CHAPTER # 01

INTRODUCTION

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1 Background
Banking is as ancient as human civilization and its importance as a monetary
intermediately cannot be left without!

The primary company, company and any sector component is financing. A-days now, as
a basis of existing company, a banking portion comes through. The advance of any
country relies largely on the financial framework. The term bank comes from old Italian
banking or from a French word banking, both of which imply a bench or currency
exchange board. In previous occasions, European financial credit agencies or cash change
companies used to show gold from various nations in enormous quantities to progress or
trade in chairs or boards.

A bank is characterized as a monetary foundation which manages cash and credits, it

acknowledges stores from people, firms and organizations at low rate while high loan fee
that needs the credits.

During the British regime in South Asia, banks officially began in Pakistan. The amount
of banking in Pakistan has constantly increased and increased after the circumstances of
Brittany's Raj in 1947 and Pakistan's enhancement as a country in the world. The State
Bank of Pakistan, in addition to Pakistan's National Bank, is the most ordered bank in
Pakistan. As indicated by State Bank of Pakistan data, there are 50.565 million bank
accounts (financial balances) in Pakistan, giving a penetration rate of 24.34%. Moreover,
there are 15,053 banks, 14,148 ATMs, and 53,269 POS machines dynamic in the nation.

The most important administrations served by the companies are,

 The company operates by offering customers, for instance, with a critical swap
scheme of currency. Banks take on important jobs within the buyed item and
facilities division, whilst avoiding these installment methods, products can only
be altered by tedious and insufficient barters.
 Another task of the bank is to assemble family cash, and then it provides the funds
to different economic experts. Along these lines, banks fortify the development of
money for venture reason, which in result can assist the economy with flourishing

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 and empower individuals to purchase various necessities which consequently
cause increased demand and empower various financial specialists to begin their
setup to satisfy the requirements and needs of the clients and furthermore creates
diverse business openings in the market and this may offer lift to the economy.

1.1. History of the Bank

AKBL became a compelling accessible organization in Pakistan on 9 October 1991. It
began its activities on 1 April 1992 and, as set forth in the Banking Companies Ordinance
of 1962, essentially deals with banking matters. The Bank is listed on the Pakistan Bourse
(when Karachi, Lahore and Islamabad Bonds). Since then, AKBL has walked into a 515
branch / sub-branch agreement, including 421 common, 94 sub-branch / Islamic financial
centers, and a Bahrain bank rebate bureau. In addition, in Beijing, China the Bank has a
professional department. A common system of over 11,000 internet ATMs serving all
real Paki cities. The Bank's estimate for the deal was Rs. 32.6 billion and Rs. 619 billion
in difficult and quick assets, with 1,315,783 clients in the budget, revised by 7,252
workers. AKBL has a sense of respite among all the companies with its organizational
headquarters in Rawalpindi. In opposition to emphasizing and making overwhelming
reliance on commerce, Askari established a geographically secluded asset foundation in
Karachi and Lahore, the essential commercial focuses of periodic capitals, where
basically all the companies operate in their head-to-head job settings. AKBL Limited is a
company bank based in Pakistan that operates under the guidance of public finances. The
sections are compatible with the corporate finance that consolidates financial and reality
banking ; trading and the financial advertising operates ; retirement banking that provides
small borrowers to small organizations and fuses loans ; corporate banking that provides
organizations linked to money expanding and exchanging, promotion, trading and
commercial payments ; and commercial stores.

AKBL is pleased with the region it offers to its customers by knowing the requirements
and wants of its customers and providing their businesses with the most refreshed and
imaginatively enabled expert. The fund has focused on enhancement by improving
organizational performance, progress and individual’s excitement through the use of the

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extensive master mind section that brings Islamic and agriculture to memory. AKBL
Limited was the first banking institution in Pakistan to give Internet banking and one of
the largest banks to give internet company, which was incredible help to businesses
looking to buy on loans. AKBL Limited's main focus is that continuous and balanced
growth, in the developed aggressive, productive and doubtful times, remains the route to
advance on superfluous risk, regardless of why a bank has an incentive to ensure the
safety of its advantages and to stake not to obtain greater profits.

1.2 Corporate Values

1.2.1. Vision

“To be the bank of first choice in the region.”

1.2.2 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.”

1.2.3 Core Values

Commitment: “Passionate about our customers’ success and delighting them with

quality of our service.”

Integrity: “A distinctive investment, delivering outstanding performance, return and

value.”

Fairness: “Exemplary compliance, governess and business ethics.”

Teamwork: “Caring for our people and helping them to grow.”

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Service: “Dedication towards social development and improvement in quality of life.”

1.3 Objectives
 In every aspect of the company, to attain enhancement and effectiveness.
 Constructing and strengthening a widespread culture with a continuous focus on
enhancement.
 Developing a culture based on customer service and consolation with an
outstanding focus.
 Building a facilitating environment in which workers are awakened to their
greatest potential.
 To handle a broad range of ordinary hazards in budgetary activities adequately.
To grow use of advancement to ensure down to earth exercises, powerful
organization information system, improved movement limit and high
administration benchmarks.
 To administer the Banking Association arrangements to obtain sound and
moderate yields on economic experts and to gather shareholder confidence
decisively.
 To adopt beneficial intervention plans that better meet the budgetary requirements
of clients.
 To explore fresh roads to improve and develop AKBL.
 Taking advantage of the AKBL's IT concerns.

1.4 Corporate social responsibility (CSR)

Askari is as fundamental to AKBL as its products and administrations as a qualified
commercial inhabitant. AKBL, as the main cash-related foundation, guarantees that it’s
excellent characteristic company choices comply with legal demands and respect
individuals, systems and systems and the environment. AKBL adequately checks out
different social works by driving various exercises to help the less made or entitled
people from the overall population.

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In the area of matches, history, reducing misery, wealth and restorative science,
instruction, and logical study AKBL has created numerous commitments. Askari was
involved in the IUCN's Water Protection activities by co-apporting the main smart
reference book for Pakistan to improve national awareness on the overall level.
Furthermore, during the most recent year the bank and its workers contributed towards
the Diamer Bhasha and Mohmand Dam Fund.

To help our national game the bank gives privileged work to the players and mentors of
National Hockey Team. Commitments are additionally made for unique individuals'
establishment and Armed Force Institute of Cardiology.

1.5 Awards and Achievements

In various years AKBL was honored with a distinct prize that demonstrates that the bank
is committed to its aim.

 “Best 2012 Annual Report Award–2nd ICAP & ICMAP Runner-up”

 “Best 2011 Annual Report Award for ICAP & ICMAP”
 “Best 2011 Annual Report Award and 2011 SAARC South Asian Accountant
Federation annual corporate governance award”
 “Asian Retail bank's top prize – Consumer Association First Consumer Choice
Award 2011”
 “Best Asian Bankers Retail Award Global Finance newspaper Best Bank in
Pakistan 2001 and 2002”
 “Best Consumer Internet Bank Global Finance newspaper – 2002 and 2003”
 “Euro and Asia Money Awards – 1994, Credit for the European Commission and
the European Union.”
 “The Best Presented Annual Accounts by South Asian Federation of Accountants
(SAFA), in the SAARC region”
 “The Best Consumer Banking Award 2006 by the Consumer Association of
Pakistan – 2007”

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 “The Best Retail Banking Award 2008 by Pakistan Guarantee Export Corporation
Ltd – 2008”
 “Best Corporate Report Award for the year 2008 by ICAP & ICMAP – 2008”
 “The Best Annual Report Award for the year 2010 by ICAP & ICMAP”
 “The Best Presented Accounts Award 2010 – 2nd Runner Up-Joint by South
Asian Federation of Accountant.”

1.6 Head Office

AWT Plaza

P.O. Box 1084, The Mall, Rawalpindi.

Tel: +92 51 9063000

Fax: +92 51 9272455

Website: www.askaribank.com.pk

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1.7 Corporate Information

1.7.1 Board of Directors

BOD consists of 11 members which include Chairman and a Chief Executive.

Table 1.1 Board of Directors

S.NO Name Designation

1. Lt Gen Syed Tariq Nadeem Gilani, HI(M) (Retd) Chairman

2. Lt Gen Tariq Khan, HI(M) (Retd) Director

3. Lt Gen Javed Iqbal, HI(M) (Retd) Director

4. Mr. Rehan Laiq Director

5. Dr. Nadeem Inayat Director

6. Mr. Mnzoor Ahmed (NIT) Director

7. Mr. Kamal A, Chinoy Director

8. Mr. Syed Ahmed Iqbal Ashraf Director

9. Mr. Mushtaq Malik Director

10. Brig Saleem Ahmed Moeen, SI (Retd) Director

11. Mr. Abid Sattar President & Chief Executive

1.7.2 Audit Committee

Table 1.2 Audit Committee

S. No Name Designation

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1 Syed Ahmed Iqbal Ashraf Chairman

2 Dr. Nadeem Inayat Member

3 Mr. Rehan Laiq Member

4 Mr. Manzoor Ahmed Member

1.7.3 Organizational Structure

Table 1.3organizaation structure

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1.8 AKBL Hassan Abdal
Branches at the AKBL will be available from Monday to Friday, from 9:00 a.m. to 5:30
p.m.

AKBL Hassan Abdal

Branch code: 344

Ph# 0572-520622, 0572-520627

Fax# 0572-520628

Near Lari Adda, Hassan abdal, District Attock

Just like every other conventional bank, AKBL is comprises of different departments,
which are as follows:

 Account opening department

 Clearing department
 Accounts department
 Remittance department
 Cash department
 Credit department

1.8.1 Account opening department

To undergo the bank operations and its working deposits are the main source, which are
generated by opening accounts. The opening of a account is the foundation of bank-
customer loyalty. The account opening department is the backbone of banks. Mr. Zuhair
Asif was the account opening officer at ABKL Hasan Abdal, providing services to the
customer regarding the account best suitable to them and other information about opening

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their account. This department has to open accounts of people which consist of certain
steps, different information about the person is ensured to avoid any kind of future
default and problems like;

Avoid fraud 

protection from unintentional overdraft 

carelessness 

Customer inquiries

1.8.1.1 Types of Account

AKBL offers mainly 3 types of account which has the further types.

 Current deposit Account

 Saving Account
 Term deposits Receipts

Current Deposit Account

CDAs can be opened by people (either independently or mutually), proprietor,

partnership firms, public and privately owned organizations, government associations,
partnerships, clubs, societies, affiliations, NGOs/NPOs/magnanimous associations and so
forth. It tends to be opened in Pak rupees just as in outside monetary standards.

 AKBL Little Champ Account

 AKBL Waqar Account
 AKBL Asaan Account
 Pension Current Account
 Value Plus Current Account
 BBA( basic banking account)

Their salient features are:

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  Minimum deposit Rs. 5000
 Online services are free, while all other services are charged.
 All services free for asaan account for the 1 st year, and then they are
charged like every other account.
 Interest free deposit.

Saving Account

The savings account is defined by the payment of profit on a monthly median plan credit
balance. Cash accounts can be launched by individuals, proprietors, association
companies, public and private organizations, government organizations, associations,
clubs, affiliations, NGOs / NPOs / magnanimous associations, etc. (either independent or
mutually independent). It appears, just as in external monetary standards, to be entered in
Pak Rupees.

 AKBL Profit and Loss Saving Account

 Pension Saving Account
 Value plus Saving Account
 Askari Special Deposit Account (ASDA)

Their salient features are:

 Profit is calculated at quarterly basis

 Initial deposit Rs. 5000
 Credit on the first month of the calendar calculated on the median
monthly equilibrium.
 Payment for profit shall be subject to income charges by the
Government.
 A minimum equilibrium is not required for opening.
 There is also no minimum necessity for equilibrium servicing

Tem deposit Receipts

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Term deposits are generally referred to as TDRs. The TDR is reserved for at least 1
month, three months, six months, twelve months, 2 years and 5 years.In TDRs profit ratio
is fixed according to its term period and profit being paid at the time of maturity of funds.

Their salient features are:

 Partial or entire TDR amount (with or without profit) can be rolled-over

upon request of customer.
 The TDRs shall have Zakat's deduction in relation to the 1980 Zakat &
Ushr order.
 The receipt of profits shall be deducted in accordance with public
regulations from the income bill.

 Short Notice Deposit Receipt (SNDR): SNDR is used for a short-term deposit
period from 7 to 29 days for the purpose of depositing funds.
 Minimum balance can be Rs. 5000.
 Profit is paid upon maturity of SNDR.
 If SNDR are not cashed by customer then it is further rolled for the
similar term deposit.

1.8.1.2 Account opening Procedure

The account opening method is nearly the same for all the account however the data
required for each sort are different. Before the bank officer opens an account he checks
the following client characteristics:

Customer must be:

 Sound mind
 Age of majority
 Not be bankrupt or insolvent.

Documentation

For individual account

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The necessary documentation for account opening are as follows:

 National Identity Card (CNIC) issued by NADRA

 Salary slip or the documentation of business, as a proof of earning/income.
 No earning proof is required for Asaan account.

For partnership account

 All the associates are copied by CNIC.

 Application to open the account on the company's correspondence sheet.
 Registered association certificate needed.
 Letter indicating that a partner has the power to behave on the organization's
basis.
 If a partner company is not registered, the company shall be held responsible on
behalf of the company for all actions by that company.
 All company associates should be named and addressed on a board.

For corporate account

 C.N.I.C of Board of Directors.

 Article of the association.
 Resolution of the Board of Directors.
 Incorporation certificate.
 Business commencement certificate.
 Memorandum of association.

Procedure

During account opening the account holder must be present because several things are
verified through his finger prints and certain information is filled by him. The account
opening process consists of following steps.

 Firstly the account opening form is filled by the officer and information about the
account holder is filled. Which include the bio data section, kin part, and the SSC

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 (specimen signature card) which contain account holder’s signature which are
then scanned. And verified whenever the signature has to be verified.
 Then the officer take out the print of veriSys (verification system) by entering
CNIC of customer in the NADRA provided database for verification system.
Then attach it with the form.
 If the signature are different as from the signature on CNIC. Then the undertaking
is signature which contain the CNIC and new signatures.
 KYC (know your customer) is the computerized form which include all the
relevant information about the customer. Also attached to the form.
 Initial amount is deposited by the customer for activation of account.
 The account opening form, proof of occupation and other documents upon
completion is then stamped by the officer. And then verified by the bank
manager.
 Then forwarded to the head office through e-mail (scanned) and also by mailing
the documents.

1.8.1.3 Issuance of cheque book and ATMs

For cheque book request, Form A is filled along with the signature and title of account
writing that the cheque book may consists of 10, 25, 50 leaves. For Debit Card there is
also a form which has two options either standard card with daily limit of Rs. 50000 or
gold card with the daily limit of Rs. 100000. Which is sent to the head office and the
application is processed within 3-4 working days. When the customer receive the ATM
and cheque book is recorded in the cheque book and ATM record register, manually.

1.8.1.4 Account closing Procedure

The customer completes a closing form for the account and provides the cause for the
closure of the account. The ATM must be destroyed in the presence of two bank officers
and subsequently attached to the form and sent in the central office. The ATM is then
destroyed. And he's given all his money.

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1.8.2 Clearing Department

The checking department collects checks, calls for drawings (request drafts), payments
made by the customer from distinct companies. The bank carries out two kinds of
checking.

1.8.2.1 Inward Clearing

Clearing comes from the term clear and described as a structure for commercial cheques
and other dubious instruments taken for their clients in the department. In the inward
clearing, NIFT (National Institutional Facilitation Technologies) will deliver cheques of
the corresponding account which were placed in other accounts for checking to their
corresponding branches. This is referred to as inward wiping. In inward clearing, the
account holder shall be debited while the balance of the other bank shall be credited.

1.8.2.2 Outward Clearing

In outward clearing the cheques from different branches exhibited in possess branch are
transmitted through NIFT to their respective branches. Before these cheques have been
submitted, some elements should be observed that the correct 3 stamps have been
stamped, cheque dates, sum in numbers etc.

Inward clearing occur at 10:00am and outward clearing at 3:00pm.

1.8.3 Accounts department

In AKBL this department is of great importance. The day-to-day bank operation is

registered on the PC and an overview is published at the start of the day, and tallied and
numbered with tools received all day long. For each tool, debit and loan vouchers are
established and are kept as a register. The focus is sent to the headquarters by the
beginning of the week of the large amount of transactions. It also illustrates, as wiping,
transfer transmission, etc. Headquarters records. The following obligations are also
performed:

Preparation of Daily Bank Position Statement.

Checking Bank’s Daily Activity.

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 Maintenance of book of the accounts of head office.
Salary disbursement of staff.
Arrangement of stationary for bank.
Pre audit checking of all bank transactions.

1.8.4 Remittance department

"Cash is the bank's blood because it circulates and produces profit."

The bank's Remittance department is critical given that the cash is transferred from one
location to another. The instruments of Remittance department are

Demand Draft

It is a request to pay a specific amount referred to on the DD for the individual named in
the next branch of a similar bank. It's a transfer of resources between towns. In order to
plan a draft, the customer fills in the application structure and the official bank fills in the
PC programming data and prints the draft of the interest.

Pay Order

Intra-city shifting resources are pay requests. This is the bank's own check. The wage
order tool has three sides:

Purchaser
The Bank
Receiver

1.8.5 CASH DEPARTMENT

Cash department has essential role in the banking. All money exchange represent in
account, for example, money got from client, import and export transactions, bill
payment and so forth includes money installment and receipt exchange in it. These are
following various functions performed in this department:

Acceptance of deposit.

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 Cheque payment.
Collection of funds.
Handling of ATM.
Funds transfer from one account to another.
Verification of signature.
Posting.
Handling of prize bond.

1.8.6 Credit Department

A straightforward however functional meaning of credit is "the capacity to purchase with

a guarantee to pay" at the end of the day, to get present value for a guarantee to pay later
on. The word “credit” is derived from the Latin word “credo”. And the AKBL has the
consumer products in order to facilitate them in several ways. The main consumer
products are:

Ask4car
Personal Finance
Mortgage Finance
MasterCard Credit Cards (classic, gold, platinum, corporate)
Askari world MasterCard Credit Cards.

1.8.7 Software used in AKBL

The bank uses different kinds of software to run its work, such as the Flex Cube, OBI and
MS Office software. As well as the key finance applications Oracle Financial Service
Software (OFSS). As the hardware "MIS and Supply Chain Management," "People Soft,"
"Reveleus," "Risk Management," "Seibel" and "Customer Relationship Management
Software," the Bank has an OFSS system. They are fully incorporated with OFSS,
reinforce the ability to deliver products and services and enhance operating and external
monitoring norms.

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1.8.8 Lockers

Lockers facility is also available in AKBL. And are available at predetermined fees. And
have different sizes, small, medium, large.

Size of locker Rent of locker (Rs.) p.a

Large 4640
Medium 2900
Small 2320
Table. 1.4

CHAPTER # 02

MY INTERNSHIP PLAN

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2.1 Internship Experience
The internship program is very beneficial. It provides me a wonderful opportunity to
accommodate fresh stuff. It also tells me that the universe of research and practice is
entirely different. Unlike examination, work life is not fluid. I have regularly faced
several problems during my work. I found that there are two esteemed things that help me
to tackle issues are "braveness and persistence". Courageous to confront the problem and
be patient to comprehend it.

All the knowledge I procured from my internship is different to me, since I had never
done internship before. Legitimately speaking with clients and satisfying their essential
prerequisites was absolutely another experience for me. I figured out how to
communicate successfully and proficiently with clients. Internship program likewise
improves my communication skills with various people in well way.

My six week internship experience is follows:

2.1.1 1st Week

First week of my internship was introductory week; I came to know how much
department are working there in the bank. I got the knowledge in the first week of how to
fill in the deposit slip and knew the self-deposit does not require an ID card. And if any
mistake happens, there must take the sign of the depositor upon correction. I just worked
upon the deposit slip and the mail dispatched and mail received. And recorded the
dispatched and received mail in the registers.

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2.1.2 2nd Week

In the second week I worked in the Remittance department. People came for collecting
their money with the MTCN number which consists of 14 digits. (Whereas MTCN
number may consist of 11, 10 and 14 digits.) AKBL Hasan Abdal branch only deals with
the 14 digits MTCN. The receiver and sender name, amount and the purpose of sending
is filled. Then the form is signed by the receiver and ID copy is attached to the form. And
form further proceeded by the cash department and money is given to the receiver. I also
came to know how to operate the photocopy machine.

2.1.3 3rdWeek

In 3rd week, I volunteered in Account opening department. First I was taught to create the
whole account opening form, current account form, Asaan account form, corporate etc.
Then I came to know the documents which are needed for account opening the ID copy
of the bank account holder and the next of kin, the proof of income (not for asaan
account). Further I came to know about the corporate account and its prerequisites.

2.1.4 4th Week

In the fourth week, I worked in the same department i.e. account opening. After that I
was taught how to fill the form, which section is filled with block letters and small letters.
And where the signatures of the account holder are necessary. Then I was taught how to
do stamping of the account opening form and then finally completing all the necessary
forms and proofs it is signed by the account opening officer and BM. The form is also
forwarded through mail to the head office to review, if any discrepancy happens, it is
resolved and then finally the account opening form is dispatched to the head office. And
within 2, 3 days account is opened. I also came to know about the ATM and cheque book
forms, then further cheque book receiving and recording it in register.

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2.1.5 5th Week

In the fifth week of my internship, I get the knowledge about the clearing department. I
did the voucher checking and the cheque checking and maintaining the prerequisites.
Then the outward clearing is done at 3pm and inward clearing is done at 10am. I
maintained the non-financials, account status, and account maintenance files. I used to
keep the records with the ascending order of the date in the respective files. And daily
paste the currency rate list at the notice board.

2.1.6 6th Week

In the 6th week I worked in the customer care/ credit department. Where I came to know
about the types of loan which are provided to the customers. The credit cards and their
ranges. And what are the conditions for applying for each type of loan like Ask4Car,
mortgage finance etc. all these information about the credit and account opening is
available at its website too. Customers can also use the online banking services. I also got
the knowledge about the Banc assurance and the insurance provided by the bank, such as
health, education, marriage, vehicle etc.

2.2 My Learning
Besides all the work related learning experience from the internship program I came to
know that how the practical life is different from the student life. But this internship
helped in a lot in learning the work of bank. I came to know about different department
and it vast the scope and thus I have learnt the whole working. Such that if I work in a
bank I will be already having enough knowledge about the working. This internship
helped me a lot in tackling different kind of problems and patiently solving these
problems.

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 CHAPTER # 03

FINANCIAL ANALYSIS

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3 FINANCIAL STATEMENT ANALYSIS
Financial analysis relates to an evaluation of a company, sub-company or project's
viability, stabilization and profitability. Financial Analysis is an assessment of an
organization’s past performance and its prospects for what's to come in future. It
comprises of applying analytical tools and strategies to budget summaries and other
significant information to get valuable data. Its fundamental reason for existing is to give
an unmistakable image of the financial position of an association.

In this chapter, I have used various instruments for financial analysis. AKBL's financial
statements are evaluated in:

3.1 TYPES OF FINANCIAL ANALYSIS

 Ratio Analysis.
 Vertical Analysis
 Horizontal analysis.

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25
3.2 Ratio Analysis

Ratio analysis represents a qualitative technique for knowing the liquidity, operating
efficiency and profitability of an organization by examining the information presented in
its financial statements. It is also referred to as a basic assessment. The associated
information are similar with the ratios. When stated as a associated figure, a lone figure
alone has yet to have any significance, it gives critical results. Analyst uses the
proportions to compare their history and expects that their potential percentage will
determine whether the economic situation of the organization improves or decreases after
some moment.
The ratios are categorized as:
 Liquidity Ratio
 Leverage Ratio
 Coverage Ratio
 Activity Ratio
 Profitability Ratio

3.2.1 Liquidity Ratio

Liquidity ratio is a kind used in matrices to determine the capacity of a debtor to

reimburse present debt obligations without increasing foreign equity. Liquidity
relationships a metric by calculating metrics including the capacity of a company to
cover debt obligations and its security net:
 Current Ratio
 Quick Ratio
 Cash Flow Ratio
 Net Working Capital

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3.2.1.1 Current Ratio
Current ratio is the type of liquidity ratio which shows that whether the company or firm
is capable enough to payback its current liabilities or not with its current assets. It can be
find out by comparing current assets to the current liabilities.

Current ratio = current assets / current liabilities

Table 3.1

Years 2014 2015 2016 2017 2018

Total Current Assets 417336678 506745368 586260649 623332994 656622181

Total Current Liabilities 408183670 496590340 570652932 608164881 641851059

Current Ratio 1.022423749 1.020449508 1.02735063 1.024940791 1.023013317

Current Ratio
1.03
1.03
1.02
1.02
1.02
1.02
1.02
2014 2015 2016 2017 2018

Figure 3.1

Interpretation
As the current ratio of the AKBL is greater than 1 throughout these 5 years that means it
has a good payback liabilities policies. But during these 5 years the highest current ratio
is in 2016 which means that the current assets are 1.027 times more than the liabilities.
And this ratio lies between 1.02-1.025 in other years. AKBL is efficiently managing its
Current Liabilities and is this aspect is attractive for the investors.

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3.2.1.2 Cash Flow Ratio
This is also the ultimate liquidity ratio which is used to measure the payback ability of
liabilities of the organization by the cash. It is measured by comparing the cash to the
current liabilities of the organization.

Cash flow ratio = cash / current liabilities

Table 3.2

Years 2014 2015 2016 2017 2018

Cash 19,130,113 29,685,228 42,568,141 44,239,325 49,187,645

Current Liabilities 408,183,670 496,590,340 570,652,932 608,164,881 641,851,059
Cash Ratio 0.046866434 0.059778102 0.0745955 0.072742321 0.076634048

Cash Ratio
0.1
0.08
0.06
0.04
0.02
0
2014 2015 2016 2017 2018

Figure 3.2

Interpretation
As the graph shows that the ability of the payback obligations is gradually increasing. It
was least in 2014 and is showing a increase in the ratio which means that the organization
is moving towards better situation and is more capable of meeting its liabilities through
its cash. 2014 has the highest cash ratio in previous five years.

3.2.1.3 Net Working Capital

Net working capital is the amount which a company or a firm holds in order to run its
daily operations. This ratio exposes whether a company has enough resources to meet its

28
daily need or not. This ratio is measured by finding the difference between total current
assets and liabilities.

Net working capital = Total current asset – Total current liabilities

Table 3.3

Years 2014 2015 2016 2017 2018

Total Current Assets 417336678 506745368 586260649 623332994 656622181

Total Current Liabilities 408183670 496590340 570652932 608164881 641851059

Ratio 9153008 10155028 15607717 15168113 14771122

Net Working Capital

18000000
16000000
14000000
12000000
10000000
8000000
6000000
4000000
2000000
0
2014 2015 2016 2017 2018

Figure 3.3

Interpretation
This networking ratio analysis shows that throughout last five years AKBL has enough
net working capital and is rising from left to right. But it has a sudden rise in 2016, and in
last three years it is being maintained nearly about that point. The company has a
handsome amount of asset left after settling the current liabilities such that this ratio
depicts that the liquidity ratio of the firm is attractive for customer and investors.

29
3.2.2 Leverage Ratio

Average ratio is the instrument which is used to find out that how many percent of the
capital investment include the credit part. If the leverage ratio is less than one then it is
good for the bank as it pay more to its shareholders, but if it is less than 1 it means that
the asset that a shareholder holds or equity which he holds are less payable, thus it isn’t
attractive to the customers. It has following types;
 Debt to Equity Ratio
 Debt to Total Assets Ratio
 Debt to Capital Ratio

3.2.2.1 TotalDebt-To-TotalShareholder Equity

This ratio is the measure of the leverage of the company that how much part of the asset
finance consists of the debt relative to its shareholder’s equity. And it can be find out by
comparing total debt to the company’s share holders’ equity.

Total debt to shareholders equity = total debt / total shareholders’ equity

Figure 3.4

Years 2014 2015 2016 2017 2018

Total Debt 376,098,607 423,375,484 509,013,771 586,562,243 624,272,878
Total Shareholder
Equity 18,728,888 23,707,061 26,852,943 32,576,950 32,435,491

Ratio 20.08120327 17.85862381 18.95560464 18.00543768 19.24659867

30
 Total Debt-to-Total Shareholder Equity
20.5
20
19.5
19
18.5
18
17.5
17
16.5
2014 2015 2016 2017 2018

Figure 3.4

Interpretation
Banks usually prefer lower ratio because bank has to pay less interest charges on lower
debts. This ratio has a fluctuating trend throughout last 5 years it is rising and falling. The
year 2015 and 2017 shows a low debt ratio. While the remaining three shows more debt
ratio than that of the shareholder’s equity.

3.2.2.2 Debt to capitalization

This ratio is the measure of the total part of the debt which contributes to the total capital
of the organization. This measure includes the both long term and short term debt as a
whole total debt divided by the total equity that the organization hold, owners’ equity
plus debt that the organization has to pay.

Debt to capitalization = total debt / total capitalization

Table 3.5

Years 2014 2015 2016 2017 2018

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

Debt to Capitalization 0.946973861 0.949888765 0.94738348 0.950608988 0.9525727

31
 Debt to Capitalization
0.95
0.95
0.95
0.95
0.95
0.94
2014 2015 2016 2017 2018

Figure 3.5

Interpretation
As the banks always want that it has the low debt such that it has to pay less interest
payments upon lower loan. In the upper trend AKBL has relatively low debt rate in 2014
and 2016. But in remaining three years it is rising which is not good for the banks, such
that it has to lower it down.

3.2.2.3 Debt To total asset

As it is clear from its title, this ratio measures the percentage of the debt which finances
the whole assets of the organization. This ratio tells us that how much total asset of the
firm is financed by the creditors. It can be find out by dividing total debt to the total
assets of the company.

Debt to total asset = total debt / total assets

Table 3.6

Years 2014 2015 2016 2017 2018

Total Debt 376,098,607 423,375,484 509,013,771 586,562,243 624,272,878

Total Asset 408,183,670 496,590,340 570,652,932 608,164,881 641,851,059

Debt to Total Asset 0.921395525 0.852564881 0.891984852 0.964478978 0.972613302

Interpretation
As this ratio shows the debt portion of the whole asset, which a company hold. AKBL
has the fluctuating trend. Lower the debt to asset ratio is good for the organization, as it

32
rises it is against the organization’s favor. The financial year 2015, was the best one
regarding the debt to total asset ratio because it shows the least ratio.

3.2.3 Coverage Ratio

A coverage ratio, as its name shows, is the group or bundle of the transactions such that
the firm could fulfill its credits and also be able to efficiently fulfill its money related
responsibilities which include the dividends payment and interest payments. The greater
the proportions, the simpler it is for you to receive interest payments or pay bonuses.
Some key reporting kinds are as follows:

 Interest Coverage Ratio

 CashFlow Coverage Ratio
 Dividend coverage Ratio

3.2.3.1 Interest coverage ratio

This coverage ratio shows that how easily a company can pay interest on the higher
obligations which it holds. The greater the ratio, shows positive impact of the company. It
can be expressed as:

Interest coverage ratio = Earnings before interest and tax / interest expense

Table 3.7

Years 2014 2015 2016 2017 2018

EBIT
1,092,385 16,888,515 20,712,243 22,780,735 23,655,831
Interest Expenses 9,532,888 11,107,102 12,280,547 14,303,787 15,164,029

Ratio 0.114591192 1.520514982 1.68658961 1.592636621 1.55999642

33
 Interest Coverage Ratio:
1.6
1.2
0.8
0.4
0
2014 2015 2016 2017 2018

Interpretation
As the interest coverage ratio shows the timely interest payment of the debt by the
company, as it is greater with the each passing financial year it is the most favorable
condition for the AKBL. From 2014-15 it was a gradual boost to the interest coverage
ratio thus in 2016 it increased more and is stabilized between 1.5-1.7. Hence, it shows
that the organization is paying its interest payments on debt effectively and efficiently.

3.2.4 Activity Ratio

Activity ratio is a matrix which regulates a company to change its account balance sheet
to its income. It measures the comparative competence of the organization which
depends upon the efficient use of its resources, its influences and other financial balance
sheet items which shows whether the management is working efficiently or not in terms
of generating income and cash from the funds its own. Some of the activity ratios are:
 Receivable turnover
 Average Collection period
 Payable Turnover
 Payable Turnover in Days
 Inventory Turnover
 Inventory Turnover in Days
 Total Asset Turnover
 Total Asset Turnover in Days
 Fixed turnover

34
3.2.4.1 Fixed Asset turnover ratio
This ratio show the efficiency of any organization that how much sales it can generate
from its asset. It shows the sales generating capability of the organization utilizing its
assets.

Fixed asset turnover = Net sales / Fixed asset

Table 3.

Years 2014 2015 2016 2017 2018

Net Sales 34,604,210 36,592,093 35,512,309 36,267,220 43,669,883
Fixed Asset 29,745,867 29,121,346 32,878,544 33,375,375 49,168,500
Ratio 1.163328337 1.25653852 1.080105889 1.086646068 0.888167892

Fixed Asset Turnover Ratio:

1.2
0.8
0.4
0
2014 2015 2016 2017 2018

Figure 3.

Interpretation
The higher the ratio shows the efficient use of the resources and the low fixed asset
turnover ratio depicts the underuse of the resources available to the organization. And the
trend shows that there is little change in the ratio in the previous 5 years but this situation
is alarming because it is decreasing every year.

3.2.4.2 Asset turnover

Asset turnover ratio is the key indicator to know the efficient use of the assets by the
company. As the ratio is higher it refer to the best or effective use of the assets, but if the
ratio is lower then it depicts the bad/ underuse of the assets by the company.

Asset turnover ratio = Net sales or interest earned / total assets

35
 Table 3.

Years 2014 2015 2016 2017 2018

Net Sales / Interest
Earned 34,604,210 36,592,093 35,512,309 36,267,220 43,669,883

Total Asset 408,183,670 496,590,340 570,652,932 608,164,881 641,851,059

Ratio 0.084776076 0.073686679 0.062231011 0.059633861 0.068037409

Asset Turnover Ratio

0.1
0.08
0.06
0.04
0.02
0
2014 2015 2016 2017 2018

Figure 3.

Interpretation
This trend of the asset turnover ratio shows that in 2014 it was the highest one then it
started coming down consecutive three years, and then it started to recover back in 2018
because the ratio started rising. This shows that the assets are again used efficiently than
before.

3.2.4.3 Total Asset Turnover in Days

This ratio shows the efficiency of the organization regarding the event happening in days.
That maximum how much day does it take for the asset turnover ratio? Lesser the days
greater the efficiency.

Total asset turnover in days = Days / asset turnover ratio

Table 3.

Years 2014 2015 2016 2017 2018

36
 Days 365 365 365 365 365
total turnover Ratio 0.084776076 0.073686679 0.062231011 0.059633861 0.068037409

total turnover in days 4305.45993 4953.405483 5865.242955 6120.68368 5364.695768

total turnover in days

7000
6000
5000
4000
3000
2000
1000
0
2014 2015 2016 2017 2018

Figure 3.

Interpretation
As the graph is showing the increasing trend of the ratio this means that the situation is
against the bank favor. It is at its peak in 2017 and the most unfavorable condition for the
bank. Now again in 2018 it is getting better and the ratio is started lowering down.

3.2.5 Profitability Ratio

Profitability ratios, as it is clear from its name it is calculated over a time period of
monetary values which is used to analyze and evaluate the abilities of the organization to
generate the income as compared to its operating costs, returns, Balance sheet resources,
equity etc. using each data with the exact knowledge of the time. Some of the
profitability ratios are:
 Net Profit Margin
 Gross Profit Margin
 Return on Investment
 Return on Equity
 Basic Earning Power
 Earnings Per Share

37
3.2.5.1 Gross Profit Margin
It is the type of profitability ratio which compares the gross profit to its net sales.

Gross profit margin = Gross profit/ net sales

Table 3.

Years 2014 2015 2016 2017 2018

Gross profit 8,597,317 11,893,286 14,901,707 15,015,552 16,195,255
Net Sales / Interest 34,604,210 36,592,093 35,512,309 36,267,220 43,669,883
Gross profit Margin: 0.24844714 0.325023387 0.4196209 0.414025448 0.37085639

Gross profit Margin:

0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2014 2015 2016 2017 2018

Figure 3.

Interpretation
Banks always prefer the higher gross profit ratio because it gives them higher portion of
markup or interest earned. Which ultimately result in increased profit of the organization
and thus its growth stimulates. So in the above graph year 2016 was the best one
regarding gross profit margin because it shows the most profit ratio earned in comparison
of the five years.

3.2.5.2 Net Profit Ratio

This ratio shows that how well the company could manage its costs and generate more
sales in less cost. As the higher the ratio the company is more efficient in converting its
revenue to its actual profit gained and vice versa.

38
 Net profit ratio = Net profit after tax / net sales or interest earned

Figure 3.

Years 2014 2015 2016 2017 2018

Net Profit after Tax 4,014,932 5,043,419 5,220,635 2,561,093 96,165,760
Net Sales / Interest 34,604,210 36,592,093 35,512,309 36,267,220 43,669,883
Net Profit Margin: 0.11602438 0.137828109 0.14700917 0.070617296 2.20210711

Net Profit Margin:

2.5

1.5

0.5

0
2014 2015 2016 2017 2018

Interpretation
In the first 4 years the Net profit margin is least and it is about at the border line because
AKBL was facing difficulty in managing markup/returns. And thus it when they carefully
handled the problem. It give a drastic change in the ratios and thus in 2018 it has been
raised to 2.2. This is a positive aspect to the bank.

3.2.5.3 Return on Investment

This ratio shows the profit earned on each investment. Return on Investment Ratio
depicts the return got from each investment, relative to the investment cost. It can be
determined by the following formula.

Return on investment = Net profit after Tax/Total Asset

Table 3.

Years 2014 2015 2016 2017 2018

NPAT 4,014,932 5,043,419 5,220,635 2,561,093 96,165,760

39
 Total Asset 408,183,670 496,590,340 570,652,932 608,164,881 641,851,059
Return on Investment: 0.009836092 0.010156096 0.009148529 0.004211182 0.149825662

Return on Investment:
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2014 2015 2016 2017 2018

Figure 3.

Interpretation
The rise in this ratio shows that there is a good return upon the investments. As in the
case of AKBL there was really very low return upon investment in the 1 st 4 years and
then in 2018 this ratio has created a boost which is the positive aspect of the bank.

3.2.5.4 Return on Equity

ROE is basically the degree of profitability a firm can raise from its equity. It is the
measure of the efficiency of the organization management and decision making. And this
can be expressed as:

Return on equity = net profit after tax / shareholder equity

Table 3.

Years 2014 2015 2016 2017 2018

NPAT 4,014,932 5,043,419 5,220,635 2,561,093 96,165,760
Shareholder Equity 23,707,061 26,852,943 32,576,950 32,435,491 33,508,907
Return on Equity: 0.169355957 0.187816248 0.160255487 0.078959588 2.869856662

40
 Return on Equity:
3.5
3
2.5
2
1.5
1
0.5
0
2014 2015 2016 2017 2018

Interpretation
This ratio shows the efficient use of the shareholders equity by the organization. That
how well they utilizes their funds and enhance their profitability. According to the above
trend, in the first 4 years it is constantly low, and then in the last recent year 2018 it
shows a growth of 2.8. Thus the organization is moving towards its betterment.

3.2.5.5 Basic Earning Power Ratio

BEP shows the basic earning power of the organization before the deduction of income
tax and the financial leaverage.it is calculated by dividing the EBIT with Total asset.

BEP = EBIT / Total Asset

Years 2014 2015 2016 2017 2018

EBIT 16,888,515 20,712,243 22,780,735 20,949,037 74,983,277

Total Asset 447,082,545 535,866,714 619,139,193 656,708,369 705,790,681

Ratio 0.037774937 0.038651856 0.036794206 0.031900061 0.106240106

Basic Earning Power

0.12
0.1
0.08
0.06
0.04
0.02
0
2014 2015 2016 2017 2018

41
Interpretation
Bank always prefer the greater ratio because greater the ratio will be, greater will be the
income generated by the bank. In the above graph the ratio shows that the almost constant
low ratio of the BEP. And in 2018 by changing the policies and product enhancement,
they have achieved a great boost in 2018.

3.2.5.6 Earnings per Share Ratio

Earnings per share ratio show the income the organization will be able to achieve upon
each share. And can be find out by dividing net profit after tax to number of the shares
issued by the organization.

Earnings per share = net profit after tax / no. of shares

Table no 3.

Years 2014 2015 2016 2017 2018

Net Profit after Tax 4,014,932 5,043,419 5,220,635 2,561,093 96,165,760
Number of shares 1,260,260,180 1,260,260,180 1,260,260,180 1,260,260,180 1,260,260,180

Earnings Per Share 0.003185796 0.004001887 0.004142506 0.002032194 0.076306275

Earning Per Share

0.09
0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0
2014 2015 2016 2017 2018

Figure 3.

Interpretation
More the earning upon share is better/ beneficial for the organization as it earns better
and thus will be able to distribute more to its shareholders. And this trend shows that the

42
2018 was the best year with respect to EPS ratio because the organization get the highest
ratio in 2018.

3.3 Vertical Analysis

Vertical analysis (Common Size) is a technique used to identify where a company has
applied its resources and to what extent these resources are distributed among the
different accounts of the balance sheet and income statement. The analysis determines
the relative weight of each account and its share of asset resources or revenue generation.
Each element of the financial statement (Both Income Statement and Balance sheet) is
shown in the vertical analysis as a percentage of another item. Represented as a
percentage of total assets, assets, liabilities, and share capital. In the case of Income
Statement, the percentage of total sales is defined as each element of revenue and
expenditure.

43
 Vertical analysis of Profit and loss
  2014 2015 2016 2017 2018
Mark-up/return/interest earned 100.00% 100.00% 100.00% 100.00% 100.00%
Mark-up/return/interest expensed 65.63% 59.28% 57.72% 55.34% 57.38%
Net mark-up/interest income/Gross Profit 34.37% 40.72% 42.28% 44.66% 157.38%
           
Reversal of provision against non-performing loans and
advances-net -0.24% 0.86% -2.05% -3.28% 0.79%
Impairment loss on available for sale investments 0.60% 0.59% 0.06% 0.08% 0.60%
Provision for diminution in the value of investments-net 0.57% 0.95% 0.14% 0.30% 0.07%
Reversal of provision against assets held for sale 0.00% 0.00% 0.00% -0.42% 0.00%
Impairment loss on immovable assets          
Bad debts written off directly          
  0.93% 2.40% -1.86% -3.32% 1.45%
Net mark-up/interest income after provisions 33.44% 38.32% 44.14% 47.98% 158.83%
           
Non mark-up/interest income          
Fee, commission and brokerage income 4.15% 4.73% 6.07% 7.46% 7.14%
Dividend Income 1.01% 0.83% 0.86% 0.84% 0.53%
Income from dealing in foreign currencies 2.85% 2.28% 1.80% 2.32% 3.65%
Gain on sale of securities-net 5.21% 8.87% 9.93% 5.67% 0.96%
Unrealized gain/(Loss) on revaluation of investments
classified as held for trading-net          
Other Income 2.15% 1.57% 1.35% 0.96% 0.60%
Total non-markup/interest income 15.37% 18.28% 20.01% 17.25% 12.87%
Earnings before Interest & Tax 48.80% 56.60% 64.15% 65.23% 171.70%
Non mark-up/interest expenses          
Administrative expenses 31.60% 32.83% 39.65% 41.22% 37.19%
Other provisions/write offs 0.14% 0.14% 0.01% 0.06% -1.24%
other charges 0.36% 0.59% 0.62% 0.53% 0.44%
Total non-markup/interest expenses 32.10% 33.56% 40.28% 41.81% 36.39%
  16.71% 23.04% 23.87% 23.41% 208.09%
Extra ordinary/unusual items          
(Loss)/Profit before taxation 16.71% 23.04% 23.87% 23.41% 208.09%
Taxation-current -2.93% -6.37% -6.00% -6.25% 16.40%
Taxation-prior years 0.00% -1.14% -0.75% -0.67% -3.05%
Taxation-deferred -2.18% -1.76% -2.42% -1.97% -1.24%
  -5.10% -9.26% -9.17% -8.89% 12.12%
(Loss)/Profit after taxation 11.60% 13.78% 14.70% 14.53% 220.21%

Interpretation

44
The vertical analysis describes that each item of the income statement is divided by the
total sales. Mostly, the banks like to have higher return rate and want low interests and
tax payments. The analysis shows that the gross profit of 34.37%in 2014, 40.72% in
2015, 42.28% in 2016, 44.66% in 2017, mana and 157.38% in 2018. The organization is
earning more and more and the ratio depicts an increasing trend throughout the last five
years. Bank controlled its interest and the tax payments effectively by applying corporate
strategies. The vertical analysis also focuses upon major factor that is provisions, which
increased abnormally and show irregular trend. Except provision every other item shows
the normal increasing trend in the income statement. Thus the net income after provisions
is 33.44% in 2014, 38.32 in 2015, 44.14% in 2016, 47.98% in 2017, and 158.83% in
2018. And thus the profit and loss after taxation is 11.60% in 2014, 13.78% In 2015,
14.70% in 2016, 14.53% in 2017, 220.21% in 2018.

Vertical analysis of Balance sheet

years  2014 2015 2016 2017 2018
cash and balances with
treasury banks 4.28% 5.54% 6.88% 6.74% 6.97%
balances with other banks 1.58% 1.55% 0.94% 0.49% 0.58%
lendings to financial institution 0.77% 0.15% 1.10% 0.34% 0.00%
investments 48.58% 50.02% 47.78% 47.96% 36.87%
advances 38.14% 37.31% 37.98% 39.39% 48.61%
Total Current Assets 93.35% 94.57% 94.69% 94.92% 93.03%
operating fixed assets 1.86% 1.72% 1.78% 1.63% 1.81%
assets held for sale 0.01% 0.00% 0.04% 0.01% 0.01%
deferred tax assets 0.20% 0.00% 0.00% 0.02% 0.53%
other assets 4.59% 3.71% 3.49% 3.42% 4.61%
Total Fixed Assets 6.65% 5.43% 5.31% 5.08% 6.97%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%
Bills payable 1.53% 1.14% 1.39% 1.64% 2.20%
Borrowings 3.07% 10.70% 14.42% 10.90% 7.46%
Deposits and other accounts 86.69% 80.84% 76.37% 80.07% 81.19%
Total Current Liabilities 91.30% 92.67% 92.17% 92.61% 90.85%
sub-ordinated loans 1.79% 0.93% 0.81% 0.76% 1.41%
Deferred tax liabilities 0.00% 0.02% 0.09% 0.00% 0.00%

45
 Other Liabilities 1.61% 1.37% 1.68% 1.69% 3.00%
Total Non-Current Liabilities 3.40% 2.32% 2.57% 2.45% 4.41%
Total Current & Non-Current
Liabilities 94.70% 94.99% 94.74% 95.06% 95.26%
Share Capital 2.82% 2.35% 2.04% 1.92% 1.78%
Reserves 1.08% 1.20% 1.40% 1.82% 2.20%
Unappropriated Profit 0.42% 0.52% 0.66% 0.43% 0.53%
Surplus on revaluation of
assets-net of tax 0.99% 0.94% 1.17% 0.77% 0.23%
Total Shareholder Equity 5.30% 5.01% 5.26% 4.94% 4.74%
Total Shareholder & Liabilities 100.00% 100.00% 100.00% 100.00% 100.00%

Interpretation

In vertical analysis of the balance sheet, you consider the total asset of each year as 100%
and calculate the percentage of each item contribute to the total assets. And find out the
major contribution of the item, which has the greatest importance for the organization. In
the vertical analysis of the balance sheet shows that the total asset majorly depends upon
the investments and the advances. Investment throughout the 5 years are 48.58%,
50.02%, 47.78%, 47.96%, 36.87% respectively. And advances as 38.14%, 37.31%,
37.98%, 39.39%, and 48.61% respectively. Thus the total asset major portion depends
upon these two items. And the total shareholders’ equity and liability depends upon the
deposits and other accounts which are 86.69%, 80.84%, 76.37%, 80.07%, 81.19%
respectively throughout previous 5 years.

3.4 Horizontal Analysis

If you're an investor and think about investing in a business, just a year-end balance sheet
or statement of income wouldn't be enough for you to judge how a business is doing. You
have to look at it for at least a few years to be sure. Better yet, if you can see and make a
comparison between many years of balance sheets and income statements.

Through horizontal analysis of financial statements, for consecutive many years you
would be able to see two actual data and compare each and every item. And on that basis,

46
you can predict the future and understand the trend.

Horizontal analysis of profit and loss

  2014 2015 2016 2017 2018
           
Mark-up/return/interest earned 100% 106% 103% 105% 126%
Mark-up/return/interest expensed 100% 96% 90% 88% 110%
Net mark-up/interest income/Gross Profit 100% 125% 126% 136% 578%
           
Reversal of provision against non-performing loans
and advances-net 100% -380% 877% 1430% -412%
Impairment loss on available for sale investments 100% 105% 11% 14% 125%
Provision for diminution in the value of investments-
net 100% 175% 24% 55% 14%
Reversal of provision against assets held for sale          
Impairment loss on immovable assets          
Bad debts written off directly          
  100% 273% -205% -374% 196%
Net mark-up/interest income after provisions 100% 121% 135% 150% 599%
           
Non mark-up/interest income          
Fee, commission and brokerage income 100% 121% 150% 189% 217%
Dividend Income 100% 87% 87% 87% 66%
Income from dealing in foreign currencies 100% 85% 65% 86% 162%
Gain on sale of securities-net 100% 180% 196% 114% 23%
Unrealised gain/(Loss) on revaluation of
investments classified as held for trading-net          
Other Income 100% 77% 64% 47% 35%
Total non-markup/interest income 100% 126% 134% 118% 106%
Earnings before Interest & Tax 100% 123% 135% 140% 444%
Non mark-up/interest expenses          
Administrative expenses 100% 110% 129% 137% 149%
Other provisions/write offs 100% 106% 7% 46% -1150%
other charges 100% 172% 176% 154% 152%
Total non-markup/interest expenses 100% 111% 129% 137% 143%
  100% 146% 147% 147% 1572%
Extra ordinary/unusual items          
(Loss)/Profit before taxation 100% 146% 147% 147% 1572%
Taxation-current 100% 230% 210% 224% -707%
Taxation-prior years          
Taxation-deferred 100% 85% 114% 95% 72%

47
  100% 192% 184% 183% -300%
(Loss)/Profit after taxation 100% 126% 130% 131% 2395%

Interpretation

Horizontal analysis demonstrates the percentage increase and decrease of every item
against each year. Taking the earliest year as a base year and taking all of its item as
100%. The sales/ interest earned are 106% in 2015, 103% in 2016, 105% in 2017, and
126% in 2018 with respect to 2014. The gross profit are 125% in 2015, 126% in 2016,
136% in 2017, and 578% in 2018. And the earning before tax is 123% in 2015, 135% in
2016, 140% in 2017, and 444% in 2018. And the profit and loss throughout the five year
is 126% in 2015, 130% in 2016, 131% in 2017, and 2395% in 2018 with respect to 2014.
And thus all of the above item and other than these items, all of them show the increasing
trend with respect to the year 2014.

Horizontal Analysis OF balance Sheet

  2014 2015 2016 2017 2018
cash and balances with treasury 100.00% 155.18% 222.52% 231.25% 257.12%

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 banks
balances with other banks 100.00% 117.37% 82.71% 45.19% 57.91%
lendings to financial institution 100.00% 23.72% 199.45% 65.64% 0.00%
investments 100.00% 123.39% 136.20% 145.00% 119.81%
advances 100.00% 117.26% 137.93% 151.73% 201.24%
Total Current Assets 100.00% 121.42% 140.48% 149.36% 157.34%
operating fixed assets 100.00% 111.21% 132.77% 129.27% 154.13%
assets held for sale 100.00% 0.00% 487.43% 150.31% 150.31%
deferred tax assets 100.00% 0.00% 0.00% 11.51% 431.12%
other assets 100.00% 96.95% 105.26% 109.49% 158.51%
Total Fixed Assets 100.00% 97.90% 110.53% 112.20% 165.30%
Total Assets 100.00% 119.86% 138.48% 146.89% 157.87%
Current Liabilities          
Bills payable 100.00% 88.91% 125.16% 157.10% 226.30%
Borrowings 100.00% 417.14% 649.55% 520.94% 383.51%
Deposits and other accounts 100.00% 111.76% 121.99% 135.66% 148.00%
Total Current Liabilities 100.00% 121.66% 139.80% 148.99% 157.25%
sub-ordinated loans 100.00% 62.52% 62.49% 62.47% 125.03%
Other Liabilities 100.00% 101.82% 144.30% 154.40% 294.19%
Total Non-Current Liabilities 100.00% 81.78% 104.72% 106.03% 205.19%
Total Current & Non-Current
Liabilities 100.00% 120.23% 138.54% 147.45% 158.97%
Share Capital 100.00% 100.00% 100.00% 100.00% 100.00%
Reserves 100.00% 133.63% 179.75% 247.70% 322.22%
Un appropriated Profit 100.00% 148.39% 219.32% 153.04% 199.44%
Surplus on revaluation of assets-net
of tax 100.00% 114.09% 163.39% 113.94% 37.32%
Total Shareholder Equity 100.00% 113.27% 137.41% 136.82% 141.35%
Total Shareholder & Liabilities 100.00% 119.86% 138.48% 146.89% 158.03%

Interpretation

The horizontal analysis of the balance sheet demonstrate that every item of the balance
sheet is compared with the base year percentage of the each item. Thus it shows normal

49
trend of increment in each year. The total asset shows the 19.89% in 2015, 38.48% in
2016, 46.89% in 2017, and 57.87 in 2018 increment. And this show a normal increasing
trend of the ratios. The total shareholder equity and liability show 19.86%, 38.48%,
46.89%, and 58.03% in the five years respectively. Thus by this analysis it is proved that
the organization is striving towards its betterment and working hard to get better and
better day by day.

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 CHAPTER # 04

SWOT ANALYSIS

SWOT ANALYSIS
The term "SWOT" is used to combine strengths, weaknesses, opportunities and threats.
An organization is analyzing its internal strengths and weaknesses as well as its external
opportunities and threats. Since each organization has internal strengths and weaknesses
and external opportunities and threats, SWOT analysis by AKBL has been discussed
briefly below.

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4.1 STRENGTHS

 Management staff gives the friendly environment and good communication

system to the staff.
 Management are enough qualified that they can take worthy decision.
 The appointed staff is highly qualified, and their selection is based on merit
system so that the appointed staff handles the situation skillfully.

 Customer loyalty is a barrier to the achievement of all the companies, and the
power of AKBL is restricted.

 Askari provide good compensation packages to its employees thus to motivate

them and boosting their morale.

 Extensive training and development programs are held for increasing the new
methods and technological knowledge for its employees.

 AKBL has an extensive network and branches, rendering connectivity easy and
easy for people.

 AKBL relies on business financing: it attaches great significance to the good

interaction with other businesses as well as financial organizations between
development and maintenance.

 AKBL has a modern IT system which helps to deal with the problem.

 The transaction of customers is secure and updated on computer regularly.

4.2 WEAKNESSES

Nothing here in the world is perfect. It also carries with AKBL a couple of
weaknesses.

 Askari funds fall behind in the publicity media a lot in opposition to other
publications, HBL, UBL, MCB, ALFALAH and SCB.
 Askari Bank has not a lot of market shares, it is also a vulnerable condition.

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  AKBL follows the centralization approach and thus the whole decision making
rights are reserved to the board members and employees are not made part of
decision making at any level.
 AKBL has numerous representative/ employees working from more than two
decades at the same post thus have hindered the professional development of
many competent junior employees.
 It is obvious that the betterment and the competitive advantage can be achieved
through the management of HR. AKBL appears to be less centered around this
profoundly basic issues as the job fulfillment/ satisfaction level of the employees
working at AKBL, which is truly low.
 Despite of the fact, that the bank has the electronic framework for its operations
yet registers are utilized to keep up the data about records, cheque books,
clearing etc.

4.3 OPPORTUNITIES

 Customer’s feedback on different merchandises and financial records, has really

enhanced the bank performance and encouraged the environment for future
strategies.
 Explanation of the bank’s procedures may lead to a high revenue business.
 The branch should also avail the opportunity to start Islamic banking.
 There is good opportunity for this branch to sponsor in different activities such as
games on provincial and national level to aware people about the bank.
 There is a big opportunity for AKBL to market their products through different
Medias and get higher return through making new customers.

4.4 THREATS

 As competitors are increasing day by day, they should make strategies so that
they get maximum attention from consumer by giving those good offers and
facilities.
 Enhanced facilities for banking.

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  Instability in the business-and economic-sector government policy.
 As everybody likes to be supported more, the change in customer supply.
 Global development of technology.
 The excellent picture of the division has been destroyed by political stress. Those
who come into authority try to put excessive interference with the bank's
procedure on banking officials.
 Strict public rules on clients ' loan equipment and sensitivity laws.
 Public lack of trust in opening transactions in foreign currencies because of
political unrest

In line with the results of the sector, we can conclude that the bank can reach its aims
favorably by developing the consumer stake and by helping client awareness, to
accomplish higher consumer satisfactions, by updating the technology through the hard
work of the employees.

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 CHAPTER # 05

CONCLUSIONS & RECOMMENDATIONS

The last and the most important part of the report is recommendation and conclusion.
Without this part report cannot be completed. This part of report has its own importance
as it gives us some recommendation and conclusion regarding organization.

Bank employees were very cooperative and they lead me in a good manner. Due to my
collaboration and understanding, my teachers help me greatly to finish my internship and

55
reach my goals during the Bachelors ' Bachelor in Business Administration (BBA)
Lectures. In my next practical life this knowledge will surely help me.

The study of AKBL's financial statements show progress day by day. In recent years the
bank profit diagram is growing and is projected to go further in the next few years. This
concludes that the past years analysis shows that the bank is going to move towards
wealth, growth and independence. On the other hand, consumers should collaborate in a
healthy relationship with the bank. All of this proposes that the bank succeed in
competing with its rivals.

5.1 CONCLUSION
One important aspect of the effectiveness of the business is the concentrate on economic
leadership related to the purchase, funding and assets governance in the light of some
objectives. After analyzing AKBL and its Finance Department, the previous outcomes
have been achieved:

 It was noted that the Bank depends on its interest rate to use its earnings
resources more carefully.

 The conclusion has been drawn that the Bank has effective and lucrative
decision-making capabilities but can impact its accounts through its fees.

 The own capital of the bank is less than the shareholder capital, which is more
than the own capital of the shareholder funds.

 AKBL is showing increasing progress in terms of asset returns, which implies

that the yield on investments is good, comparative to its complete resources.

 The AKBL's price to earnings proportion is up mildly, showing that the business
is less cost-effective.

 Customer confidence decreases during this era.

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5.2 RECOMMENDATION
More profit is possible by enforcing the small value on the promotion of credit and by
getting a greater level of profit for the reason of deprecation. Some recommendations are
made for Askari fund

 Cash and other property such as marketable bonds must be increased by the Bank.

 the Bank's present liabilities should be focused

 The company shall ensure that the employees contribute to the bank's promotions.
In order for each person to take responsibility for bank results and credibility it
should encourage proprietary behavior. In this context, the bank must adopt a
marginal benefit strategy, promoting quickly skilled executives and
representatives to motivate the employees.

Reference
https://askaribank.com/

http://akbl.com.pk/wp-content/uploads/2019/03/Askari-Bank-Annual-Report-2018.pdf

https://en.wikipedia.org/wiki/Askari_Bank

https://www.wallstreetmojo.com

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