the charges are extremely
high on online funds transfer etc. This can create an alarming condition and the bank can
lose some of its customers.
 Legal regulation is serious threat for organization because government changes their
policies and put different kind of taxes and regulation on the organization top management
always keeps the eye on moving trend of government.
 While advancing loans bank should take step with precautions because state bank charges
high penalties on the violation of prudential regulation.
 AKBL should be vigilant in case of prudential regulations for example they should report
suspicious transactions to SBP.
 Higher expense is a threat for Askari bank that they should cover up so there income may
also raise.
 Higher rate of inflation is a threat for Askari bank the prices of the product and services
up and up and unemployment is increasing very rapidly bank should adopt flexible policies
to give relief their customer